Turning 65: Evaluating Medicare Advantage Plans

After 23 years of covering — and giving advice about — Medicare, a veteran journalist wades into the system herself. Part five of a 5-part series.

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After choosing a Medigap plan (in part 3 of this 5-part series on joining Medicare), I still felt I should compare so-called Medicare Advantage (MA) plans, which work like old-fashioned HMOs.

After all, there’s much more government-provided plan information about MA plans than about traditional Medigap policies, so it seemed like I was being encouraged to select an MA plan. Even though I knew I would not feel comfortable in a restricted provider network, which is the crux of most MA plans, I tried to approach the selection process with an open mind.

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As I found with Medigap policies and the prescription drug plans that go with them, there were too many choices and too many data points for me (and probably most seniors) to comprehend. Making what’s always caled the “right” decision seemed all but impossible. I again found conflicting and out-of-date information in government and private insurance brochures, websites and help-lines.

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With all this confusion, I understand why seniors fall for misleading or deceptive sales pitches. In one common sales approach, for example, MA sellers invite seniors to a local restaurant, gloss over the negatives, then highlight plans with low or no monthly premiums that include drug coverage, gym memberships, and vision and dental care thrown in to boot. Appealing, right? The truth is, seniors like me do need a helping hand, but all too often whoever is extending it doesn’t have our best interests at heart.

The Trade Offs

While there are numerous variations of MA plans with low or no monthly premiums, the mix of policy features should ultimately determine whether a plan is a good or bad deal. The trade-off for a no-premium plan may be hidden (and expensive) hospital co-pays, out-of-pocket limits, or the obligation to pay 20 percent of special treatments like chemotherapy. You may also have to change doctors (a requirement with most MA plans), which I did not want to do.

So, the first questions seniors should ask themselves are, “How much risk can I assume for uncovered medical care?” and “How much of my monthly budget can I spend to minimize that risk?”

My goal was to lower my exposure for uncovered bills as much as possible. I was also fortunate enough to be willing and able to spend the money up front in the form of higher premiums to make sure I had no nasty bills at the back end if I got sick. Many seniors might not be so lucky. Someone who is more of a gambler might opt for lower monthly premiums and keep their fingers crossed. Others might simply have no choice but to choose the least costly premium.

Minimizing My Risk

My own choice ultimately boiled down to limiting the exposure I would face for uncovered medical bills and how much money I was willing to spend to cover my risk. I ended up with three options: 1.) remain on a retiree plan from a previous employer, 2.) choose Medigap policy Plan F and a separate drug plan that would minimize my exposure to uncovered medical services, or 3.) select a Medicare Advantage PPO plan, which would let me stay with my current doctors.

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Decision Time

I decided to stay on my retiree plan from a former employer, even though it was my most expensive choice — $545 a month including the prescription drug benefit. I could have chosen something for a lot less, but this is the same plan I have had for 34 years, and the deductible was low — $500 — and so was the maximum out-of-pocket amount — $1,500. Drug co-payments were only $5 for generics and $7.50 for brand-name products. Out-of-country travel was also covered. And, if my former employer dropped coverage, I would have a two-month window in which to buy a Medigap policy.

Though I went with the plan that felt the safest and the most familiar, there are still many unknowns. This is one of those so-called Cadillac health plans that the health reform law will eventually do away with. Does this mean that in a few years I will have to trade in my great coverage for something less? What will happen if my retirement income changes drastically? What other changes will be in store for seniors and Medicare in the future? I hope to explore these and other questions in later columns.