Medicare Plan Choices

By: AARP Education & Outreach | Source: AARP.org | November 2009

Medicare is a federal health-insurance program for people who are 65 and older, some younger people with disabilities, and people with end-stage kidney disease.

With Medicare, you usually have a choice of coverage options. You can always choose the Original Medicare Plan, open to everyone with Medicare. Or you may be able to choose a Medicare Advantage (MA) plan. These plans are offered by private insurance companies, which provide your Medicare benefits. If you select Original Medicare, you can also choose a Medicare Drug plan to help reduce the cost of your prescription medications. Most MA plans offer prescription drugs, but if yours does not, you may also choose a Medicare Drug plan.

The Medicare coverage options are:

• The Original Medicare plan, sometimes called the “traditional” plan
• Medicare Advantage plans:

    -Medicare Health Maintenance Organizations (HMOs)

    -Medicare Preferred Provider Organizations (PPOs)

    -Medicare Private-Fee-for-Service (PFFS) plans

    -Special Needs Plans

    -Medicare Medical Savings Accounts

• Medicare Prescription Drug plans

Remember:

• You can always choose the Original Medicare plan.
• No matter which Medicare plan you choose, you will still have Medicare.
• All Medicare coverage options must provide at least the same benefits offered by the Original Medicare plan.
•  In all Medicare coverage options, plan costs and coverage may change each year.
• In general, you can switch plans during the annual election period held in November15-December 31. However, depending on the coverage option you select, there may be some restrictions, so it is a good idea to check before you make any change.
• If you are now in the Original Medicare plan and you’re happy with what you have, you don’t need to change.

The Original Medicare Plan

The Original Medicare plan pays doctors a fee for each service you receive. Under this plan, you can go to almost any doctor or hospital in the country that accepts Medicare payment. 

In the Original Medicare plan, Medicare pays its share of the doctor or hospital bill, and you pay your share. The Original Medicare plan pays for many heath care services and supplies, but it doesn’t cover all of your health care expenses. For this reason, many people with Original Medicare also buy a Medigap policy to pay for costs that Medicare does not cover. You may also enroll in a Medicare prescription-drug plan.

Medicare Advantage Plans
There are different types of Medicare Advantage plans, such as HMOs, PPOs, PFFSs, and Special Needs plans. They are offered by private insurance companies. These plans provide Medicare benefits and generally provide additional benefits, such as dental and vision services as well as lower  cost-sharing charges. However, there may be restrictions that limit where you can get your care, and which doctors you can see.

Medicare HMOs and PPOs, and Special Needs Plans
In a Medicare HMO, you can only go to doctors, specialists, and hospitals in the plan’s network. You may be asked to choose a personal doctor, such as a family doctor or an internist, to be your main or primary-care doctor. Your personal or primary-care doctor will coordinate all of your health care and send you to a specialist when you need one (such as a cardiologist for a heart problem).

Some Medicare HMOs offer a point-of-service option. This allows you to go to other doctors and hospitals that are not in the plan’s network, but you may pay more.

A Medicare PPO also has a network of doctors, specialists, and hospitals. However, in a PPO, you can go to doctors, specialists, and hospitals outside the plan’s network, but you will pay more for your care.

Since prescription-drug coverage is usually included in HMOs and PPOs, you may not need to select a separate Medicare prescription-drug plan.

A Special Needs Plan (SNP) is a type of MA plan that is usually an HMO. SNPs are available only in certain areas and only to certain population groups: people who are dually eligible for Medicare and Medicaid; people who have certain severe chronic conditions; or people who live in nursing homes. These plans must offer prescription drugs and certain specialized services targeted to the people they serve. Check with Medicare to find out if there is a SNP in your area.

Medicare Private Fee-for-Service (PFFS) Plans

You can choose any doctor or hospital that accepts the plan’s payment. The insurance company pays its share of your doctor and hospital bills, and you pay your share. However, the private insurance company, not Medicare, decides how much you pay for your care. This means you might pay more for your health care than if you were in the Original Medicare plan. However, under the PFFS plan, you may get extra benefits.

Some PFFS plans include prescription-drug coverage and some do not. Unless your prescription drugs are covered through the PFFS plan or elsewhere, if you want drug coverage, you will need to select a Medicare prescription-drug plan.

Medicare Prescription-Drug Plans

You need to decide if you want prescription-drug coverage. If you have Original Medicare and you want drug coverage, you need to select a Medicare prescription-drug plan. You may not need to select a drug plan if you have a Medicare Advantage Plan, because drug coverage is generally included in Medicare HMOs and PPOs.

Be aware that drug plans vary considerably in coverage and costs. Compare plans carefully to find the best plan for your needs.

You may not need to buy additional coverage if the prescription drugs you take are covered by other insurance (for example, if you have coverage under Medicaid, an employer retiree plan, or a union plan).

Where Medicare Plans Are Available

• The Original Medicare Plan is available everywhere in the country and to everyone who signs up for Medicare.
• Medicare Advantage Plans are available in most parts of the country. 
• Medicare Prescription Drug Plans are available everywhere in the country; however, plans often vary by region.

Signing Up for a Medicare Plan
The Original Medicare Plan:
If you are getting Social Security or Railroad Retirement benefits, you automatically get the Original Medicare plan (Parts A and B) when you turn 65. You’ll receive a packet of information on Medicare, including your Medicare card. If you are not getting Social Security or Railroad Retirement benefits, sign up for Medicare yourself by calling or visiting your local Social Security office. In this case, you direct Medicare as to the plan you want.

Medicare Advantage Plans:
If you want to join a Medicare Advantage plan (HMO, PPO, or PFFS), you must have both Medicare Part A and B and live in the service area of the plan you want to join. People with End-Stage Renal Disease (ESRD) are not eligible to enroll in a Medicare Advantage plan (but if you are already enrolled and you get ESRD, you may remain in your MA plan).

Medicare Prescription Drug Plans:
If you want to join a Medicare drug plan, you can contact the Medicare prescription drug plan that you are interested in directly to get information and an enrollment package. You can also call Medicare toll-free at 800-633-4227 or visit Medicare.gov to get information about signing up for a plan.

Changing Plans
Generally, you can choose to switch from your current plan to a new plan during open enrollment, from November 15 to December 31 of each year. Enrollment is generally for the calendar year, so new coverage would become effective on January 1st. In special cases, such as a move or entering a nursing home, you can switch plans outside the open-enrollment period.

If you decide to switch plans you can:

• Write or call your plan
• Call Medicare toll-free at 800-633-4227
• Contact the Social Security Administration

After you ask to switch, your plan will let you know, in writing, the date your coverage begins. If you don’t get a letter, call the plan and ask for the date.

Before Switching Plans
If you have other health coverage, such as Medicaid or retiree health insurance from an employer or a union, before you make a change, find out how these plans work with each Medicare plan you are considering. You will want to find out all the facts before dropping your extra insurance or switching from one   Medicare plan to another. If you drop your additional insurance when you change plans, you may not be able to get the same coverage back if you change your mind at a later date.