Choosing the Right Medicare Plan for You

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

Medicare offers several different types of plans. Although all plan types are not necessarily available in your area, everyone enrolled in Medicare has a choice of at least one other type of plan in addition to Original Medicare.

You may be able to get Medicare coverage through:

• The Original Medicare Plan
• Medicare Advantage Plans
  • Medicare Health Maintenance Organizations (HMOs)
  • Medicare Preferred Provider Organizations (PPOs)
  • Medicare Private-Fee-For-Service (PFFS) Plans
  • Medicare Medical Savings Account (MSA) Plans
• Medicare Prescription-Drug Plans

If you are happy with your current Medicare plan, there is no need to change. But depending on your needs, you may want to find out if another plan might be better for you.

Four Steps to Help You Choose

If you want to explore your options, use our guide below and take your time to work each of the following steps:

Step 1: Find the Medicare plans in your area.

Step 2: Think about what's important to you.

Step 3: Compare the costs, benefits, rules for choosing doctors, and the quality of each plan.

Step 4: Choose the plan that's best for you.

FYI: If you have other health care coverage, such as Medicaid or retiree health insurance from an employer or a union, find out how these will work with each Medicare plan before you make any changes to your current coverage. This information helps you determine which plan would work best for you.

Step 1: Find the Medicare Plans in Your Area

Not all the Medicare plans are available in all parts of the country, but almost all people on Medicare have a choice. Start by finding out which health-plan choices (besides Original Medicare) are available in your area by going to Medicare Options Compare.

If you do not have any other Medicare plan available to you, you will be in the Original Medicare plan. You don’t need to read any further, since the rest of this article deals with the other plans.

Step 2: Think About What's Important to You

Each person with Medicare has unique needs and concerns when it comes to health care. Some people are most concerned about keeping costs down. Others want the freedom to go to any doctor they choose.

Here are differences to look for when considering the various Medicare plans:

• How much you pay in premiums and out-of-pocket costs
• How much choice you have to select your own doctors or hospitals
• Whether or not you can go directly to a specialist
• Whether or not you can get additional benefits, such as prescription coverage
• How far you will need to travel to get to the doctor or hospital
• How often you travel for business or leisure

As you review each plan in your area, think about the options that are most important to you.

FYI: Find out as much as you can about each Medicare plan you are contemplating. Don't only rely on information from the plan alone. Get additional information from Medicare, your State Health Insurance Assistance Program, and from people and organizations you trust.

Step 3: Compare the Costs, Benefits, Rules for Choosing Doctors, and the Quality of Each Plan

The amount you pay for Medicare depends on the following factors:

• Which Medicare plan you choose
• How often you go to the doctor or hospital
• Whether or not you have other insurance

On the surface, cost comparisons seem easy, but many times, there are hidden costs with some of the Medicare options.

For example, if you choose a Medicare HMO or PPO, you don't need to buy a Medicare Supplemental (Medigap) policy. (Medigap is insurance that helps pay for some of your costs in the Original Medicare plan.)

On the other hand, if you are in an HMO or PPO and decide to use a doctor outside the plan's network, you'll have to pay for some or all of that care yourself.

If you are in a Medicare Advantage plan that provides prescription drug coverage, you don’t need additional Medicare prescription drug coverage.

Find out how these costs are handled before you choose. Also keep in mind that cost alone can't tell you how good the care is. The Medicare Options Compare Tool can tell you the specific costs of the plans in your area.

Consider how some common situations can affect the cost of your plan or your medical expenses:

If you travel frequently within the United States or leave your hometown for long periods of time:

The Original Medicare plan and some Medigap policies will pay your routine health care costs anywhere within the United States. But if you join a Medicare Advantage plan, such as an HMO or PPO, your coverage may be limited to the area served by the plan.

A Medicare PFFS plan will usually pay your health care costs as long as the doctor or hospital accepts the plan's payment. Be sure to check on where the plan's payment is accepted before you sign up.

If you travel outside the country:

Your health care may or may not be covered, depending on the plan you are in. The Original Medicare plan does not cover care outside the country, except in some emergency situations in Mexico and Canada. Some Medicare Advantage plans and Medigap policies do cover care outside the United States. Check your plan or policy before you travel.

If you have high prescription drug costs or if you want prescription drug benefits think about the following information:

• Medicare Prescription Drug Plans
  
  If you are in Original Medicare or a Medicare Advantage plan that does not offer prescription drug coverage, you can join any Medicare-approved prescription drug plan serving your area. Drug plans vary in terms of the drugs covered and your out-of-pocket costs. You are advised to compare plans carefully to find the one that best meets your needs.
• Medicare Advantage Plans
  
  Medicare Advantage plans often offer additional benefits, such as prescription drugs. Keep in mind that these benefits can change each year and might only offer limited benefits. Attentively check into the prescription drug benefits of the plans you're considering.
• Prescription Drug Assistance Programs
  
  Prescription Drug Assistance Programs offer free or discounted prescription drugs.

If you have retiree health insurance from your an employer or from a union:

Before you retire, find out what your costs and benefits will be under your retiree health insurance. Your retiree insurance, together with Original Medicare, may pay for more of your health care and cost you less than a Medigap policy. Your retiree health insurance might also be used with a Medicare Advantage plan.

FYI: Check out all the facts with the administrator of your retiree health insurance before making a decision about your Medicare options. If you give up your retiree health plan, you usually can't get it back. For example, you might lose it if you switch from the Original Medicare plan to another Medicare plan.

If you are not sure you can pay for your Medicare costs or are on a limited budget:

Consider joining a Medicare HMO or PPO;premiums are generally lower. Also find out if you can get help from your state to pay some of your health care expenses.

Benefits

All Medicare plans offer the same basic set of benefits. However, some Medicare Advantage plans may have additional benefits, such as eye care or prescription coverage.

To find out the specific benefits of the plans in your area, visit Medicare Options Compare.

Rules for Doctor Choice

Medicare plans differ in the freedom of choice you have to pick your own doctors:

• In the Original Medicare plan, you can go to any doctor or hospital in the country that accepts Medicare. Most doctors and hospitals do.
• In a Medicare HMO, you usually can only go to the doctors and hospitals in that plan's network. Some HMOs offer a point–of-service option, which allows you to go to doctors and hospitals outside the plan’s network, but you may pay more for this choice.
• In a Medicare PPO, you can go to doctors and hospitals outside the plan's network, but you usually have to pay more.
• In a Medicare PFFS plan, you can choose any doctor or hospital that accepts the plan's payment.

Another common concern about doctor choice is being able to go directly to a specialist. In the Original Medicare plan, PFFS plans and most PPOs, you can go directly to a specialist. In Medicare HMOs, you usually are able to see a specialist only if your primary care doctor first approves your visit.

Find out the rules about getting care under each plan you are considering. Be sure to ask for a list of the doctors and hospitals in each plan's network.

FYI: All Medicare plans must pay for your health care costs away from home if you have an emergency or need urgent care.

Quality

Information on the quality of care is available for the Original Medicare plan and for Medicare HMOs, visit Medicare Options Compare to learn more.

Quality information can tell you:

• How well the plan performs in keeping its members healthy
• How well the plan treats the sick
• How well doctors in the plan communicate with their patients
• How easy it is to get a referral to a specialist if one is needed

For example, you may be able to find out how many women in the plan get a mammogram to check for breast cancer. You may also be able to find out how many people in the plan get a drug called a beta blocker after a heart attack. People who get this drug are less likely to have another heart attack.

Step 4: Choose the Plan That's Best for You

After you gather the data about your plan choices and have thought about what features make the difference for you, take your time sorting through the information you have.

Ask more questions and talk to people and groups that you trust. Help is available to you if you need it.

Your home state’s insurance assistance program  should have specific information about the plans in your area and any state laws or regulations in your state that affect people with Medicare.

The more you learn about your Medicare choices, the better prepared you will be to make the choice that is right for you.