Medicare choices are to November what thunderstorms are to August and crowded restaurants are to January. • When their time rolls around, there's no escaping them. You just have to grit your teeth and deal with them. • This year, more than most, people on Medicare should do their homework before selecting health coverage for 2011. That's because several aspects of the Obama administration's health care reform will kick in next year and alter the competitive balance among insurance plans.
An arrangement that worked well for you this year may prove more expensive next year, while other plans may get cheaper. Meanwhile, a few plans will discontinue service altogether, forcing their clients to start from scratch.
This issue of LifeTimes is designed to make choices easier. Charts list basic aspects of different plans. And there's also information about guiding you through Medicare's website — by far the best way to compare costs based on your particular circumstances.
You can start your research now. Signup begins Nov. 15 and ends Dec. 31. If you do not make a choice, Medicare will extend your present arrangement.
The biggest change for 2011 is good news for everyone. Prescription drug manufacturers have agreed to discount brand-name drugs 50 percent in Medicare's so-called doughnut hole. This could save hundreds of dollars for people who use brand drugs.
Many preventive services, like mammograms, flu shots and annual physicals, will now be offered at no cost, whether a person is relying on traditional Medicare or a private health plan.
Medicare is also honing its star system for evaluating drug and health plans, based on clinical outcomes and surveys of customer satisfaction. You can find these ratings on Medicare's website ( www.medicare.gov). They can tell you how well a health plan's doctors listen, for example, or whether a lot of unhappy clients are dropping the plan.
Another change relates to deadlines. People who pick a Medicare health plan, such as an HMO or PPO, will be locked into that plan from Jan. 1 through the rest of the year. In past years, Medicare had a grace period, giving people a few months to switch between health plans.
People can still switch from a health plan to "original Medicare'' until Feb. 15, but no more switching health plans. That's another reason to make an informed choice in the first place.
"Take time and do comparison shopping,'' says Scott Latimer, who oversees Humana's Medicare business in West Florida. "Most plans I've seen are not the same this year. People's health needs change. It's worth doing it right.''
Understand how Medicare works
Medicare charges a monthly Part B premium that is deducted from Social Security checks. Most people pay $96.40. Part B covers outpatient hospital care, doctors' services, physical therapy and more services that are not covered by Part A coverage, which includes in-patient hospital care, among other things.
If you choose original Medicare for your health care, you can essentially pick any doctor or hospital you want, anywhere in the country. You will pay deductibles and copayments, though some people buy "Medicare supplement'' insurance to cover these costs.
Or, you can sign up for a private Medicare health plan, usually an HMO or PPO. Sometimes called Medicare Advantage, these private plans are usually less expensive than original Medicare, though not always. Some even rebate all or part of your Part B premium.
The tradeoff is that private health plans often restrict you to doctors, hospitals and other providers on their network, or charge a hefty fee if you get service outside the network. Say you want treatment at a specialty cancer center or top-notch heart clinic in another state. Then original Medicare will usually be much cheaper than a private health plan.
Original Medicare does not cover prescription drugs. That's what stand-alone Part D drug plans are for. They cost as little as $14.80 a month and complement original Medicare's health coverage.
In addition to stand-alone Part D drug plans, most private health plans offer drug coverage as part of their package of services. The charts in today's section detail stand-alone drug plans as well as health plans with drug coverage.
Get drug coverage
Unless you already have prescription drug coverage through the VA, a union, an employer or some other comparable source, it's important to get a health plan with drug coverage or, if you are on original Medicare, a Part D drug plan. Even if you don't take any drugs, you should get drug coverage.
Coverage is inexpensive and could save you lots of money if you get sick during the year.
More important, Medicare will impose a stiff financial penalty if you don't pick a drug plan now and then try to sign up later in life, at a time when you need it.
Turn on your computer
The charts in this section compare estimated costs based on a hypothetical person in good health. But depending on your health and the drugs you take, the costs of plans can vary widely from the estimated costs in the charts. Some plans will be more expensive, others could be cheaper.
The only good way to compare costs that fit your circumstances is with Medicare's online "Plan Finder,'' which factors in the cost of your particular drugs.
If you don't use a computer, find a friend or family member who can. We also explain in today's section about some of the ins and outs of using the website.
Beyond up-front costs
Some health plans with drug coverage charge no premium and even rebate part of your Part B premium. These rebate checks have proved to be a powerful marketing tool. Humana, for example, will offer an HMO plan with a full Part B rebate this year, Latimer says, because so many potential customers said they liked Humana but wanted a plan with a rebate.
But like all plans that offer rebates, Humana finds ways to recoup that up-front cost. For example, a Humana HMO plan without the rebate caps your annual out-of-pocket expenses at $5,000. A similar plan — with the rebate — limits out-of-pocket expenses to $6,700. Someone opting for the Part B rebate could save $1,156.80 up front (the full $96.40 rebate times 12), but end up getting sick and paying an extra $1,700 in out-of-pocket expenses.
Drug coverage and the gap
When Medicare started paying for prescription drugs in 2006, Congress wanted to offer the most protection to people with huge drug bills while making sure that all beneficiaries shouldered a share of the cost.
The result was what Medicare calls the "coverage gap,'' which many people also refer to as the "doughnut hole.''
Whether you buy a stand-alone Part D drug plan or a health plan with drug coverage, it works like this:
You may pay a deductible, though many plans waive this deductible. Then you are responsible for copayments for each drug you purchase. Copayments can range from nothing for generics, to $70 or more for brand-name drugs. Your insurance plan negotiates a price from the pharmacy and pays any remaining balance.
You reach the coverage gap when the total cost of all your drugs for the year reaches $2,840, the threshold set by Congress. Note that the total cost of all your drugs is what the insurance company pays the pharmacy, not what you pay the plan. If your plan buys your drugs for $500 a month, but charges you only $100, for example, you will hit the coverage gap in less than six months.
In the coverage gap you pay the entire cost of your drugs unless your insurance plan offers additional coverage. Some plans cover no drugs in the gap. Some cover only generics. Some cover generics, plus a few brand-name drugs. Manufacturers for the first time will now offer 50 percent discounts on brand-name drugs in the gap and a 7 percent discount on generic drugs.
You stay in the gap until your total out-of-pocket expenses for the year total $4,550. That's when Congress requires plans to offer you "catastrophic'' coverage, where you make only small copayments for generic and brand-name drugs. Discounts you receive from manufacturers in the gap count toward this out-of-pocket expense. For example, if a drug costs $100 and you get a 50 percent discount, you will pay $50, but the full $100 will count toward getting you out of the gap and into catastrophic coverage.
All other things being equal, stand-alone drug plans, or health care plans that offer coverage in the gap, are better than plans that don't. Even if you take few drugs now, your health could deteriorate next year and coverage in the gap could save you a lot of money.
For low-income people
People with little income and minimal assets may qualify for subsidies that can dramatically lower their out-of-pocket costs for a stand-alone drug plan. In 2010, a single person could qualify with an income of less than $16,245 and liquid assets of less than $12,510. A married couple could qualify with an income of less than $21,855 and assets of less than $25,010. (Liquid assets include stocks, cash and savings accounts; ownership of homes and cars, for example, are not counted.) These thresholds may rise a bit for 2011. So if you fall below them or are just a little above them, contact the Social Security Administration to see if you qualify. Call toll-free 1-800-772-1213 or apply online at www.socialsecurity.gov.
People on both Medicaid and Medicare receive premium subsidies. The state usually notifies them that they should pick a drug or health plan where the subsidy covers the entire premium cost. But sometimes those low-premium plans do not cover important drugs you need. Run your drugs through Medicare's Plan Finder to find the best plan for you. Don't just accept a plan the state suggests.
Florida's SHINE program, administrated by the Department of Elder Affairs, offers excellent volunteers who can help people over 65 and disabled people with insurance issues. When you call for an appointment, the volunteer will call you back. They are trained to use Medicare's website to help you find a personalized plan.
Before you contact SHINE, make a list of all your drugs, dosages and monthly usage. Call the Florida Senior Hotline toll-free at 1-800-963-5337 from 8 a.m. to 5 p.m. Monday through Friday. You will be referred to the nearest SHINE office.
You can also call Medicare toll-free at 1-800-633-4227 and get help. These government workers generally do not have as much time to spend with you as SHINE volunteers do.
Stephen Nohlgren can be reached at firstname.lastname@example.org or (727) 893-8442.