Medicare is a lifeline, but once a year it is also a pain in the neck.
This is the season when older American and disabled people are bombarded by television ads and fliers touting a maddening smorgasbord of insurance plans. They promise peace of mind. They offer money in your pocket.
But in truth, Medicare's options are intensely personal and change every year. No one plan is the cheapest for everyone. No one plan has the best benefits. You and your neighbor could join the same plan but experience very different outcomes.
National surveys indicate that 90 percent of people on Medicare simply settle on one drug plan or health plan and just keep renewing it year after year.
That could be a costly mistake.
Plans change their benefits every year. If the plan you had this year drops just one of your prescription drugs from its formulary for 2013, you could end up paying thousands of dollars more than you need to.
Many people naively home in on plans that rebate Part B premiums.
You may get a little check every month, but if the plan doesn't cover what you need, one illness could eat up all those rebates and more.
This issue of LifeTimes is designed to help you sift through the maze. Charts list basic aspects of different plans. One story guides you through Medicare's website — by far the best way to compare costs based on your particular circumstances. We'll also briefly explain Medigap insurance and how it fits with your other Medicare options.
You have until Dec. 7 to pick a plan, though it's best to sign up earlier and avoid the last-minute crush.
So let's get started.
Understand how Medicare works
Under original Medicare, Part A covers inpatient hospital care and a few other services. You get this automatically with no premium.
Part B covers outpatient care, doctor visits, physical therapy and other services. Part B is optional and costs most people a monthly premium that is deducted from their Social Security check. If you don't sign up for Part B when you become eligible for Medicare, you may face a stiff penalty for the rest of your life if you need these services later. People with higher incomes will pay a higher monthly premium.
Part D covers prescription drugs. You buy these plans from private insurance companies for a premium as low as $15 a month. They defray the cost of your medications.
These are the components of original Medicare. (For the curious, the term "Part C" is no longer in use.)
All parts of original Medicare carry deductibles and copayments that can add up to hundreds, if not thousands, of dollars a year.
Sometimes, health insurance from employers or unions will pay deductibles and copayments. Some people may cover them by buying "Medicare supplement" policies, also known as "Medigap." Medigap policies tend to be costly, but if you suffer a serious illness, they can pay off.
"Medicare Advantage" provides alternatives to original Medicare. These are privately managed health care plans — usually an HMO or PPO — where you typically get service within a network of providers. For a more detailed explanation of plan types, consult the text that accompanies the health plan charts in this section.
To get a private health plan, you still must pay a monthly Part B premium, though some plans rebate part or all of that premium.
Medicare Advantage plans are subsidized by taxpayers and usually turn out to be less expensive than original Medicare — though not always.
They may offer some vision, hearing and dental benefits that original Medicare does not.
The downside is being limited to a network or paying a hefty fee when you seek treatment outside a plan's network. Say you want treatment at a specialty cancer center or top-notch heart clinic in another state. Then, original Medicare will be much cheaper because you can use it with doctors and hospitals all over the country.
Also, some health plans skimp on coverage for hospital or skilled nursing care. Pay close attention to those benefits when picking a plan. Don't just choose the plan with the cheapest premium. Most health plans include drug coverage, but a few do not. The charts in this section list only Medicare Advantage health plans that cover drugs.
Last, check with your doctors before signing up for a health plan. If they are not included in that plan's network, you may have to change doctors or pay for doctor services out of your own pocket.
Get drug coverage
Unless you already have prescription drug coverage through the Veterans Affairs Department, a union, an employer or some other comparable source, it's important to get some kind of drug coverage — either a Part D drug plan if you are on original Medicare or a Medicare Advantage health plan that covers drugs.
You should get coverage even if you don't use any prescription drugs.
It won't cost much — you can buy a Part D plan for less than $180 a year, and some health plans do not charge extra for drug coverage. If you get sick during the year, you may need an expensive drug and will be happy that you bought coverage.
More important, Medicare holds down the cost of drug coverage by making sure healthy people are part of the pool — not just people who use a lot of drugs.
If you do not sign up for drug coverage when you first become eligible, and you don't have comparable drug coverage from some other source, Medicare will impose a stiff financial penalty when you eventually do need drug coverage. You may save $180 a year now by not buying a Part D plan, but the penalty could cost you several times that every year for the rest of your life.
Turn on a computer
The charts in this section compare estimated costs based on a hypothetical person in good health. But depending on the drugs you take, the costs of plans can vary widely from those estimates.
The only good way to compare costs tailored to your circumstances is with Medicare's online "Plan Finder," which factors in your general health condition and the cost of your particular drugs. An accompanying story explains how to use it.
If you don't use a computer, find a friend or family member who does.
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," often called 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 be required to pay a deductible; then you are responsible for copayments for each drug you purchase. (Your insurance plan negotiates a price from the pharmacy and pays any remaining balance, if there is one.)
You reach the coverage gap when the total actual cost of all your drugs (not just copayments and deductibles) for the year reaches $2,970, a threshold set by Congress. In other words, $2,970 is the maximum amount an insurer pays for drugs in a year.
Once you hit that, you have to pay for the drugs unless your insurance plan offers additional coverage. Some plans cover no drugs after the maximum is reached. Some cover only generics. Some cover generics, plus a few brand-name drugs.
Your responsibility is not limitless. The Affordable Care Act mandates that plans must offer at least a 52.5 percent discount on brand-name drugs in the gap and a 21 percent discount on generic drugs.
You stay in this no-coverage gap until your out-of-pocket expenses for the year total $4,750. Then the plan must offer you "catastrophic" coverage, where you once again make only small copayments for generic and brand-name drugs.
Drug plan premiums do not count toward your out-of-pocket expenses, but deductibles and copayments do. Discounts in the gap also count. For example, if a drug costs $100 and you get a 60 percent discount, you will pay $40, but the full $100 will count toward getting you out of the gap and into catastrophic coverage.
Other things being equal, Part D drug plans or health care plans that offer gap coverage are usually better than plans that don't.
For low-income people
People with limited income and minimal assets may qualify for subsidies that can dramatically lower their out-of-pocket costs for a Part D drug plan or a Medicare Advantage health plan that covers drugs.
A single person could qualify with a 2012 income of less than $16,755 and liquid assets of less than $13,070. A married couple could qualify with an income of less than $22,695 and assets of less than $26,120 (Liquid assets include stocks, cash and savings accounts. Ownership of homes and cars, for example, is not counted.)
If you fall below these thresholds 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 socialsecurity.gov/i1020.
People on Medicaid who receive subsidies for their Medicare coverage often get a form letter from the state telling them to pick the plan with the lowest premium. This is a blanket directive and doesn't work for everyone. It does not take into account the drugs you take.
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 volunteers who can help people over 65 and disabled people with insurance issues. 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. weekdays. You will be referred to the nearest SHINE office.
You also can 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 email@example.com or (727) 893-8442.