Let's take a close look at the complex Medicare options during 2015's enrollment and renewal period, October 15 through December 7, 2014.
In 2015, many women will enroll in Medicare for the first time. Some previous enrollees may face significant changes in their health status; others may face important changes in their medical plans, or face changes in both. For all of us, those new to Medicare and those considering their changing options, this can be a very confusing time.
The Big Picture
There are about 29 drug plans to review, 18 options for Medicare Advantage (plans delivered through private insurers), plus 10 supplemental or medigap plans that cover what traditional Medicare does not.
No broad-based changes are expected, but there may be meaningful shifts within individual plans. For example, your Part D prescription plan may no longer pay for one of your drugs. Or your Medicare Advantage plan may have dropped your favorite doctor or cancer center from its network.
Let's start with the basics and try to keep a clear head.
Two Basic Alternatives
1. Traditional Medicare
Part A: Covers hospital and skilled nursing facility stays, plus some home health visits and hospice care. Part B covers preventive care, doctor visits, and outpatient services. Premiums for 2014 were usually $104.90 a month and are expected to remain the same in 2015.
Medigap:Deductibles, co-payments and coinsurance (when you pay for a percentage of medical services) can be onerous because there's no out-of-pocket ceiling. So most people buy a medigap plan, aka supplemental coverage, to cover out-of pocket costs on Parts A and B (unless, of course, they have retiree employer coverage to handle the gap).
- Medicare Part D: Offered only through private insurers, Part D covers drugs. The average monthly premium for 2015 is estimated at $32.
Reasons to choose traditional Medicare:
- 70% of all Medicare beneficiaries choose traditional Medicare. When used with a medigap plan, your costs are more predictable, and you are free to see any doctor who accepts Medicare.
- Medigap has 10 federally standardized plan levels (labeled from A to N), which means coverage must be exactly the same across the board, with all insurers.
- Depending on the plan you choose, the total cost of your premiums could come close to your final out-of-pocket cost for the year. In Connecticut, for example, one of the most comprehensive medigap policies, called Plan F, costs a person about $218 a month ($2,622, yearly), and it covers all of your co-payments and deductibles.
Remember, if you are thinking of switching from a Medicare Advantage plan back to traditional Medicare and you want to buy a medigap (supplemental) policy, do so while you are younger and healthier. Later on, coverage may become more expensive, or you can be denied coverage altogether. With some exceptions, you are guaranteed coverage only if you buy during the six-month period after your 65th birthday.
During that time, insurers can't refuse to sell you a policy because of a pre-existing medical condition, nor can they charge you extra. Once past this safe period, you are no longer guaranteed coverage under federal law (though individual states may extend some protection). Once you have bought a medigap policy, however, it generally can't be canceled because you become old or sick. To find out what your state has to offer, contact your local State Health Insurance Assistance Program (SHIP) at: shiptalk.org
2. Medicare Advantage
Sometimes referred to as Part C, Medicare Advantage plans can be purchased only from private insurers. These plans often provide one-stop medical services because they cover Parts A and B, and a drug plan, as well. Some also throw in extras like dental and vision coverage. Average monthly premiums for Advantage plans are expected to go to $33.90 in 2015—a $2.94 increase (this cost is in addition to your Part B monthly premium of $104.90).
Here are the reasons to choose Medicare Advantage:
- 30% of all Medicare beneficiaries enroll in a Medicare Advantage plan because of the plan's low or sometimes zero premiums, for certain services, plus low co-payments.
- Some plans also offer limited dental or vision coverage.
Here are the drawbacks:
- Limited provider networks, and doctors can be dropped or drop out on their own.
- Consumers are responsible for all cost-sharing, which can be unpredictable.
- For 2015, cost-sharing will be capped out at an out-of-pocket limit of $6,700 for in-network service.
- Your Medicare Advantage plan may cease to exist.
- Make sure your plan will cover you when you travel or spend a lot of time in another state.
Consider what services you would need if you were sick and take a careful look at potential costs under various plans. If you are already enrolled, the "annual notice of change" sent to plan enrollees will detail changes in coverage, costs and networks. If you are dissatisfied with your Advantage plan, you can unenroll from January 1 to February 14, 2015, and switch to traditional Medicare.
Changes in Medicare Advantage plans
We can expect a slight overall decline in the total number of available Medicare Advantage plans. This means that almost 320,000 enrollees will have to find a different Medicare Advantage plan or use traditional Medicare. Some new Medicare Advantage plans will, however, enter the market in 2015.
Changes in Medicare Part D: Stand-alone Prescription Drug Plans
The average monthly premium is expected to rise 4% to $38.83 from $37.27. But that figure masks a lot of variation across plans. For example, enrollees in 6 of the 10 most popular stand-alone plans will get double-digit premium increases in 2015, while three of the 10 most popular ones will get double-digit decreases.
Compare drug costs
Don't assume your drug coverage plan will stay the same. Lists of covered drugs often change or your company may insert new restrictions. Go to Medicare's Plan Finder website (medicare.gov/find-a-plan). Enter your drugs, including dosage and frequency, and where you like to buy them. This site will show you what the different plans cover and give you your total estimated costs for the year.
Check out the 2015 Medicare & You booklet. Read it online or download and print it out. To talk to a live person, call 1-800-633-4227.