Health Care requires checkup

There's much to consider when choosing coverage

MarketWatchNovember 25, 2012 

20100127 Health care

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  • Medicare resources

    If you need help weighing your options or enrolling in a Medicare plan, there are several free resources you can consult.

    ■ Medicare.gov has a Plan Finder tool that works by plugging in your ZIP code. Counselors also can assist you by calling 1-800-Medicare (1-800-633-4227).

    ■ States also run help centers through Shiptalk.org.

    ■ AARP has Medicare enrollment guides in English and Spanish on its website, AARP.org.

    ■ You also can call the companies that provide the plans for help understanding their offerings. The Kaiser Family Foundation offers descriptions of how Medicare works on its website, KFF.org.

If you have Medicare coverage or you help someone who does, it's time for your annual homework assignment: comparing your options during open enrollment to see if you can do better.

It can be intimidating, but the payoff for your effort is potential savings of hundreds to thousands of dollars.

Through Dec. 7, Americans enrolled in Medicare, the federal health-insurance program for people 65 and older and the disabled, can make changes to how they receive their benefits. Those changes take effect Jan. 1, 2013.

In the next few weeks, beneficiaries can switch their stand-alone Part D prescription drug plan or enroll in one for the first time, if they didn't sign up when they were first eligible. They also can join a Medicare Advantage plan, a private health plan that wraps medical and often drug benefits into a single HMO- or PPO-like product. Or they can drop out of a Medicare Advantage plan in favor of original Medicare, the government-sponsored program that doesn't have restricted networks of doctors and hospitals.

Here are five of the costliest mistakes beneficiaries often make during open enrollment, according to experts:

Mistake No. 1: Not bothering to give your current coverage a checkup.

The first step is to take stock of what you have. Even if you like your drug coverage, make sure you review your plan's annual notice of change, a letter from the companies that Part D enrollees should have received by now, said Fred Riccardi, director of programs and outreach for the non-profit Medicare Rights Center.

"It should say whether a drug that they're taking is no longer covered," he said. "It should specify how their premium is changing or if a pharmacy is leaving the network."

If you don't have any drug coverage, now is the time to consider hopping on board. Should you develop a health condition that requires prescription medication, your out-of-pocket costs without insurance could easily overshadow the 1 percent per month late-enrollment penalty you may accrue for delaying enrollment in Medicare Part D.

Mistake No. 2: Failing to shop around or considering only premium costs if you do.

If you pass on seeing what's out there, you run the risk of overpaying for your drugs next year by default.

"You really have to look to see that the drugs (you take) are covered at the best possible price," said Katy Votava, founder and president of Goodcare.com, a consulting service focused on Medicare and health-care costs. At minimum, beneficiaries should compare drug plans every two years because costs often creep up, she said. "People assume drug coverage is more standardized than it is."

In fact, drug plans, which you can compare at Medicare.gov, are all over the map in terms of how they structure premiums, deductibles, co-payments and tiers of coverage.

In addition to making sure the drugs you need are on the formulary, or list of covered drugs, and that your pharmacy is in the network, see whether plans impose prior authorization, step therapy, quantity limits or other restrictions, Riccardi said.

Reasons to shop around include if your medications have cost you a lot in the last year, if premiums are increasing to an uncomfortable level, if you're using a lot of out-of-network care in a Medicare Advantage plan, or if you've experienced poor customer service.

Mistake No. 3: Failing to account for out-of-pocket maximums.

This is the number that tells you how much you could pay in a year before the plan kicks in to cover what's considered catastrophic costs. Read the fine print to understand what the plan does and doesn't count toward its out-of-pocket max. Factoring in worst-case scenarios could save you thousands of dollars if you develop a condition that requires extensive health services or a pricey prescription drug. Then compare plans and do the math.

"If you've had a Medicare Advantage plan where all your care providers were in the network and it had a low out-of-pocket max, like $1,700, then most people couldn't get a Medigap (supplemental insurance) plan that would cost less than that," Votava said. Otherwise, going with original Medicare and a Medigap plan to cover out-of-pocket costs might make more sense.

Mistake No. 4: Choosing a Medicare Advantage plan without first checking if your doctors are in network.

About 1 in 4 Medicare beneficiaries chooses a Medicare Advantage plan, which sometimes offers benefits beyond what's included in traditional Medicare.

If you're considering a Medicare Advantage plan, remember that this model means seeing out-of-network providers can quickly become a costly proposition for you. Before signing up for this option, call your preferred doctors, specialists and hospitals to verify that they participate in the plan's network.

Mistake No. 5: Assuming retiree health coverage from a former employer is automatically the best deal or misunderstanding how it interacts with Medicare's various parts.

Retirees are often loyal to their old employers, Votava said, but their retiree plan may not be the gold standard in terms of value for their money. In some cases, retirees could get better coverage at a lower cost by going with original Medicare and a Medigap plan or a Medicare Advantage plan.

A basic rule of thumb is if seniors are spending more than $250 to $300 a month for their retiree coverage, they should shop around, Votava said. "Even people who are paying $200 could be paying $125."

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