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Assessing Risk: Medicare Advantage vs. Medigap vs. Drug Coverage Only

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As Medicare's open enrollment season draws to a close, it's a good bet that seniors are still sifting through all those brochures and flyers that have come in the mail the last several weeks.  My husband received 22.  Some used tried-and-true scare tactics that Medicare insurance sellers have relied on forever to get him to open the envelope and bite.  Others simply designed ways to gauge his interest in hopes that a salesperson could get in the door.

Under current government rules, health insurance agents must make an appointment before coming to a senior's home. That's the government's way of protecting them from pushy salespeople making cold calls. The theory is that an agent who is invited in will help seniors compare plans and choose the best one; though, the 'best' may very likely be what helps the agent or insurance company the most. Flyers are mere appetizers for the main course served by an agent.

The first solicitation from First United American blared on the envelope:  ATTENTION: NEW 2011 MEDICARE PRESCRIPTION DRUG COVERAGE INFORMATION HAS ARRIVED.'  The next one said:  SECOND NOTICE:  PLEASE REVIEW MEDICARE PRESCRIPTION DRUG COVERAGE FOR 2011.  The second notice bit, of course, was to make the envelope look like something official from the government.

Both were pushing a prescription drug plan, called a PDP in Medicare-speak.  It's meant to be used along with an old-fashioned Medigap policy that does not cover prescription drugs.  I spotted some scary fine print.  It said that if you sign up for the drug benefit, your membership in a Medicare Advantage (MA) plan may end.  No more doctor, hospital, or drug coverage from that plan.  I wonder how many seniors missed that warning.

Emblem Health sent three messages.  Two pushed plans using scary language highlighting changes in the law to get people interested in their brand of MA plan.  One said: ACTION REQUIRED and noted that due to the recent changes in health care legislation, you will no longer be able to switch Medicare Advantage Plans after December 31. Another warned my husband may not have a second chance to get the right Medicare Advantage coverage, and urged him to get the facts to make the right choice by calling for a free Medicare decision guide.  Another of Emblem's solicitations contained a short survey to fill out and return. The company would then send along a copy of the decision guide.

What was missing from most of these solicitations was real information.  The AARP-UnitedHealthcare solicitation for Medigap policies gave the table of standard benefits and premiums for New York.'  That's kind of helpful.  Their solicitation for Medicare Advantage plans was more explicit. The envelope enticed with 'Looking for a plan with a monthly premium starting at $0? The flyer for United's MedicareComplete plan gave a brief summary of benefits: zero monthly premium, zero annual medical deductible, zero copayments for routine physicals, immunizations and preventive screenings. What a deal! But a good consumer needs to know more.

First of all, the new heath law allows all of those services without copayments whether you have a Medicare Advantage plan or not, so United wasn't offering anything special here. There were other caveats. What about staying in a network and the lack of freedom to go to any doctor?  What about coinsurance (a percentage of a medical bill that you are required to pay) that you might have to pay: for chemotherapy drugs, for example?  To find out more, a shopper would need to call the company, visit with a sales agent or use Medicare's website, not a simple task.

So I suggest a simple rule no matter whether you use an agent or the government website: the Medicare option you choose boils down to your risk vs. premium calculation. A combination Medigap policy with a stand-alone drug benefit may cost more upfront than a Medicare Advantage plan with no monthly premiums and deductibles. But if you are seriously ill, the combo plan may be cheaper in the end when you consider the hidden costs of an MA plan that may not be disclosed when you sign up. In our ZIP code alone there are 84 options. Mindboggling!  There's no way anyone can choose "the best" from that kind of crowd, which raises a point I have made before do we really need all that choice in health care?

More Blog Posts by Trudy Lieberman

author bio

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Blog. Follow her on twitter @Trudy_Lieberman.


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