This is the first in a series of posts that examine the process of signing up for Medicare, navigating its rules, choosing supplemental coverage and planning for health care in a program with a very uncertain future.
Finally, it was time to sign up for Medicare after 23 years of writing about the subject as a journalist and giving advice to others. It was a coming of age, so to speak. Over the years reporting for a number of publications I had become sort of an expert on the program'one of the most complicated and complex the federal government has to offer. Medicare is wildly popular with beneficiaries for good reason. Without it, they would not get health care. But popularity is not the same thing as understanding, and lack of knowledge of how Medicare actually works has made seniors a juicy target for unscrupulous sales people and medical providers expert at scamming the system.
Medicare was never simple; it was intricately designed to satisfy insurers and doctors who opposed its creation. In the last six years, it has become even more complicated. This complexity stems in part from the fact that Medicare was never meant to cover all of someone's health expenses. In 2006, Medicare covered less than half of a recipient's total spending for medical and long-term care expenses. Seniors paid on average 25 percent of their total health care expenses including premiums, deductibles and out-of-pocket spending. How to cover those gaps is the first and most important decision anyone makes after signing up for Medicare. It was no different for me. Many seniors have more than 100 possible ways to cover these gaps. I had almost that many. Where to begin?
The first decision was whether to get all my basic Medicare benefits'hospital, doctor visits, lab services---from what's called original or traditional Medicare or from a Medicare Advantage plan. Medicare Advantage (MA) plans work much like old-fashioned HMOs. For a fixed payment from the government, health plans and providers agree to accept Medicare Advantage rates. In the last few years, those payments have been so high, MA plans have been able to throw in some extra benefits like dental or vision care. The downside is you have to use doctors in the plan's network. I would have to be comfortable with that.
If I chose original Medicare, that would mean selecting either a Medigap policy or keeping my retiree health plan from a former employer. Both of these options would cover the gaps in benefits under Medicare Part A, which pays for hospital stays and under Part B, which covers physician and outpatient care. They would cover most out-of-pocket expenses arising from those services.
Prescription drug coverage, known as Medicare Part D, added more complexity to my decision. If I kept my retiree plan, I would be able to continue the drug benefits I have now. If I chose a Medigap policy, I would have to buy separate drug coverage through what's called a stand-alone 'prescription drug plan.' If I elected to enroll in an MA plan, drug coverage would be included in the benefit package.
Each option came with advantages and disadvantages, which is the case for everyone signing up for Medicare. My goal was to find the option with the best coverage at the best price, and the one that offered the most long-term stability given the political upheaval surrounding Medicare itself. I began with some questions.
- Should I take original Medicare or a Medicare Advantage plan? I would have to think long and hard about going into a restricted-doctor network because of long-term relationships I have with my doctors.
- Assuming I picked original Medicare, would I be better off with a traditional Medigap policy and a stand-alone drug plan or keep my retiree health plan? I am one of the lucky few who still has excellent insurance from a retiree health plan that offers first-rate drug coverage. The coverage is expensive'more than $500 a month.
- How much less would my monthly outlay be if I were to choose a Medigap policy and a stand-alone drug plan? This is where other considerations came in.
- Would the retiree plan cover all of my Part B coinsurance, the biggest out-of-pocket expense in Medicare, if I went to out-of-network providers? My retiree plan, a PPO, offers both in- and out-of-network benefits. How it pays out-of network doctors is important.
- If I chose the retiree coverage and my ex-employer dropped coverage, would I be able to choose a Medigap policy or a Medicare Advantage plan without having to pass an insurer's health requirements?
- Since I travel out of the country a lot, which option'a Medigap policy or the retiree plan'would give me coverage out of the United States?
I was ready to search for answers, first looking at all the marketing brochures that sellers of Medigap and Medicare Advantage plans had sent my way.