Medicare Coverage and Enhancement Options

As a Medicare beneficiary, you have at least six options available with regard to medical care and numerous options available for prescription drugs.  There are tradeoffs to each option in terms of what is covered, your out of pocket exposure and how much you must pay for the plan you select.

As an independent insurance agent and advisor who represents most of the major companies including the likes of Mutual of Omaha, BlueCross, Humana, Secure Horizons, and Aetna, Jeff Wilhelm, J.D. of Otto & Wilhelm Insurance has researched the plans and companies available in the Yavapai County, Arizona market in 2008-2009 and has created this summary based on his recommendations.  In the late fall of 2009, this summary will be revised to reflect product changes for 2010.

The options currently include:

1. Original Medicare.
2. Medicare Advantage Private Fee for Service Plans.
3. Medicare Advantage PPO Plans.
4. Unicare Life & Health High Deductible Plan F Medicare Supplement.
5. United World/Mutual of Omaha and BlueCross BlueShield Standard Plan F Medicare Supplements.
6. Lincoln Heritage Life Standard Plan F Medicare Supplement.

MEDICARE MONTHLY PREMIUM / COST OF OPTION

1. Original Medicare:  $96.40.
2. Medicare Advantage Private Fee For Service Plans:  $0 to $25 plus original Medicare’s $96.40 = $96.40 to $121.40.
3. Medicare Advantage PPO Plans:  $38 to $43 plus original Medicare’s 96.40 = $134.40 to 139.40.
4. Unicare Life & Health High Deductible Plan F Medicare Supplement:  $24.00 plus original Medicare’s $96.40 = $120.40.
5. Standard Plan F Medicare Supplement: United World/Mutual of Omaha (female) $109.61/BlueCross BlueShield (male) $120.00 plus original Medicare’s $96.40 = $206.01/$216.40.
6. Lincoln Heritage Life Standard Plan F Medicare Supplement: $96.71 (female)/$111.12 (male) plus original Medicare’s $96.40 = $193.11/$207.52.

Note:  With the exception of Medicare Advantage plans (options 2 and 3), none of the other above listed options includes prescription drug coverage.  You will need a stand alone Medicare Part D prescription drug plan to have drug coverage and to avoid the Medicare penalty for not enrolling in a Part D plan.  Depending upon the specific drugs you need, the recommended stand alone prescription drug plan will range in price from as low as about $14.10 per month for a standard plan with a $295 deductible and $32.60 per month for an enhanced plan with copay features and no deductible.  On average and including paying the monthly premium for the plan, clients have been saving between 50% and 60% on their annual drug costs by enrolling in a prescription drug plan.

OUT OF POCKET EXPOSURE/RISK

1. Original Medicare:  With original Medicare, there is no cap on your annual out of pocket exposure.  For example, if you have an extended hospital stay that exceeds 150 days, you could owe out of pocket hundreds of thousands of dollars in any given year.  It is strongly recommended that you select an option other than original Medicare only.
   
   
2. Medicare Advantage Private Fee for Service Plan (Example only):  The stated annual out of pocket limit/cap is $3,000.  The out of pocket costs that cannot cumulatively exceed $3,000 per year include hospitalizations ($150 per day for days 1-7), skilled nursing care at $50 per day for days 11 through 20, primary care physician visit ($15) and specialist doctor visit ($15).  Please see the following description of “Medicare Out of Pocket Expenses” which outlines where the out of pocket expenses can come from with original Medicare, and where the out of pocket expenses can come from under this type of plan.  This type of plan is best suited for healthy budget minded individuals who do not have chronic or recurring illnesses or a family history of illness.
   
   
3. Medicare Advantage PPO Plan:  Same as option 2 above except the out of pocket limit/cap is usually higher such as $4,000 to $5,000.
   
   
4. Unicare Life & Health High Deductible Plan F Medicare Supplement:  the annual out of pocket limit/cap is $1,900.  Please see the following description “Medicare Out of Pocket Expenses” which will show where the out of pocket expenses can come from that you might have until you meet the deductible of $1,900.  After you have met your deductible, the plan will pay 100% of any remaining charges for which Medicare only pays a portion.  For example, if you visited your doctor three times in one year and the charges were $100 each visit for a total of $300, you would be out of pocket $135 for your Medicare Part B deductible and $33.00 for the 20% balance that Medicare does not pay for doctor visits.  Your total out of pocket under this example would be $168.00.
   
   
5. United World/Mutual of Omaha and BlueCross BlueShield Standard Plan F Medicare Supplements:  Your annual out of pocket exposure is zero.  With these plans, you would owe nothing toward deductibles or coinsurance.  Your only cost is the monthly premium.  These types of plans are more expensive to purchase but with them you have peace of mind knowing exactly what you will be paying each month regardless of health issues you might develop.
   
   
6.  Lincoln Heritage Life Standard Plan F Medicare Supplement:  Same as option 5 above.

OPTION SPECIFIC ISSUES

1. Original Medicare:  There is no good reason to have original Medicare only.  The out of pocket exposure/risk is too great.  This is especially true in light of the fact that there are Medicare Advantage plans that can cap you’re out of pocket exposure/risk at roughly $3,000 per year and cost $0 per month to have.  In addition to out of pocket exposure/risk is the issue of doctor and hospital availability.  Many doctors and some hospitals such as the Mayo Clinic do not accept Medicare assignment.  You can still use these doctors and hospitals, but be prepared to pay up front out of your pocket and then seek reimbursement for a portion of the charges from Medicare.
   
   
2. Medicare Advantage Private Fee for Service Plans:  There are several issues with Medicare Advantage Private Fee for Service plans in general.  First, please understand that Medicare Advantage plans are not Medicare supplements.  One of the biggest issues you will have with a Medicare Advantage plan that you will not have with a Medicare supplement is doctor and hospital availability, both locally and when traveling.  Many doctors and some hospitals such as the Mayo Clinic might not accept a Medicare Advantage plan.  Further, even though a provider accepts a Medicare Advantage plan for one visit, the provider is free to reject the plan on a subsequent visit.  The second issue with Medicare Advantage plans is that the Advantage Plan company can change the plan design, change the premium or withdraw from the market at the end of each calendar year.  The third issue is budgeting.  Because you do not know how much, if any, of the $3,000 in annual out of pocket expenses you might incur in a given year, it is not as easy to budget as it would be with a Standard Plan F Medicare supplement.  With a Standard Plan F Medicare supplement, you know exactly what your monthly cost will be.
   
   
3. Medicare Advantage PPO Plans:  Same as option 2 above except there is a list of providers that have agreed to accept the plan.  However, the list typically has only a portion of the local providers in the plan.  This, again, makes finding a doctor that accepts the plan rather difficult.
   
   
4. Unicare Life & Health High Deductible Plan F Medicare Supplement:  There are really no issues with this plan.  As with any Medicare supplement, you can go to any doctor or hospital that you want.  With the low monthly premium of $24.00 and the relatively low out of pocket maximum of $1,900 per year, this is an excellent choice.  Nevertheless, there is a deductible that you would not have if you had a Standard Plan F Medicare supplement without a deductible.
   
   
5. United World/Mutual of Omaha and BlueCross BlueShield Standard Plan F Medicare Supplements:  There are no issues with these plans with the exception that they cost the most.  As with anything, you get what you pay for.  If you want flexibility and peace of mind from a highly rated company, these are the right plans.
   
   
6. Lincoln Heritage Life Standard Plan F Medicare Supplement:  Same as option 5 above except Lincoln Heritage is a smaller company.