• Consider Your Medicare Options
• Know What You Want from a Medicare Plan
• Compare Medicare Plans Offered Where You Live

Nearly seven out of ten Medicare HMO enrollees are in a plan that offers prescription drug benefits under their “basic” option, but the level of drug coverage offered by Medicare HMOs varies from plan to plan. – Achman and Gold, Mathematica Policy Institute, 2003 Most people with Medicare – about 60% – live in an area with at least one Medicare HMO or PPO plan. Yet only 11% of people with Medicare are now enrolled in a Medicare private plan. – MedPAC, 2004

More than 41 million people are covered by the Medicare program. People with Medicare can get their coverage through original Medicare (the traditional fee-for-service program) or from Medicare private plans (the Medicare Advantage program). Today, fewer than five million people with Medicare are enrolled in a Medicare private plan (HMO, PPO or PFFS). Most people with Medicare who have joined a Medicare private plan are in health maintenance organizations (HMOs), which have been available under Medicare since the mid-1980s.

To make an informed decision, you need to first understand how these health plans work and how they differ, then decide which option is best for you. Here is a brief description of each of the Medicare options.

Original Medicare

If you choose coverage under the traditional fee-for-service Medicare program, you can generally get care from any doctor or hospital you want and receive coverage for your care anywhere in the country. However, traditional Medicare has high cost-sharing requirements and does not currently cover the costs of certain benefits, such as outpatient prescription drugs (drug coverage will begin in 2006; see Learn About the Upcoming Drug Benefit (Part D). To help pay for uncovered benefits, and to help with Medicare's cost-sharing requirements, many people on Medicare have supplemental insurance.

Medicare Private Plans

Medicare HMOs
Medicare HMOs cover the same doctor and hospital services as the original Medicare program, but out-of-pocket costs for these services are usually different. HMOs appeal to some people with Medicare because they may provide additional benefits, such as prescription drugs and eyeglasses, which are not covered by the traditional Medicare program. If you choose an HMO, you may be able to get some help with these additional benefits. Typically, Medicare HMOs charge a premium that you would need to pay in addition to the Part B monthly premium.

You should be aware that Medicare HMO enrollees generally can only use doctors, hospitals, and other providers in the HMO's network. For an additional fee, some HMOs offer point-of-service (POS) benefits that partially cover care received outside the network. 

If you join a Medicare HMO, you will usually have to select a primary care doctor who is responsible for deciding when you should see a specialist, and which specialist you should see.

Neither Medicare nor the HMO will pay for unauthorized visits to specialists in the plan, or to providers outside the HMO's network, or for non-emergency care outside the HMO's service area.

Medicare PPOs

Other Medicare Advantage Plans
There are three additional private plan options that may be available under the Medicare Advantage program. These include provider-sponsored organizations (PSOs), private fee-for-service (PFFS) plans, and medical savings accounts (MSAs) coupled with high-deductible insurance plans. Not all Medicare private plan options are available everywhere. To date, HMOs remain the primary alternative to traditional Medicare. For additional information about Medicare Advantage plans, call 1-800-MEDICARE, or get information about Medicare options in your area on the Medicare Personal Plan Finder website, http://www.medicare.gov/MPPF/home.asp.

Know What You Want from a Medicare Plan

Whether original Medicare, a Medicare HMO, or another private Medicare plan is right for you will depend on your unique needs and circumstances. Think about what is most important to you when you are healthy and when you are sick. Here are some topics to consider:

Receiving care from the doctor and hospital of your choice
Under original Medicare, you can use whatever specialists and hospitals you choose, whenever you need, and without a referral from another doctor. Medicare private plan options could limit your ability to get care from the doctor or hospital of your choice, or there may be extra charges for out-of-network care. If provider choice is a priority, you should consider original Medicare with added protection from a Medicare supplemental insurance policy, sometimes known as Medigap, or from an employer-sponsored or union retiree health plan, if one is offered to you.  

Getting coverage of additional benefits to reduce your medical costs

If you are on a tight budget and are willing to limit your choice of doctors and hospitals, you may be able to reduce your health care expenses and get coverage of additional benefits through a Medicare Advantage plan. It is important to review the scope and limits of additional benefits when choosing among available plans. It is also important to look at how much your out-of-pocket costs will be if you get sick. For example, some Medicare private plans charge a deductible every time you enter the hospital, while original Medicare only charges a deductible once per benefit period, even if you have multiple hospitalizations.

Starting in 2006, coverage for prescription drugs will be available to beneficiaries in original Medicare who enroll in a private drug plan and those who enroll in Medicare Advantage plans that provide drug coverage.

Maintaining health care coverage while away from home
Under original Medicare, you will be covered for care anywhere in the United States. While private plans must cover emergency care for members outside the plan area, most do not cover other health care services while away from home. For example, Medicare HMOs have more restrictive networks of doctors and hospitals that limit coverage away from home.  

Keeping supplemental coverage from a former employer or union
If you are considering joining a Medicare private plan, you should talk to your employer or former employer to be sure you won't lose valuable retiree health benefits. Many employers offer retiree health coverage as a supplement to traditional Medicare; some also offer coverage through Medicare HMOs and other private plan options. 

Coordinating with Medicaid benefits
If your income and assets are quite modest, you may qualify for Medicaid benefits or other special programs that will help pay some of your health care costs. For those who qualify, Medicaid often pays for valuable benefits, such as prescription drugs and nursing home care, and also pays Medicare's premiums. If you are already covered by Medicaid and Medicare, you should find out what you must pay to join a Medicare private plan and whether Medicaid will cover the plan’s copayments. Contact information for your state Medicaid office can be found in the Additional Resources section of this guide.

Changing your mind

Currently, you can enroll in a Medicare private plan at any time when the plan is accepting new members. You may also disenroll or change plans at any time for any reason. Beginning in 2006, you will only be able to change your enrollment once a year – only during the first six months of the year. In later years, this “open enrollment” period will be limited to just the first three months of the year. If you enroll in a Medicare private plan that later stops serving people with Medicare, you can always return to original Medicare, the traditional fee-for-service program, or you can enroll in another Medicare Advantage plan. 

Compare Medicare Advantage Plans Offered Where You Live

If you are happy with your original Medicare coverage you can stick with it. You can keep your coverage through your Medicare private plan if the plan continues operating in your area from year to year. If you think you may want to change, the next step is to find out which plans are offered where you live. While original Medicare is available in all parts of the U.S., private plans may not be. In some areas of the U.S., no private options are available today, while in other areas, people with Medicare have multiple Medicare private plans from which to choose.

For a list of plans in your area and a copy of the Medicare handbook, Medicare & You, call Medicare at 1-800-MEDICARE or visit Medicare's website at www.medicare.gov. For free help in understanding differences among Medicare plans, you can call your State Health Insurance Assistance Program (SHIP). Contact information for your state’s SHIP is in the Medicare handbook and in this guide under Additional Resources.

You should consider four important factors before signing up for a plan:

Accessibility of doctors and hospitals
Can you continue to see the doctors you know and trust if you join a certain plan? Your doctor or specialist might be in one plan's network, but not in another's. Even if your doctor is in a plan’s network, he or she can leave that network at any time. What about your choice of hospital?


Extra benefits
The supplemental benefits offered by Medicare private plans vary widely and may change every year. If you want to join a plan because of the prescription drug benefit, make sure that the plan covers the drugs you need and you understand any limits that may apply. You may need to evaluate your options again in 2006 when a prescription drug benefit becomes available to those in original Medicare who sign up for stand-alone private drug plans.


Cost
How much are the monthly premiums and copayments associated with different health care services? Is there a deductible? Keep in mind that costs generally change each calendar year.


Quality and reputation
All Medicare private plans are not the same. Review each plan's written information and try to talk to plan members about their experiences. For information on quality and performance, visit Medicare's website at http://www.medicare.gov/MPPF/home.asp.

Know your rights
No matter which plan you choose – original Medicare, a Medicare HMO, or another Medicare private plan – you need to understand your rights as a patient and a consumer. If you believe you have been unfairly denied any Medicare-covered benefits, you have the right to appeal. You should send a copy of the denial notice and, if possible, a letter from your doctor explaining your need for the denied service and a letter requesting a review to the company that issued the denial.