Medicare: Why shop around for Open Enrollment?
You’re eligible for Medicare. You tell yourself: this is the last Medicare plan I’ll ever need. No matter what else happens, I’ve got the Medicare issue handled. Then you let the Open Enrollment period – October 15 to December 7 – go by without switching plans because you want to be delivered of complicated options such as Medicare Advantage plans, Part D prescription drug benefit plans and Medigap supplemental insurance. Like my mother always said, you've got to stick it out, even if you picked the loser, right? Meanwhile you start bleeding money because even if you think your plan is rock solid, the key elements of it keep changing especially regarding how your preferred providers, hospitals, and prescription drugs are covered – if they are still covered at all.
As both associate director of Medicare policy at the Kaiser Family Foundation health policy research organization Gretchen Jacobson and head of research and data for the health plan comparison site HealthPocket.com Kev Coleman recently told CNBC.com, you need to compare the premiums charged by your plan, maximum out-of-pocket costs, the doctors and hospitals in your network, and the prescription drugs included in your plan’s ‘formulary’ every single year. “Beneficiaries should revisit their plan choices and look to see if another option would fit their needs,” Jacobson said. “Studies have found that if people were to switch plans, they would actually save money.”
Even as experts agree on the importance of shopping around, there is always a catch – and one of the 22 kind in this case. “We did focus groups asking seniors how they choose and change their health insurance plans, and overall, seniors found it to be a very confusing process and an overwhelming process,” Jacobson remarked. “Seniors said they don't like to revisit their plan choices and go through that process again, because they found it frustrating to begin with.” And it has nothing to do with being a senior, either – that’s senior, NOT senile. Anyone would have trouble navigating the Kafkaesque healthcare insurance process, despite the existence of tools and resources like the aforementioned HealthPocket.com, as well as Medicare.gov, eHealthinsurance.com, and GoHealth.com.
As a result, approximately 70% of enrollees still have original Medicare as they did 10 or 20 years ago. Most of them don't have to pay a monthly premium for Part A, though all pay a minimum of $104.90 a month for Part B. They also have to sign up and pay for a Part D prescription drug plan. Since original Medicare covers about 80% of healthcare costs, enrollees often face out-of-pocket expenses, for example a $1,216 deductible for hospital stays. Approximately 25% of enrollees buy Medigap to help reduce out-of-pocket costs, while about 40% have a similar employer-sponsored supplemental insurance policy.
One of the advantages of original Medicare is its sheer simplicity; enrollees know they can go to any doctor that accepts Medicare payments. On the other hand, there’s no annual or lifetime cap on out-pocket spending. This has prompted 30% of enrollees to get Medicare Advantage plans provided by private insurers but subsidized by Medicare. Although more than 50% of Medicare Advantage enrollees paid $0 in monthly premiums last year, that number is expected to decrease to 19% in 2015, when the average monthly premium will be $33.90. Medicare Advantage plans do have a $6,700 out-of-pocket spending cap for users who remain in-network, but networks are narrower.
Increasing out-of-pocket limits and narrowing their provider networks are among that measures that have allowed Medicare Advantage plans monthly premiums to decline since 2010, a Kaiser report said in May. But as Coleman points out, “at the end of the day, health insurance is only as good as the hospitals and doctors that accept it.” She adds that the 18 Medicare Advantage plans from which average enrollees can choose can be a “very overwhelming” amount of choice. Still, “for the average person, all things being equal, Medicare Advantage looks to be the best,” as a “typical new Medicare enrollee could save almost 20% over original Medicare and 45% over Medigap” by switching to a Medicare Advantage plan, according to a March HealthPocket report.