The top four mistakes seniors make when choosing a Medicare Advantage plan
Medicare advantage plans are an excellent, affordable alternative for many seniors who want to add extra coverage to their original Medicare insurance. Many plans add benefits you won’t find in supplemental insurance plans, such as prescription drug coverage, vision or dental. Typically, they have a lower monthly premium as long as the beneficiary keeps using the plan’s network of medical service providers.
Depending on the plan and the medical services you use, you may be required to share costs as co-payments, co-insurance and/or deductibles. In a Medicare advantage plan, you are still enrolled in traditional Medicare, but a private insurer will handle your medical benefits and bills.
Depending on your location, you will have a wide variety of Medicare advantage plans to choose from, each with a different set of benefits and out-of-pocket expenses. So, how do you find the plan that best fits your needs, and avoid mistakes that may compromise your health care or your financial funds?
Mistake #1. Selecting a Medicare advantage plan that was recommended to you
Believe it or not, the most common mistake seniors make when choosing a Medicare advantage plan is favoring a plan just because a friend or a family member is enrolled in it. While recommendations are usually a great way of finding trust-worthy high quality products or services, you need to be careful when it comes to deciding on health insurance. A plan that may be perfect for your spouse may not be the best for your medical needs. Each person has a different health situation, which requires individual care and medication.
Mistake #2. Selecting a Medicare advantage plan because it has no or a low monthly premium
While there is in general nothing wrong with zero premium Medicare advantage plans, or a plan with a low monthly premium, you should never select a Medicare advantage plan by only looking at its monthly premium. Instead, compare the total amount of annual costs, which also includes any deductibles, co-pays, and co-insurance the plan may have. Typically, a zero or low premium plan will have a higher annual maximum out-of-pocket limit, which may require you to pay several thousand dollars for your medical care. Some insurance companies have a Medicare advantage cost calculator on their website, where you can calculate your annual total costs, by estimating the services you may use during the year. Always look at the ‘worst case’ scenario – will you be able to meet your annual maximum out-of-pocket limit, in case you get really sick?
Mistake #3. Preferring a PPO plan over a HMO plan
Traditionally, advantage plans are as ‘managed care’ structured as HMO or PPO plans. The difference between HMO and PPO is, that with a HMO plan you have to use the provider’s network of providers in order to be covered, while a PPO plan gives you the choice to utilize in-network or out-of-network services. However, the freedom to choose your own out-of-network provider in a PPO plan comes with a higher co-payment! Before you select on a plan – and this goes for HMO and PPO plans – make sure your current medical service providers are in the plan’s directory. If they are not, and you keep visiting them, you will not be covered in a HMO plan, and you will only partially be covered in a PPO plan. To be fully covered according to the policy you select, you must use the providers that have contracted with the plan.
Mistake #4. Selecting a Medicare advantage plan with prescription drug coverage without further research
One major benefit of advantage plans is that many (so called MA-PD plans) include prescription drug benefits. While this sounds great, you need to thoroughly check whether the medication you are taking is in the plan’s ‘formulary’. Also make sure your preferred pharmacy, or another convenient pharmacy in your neighborhood, is on the insurance company’s list of pharmacies. If you order your prescription drugs online, make sure that this is covered, too. If your doctor prescribes you medication after you have signed up for MA-PD, ask for prescription of a brand or generic drugs that are covered by your plan.
How To Cancel Or Switch A Medicare Advantage Plan You Don’t Like Anymore?
Once you are enrolled in a Medicare advantage plan, you will have to stay with it until the end of the year. However, if you already notice early on that the plan is not for you, you can cancel between January 1 and February 14. If you do, you will go back to original Medicare. You may only enroll in a new Medicare advantage plan between October 15 and December 7 each year – unless it’s a 5-star rated plan, which you can switch once during the year.
