Cutting through the Fog-Medicare Advantage Plans

According to AARP. Right now, 24 percent of Medicare Beneficiaries receive coverage through one of thousands of Medicare Advantage plans rather than original Medicare. Advantage plans—private Medicare plans sold by insurance companies that are typically available through HMOs and PPOs—have become enormously popular over the past few years because they offer a host of extra benefits that original Medicare doesn’t provide,such as free eyeglasses,dental care, hearing aids and even gym memberships. These extra benefits,however, have come at an extra cost.

Since 2006, Medicare Advantage plans have received government subsidies that have been costing around 13 percent more than traditional Medicare. But that’s about to change. Starting next year, as a result of changes under health care reform, Medicare Advantage payments will be frozen at the current levels. And starting in 2012, Uncle Sam will begin reducing payments over the following two to six years to the insurers that administer these plans until they’re getting the same amount of money on average that original Medicare spends.

What all this means is that many of the 11 million seniors that have a Medicare Advantage plan can expect their premiums to gradually increase or the extra benefits to be reduced, or both,over the coming few years. And some insurance companies may stop offering Medicare Advantage plans altogether. But not all Medicare Advantage plans will be affected. Payment cuts will depend on whether Medicare costs in your county are high or low.

And starting in 2012, high-quality plans that have been around for a while and receive a 3.5 to 5-star government rating will be rewarded with bonus payments from the government that will offset some of the fee cuts. These plans will most likely continue operating with few changes. Newer and low-quality plans are the ones that will change. To check how you plan rates, visit www.medicare.gov. Now, your best course of action is to review your Medicare Advantage plan.

If you find that your insurer is dropping your plan, or if you don’t like how your plan changes for the coming year, you can always switch to a different Advantage plan or move to original Medicare during the Medicare Advantage open enrollment period, which is the first 45 days of 2011, between January 1st and February 15th. If you do decide to go back to the original Medicare, you’ll probably want to purchase a Part D prescription drug plan and a Medigap supplemental policy to help cover deductible and copays.


You can shop and compare all Medicare health plans, prescription drug plans and Medigap policies at www.medicare.gov/find-a-plan or call 800-633-4227. You can also call the Medicare Rights Center helpline at 800-333-4114 or contact your State Health Insurance Assistance Program (SHIP), which provides free one on-one Medicare counseling. Call 800-677-1116 to find your local SHIP office. In Va. you can get One on One help through VICAP as well which is free and can be reached at 800-552-4402.