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How To Choose Which Medicare Plan Is Best For You

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Deciding which Medicare option is best for you involves a series of choices.The Medicare plan that you choose affects many things such as how much you will pay out of your own pocket, benefits, doctor choice, convenience, and quality. According to the Medicare Rights Center, most people can save money if they understand how their Medicare benefits work. Choose carefully. You may be locked into a plan for a year.

The discussion about how to choose the best plan for you is broken into three sections: General Considerations To Keep In Mind When Comparing Medicare Plans, How To Compare Medicare Plans and What To Do Before Making A Final Decision

GENERAL CONSIDERATIONS TO KEEP IN MIND WHEN COMPARING MEDICARE PLANS

When working your way through Medicare options, as a general matter, the main question is your priorities. At one extreme is total choice: choice about what doctor and facilities to use and when. At the other is managed care which limits the doctors and facilities you can use, and when you can use them. Or perhaps you're in the mid-range of a balance between the two.

The more choice you have about what medical care to obtain, where and by whom, the more money you are likely to pay. This includes premiums and out-of-pocket expenses when you access medical services. 

  • The plan which allows you the most freedom is Original Fee-For-Service Medicare. The Original Medicare Plan pays for many health care services and supplies, but it does not pay all of your health care costs. There are costs that you must pay, like coinsurance, copayments, and deductibles. These costs are called "gaps" in Medicare coverage. If Original Medicare works for you, you can buy a Medigap policy to cover these gaps. You can also add coverage for prescription drugs by adding Medicare Part D, a Medicare Prescription Drug Plan. (To learn more see: Medicare: Part D Drug Coverage and Medicare: Medigap Policies.)
  • Medicare Advantage programs offer a range of managed care type policies. To keep things from being simple, there are also some Medicare Advantage policies that are Fee-For-Service as well as a Medicare Advantage plan that is based on a tax advantage Medical Savings Account.

HOW TO COMPARE MEDICARE PLANS

Consider the following four steps to help compare Medicare plans to determine which is best for you:

Step 1. Think about your needs and their priority.

  • Are particular doctors/specialists, treatment center, pharmacy, home health agency or skilled nursing facility important to you?
  • Will you be okay with a company managing your care or do you prefer the freedom to see whatever doctor you want when you want (assuming there is "medical necessity" to see the doctor and not just a whim.) Managed care companies generally offer a health and drug coverage as a package.
  • The importance to you of the amount you are responsible for paying out-of-pocket.

Step 2. Look at the various types of health insurance policies and see which type or types most closely fit your needs.

  • Original Medicare is a fee-for-service (indemnity) type plan. Medicare Advantage plans are issued privately, and can be a variety of plans so long as they cover the minimum Medicare requirements. To understand the types of health plans, see Types of Health Plans
  • Compare Original Medicare with Medicare Advantage. Medicare Rights Center has an excellent comparison which you can see by clicking here offsite link.

Step 3. If you have limited income and assets, look to see what assistance is available to help pay for the various types of Medicare plans. For information, see: Medicare: Financial Assistance.)

Step 4. If you choose Original Medicare, you're done. If you decide you want a Medicare Advantage plan, identify the Medicare plans available in your area and compare them.  

A good place to identify plans in your area and to start comparing them is at Medicare.gov offsite link. The Medicare site lists all plans in your area, and allows you to compare plans at the push of a button. It includes Original (fee-for-service) Medicare as well as the Medicare Advantage plans available to you. Click on "find health and drug plans" or "review and compare your coverage options." Alternatively, call Medicare at 800.633.4227 and ask customer service to do the search and comparison fo r you.  Be sure to have a list of the drugs you take handy in either case. (include name, dosage and number of times you take each drug.)

Following are a few tips to consider before starting the comparison:

  • Prescription Drugs
    • Original Fee-for-Service Medicare provides drug coverage through Part D for an additional monthly premium. Medicare Advantage plans cover prescription drugs as part of the overall coverage. All the plans use formularies -- list of medications that will be covered. They also have a procedure for requesting an exception to cover a drug you need that is not on the formulary.
    • If you choose Original Fee-For-Service Medicare, also consider whether to get a Medigap Policy and Part D drug coverage -- both of which are generally recommended by financial advisors for people with a serious or chronic health condition. (To learn more, see: Medicare: Part D Drug Coverage and Medicare: Medigap Policies.)
  • Consider your other costs: For instance, deductibles, co-pays, services that you want that are not covered.
  • Out-of-area services: If you travel a lot, you need to take that into consideration when choosing your Medicare plan. Most Medicare Advantage Plans don't cover when you are outside their service area except for emergencies and for urgent care. Under Original Fee-for-Service Medicare, you have the same coverage regardless of where you are in the United States.
  • Choice of Physicians, Treatment Center, Home Health Agency, Skilled Nursing Facility, Pharmacy: Just like private sector Indemnity versus Managed Care plans, Original Fee-For-Service Medicare allows you the freedom to choose any doctor, treatment center etc. you like. If you are interested in a Medicare Advantage plan that limits you to a network of doctors and treatment centers, check to be sure that your primary care doctor and your specialists are in the network. Likewise, check to see that the treatment center, home health agency, skilled nursing facility and the pharmacy you want to use are in network. If you have a doctor, facility or pharmacy that you really don't want to leave, and he, she or it are not part of any Medicare Advantage network, it may be worthwhile choosing Original Fee-For-Service Medicare just for that reason.
  • Coordination with other benefits: If you have benefits, such as from an employer or a union, check how the plan you are interested in coordinates with the benefit(s) so you obtain maximum coverage at minimum out of pocket cost. (To learn about coordination of benefits, click here.)
  • Do your research before contacting a Medicare Advantage Plan or insurance agent directly.  Once you make such contact, you will probably be subjected to sales pressure. When you contact them, many Medicare Advantage plans will offer to send someone to your house to "tell you all about your choices" or they may invite you to one of their frequent "seminars" at neighborhood restaurants and senior centers. While usually billed as educational, these encounters are usually accompanied by strong sales pitches.

As you work your way through the prompts, keep in mind the following:

  • Your prescription information is automatically saved. This is very helpful if you take more than a few drugs. You can update the list each year instead of creating it again if you keep track of the Drug List ID and Password Date. (Consider keeping the information with your Medicare file. For tips on getting organized, click here.)
  • The site permits you to narrow the search so you only see plans which fit criteria that are of interest to you. One criteria to note in particular is the 5 star rating system. The rating let you know how each plan was rated in previous years using a variety of factors such as enrollee satisfaction, number of filed grievances, access to care, and network availability. A 3-4 rating is pretty good. 5 is best. 
  • In addition to looking at the rating for each plan in which you are interested, search around the internet for information about other peoples' experience with the plan(s). For example, in your favorite search engine, type "customer satisfaction with plan XXXXX".  Don't believe everything you read. Still, you may learn valuable information about the plan. 
  • If a plan you are interested in has 3 stars, call Medicare at 800-Medicare (800.633.4227). Ask: Please tell me more about the rating breakdown for XYZ plan. For example, what were the problems? What did people have to say?

If you are still confused about which plan to choose, see Survivorship A to Z's  Health Plan Evaluator. The Evaluator lets you add levels of importance to each feature. The Evaluator works for private health insurance as well as Medicare plans. It is not necessary to compare all features of the different plans you are interested in. You will get an idea from the relative totals which is best for you.

WHAT TO DO BEFORE MAKING A FINAL DECISION

 Before making a final decision, always check with the plan directly to confirm that the coverage information you have is correct. 

  • Ask for the name and/or identifying number of the person who provides the information. Write it down together with the date and time of the call, the information you were given and the outcome of the call. 
  • Ask that the information be sent to you in writing.

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