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By Christine Benz | 10-11-2010 03:51 PM

An Annual Medicare Checkup

Retirement specialist Mark Miller outlines why every Medicare participant should evaluate their Advantage and prescription drug options every year.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. We're just about to enter annual enrollment season for the managed care and prescription drug benefits offered under Medicare. I'm here today with Mark Miller. Mark is Retirement Specialist, Columnist and Author.

Mark, thanks so much for being here.

Mark Miller: Hi Christine.

Benz: So Mark, you're expert in this stuff, it's very arcane. First of all, let's talk about what are people signing up for during this annual enrollment season?

Miller: This is signing up for the prescription drug plan that's offered through Medicare and it's also an option to pick a managed care option called Medicare Advantage. Most Medicare Advantage Plans are PPOs or HMOs. Those are the two things you can sign up for.

Benz: Okay. So, I think the prescription drug piece is fairly straight forward, but you and I were talking, and it sounds like there is some confusion about exactly what Medicare Advantage is. How is differs or does not differ from what people are buying with the private plans that they might have to supplement Medicare. Let's talk about Medicare Advantage.

Miller: Sure. With Advantage you're basically choosing instead of traditional Medicare for the hospitalization and doctor portions Part A and Part B. Those are traditional in the sense that you pick your doctors and your hospitals, and it's not a network. With the PPO and HMO options and Advantage, you join a network and you get some advantages out of that, lower out-of-pocket expenses, better caps against catastrophic fees. Usually the prescription drug feature is built right into it. So it can have some advantages that way.

On the other hand, it's less flexibility. You don't get to choose as many of your own doctors. Another downside to it is, if you retired and split your time between two different parts of the country, these are localized networks. So, if you join something in Chicago, it may not work for you in Miami.

Benz: Okay. So, in that case, maybe the private, well, it's the way to go?

Miller: Then it's the traditional Medicare option, yes.

Benz: Right, right. So Mark, you say to revisit your options every year during this annual enrollment period, why is that?

Miller: Sad to say, but it's important to shop these plans annually, particularly now with healthcare reform causing some changes in market. But, for example, let's look at the prescription drug side, which is really your main point here. From year-to-year your drug needs may change, and the insurers will make changes in the plans from year-to-year when it was called – primarily it was called the formularies which is the list of what drugs are covered and under what circumstance. So a plan that might have been right for you one year may not be the most cost effective way to go the next year.

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