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An Annual Medicare Checkup

Christine Benz

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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Benz: Okay. So, in terms of researching these plans, first of all, where should you do it? What you think are the best tools out there for evaluating what's the right plan for you?

Miller: The best authoritative online tool is actually at the Medicare.gov site. They are the primary go-to source. They've got all the primary data, and they've excellent tools on there for shopping the plans. So, for example, with either Advantage or the prescription drug plans the Part D plans, you go on to site and use this tool. You plug in your social security number. You enter your specifics of your prescriptions, and then the site will spit back to you a list of the options and then you can see and you compare the prices.

In addition to just looking at that first level of what the prices are, you need to dig deeper, say, "Oh, this plan looks good for me." You have to go a couple of layers into it, click through to see the specifics of what drugs are covered and under what circumstances. For example, is a drug covered under any circumstance or only with certain restrictions can make a big difference.

The other thing to look at is how you want to get your drugs delivered. Do you want to go to your local pharmacy and if so, is that pharmacy in partnership with this plan, is it a mail order option?

Benz: Okay. So what are some other tips for making sure that you're making the right decisions?

Miller: If you don't want to do this on the web, there are some excellent non-profit organizations that provide counseling. You can get a one-on-one counsel. There are also some fee-based services where for a fee of $200 or $300 they will actually work with you and shop your plan. The big point is that some way or another get to the bottom of it because the swing in price, if you don't pick the best plan for yourself or a good plan, can be a couple of thousand dollars a year in differences in premium. So not small dollars we're talking about here.

Benz: Right. And I know you are a big believer in younger folks helping their parents. If their parents aren't web-savvy help them up…

Miller: A lot of adult children are in fact – I get questions a lot of the time from adult children who are helping parents out, and a lot of the adult children don't even understand a lot of these nuances on what these plans are, the enrollment windows. So if you're somebody providing assistance to a parent with money matters and so forth, this is something to just roll into the mix and…

Benz: Add to your repertory.

Miller: Add to your list of tasks, exactly.

Benz: So I also wanted to ask, say you've made – you go through this enrollment period, you make a choice and you later determine that it wasn't a good choice and you want to undo it. What are your options in that case?

Miller: It's interesting. There's another period called the open enrollment. We've just been talking about annual enrollment. The open enrollment comes right after annual enrollment, runs from January through March, but it's being shortened this year as part of the Health Care Reform Law to January through mid-February and the number of choices you can make on sort of the take – basically, it's a time when you can take back decisions.

Let's say, I enrolled for this Medicare Advantage and I don't like it now, I want to go back. The only thing you can do now during this next period is to actually drop out of an Advantage Plan and pick just a Part D prescription drug plan and go back to traditional Medicare. No other changes will be allowed.

Benz: You can't change drug plans at that point?

Miller: You could go from an Advantage to a Part – to a prescription drug plan only. It just means bottom line that it's that much more important to make good decisions in the November to December window than ever before.

Benz: Thank you, Mark. Helpful tips, we appreciate it.

Miller: You bet.

Benz: Thanks for watching. I'm Christine Benz for Morningstar.com.