Medicare Advantage: Why $0 premium?by Denise Early on Nov. 10, 2009, under Health
Health Net has upset many of the members in their Medicare Advantage plans by announcing a $36 per month premium for their Ruby 1 plan in 2010. Seniors in Arizona are accustomed to paying nothing for their Medicare Advantage plans, plans which include drug coverage, gym membership, and even dental benefits (in some plans) – all for $0 per month premiums.
Those days are gone, or will be gone a year from now. Humana, with its $0 premium plan, will be working hard to take lots of business from Health Net. Secure Horizons will be trying to get back the thousands of seniors it lost to Health Net over the last three years. Seniors are being inundated with mailers from all these companies, as well as CareMore, a new HMO Advantage plan in town.
But back to the cost of Medicare Advantage plans. Tucson is one of the few places in the country where Medicare Advantage plans have no monthly premium -except for Florida, where there are no premiums and no co-pays for hospitalization and doctor visits. Up in Phoenix, Humana and Secure Horizons are charging $30 per month for their HMO’s. Here in Tucson, the same plans have $0 premium – for 2010.
Two weeks ago I was helping a couple who moved to Tucson from Michigan. They needed to change from their Michigan Medicare Advantage plan, which cost them $75 per month, to a local plan. For them, $36 per month sounded like a good deal. But for many seniors here in Tucson, the idea of paying for their Medicare Advantage plan is just too much to take.
I have been warning everyone that they can change plans for 2010, but they can’t avoid what’s coming down the road in 2011. That’s when the real cuts to Medicare Advantage will begin, and every plan will have to charge a premium or go out of business.
How can there be a $0 premium for a Medicare Advantage plan?
In Arizona, when a senior signs up with Humana, for example, Medicare pays Humana around $800 per month to act as that senior’s Medicare coverage. Humana will pay the medical bills for that senior, and the senior will pay co-pays associated with each service. In Florida, Medicare pays around $1,100 per month for each person enrolled in a Medicare Advantage plan. This is why the Humana plans in Florida have such “rich benefits”, such as no co-payment for hospitalization or doctor visits.
When Medicare starts to cut payments to Medicare Advantage plans, the plans are going to pass on costs to people enrolled in the plans. So seniors in Tucson are going to have to get used to paying monthly premiums in 2011. Health Net is just ahead of the game by making the change for 2010. It will be interesting to see how many seniors jump ship to another Medicare Advantage plan in the meantime. A year from now, things will get really interesting.