I was talking to a client this afternoon who had just attended the Pima Council on Aging (PCOA) Annual Medicare program.  The program provides an overview of choices available to Medicare beneficiaries and highlights changes in Medicare Advantage and Medicare supplements.

My client, who is turning 65 in January, seemed overwhelmed by the information she heard – and she said she was more confused than ever about  making a decision for her Medicare coverage. 

Her husband has a Medicare Advantage plan and has been happy with it – and he has had some medical issues that have been taken care of without any hassles with the insurance company.  My client is healthy and able to afford a Medicare Supplement premium – but she’s not sure she should pay for something she might not use.

The PCOA program talked about the new Medicare Supplements that will be introduced in June 2010, and my client recalled that we had spoken about how attractive the Plan N will be  – with a low premium, but comprehensive coverage, and co-pays for doctors and the emergency room.

My client told a PCOA representative that she had heard she could join a Medicare Advantage plan in January, when she turns 65.  Then she could disenroll from the MA plan in June and sign up for a Medicare Supplement with “guaranteed issue”. 

The PCOA rep said this was not possible because seniors are locked into their MA plan through the end of the year.  So my client called me and said I had given her wrong information.  I knew this was not the case, so I looked at the “Medicare and You 2010″ booklet and found the information.  So here it is:

“Medicare and You 2010″  
Page 75  Section 2—Your Medicare Choices Medigap
If You Want to Buy a Medigap Policy   (the third to last point near the bottom of the page):  

If you join a Medicare health plan for the first time, and you aren’t happy with the plan, you will have special rights to buy a Medigap policy if you return to Original Medicare within 12 months of joining.

— If you had a Medigap policy before you joined, you may be able to get the same plan back if the company still sells it.

— The Medigap policy can no longer have prescription drug coverage even if you had it before, but you may be able to join a Medicare Prescription Drug Plan.

— If you joined a Medicare health plan when you were first eligible for Medicare, you can choose from any policy.

So who knows more about Medicare?  I think I win this one.

November 15^th   to December 31^st is the Medicare Annual Election period.  This is an important time for a number of reasons.

Part D: If you have a stand-alone Medicare Part D plan (that is not part of a Medicare Advantage plan), this is the only time of year when you can change to another plan.  If your premium has gone up, you can shop around for a lower-priced plan.  Your new plan would take effect on January 1, 2010 and you must stay in that plan for the entire year (unless you move out of the plan’s service area).

The average Part D premium is about $35 per month, so if your plan premium is a lot higher than this, it might be time to shop around.  But be sure all of your prescriptions are covered by the plan you are considering and at what co-pay level.

Medicare Advantage: If you want to change your Advantage plan, you can submit an application for a new plan during this period.  Your new coverage would begin on January 1, 2010.  Be sure all your doctors are in the plan network before you sign any papers.  And be sure your prescriptions are covered by the new plan and for what co-pay.

For Medicare Advantage plans, you actually have another opportunity to change plans during January, February, and March.  After the end of March, you are locked into your Advantage plan for the rest of the year.

From talking with seniors, it is interesting to see how many different reactions there are to plan changes.  Some people are willing to change their doctors if a new plan offers lower co-pays or a lower premium.  Most seniors will not switch plans if it requires them to give up their primary doctor or their specialists, because they have  ongoing health problems. Some people will not change their Advantage plan because they want to keep their gym membership.

Some folks are shocked by the idea of a $36 premium for their Advantage plan, while others figure it is a small price to pay for the coverage.  I talked to a lady in Pinal County who is currently paying $100 for her Medicare Advantage plan.  When she saw another plan with a $59 per month premium that includes dental and vision benefits, she thought that was a great deal.

I guess the point of this post is that Medicare beneficiaries have a many choices, even if they are only considering Medicare Advantage plans.  Choice is a good thing, but it requires seniors to do some homework so they make an informed decision that will make the transition to a new plan seamless and hassle-free.

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.