A reader responded to my last post and accused me of misleading seniors about the timeframe for changing their Medicare coverage.  Here is some clarification.

If a person is enrolled in a Medicare Advantage plan which includes a drug plan (Part D), that person can change their plan during the Open Enrollment Period of January 1 – March 31st.  Most of the Advantage plans in Tucson include Part D, and people enrolled in these plans can make one plan change during the first three months of 2010.  They can only move to another plan that has a Part D drug plan.

If a person does not have a Part D drug plan before December 31st, (as part of a Medicare Advantage plan or as a stand-alone plan), they cannot enroll in a Part D plan until next November’s Annual Election Period.  So if a person wants to enroll in a Humana Medicare Advantage plan in January (all of which include Part D) , they will be refused by Medicare – because they cannot pick up a Part D plan after December 31st.

Some examples :

Mrs. Jones is enrolled in Health Net’s Ruby plan.  She has not paid attention to mailings from the company.  In January she realizes she must pay a monthly premium and she decides to shop around for another plan.  She can change to another Medicare Advantage plan that has Part D (as her Ruby plan does).

Mr. Smith has Medicare and a stand-alone Part D plan.  He decides he’d like to enroll in a Medicare Advantage plan in February.  He can enroll in a Medicare Advantage plan which includes a Part D plan – because he has Part D already.

Mr. Rivera is a veteran who gets his prescriptions filled at the VA, so he never enrolled in Part D.  In February he decides to enroll in a Medicare Advantage plan.  He cannot enroll in a Medicare Advantage plan that includes a drug plan.  This is because Medicare will not allow him to get a Part D plan at that time of year.  Medicare recognizes VA pharmacy coverage as “creditable” coverage, so Mr. Rivera won’t face a late-enrollment penalty for Part D if/when he enrolls in a Part D plan.  But for some reason, Medicare doesn’t recognize VA pharmacy coverage during the Open Enrollment period (January-March).  He can only enroll in a Medicare Advantage plan with Part D during the Annual Election Period which is November 15 – December 31st.

If you can’t make up your mind about changing your Medicare Advantage plan or staying put, December 31st is not your deadline.  You still have January – March (Open Enrollment) to make one change.

The December 31st deadline applies only to people with a stand-alone prescription drug plan, or those who are signing up for a Part D plan for the first time – alone or with a Medicare Advantage plan. But the 40% or so Tucsonans enrolled in Medicare Advantage still have a few months to make a change.

It seems like lots of insurance agents (and insurance company advertising) have left seniors with the misconception that they must “ACT NOW!” or they’ll be locked into their Advantage plan until 2011. Don’t let anybody push you to make a decision – you still have plenty of time.

Submitting paperwork this week or next will likely mean you won’t get your new Advantage plan card by January 1st. And if you have prescriptions that need refills in early January, you might find your old plan coverage cancelled but your new plan not yet in the system. I tell everyone to refill prescriptions before the end of the month, if at all possible.

The best time to submit an application to change your Medicare Advantage plan is early in the month.  If your paperwork goes in before the tenth of the month, everything will be processed and you’ll have your card – and your info will be in the system for the first of February. 

I have a feeling there will be many folks who did not look at the materials sent by their Medicare Advantage company at the end of October. These materials provided information on changes to their Advantage plan for 2010.  When they realize their plan has changed substantially (and they’re being asked to pay a premium), lots of folks will start shopping for a new plan in January, February, or March.

The key piece of information is that people enrolled in Medicare Advantage plans can still make one change during the Open Enrollment Period of January through March.

A recent report from Congress highlighted the reasons why Democrats hate Medicare Advantage. The study of Medicare Advantage plans’ revenues and expenses from 2005 to 2008 found that the average Medicare Advantage insurer spent over 15% of its revenues on marketing, administrative costs, and profits. Most of these companies’ revenues come directly from Medicare (around $800 per month per enrollee in Arizona) while the rest comes from premiums charged to people enrolled in the plans.

Medicare spends less than 1.5% on administrative expenses and over 98% on health care costs for seniors. Two-thirds of Medicare Advantage plans spent only 85% of their revenue on enrollees’ health care costs. The study sited six plans that spent only 75% of revenues on their enrollees.

The report concluded that total amounts spent on profits, marketing, and other expenses by Medicare Advantage plans over the last four years was 27 billion dollars.  This is money that should have stayed in the Medicare Trust Fund, but instead went to private insurance companies to be spent on things other than health care for seniors and disabled citizens on Medicare.  This is why Democrats have targeted Medicare Advantage for big cuts.

The report notes that in 2007 one Medicare Advantage company paid its top executive $35 million.  Another company paid out a total of $210 million among 260 managers. The study also reported on expensive retreats, which are typical rewards for top sales agents and employees in the insurance industry. In 2007, one insurer spent over $3 million on retreats in Hawaii while it spent only 83% of its revenue on health benefits for seniors enrolled in its plans.

This is why Democrats hate Medicare Advantage plans.  And this is why Democrats will see to it that Medicare cuts payments to the insurance companies that run the plans. Democrats in Congress don’t agree on much, but I think this is the exception. 

It looks like there’s plenty of fat that can be cut from these plans’ expense sheets – and profit margins – before they start raising co-pays and premiums for seniors. But we’ll have to see how that turns out.

The full report can be found at http://energycommerce.house.gov/Press_111/20091209/MedicareAdvantageReport120909.pdf