I have lost track of the number of clients who have asked me how Obamacare will affect their Medicare Advantage plan. They saw so many advertisements during the election campaign about how millions of seniors will lose their Medicare Advantage plan, and how $700 billion is being “stolen” from Medicare to be used for Obamacare. They are worried.

I tell these folks that I read a lot about Medicare and Obamacare – and I don’t think Medicare Advantage is going anywhere but up. In fact, since 2010, when Obamacare was passed into law, Medicare Advantage enrollment has grown 28%. On top of that, enrollment in Medicare Advantage is expected to grow 11% from 2012 to 2013.

I tell people that Obamacare does cut payments to Medicare Advantage plans because, since 2006,  Advantage plans have been overpaid by 10 – 14% each year. This has been very good for insurance companies’ profits, but it is not good for the Medicare budget.  But the reductions in payments to Medicare Advantage plans are taking place over several years so there is no big financial shock that would drive insurance companies out of the business.

According to CMS (Centers for Medicare and Medicaid Services), Obamacare payment cuts have had no negative effect on Medicare Advantage (MA) premiums and co-pays.  Of course, MA co-pays have been inching up each year – but that was happening before Obamacare.

I have written previously about how big insurance companies like United, Aetna, Wellpoint, and Cigna have spent billions of dollars buying Medicare Advantage plans. They seem pretty sure the Medicare Advantage business will be generating profits for years to come.

In Maricopa, Pima, and Pinal counties in Arizona, nearly 50% of Medicare beneficiaries are enrolled in Medicare Advantage plans. In Florida, California, Pennsylvania, and several other states,Medicare Advantage is huge. (Note: Florida Advantage plans are much better than what we have here in Arizona.) With over 12 million people enrolled in Medicare Advantage plans across the country, I don’t see any politicians (who want to keep their jobs) pushing to end Medicare Advantage.

Based on all the evidence I’ve seen, I’m pretty sure Medicare Advantage is here to stay.

How do you pick your Medicare coverage? There are so many choices, it can be overwhelming.

Will you choose to stay with Medicare and get a Medicare Supplement? Then you’ll need a stand-alone Part D plan.

If you think Medicare Advantage is the better choice, how will you choose from the 16 plans available in Tucson? There are 20 Medicare Advantage plans available in the Phoenix area.

I hear all kinds of stories about how people pick their Medicare coverage: Some pick what their friends have. Some people sign up for a Medicare Advantage plan in the grocery story. Seriously!

Picking your Medicare coverage is serious business, so I came up with the top ten ways to pick your Medicare coverage. I have met people who used each of the ways shown in the following video.

Should you choose a Part D plan with a deductible? Most clients’ eyes glaze over as I explain how the deductible works.  And I’ve gotten calls from clients who forgot about the deductible in their Part D plan and wondered why they paid such a high price for a drug.

I have quite a few clients who signed up for a Medicare supplement and needed a stand-alone Part D plan – even though they take no drugs, or just a couple of generics.  They could pay $30 or more for a Part D plan that has no deductible, and they would pay $4 to $15 for their generics. The crazy thing is that they could buy those generics for $4 to $8 without Part D.

But these folks know that, while Part D is “voluntary“, there is a penalty for people who don’t enroll in a plan and then later find out they need the coverage. So I tell them they should pay the lowest premium just to be in the Part D system. And the lowest-cost Part D plans have a deductible.

In 2013, the standard deductible is $325 for Part D plans that have a deductible. These plans have monthly premiums that range from $15 (sorry, not in Arizona), or $18 to $26. I don’t know why a person would pay a higher price for a plan with a deductible when you can pay $32 for a plan without one.

An example of Part D confusion

I had a client call me about what she and her husband paid for the Shingles vaccine. They have different Part D plans. Her plan has a deductible, and his plan does not. Her plan costs $15.10 per month, and his costs $28.60 (in 2012).  She paid $166 for the Shingles vaccine and he paid $95.

The husband’s plan has a $45 co-pay for “preferred brand” drugs. It has a $95 co-pay for “non-preferred brand” drugs. I looked up Zostavax in his Part D plan formulary. Sure enough, Zostavax is a “non-preferred” brand drug on his plan.

The wife’s plan as a $320 deductible (in 2012). I checked her plan formulary and the retail price for Zostavax is $166. Because she paid the full retail price, this means she has not yet met her plan deductible.  She takes two generics that probably cost $4 per month, so that will not add up to $320 throughout the year – so she will never meet her deductible. Although, now she has paid $166 toward that deductible because of the Zostavax.

The wife asked me, “Why am I not in the same plan as my husband?”. I had to remind her that we had discussed her drug costs and options when she first enrolled in her plan. I reminded her that she got her Part D plan pretty much to be in the Part D system. I also explained to her that, if she had already met her deductible, her co-insurance for the Zostavax would have been just 20% of $166, or $33.

So, I tell people who don’t really need a Part D plan that they have some choices: 1) Don’t enroll in Part D. 2) Pay a higher monthly premium for a plan with no deductible – which is paying a high price for something they don’t even need. 3)  Pick the plan with the lowest premium – but that plan will have a deductible.

This deductible question is just one of the many things that make Medicare Part D confusing. I always end my post on Part D with the question: Why did the Powers-That-Be make Part D so complicated?