Medicare Benefits FAQs

Should you enroll in a Medicare HMO plan?

It's a tough call — there are advantages and disadvantages.

Advantages

In our opinion there is only one advantage, but for many people, it's huge.

Medicare HMOs cover many of the gaps in the Original Medicare benefits plan. While HMOs may charge modest copayments for doctor visits, their enrollees don't have to purchase a Medicare Supplemental (Medigap) insurance policy. For a relatively healthy retired couple, all this can mean a savings of $2,000, $3,000 or more — every year — per person! This huge savings has convinced thousands of retirees to join Medicare HMOs and cancel their Medicare Supplemental insurance policies — a decision many of them later regretted.

Disadvantages

On the other hand, we believe there are two major disadvantages:

Medicare HMOs are managed care organizations. To control expenses, they limit the number of doctors, hospitals and other health care providers they do business with. If you want to stay with your present doctor(s) or other health care provider(s), ask them if they belong to the Medicare HMO plan you are considering. If they don't, you may want to stay with the Original Medicare benefits plan.
Medicare HMOs can leave the Medicare benefits program. If that happens, you could be faced with substantially higher out-of-pocket expenses, particularly if your health has declined.

For example, if you join an HMO and cancel a Medicare Supplemental insurance policy, Medicare penalizes you if that HMO later dumps you and you need to buy a new Medicare Supplemental insurance policy. Instead of having a choice of 10 plans, you will probably be able to choose from only 4 — Plans A, B, C and F. If the policy you canceled had better benefits, you probably won't be able to duplicate them in your new policy.

For more information, read our article, "HMOs — What if your plan leaves Medicare?"

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