Medicare Benefits FAQs

HMOs — What if your plan leaves Medicare?

If you wish — it's your decision — you can continue to be covered by your current health care plan through December 31st. After that, you'll still be in the Medicare benefits program regardless of what you do. If you don't enroll in another Medicare+Choice (M+C) plan before January 1st, you'll be covered automatically by the Original Medicare benefits Plan. But, you may have to pay higher out-of-pocket expenses. That depends on what you do between now and January 1st.

IMPORTANT NOTE: Several deadlines are involved; we've listed them below. Pay attention to them to protect your rights. Otherwise, you could end up with a plan that doesn't meet your needs, or you may have to pay substantially higher out-of-pocket expenses.

How can my HMO (M+C) plan terminate my coverage?

Medicare M+C health plans are provided by private insurance companies to people eligible for Medicare benefits. (Medicare's M+C plans include HMO plans and Private Fee-for-Service plans.) The insurance companies must sign a contract with Medicare and agree to stay in Medicare for at least one year.

Each company then decides each year if it wants to continue doing business with Medicare. Some may stay with Medicare but raise or lower their premiums, add, change or eliminate benefits, or do a little of both. Others may decide to leave Medicare in certain communities, or throughout the country.

The results? In 1998, at the peak of HMO popularity, 6.5 million people were enrolled in Medicare HMOs and other managed care plans. Since then, 2.2 million (1 out of 3) have been kicked out of their plans and had to find other health care coverage; more than half returned to the Original Medicare benefits plan. Unfortunately, many of those people had to settle for a new Medicare Supplemental insurance policy that was not as good as the old one they canceled when they joined their HMO (more about that later).

How will I know if my plan decides to leave Medicare?

Your plan must notify you in writing, no later than the first business day of October, that it will leave Medicare on December 31st. When you get the notification, make sure the letter (not the envelope) includes your name and the date it was written. If either one is not in the letter, call your plan immediately. Tell them that you need a new letter that does include both your name and the date. (You need to have the date because your eligibility for certain options to replace your current plan begin on that date.) Keep the letter that includes your name and date, and the envelope it came in, in a safe place.

This letter should also tell you if any other Medicare M+C health plans are now or will be available in your community, the protections you have, and your options.

What are your options? — You have 2:

#1 - Return to the Original Medicare Benefits Plan

If you do nothing, you'll automatically be covered by the Original Medicare benefits Plan beginning January 1st. But, you may have to pay substantially higher out-of-pocket expenses. We recommend that you purchase a Medicare Supplemental (Medigap) insurance policy to help pay those expenses. (More information about Medicare Supplemental insurance policies is in a special section below.)

#2 - Enroll in a new HMO, Private Fee-for-Service, or another M+C plan

The letter from your current plan will list all of the Medicare M+C health plans that will be available in your area for the calendar year that begins on January 1st. In some cases, however, no M+C plans will be available; if that happens, you have no choice — you will automatically be covered by the Original Medicare benefits Plan.

How soon do I need to make a decision?

Even if your current plan is leaving Medicare, it must continue to provide services to you for as long as you remain enrolled, until December 31st. But, that doesn't mean you can wait until then to get ready for the transfer of your coverage. The annual election period for making your decision is from November 15th through December 31st.

If you don't want to be covered under the Original Medicare benefits plan beginning January 1st (perhaps you don't want to buy a separate Medicare Supplemental insurance policy), you should select your new Medicare M+C plan, fill out the paperwork and send it in well before December 31st. This will help assure a smooth transfer of coverage on January 1st.

How do I find out which Medicare M+C plans will be available?

Once again, the letter from your current plan will list all of the M+C plans that will be available in your area beginning January 1st. If you to want to stay with your present doctor(s), ask them if they belong to any of these plans. If they don't, you may want to consider returning to the Original Medicare benefits plan.

If you do want to switch to a new Medicare M+C plan, call the plan and ask for a brochure that explains its benefits and premiums for the year that will begin on January 1st, including up-to-date information about coverage for prescription drugs. (Plans often change their benefits and premiums from year-to-year.)

What Medicare Supplemental (Medigap) insurance plans are available?

For people just becoming eligible for Medicare benefits, there are 10 standardized plans, A through J. Each plan has a different group of benefits. Plan A has the fewest and is the least expensive. Plan J has the broadest benefits and is the most expensive.

(All 10 plans may not be available in every state. And, Massachusetts, Minnesota and Wisconsin have their own; while their plans have different names, their benefits are similar to the "national" plans.)

Medicare HMOs are attractive because they cover many of the gaps in the Original Medicare benefits plan. While HMOs may charge small copayments for doctor visits and prescription drugs, their enrollees don't have to purchase a Medicare Supplemental (Medigap) insurance policy. For a relatively healthy retired couple, this can mean a savings of $2,000, $3,000 or more — each 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 later regretted.

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 dropped had more liberal benefits such as coverage for prescription drugs and at-home recovery benefits, you will probably not be able to get them covered in your new policy.

Our recommendation: As most of us grow older, our health will decline — despite our hopes that it won't happen. Having coverage for prescription drugs, even though limited to only $1,250 a year for Plans H and I, and $3,000 a year for Plan J, could become very important as you grow older. For that reason, if you already have a Medicare Supplemental insurance Plan H, I or J, we recommend that you don't cancel it in favor of joining an HMO until Medicare's new prescription drugs benefit takes effect on January 1, 2006. For more information, click on Medicare Supplemental Insurance for Seniors.

What dates do I need to pay attention to?

Between November 15th and December 31st:

Enroll in a new Medicare+Choice plan: Select your new Medicare M+C plan, fill out their paperwork and send it in well before December 31st to be certain of a smooth transfer of coverage on January 1st.

January 1st:

Original Medicare benefits plan: If you want to return to the Original Medicare benefits plan, or if this is your only option, you don't have to do anything; Medicare will switch you automatically. But, as mentioned earlier, you may want to purchase a Medicare Supplemental insurance policy.

March 4th:

Medicare Supplemental insurance: If you want to purchase a Medicare Supplemental insurance policy, you must apply for it by March 4th to preserve all of your rights. Specifically, if you apply before the deadline, the insurance company:

Must issue a policy to you regardless of your health;
Cannot impose a waiting period before your coverage starts;
Must cover all of your pre-existing health conditions; and
Cannot charge higher premiums because of past or present health problems.

If you miss the March 4th deadline, you may not be able to get Medicare Supplemental insurance; companies can turn you down because of health problems.

Special Cases

Special rules may apply to you ...:

if you voluntarily disenroll from your current Medicare M+C plan before December 31st; or
if you are under age 65 and on Medicare because you are disabled; or
if you have permanent kidney failure (end stage renal disease); or
if you are on Medicaid; or
if you have retiree coverage from a former employer or union; or
if you are in a nursing home or another health care institution; or
if your current plan is your first experience with a Medicare managed care plan and you have been enrolled in that plan for less than one year; or
if you are a Military retiree (see below).

If you think any these special rules may apply to you, talk with your State Health Insurance Assistance Program, Medicaid, your former employer or union (whichever is appropriate to you) before you make any changes, but as soon as possible.

Military Retirees

A new program, "TRICARE for Life," is now available for eligible military retirees and their dependents who are covered by Medicare. It supplements Medicare to give them the same benefits they had with TRICARE (CHAMPUS) before turning 65. For more information, visit TRICARE's Web site, or call them toll-free at 1-888-363-5433.

For more information about Medicare,

including how you can contact your local State Health Insurance Assistance Program (SHIP) for more information, visit Medicare's Web site, or call Medicare toll-free at 1-800-633-4227.

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