Everything you need to know about Medicare Advantage this open enrollment season

Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.”

For the past few weeks, Ask Phil has focused on Medicare’s annual open enrollment period, which began on Oct. 15 and runs through Dec. 7. During this period, all Medicare beneficiaries are free to select new plans.

Today, Phil tackles Medicare Advantage plans, but not before updating us with some important news from Congress about Part B premium increases. Next week, the Medicare Maven will return to answering your Medicare questions. Send your questions to Phil.

We interrupt today’s scheduled class, er, column, on open enrollment with news about the feds coming to the rescue of millions of Medicare beneficiaries who have been facing 50 percent hikes next year in their premiums and deductibles for Part B of Medicare — the part that covers doctors, outpatient and medical equipment expenses.

I have written about this situation before, at great length if not elegance. So, to keep it short today, the federal budget deal includes a $7.5 billion loan to Medicare that it will use to help pay some of next year’s Part B expenses.

These funds would otherwise have had to come from the 30 percent of Medicare users who were not held harmless when Social Security recently announced a zero COLA for 2017. Again, if this is all gibberish to you, please check out the aforementioned link.

As for the other 70 percent of beneficiaries, their monthly Part B premium will, as expected, remain at $104.90 next year.

As for those folks not held harmless, they had been facing 52 percent hikes. This includes not only those paying the basic monthly premium, but also higher-income Medicare beneficiaries, some of whom faced really big dollar increases.

The loan means they will only have to ante up 15 percent more for their Part B premiums. That’s a big increase, to be sure, but not the budget-buster bomb that they had been fearing. Instead of seeing the basic premium rise from $104.90 to $159.30, it will increase “only” to about $123. Before you get out your calculators, you are right that this is more than 15 percent. That’s because it includes $3 each month to help repay the federal loan.

This loan repayment will not be levied on the hold-harmless crowd next year, but they are expected to begin making their own loan repayments in 2017 and continue to do so for several years.

The deal also provides relief for the annual Part B deductible, which had also been projected to rise 52 percent but will now rise by the same 15 percent, from $147 to about $167. This deductible applies to all Medicare beneficiaries, and is the amount people must pay for Part B expenses before their insurance coverage kicks in.

Medicare Advantage plans, which are the topic for the rest of today’s offering, may defray some of this deductible, as do certain Medigap plans.

Speaking of Medicare Advantage (a seamless transition, no?) it likely will continue drawing people away from Original Medicare, which covers Part A (hospital) and Part B (doctors, outpatient and equipment expenses) of Medicare.

Medicare Advantage

Medicare Advantage, or MA for short, has only been around in its current form for about 10 years. It has taken over more than 30 percent of the Medicare market since then and is projected to add a couple more percentage points during the 2016 open enrollment season, which began Oct. 15 and runs through Dec. 7.

Original Medicare pays only 80 percent of most covered expenses, and many beneficiaries turn to Medigap policies to close this coverage gap. In addition, people with Original Medicare usually get a stand-alone part D plan.

Medicare Advantage plans, by contrast, can combine most of these features in a single insurance policy, and one that often costs less than the mix of products that people with Original Medicare can wind up with. By law, Medicare Advantage plans must cover everything that Original Medicare covers. Many plans actually cover more, including hearing, vision, dental and even gym memberships.

The plans can afford to offer these additional features because most of them require people to get their health care needs from a provider network created and managed by the plan. These networks can create big savings for insurers, who also promote them as being able to do a better job of coordinating and managing the health needs of people.

Original Medicare’s continuing appeal to many seniors is that it uses a so-called fee-for-service model that allows people to use whatever health care providers they wish, so long as the providers participate in the Medicare program, which nearly all do. This freedom is particularly important to people who spend time in more than one part of the country during the year. Medicare Advantage plans often don’t work for them, although some Medicare Advantage plans provide out-of-network coverage that accommodates at least some of the needs of such seniors.

During open enrollment, consumers are free to move from Medicare Advantage to Original Medicare and vice versa. They also can shift from one Medicare Advantage plan to another. Nearly 90 percent of Medicare Advantage users have plans that include Part D drug coverage (so-called MA-PD plans). There is also a Medicare Advantage disenrollment period, which runs from Jan. 1 to Feb. 14 next year. During this period, your only choice is to drop your Medicare Advantage plan in favor of Original Medicare and a Part D plan.

Nearly all Medicare users stay with the plans they already have. Experts say that many if not most of them could save money and improve the quality of their health coverage by changing to new health plans during open enrollment. For 2016, drug plans in particular will be more expensive, as explained in last week’s Ask Phil. Looking only at the health component of Medicare Advantage plans, only modest cost changes are expected next year, with leading Medicare Advantage insurers emphasizing the stability of their plan offerings and premiums from 2015 to 2016.

Here are four other major considerations you need to keep in mind to shop for better Medicare Advantage coverage in 2016.

Pay attention to plan ratings.

The Centers for Medicare & Medicaid Services (CMS) has a 5-star rating system for Medicare Advantage plans that is based on more than 30 variables (there are additional measures used when rating MA-PD plans). You could have hours of fun plowing through enormous CMS downloads explaining these ratings. Or you could just restrict your Medicare Advantage search to the higher-rated plans. There are lots of them. You can see the ratings of all the plans sold where you live by using Medicare’s online Plan Finder tool.

Look at total out-of-pocket costs.

Low Medicare Advantage premiums, including lots of zero premium plans, may be appealing at first glance. However, as I’ve been stressing and stressing about, premiums are just one cost component of Medicare coverage. You also need to look at plan deductibles, coinsurance and copays. Coinsurance and copays seem a lot alike and are often used interchangeably. But in health-speak, coinsurance is usually your percentage share of a covered expense, while a copay is usually a flat dollar amount.

Plan Finder should list each Medicare Advantage plan’s out-of-pocket maximum. The largest exposure that Medicare allows for these plans is $6,700 this year for health coverage, and most Medicare Advantage plans have lower ceilings. There can be a separate ceiling for out-of-network costs and for MA-PD plans, yet a third out-of-pocket number for drug costs. Again, if you’re looking for an MA-PD plan, you should revisit last week’s column.

Find out who’s in your Medicare Advantage plan provider network.

Medicare Advantage insurers have online search tools to let you know if your preferred physicians, hospitals and other care providers are in their provider networks. You don’t want to sign up for a new Medicare Advantage plan only to learn that your doctor’s not in it. I got in touch with the half-dozen leading Medicare Advantage insurers and each provided me with online links to their provider networks.

In most cases, you will need to enter your ZIP code in these insurer search tools and then put in the name of your doctor or hospital. You can also call your doctor’s office and check. Be careful to mention the specific plan name and not just the name of your insurer.

Here are the pathways to Medicare Advantage plan provider networks from leading insurers:

A final word about Medigap and Medicare Advantage plans.

Medigap doesn’t work with Medicare Advantage plans, so if you switch to Medicare Advantage from Original Medicare, you’ll have to drop your Medigap insurance. This should not present a big problem, but you need to be careful.

Medigap plans have what’s called a “guaranteed issue rights” during your initial enrollment period when you first began to participate in Original Medicare. During this six-month window you can buy any Medigap policy offered by insurers in your state, and the insurers have to sell it to you regardless of your age or health condition. Further, they cannot jack up your rates because of your age or health condition, either.

However, if you were to leave Medigap and decided later you wanted back in, you might lose your guaranteed issue rights. If this were to happen, insurers would not have to sell to you, and if they did, they might have the legal right to charge you a whole lot more for your policy. Some states have additional consumer protections here, so you should check with the free Medicare counseling service in your state that’s offered by the State Health Insurance Assistance Program (SHIP).

Medicare does offer a consumer safeguard here that it calls a trial period (it’s explained on page 23 of this Medicare Medigap guide.) If you have dropped a Medigap policy to join an Medicare Advantage plan, and you’ve had your Medicare Advantage plan for less than a year, you have the right to go back to a Medigap policy with guaranteed issue rights.