Medicare changes for 2011: what you need to know
November 3, 2010
With new Medicare regulations taking effect in 2011, we’ve identified four changes to Medicare Part C, D and Medigap plans that retirees should know about because they could affect their healthcare coverage. They are:
- Some Medicare Advantage (Part C) Private Fee for Service (PFFS) plans are ending
- Medicare Part D plans are being consolidated
- Four Medigap plans will no longer be sold and two new ones will be offered (Parts M and N)
- While average premiums for Medicare Advantage (Part C) plans will decline slightly, some plans’ premiums will rise
Information about the changes and what retirees can do in response follow.
Some Medicare Advantage (Part C) PFFS plans are ending
Due to a change in Medicare regulations, some insurance carriers are terminating their Medicare Advantage PFFS insurance plan offerings at the end of this year. Medicare will no longer allow health insurers to offer a PFFS plan unless it includes a contracted network of doctors. Many carriers have opted to terminate these plans rather than create a second or third doctor network in addition to their HMO and PPO plans.
If your insurance carrier notifies you that your medical plan will no longer be offered beyond December 31, 2010, you will need to find new coverage. Fortunately, those who are losing their plan will have a longer Special Enrollment Period (SEP) from October 1st through December 31st. During this SEP, you can choose to enroll in another Medicare Advantage plan (Part C) or enroll in separate MediGap and Medicare Part D plans.
If you do not enroll in another plan by December 31, 2010, your coverage will revert to original Medicare and you will become responsible for all costs not covered by original Medicare, including prescription drugs.
Medicare Part D plans are being consolidated
To eliminate confusion and simplify Medicare Part D prescription drug plan coverage, the Centers for Medicare & Medicaid Services (CMS) has mandated that there must be a “meaningful difference” between plans offered by the same health insurance carrier. If there is not enough difference, redundant plans will be eliminated. If your plan is being dropped, your insurance carrier will send you notice within the next few weeks if they haven’t already.
In many cases, if your plan is terminating you will be automatically “crosswalked” into one of your carrier’s other Part D prescription drug plans. You have the right to “opt out” of the automatic enrollment if you prefer to look for a new plan. In a very few cases, carriers may simply drop the plan without automatically enrolling you in a new plan.
If your insurance carrier tells you that you will be automatically switched into a new plan or that your plan is being dropped, you should consider three things before you accept the change or enroll in a new plan:
- First: will the new plan cover all the prescription drugs I use?
- Second: are co-pays changing for my drugs, and if so, what are the new co-pays?
- Third: will the new plan let me purchase drugs from my preferred pharmacy?
If the new plan will increase your out-of-pocket expense, or make it more difficult for you to purchase the prescribed drugs you need, you should look at Part D plans from other carriers to see if another plan better meets your needs.
If your carrier is “crosswalking” you into a new plan, you can accept the new plan, or choose to change Part D plans during the annual Medicare enrollment period, which runs from November 15 through December 31, 2010.
If you are being dropped from a discontinued plan without automatically being enrolled in a new one, you will have a longer special enrollment period, from October 1st through December 31st 2010, to find a new plan.
Four Medigap plans will no longer be sold, and two new ones will be added
In an effort to improve benefits offered by certain Medigap plans, as of July 1, 2010, Medigap plans E, H, I and J will no longer be sold and plans M and N will be added. However, those who currently have one of the policies that will no longer be offered will be allowed to keep their existing ones. If you decide to keep any of these policies, however, you may find your premiums rising, and should consider all your options, including other plans, to fill the gaps.
While the benefits offered by the two sets of plans are similar, new plans M and N offer higher cost-sharing options for the Medicare Part A and Part B coverage, which results in lower premiums.
While average premiums for Medicare Advantage plans will decline slightly, some plans’ premiums will rise.
Despite predictions to the contrary, average premiums for most Medicare Advantage plans will decline slightly next year, even as the benefits increase as mandated by healthcare reform legislation. This is a result of new power given to the CMS to negotiate and reject bids from insurers wishing to offer these plans that was also a provision of the legislation. However, premiums for Medicare Advantage plans offered by certain insurers in geographies may increase, and seniors should look carefully at their own plans and consider alternatives if their premiums do go up.