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Medicare Advantage: The Basics of Consumer Choice

What is Medicare Advantage (Medicare Plan C)? What do consumers need to know to make informed choices about Medicare Advantage plans?

When turning 65, new Medicare beneficiaries are faced with a dizzying array of choices. First, their eligibility for Plan A (hospital) is established. Second, they make the decision to accept Plan B (doctors). At this point in the decision process, there are a host of complex Medicare insurance choices that will have a financial impact on the consumer. These important choices will determine the consumer’s access to and delivery of health care. For all new beneficiaries, the next decision is which of two pathways to follow: stay with Original Medicare, or shop for a Medicare Advantage plan.

What is Medicare Advantage? According to the Center for Medicare and Medicaid Services (CMS), a Medicare Advantage plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide consumers with all Part A and Part B benefits. Medicare Advantage plans include Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), Private Fee-for-Service Plans (PFFS), Special Needs Plans (SNP), and Medicare Medical Savings Account Plans (MSA). If the consumer is enrolled in a Medicare Advantage plan, Medicare services are covered through the plan and are not paid for under Original Medicare. Most Medicare Advantage plans offer prescription drug coverage.

According to Medicare.gov, there are four basic characteristics of Medicare Advantage plans that the savvy consumer will want to understand. These include:

Annual enrollment and benefits
You can only join a plan at certain times during the year. In most cases, you are enrolled in a plan for a year. Plans can add benefits such as vision, dental and gym memberships, and can change these benefits from year to year.

Know your network
If you go to a doctor, other health care provider, facility, or supplier that does not belong to the plan’s network, your services may not be covered, or your costs could be higher. In most cases, this applies to Medicare Advantage HMOs and PPOs.

Understand that providers can change
Providers can join or leave a plan’s provider network anytime during the year. Your plan can also change the providers in the network anytime during the year. If this happens, you may need to choose a new provider.

Plans can stop participating in Medicare
If the plan decides to stop participating in Medicare, you will have to join another Medicare health plan or return to Original Medicare.

Once these basic characteristics of Medicare Advantage are understood, for the consumer the key factor is how to make a meaningful comparison between different plan options in terms of cost and services provided. Costs vary between different plans. For example, Medicare Advantage plans have a yearly limit on out-of-pocket costs for all medical services. Once the consumer reaches this limit, he or she will play nothing for covered services. This limit may be different between Medicare Advantage plans and can change each year. As Medicare.gov points out, the beneficiary should consider this when choosing a plan.

How can the beneficiary digest such a large amount of Medicare Advantage information that is part of the alphabet soup of Medicare? The promise of online healthcare exchanges is that they can provide tools for a meaningful comparison of Medicare Advantage plans. Further, they can help the consumer understand the costs and trade-offs between Medicare Advantage plans and choices along the other pathway, which includes Original Medicare and additional products such as Medicare Supplement and prescription drug coverage (Medicare Plan D).

Online tools have the capacity to take an enormous amount of complex information and make it available to the consumer in an easy language they can understand. Only then can the new Medicare beneficiary digest the alphabet soup that is Medicare and make a truly empowered decision about their insurance choices.

About the Author
Ellen Glassman, Ph.D. is a founder of Retiree Health Choices. She is a licensed life and health insurance broker with expertise in business development, design and marketing.

Healthcare Consumers and the Digital Divide

The narrowing digital divide between older adults and other healthcare consumers is key to understanding how retirees access healthcare information online.

The digital divide is defined as unequal access to, or knowledge of information and communication technologies. For example, the Pew Internet and American Life Project describes older healthcare consumers who have never used the Internet and have no access to online information as,”truly disconnected.”

Anecdotal evidence suggests that older people are sometimes resistant to digital innovations. However, a 2009 CDC expert panel report found that many older adults are eager and willing to learn about new technologies. The digital divide for this group is narrowing for a number of reasons. A range of devices from laptops, e-readers, smart phones and tablets are increasing access and connectivity. At the same time, new technologies are providing means for older adults with physical limitations to move ahead, while also narrowing the knowledge of information gap.

Baby Boomers aging onto Medicare are narrowing this divide further. Boomers embrace multiple technologies at work, in their leisure time, at home and while shopping online. Whether streaming videos on Netflix or shopping on Amazon, the Boomer world is digital. This digital world increasingly reaches far into different communities and across socioeconomic strata.

Many Boomers are being asked to become informed healthcare consumers. This world, too, is increasingly digital, from the doctor’s office, to the insurance company, to health insurance exchanges such as HealthCare.gov. Navigating this world takes patience, knowledge and familiarity with technology. As the 2013 rollout of HealthCare.gov has shown, we are just beginning to understand how healthcare consumers of all ages will engage with health related information online.

Older adults and Boomers aging into retirement inhabit a consumer centric world where demand is high for meaningful information to guide purchase decisions. Within this space, consumer demand for clear healthcare information online is growing. All older healthcare consumers, whether new or existing retirees, must be informed in appropriate ways.

This is a pressing matter, as healthcare literacy in the United States is generally low. A 2009 CDC expert panel report showed that skills required to use the healthcare system exceed the skills of adults who graduated from high school. The current information available about Medicare, whether on or offline, is substantial. For many adults, Medicare information is also complex and confusing. Compounding this problem, the U.S. Census Bureau Statistics indicates that the number of Americans age 65 or older will double by the year 2030 to over 70 million. The Kaiser Family Foundation predicts 30 million people will enroll in Medicare over the next eighteen years. As a tsunami of enrollment hits Medicare, online technologies will become prevalent in this market.

Healthcare exchange technologies for Medicare are in their infancy. Given the large numbers of computer savvy Boomers aging onto Medicare, the next generation of healthcare exchange technologies must rise to the challenge of becoming true online decision tools. Decision tools offer meaningful interpretations of healthcare information, and will replace current online tools that present static reams of data online. As the digital divide narrows for healthcare consumers, exchange technologies will have to meet the growing demands of a changing consumer centric culture.

About the Author
Ellen Glassman, Ph.D. is a founder of Retiree Health Choices. She is a licensed life and health insurance broker with expertise in business development, design and marketing.