Should I enroll in a stand-alone plan or a managed care plan?

If you are already in a private Medicare Advantage plan such as an HMO or local PPO that offers a drug benefit, you must use that plan’s drug benefit or drop out of the Medicare Advantage plan if you want to enroll in another prescription drug plan. If you are not currently in a Medicare Advantage plan, you have a choice. You can remain in Original Medicare and enroll in a stand-alone drug plan, or you can leave Original Medicare and choose among a range of private Medicare Advantage plans (HMOs, PPOs and PFFS plans).

There are both pros and cons to joining a managed care plan. On the positive side, a managed care plan might charge lower deductibles and premiums. Furthermore, the drug benefit is integrated into coverage of other medical services, such as hospital care and doctors’ visits, and you would pay only one premium for all your health care needs. On the negative side, managed care plans restrict your choice of hospitals and doctors, and you must pay more (sometimes a lot more) to see a doctor that isn’t in the plan’s network. In addition, many plans charge lower deductibles and premiums on the front end, but charge higher copayments when you actually use services.

Unfortunately, it can be very hard to accurately compare benefits provided by managed care plans. This is because managed care plans are required to offer the same services offered by Medicare, but they are not required to offer them in the same way. So, for example, a plan might provide reduced premiums and free eyeglasses, but less coverage for more expensive services. Seniors frequently are unaware of the restricted coverage until they become sick and require the services, at which point they are already responsible for significant out-of-pocket costs.

It is also important to recall the history of managed care plans in Medicare. Originally, the federal government provided subsidies to managed care plans to entice them into the Medicare market. Because of this, many plans can offer very attractive benefit packages, with lower premiums and copayments for some services. However, the subsidies provided to the managed care companies were not intended to last forever.