kiplingers retirement report 2010-11

7242019 Kiplingers Retirement Report 2010-11

httpslidepdfcomreaderfullkiplingers-retirement-report-2010-11 14

says Fred Karutz general manager o health-care solu-tions or SilverLink a technology company that works

with most major health plansBecause o these changes along with rising health-

care costs and new competition the plan and thestrategy you chose in past years may no longer be yourbest option You haverom November 15 toDecember 31 to select a2011 Medicare Advan-tage plan or a Part D

policy both o whichare sold by insurancecompanies Medicare Advantage I yoursquore covered by anAdvantage plan manyo the changes may notbe obvious Yoursquoll needto spend time analyzing

your old plan and comparing it to others

Te health-care lawreezes government sub-sidies to Advantage plans at 2010 levels in 2011 andthen reduces the subsidies starting in 2012 As a resultmany plans are hiking premiums and cost sharing andreducing coverage Few however are dropping popularextras such as gym memberships and vision care

At the same time the new law requires Advantage plans to boost coverage in several areas In the pastsome plans charged higher co-payments than traditionalMedicare or services such as chemotherapy Manydidnrsquot cover the 1047297rst 20 days in a skilled-nursing acil-ity which is covered by traditional Medicare In 2011

T 983144983145983155 983149983141983140983145983139983137983154983141 open-enrollment season isnot a time to go on autopilot Big changesare in store or coverage and costs or Medi-care Advantage and Part D prescription-

drug plans Itrsquos essential to reassess your game plan orchoosing health-care coverage

Te new health-care overhaul law has transormedthe landscape or this yearrsquos open enrollment Becausethe law reezes subsidies to private Advantage planseatures o many policies will change Te ldquodoughnutholerdquo coverage gap or Part D will gradually be elimi-nated And Medigap supplemental policies have beenrevamped ldquoTerersquos more o a burden on consumersto make savvy decisions about their bene1047297ts this yearrdquo

Your Guide to a Richer Retirement

Big Changes in Store for Medicare



November 2010 3

Advantage plans must provide the same coverage inthese areas as traditional Medicare

John Gorman chie executive officer o GormanHealth Group a consulting 1047297rm in Washington DCsays some Advantage plans are making changes that

wonrsquot be apparent to bene1047297ciaries unless they study the

offerings closely But these changes can end up raisingout-o-pocket costsFor instance some plans are revamping the ormu-

lary or several o the most-popular drugs Te planmay continue to charge the same co-payments or vari-ous tiers o drugs say $5 or some drugs and $20 orothers But i the drugs you take are moved to a highercost tier your out-o-pocket costs could rise signi1047297-cantly ldquoI yoursquore taking a lot o drugs look at where the

plan put those drugs on the ormularyrdquo Gorman saysldquoYou could end up paying more out-o-pocket with azero premium plan than you would with a plan thatcharges premiums o $25 per monthrdquo

Some Medicare Advantage plans are leaving thebusiness primarily private ee-or-service plans that let

you use any doctor or hospital Yoursquoll receive a noticeby October 31 i your plan is olding Your coverage

will be shifed automatically to traditional MedicareI this happens itrsquos particularly important to review

your options You could elect to get coverage throughanother Advantage plan or go with traditional Medi-care a Medigap plan and a Part D drug plan Enroll-ment in the Medigap and drug plans is not automatic

you have to sign up or them Because o new low-costMedigap and Part D options this may be a betterroute than an Advantage plan Part D prescription-drug plans Enrollees in Part Ddrug plans will see major changes in coverage costsand options In 2011 there will be a 50 discounton brand-name drugs in the doughnut hole and thecoverage gap will gradually shrink each year until 2020Medicare bene1047297ciaries will also get a break on generic

drugs in the doughnut hole Teyrsquoll pay 93 o thecost rather than the ull cost

In 2011 the doughnut hole kicks in when your drugexpenses total $2840 or the year (including both

your share and the insurerrsquos share o the costs) At that point you generally have to pay all o your drug bills

yoursel until the total cost o your drugs or the yearreaches $6448 when the insurer picks up the bill With the changes in brand-name and generic drug

coverage people may 1047297nd itrsquos no longer worth payingextra or coverage in the doughnut hole Use Medi-carersquos Plan Finder tool ( ) tocompare premiums and out-o-pocket costs or Part D

plans based on your drugs and dosagesAverage premiums or Part D are rising by just $1

in 2011 to $30 a month according to the Centers orMedicare and Medicaid Services But average premi-ums or the ten largest Part D plans are rising by 10in 2011 according to Avalere Health a consulting1047297rm

As insurers consolidate their offerings they aredropping a ew popular plans United Health GrouprsquosAARP Medicare Saver the second-most popular PartD plan in 2010 is dissolving and current bene1047297ciaries

will be moved to other United Health plans Beoreswitching make sure the plan is the best deal or yourmedications

Meanwhile new low-cost plans are available in2011 Te new Humana Walmart-Preerred Rx plancosts $1480 a month well below the average price orPart D policies But the out-o-pocket costs can varydepending on where you buy your medications

Bene1047297ciaries who buy drugs at Walmart and SamrsquosClub will pay $2 or preerred generics and $5 orother generics RightSourceRx mail-order pharmacyhas no co-payment or generics However bene1047297cia-ries who buy generics at a nonpreerred pharmacy willowe a $10 co-payment At the preerred pharmacies



4 November 2010

theyrsquoll pay 20 o the cost o nonpreerred genericand preerred brand-name drugs compared with 37at nonpreerred pharmacies And i they buy nonpre-erred brand-name drugs rom Walmart theyrsquoll pay35 o the cost compared with 50 elsewhere

Rather than increasing premiums some insurers areboosting bene1047297ciariesrsquo out-o-pocket costs by raisingco-payments Sue Frisch 67 believes her costs will rise

a lot i she doesnrsquot switch rom her current plan ldquoMy premiums actually decreased by a dime and the $310deductible stayed the samerdquo says Frisch who lives inSalisbury Md ldquoBut my co-pay or my medicationsincreased by 20 through a mail-order pharmacy and60 i I buy them at a local pharmacyrdquo

When comparing all o your options consider pre-miums co-payments and co-insurance or your drugsAsk your doctor i you can switch to generics or otherlower-cost drugs beore you pick a 2011 plan Checkout Kiplingerrsquos calculator (

) to 1047297nd generics and other lower-costalternatives

Also keep in mind that starting in 2011 individu-als who pay a higher income-adjusted Part B premium

will also pay a surcharge on their Part D premiumsSingles with modi1047297ed adjusted gross income above$85000 and married couples above $170000 will paythe surcharge Te government has not yet announcedthe size o the surcharge or 2011 Part B premiums Medigap policies I yoursquore on traditional Medicarerather than Medicare Advantage you should buysupplemental insurance to pay co-payments and de-ductibles wo new Medigap plans (Plans M and N)

which were introduced on June 1 2010 changed youroptions signi1047297cantly Tere isnrsquot an annual open-enroll-ment season or Medigap policies but itrsquos importantto examine your options and prices when decidingbetween an Advantage plan and traditional Medicare

In the past total premiums or Part B a Medigap policy plus Part D coverage tended to be higher thanAdvantage premiums But the package o these three

policies generally had lower total out-o-pocket coststhan Advantage With the introduction o new Me-digap policies the equation has changed a bit Manyo the M and N policies have much lower premiums

while imposing cost sharing Tese Medigap policiestogether with traditional Medicare and a Part D planlook more like an Advantage plan but with the optionto use any doctor or hospital

Until recently insurers sold 12 standardized Medi-gap plans A through L Each companyrsquos Plan A or ex-ample has the same coverage although prices can varyby insurer Starting in June insurers could no longersell new Plans E H I and J which have bene1047297ts thatMedicare now covers You can keep those plans i youhave them now but other plans may be better deals

Te two new plans M and N are similar to themost popular Medigap policy Plan F with a ew cost-sharing differences Plan F pays the ull Medicare Part

From the Editor

A 983144983141983137983140983155-983157983152 983142983151983154 our next issuedated December Some readers will

get their issue earlier than they getit now and others may get it a bitlater And the three holes or easy storage in athree-ring binder will disappear I too will haveto come up with a new way to save my copiesI may use a hole puncher

Wersquore making these changes in our continuingbattle against rising paper production and mail-ing costs A new method or getting Retirement

Report rom our printer in Virginia to a postoffice near you should speed deliveries in the

Western part o the US and might mean slightdelays along the East Coast We also concludedthat the holes are a too-expensive extravaganceOne thing wersquore not changing is the quality othe inormation we bring you each month

I you donrsquot want to wait or your print copy you can download Kiplingerrsquos Retirement Report rom the Internet or no additional charge osign up go to KiplingerRetirementcom and 1047297llout the orm You will be able to get access to theentire issue at about the same time we send it tothe printer You will also have access to several

yearsrsquo o back issues as well as to annual storyindexes Many subscribers are already takingadvantage o electronic delivery

Irsquom sorry or any inconvenience the changescause you And I thank you or being loyal sub-scribers to Retirement Report

Susan B Garland Editor



November 2010 5

A deductible or hospital care ($1100 in 2010) PlanM provides only 50 o the Part A deductible and

pays none o the Part B deductible which is $155 in2010 Te numbers or 2011 are not yet available

Plan N is the same as Plan M except that it cov-ers the Part A deductible generally making it a better

deal It also charges a $20 co-payment or doctorrsquos o-1047297ce visits and a $50 co-payment or emergency-room visits Premiums or Plan N tend to be a lot lower thanthey are or Plan F and even with the extra co-pay-ments it may still be a cheaper deal than Plan F

For example the least-expensive Plan F or a70-year-old man in Miami costs $21150 a month

while Plan N costs $16920 according to PlanPre-scribercom Yoursquoll still come out ahead with Plan Neven i you paid the Part B $155 deductible in ull(which is covered by Plan F) made the $50 co-pay-ment or two emergency-room visits and visited a doc-tor 12 times at $20 a visit However i your doctorstend to charge more than Medicare allows Plan F will

pay those ldquoexcess chargesrdquo but Plan N wonrsquotAlan Mittermaier president o HealthMetrix

Research which provides rankings o Medicare Ad- vantage plans says Plan N can be a good alternativeto Advantage especially i you are in a private ee-or-service plan that is leaving the business You can useany doctor and your cost sharing will be similar to thato an Advantage plan

You can buy a Medigap policy at any time How-ever you can avoid medical underwriting i you buya policy within six months o 1047297rst signing up orMedicare I you are on Medicare Advantage or morethan six months you could ace underwriting or Me-digap i you switch to Part B At that point an insurercan reject you or charge extra because o your age orhealth Some insurance companies will let you sign upregardless o your health especially i you now holdPlans E H I or J Comparing policies Donald Wentworth o acoma

Wash is going through that exercise right now Te67-year-old enrolled in an Advantage plan two yearsago But last year his premiums deductibles andco-payments increased substantially He expects thattrend to continue in 2011

Wentworth and his wie are looking at other Ad- vantage plans and they are also considering switchingto original Medicare ldquoSorting through and makinggood choices on Medicare coverage has been the mostexasperating process I have been involved inrdquo says

Wentworth a retired economics proessor ldquoWe are ac-

customed to comparing data and untangling problemsbut Medicare has just thrown us or a looprdquo

o ease the burden Medicare bene1047297ciaries can starttheir search by going to Medicaregovrsquos improved PlanFinder tool to learn about the Medicare Advantageand Part D plans available in your area o compare

Medicare Part D plans type in your drugs and dosagesYoursquoll see the total out-o-pocket costs or each planincluding what yoursquoll pay in the doughnut hole

I yoursquore comparing Advantage plans you can usethe Plan Finder (click on ldquoMedicare Health Plansrdquo)to 1047297gure out which plan works best or your speci1047297cmedications and what the average health-care bene1047297ts

will be or someone your age I you have major healthissues look careully at each planrsquos co-payments andco-insurance or doctor and hospital visits Yoursquoll also1047297nd quality ratings or each plan Also look at theCost Share Report at whichchooses the best Advantage plans in your area or threehealth categories (good air and poor)

You can check out your Medigap options at

Te tool compares monthly pre-miums or policies in your area Many state insurancedepartment Web sites also have Medigap comparisonsGo to the Web site o the National Association oInsurance Commissioners ( ) to 1047297nd contactinormation or your state department In addition

you can 1047297nd Medigap inormation with MedicaregovrsquosPlan Finder tool

I yoursquore trying to decide whether to go with an Ad- vantage plan or with traditional Medicare (plus Part Dand a Medigap policy) 1047297rst 1047297nd the Advantage planthat best 1047297ts your needs Ten choose a Part D planand a Medigap plan or comparison Add the premi-ums or Part B Part D and Medigap and 1047297gure in yourout-o-pocket costs Ten compare those costs andcoverage to the Advantage planrsquos costs Also make surethe Advantage plan covers your doctors and hospitals

Te 1047297ndings wonrsquot be exact but yoursquoll get a goodidea o the cheapest route Besides comparing costslook at the ldquoPlan Ratingsrdquo at Medicarersquos Plan Finderor Advantage plans Te ratings will let you know

whether a plan has good customer service and paysclaims smoothly or i it tends to hassle people when

paying claimsI you donrsquot use the Internet ask an adult child or

a riend or help You can get personalized help withMedicare decisions rom your local State Health Insur-ance Assistance Program (SHIP) Call 800-633-4227or visit mdash



November 2010 3

Advantage plans must provide the same coverage inthese areas as traditional Medicare

John Gorman chie executive officer o GormanHealth Group a consulting 1047297rm in Washington DCsays some Advantage plans are making changes that

wonrsquot be apparent to bene1047297ciaries unless they study the

offerings closely But these changes can end up raisingout-o-pocket costsFor instance some plans are revamping the ormu-

lary or several o the most-popular drugs Te planmay continue to charge the same co-payments or vari-ous tiers o drugs say $5 or some drugs and $20 orothers But i the drugs you take are moved to a highercost tier your out-o-pocket costs could rise signi1047297-cantly ldquoI yoursquore taking a lot o drugs look at where the

plan put those drugs on the ormularyrdquo Gorman saysldquoYou could end up paying more out-o-pocket with azero premium plan than you would with a plan thatcharges premiums o $25 per monthrdquo

Some Medicare Advantage plans are leaving thebusiness primarily private ee-or-service plans that let

you use any doctor or hospital Yoursquoll receive a noticeby October 31 i your plan is olding Your coverage

will be shifed automatically to traditional MedicareI this happens itrsquos particularly important to review

your options You could elect to get coverage throughanother Advantage plan or go with traditional Medi-care a Medigap plan and a Part D drug plan Enroll-ment in the Medigap and drug plans is not automatic

you have to sign up or them Because o new low-costMedigap and Part D options this may be a betterroute than an Advantage plan Part D prescription-drug plans Enrollees in Part Ddrug plans will see major changes in coverage costsand options In 2011 there will be a 50 discounton brand-name drugs in the doughnut hole and thecoverage gap will gradually shrink each year until 2020Medicare bene1047297ciaries will also get a break on generic

drugs in the doughnut hole Teyrsquoll pay 93 o thecost rather than the ull cost

In 2011 the doughnut hole kicks in when your drugexpenses total $2840 or the year (including both

your share and the insurerrsquos share o the costs) At that point you generally have to pay all o your drug bills

yoursel until the total cost o your drugs or the yearreaches $6448 when the insurer picks up the bill With the changes in brand-name and generic drug

coverage people may 1047297nd itrsquos no longer worth payingextra or coverage in the doughnut hole Use Medi-carersquos Plan Finder tool ( ) tocompare premiums and out-o-pocket costs or Part D

plans based on your drugs and dosagesAverage premiums or Part D are rising by just $1

in 2011 to $30 a month according to the Centers orMedicare and Medicaid Services But average premi-ums or the ten largest Part D plans are rising by 10in 2011 according to Avalere Health a consulting1047297rm

As insurers consolidate their offerings they aredropping a ew popular plans United Health GrouprsquosAARP Medicare Saver the second-most popular PartD plan in 2010 is dissolving and current bene1047297ciaries

will be moved to other United Health plans Beoreswitching make sure the plan is the best deal or yourmedications

Meanwhile new low-cost plans are available in2011 Te new Humana Walmart-Preerred Rx plancosts $1480 a month well below the average price orPart D policies But the out-o-pocket costs can varydepending on where you buy your medications

Bene1047297ciaries who buy drugs at Walmart and SamrsquosClub will pay $2 or preerred generics and $5 orother generics RightSourceRx mail-order pharmacyhas no co-payment or generics However bene1047297cia-ries who buy generics at a nonpreerred pharmacy willowe a $10 co-payment At the preerred pharmacies



4 November 2010














From the Editor












November 2010 5




























4 November 2010














From the Editor












November 2010 5




























November 2010 5


























kiplingers retirement report 2010-11

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