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Coming of age

According to Wikipedia, the online encyclopedia, the phrase "coming of age" refers to a young person's transition from adolescence to adulthood.

While it may be a stretch to use the same term for an insurance product, please allow me a little artistic license in the title of this column.

The products I am referring to are the Medicare Advantage plans currently available for 2009. We have more than 40 different plans to choose from in Clallam County, with approximately half of them including the Medicare Part D drug coverage in addition to the doctor and hospital coverage.

These plans have been called many things over their lifetime including Medicare+Choice, Medicare Part C and Private Medicare. Currently they are known as Medicare Advantage plans.

These plans are where your Medicare benefits are administered by a private insurance company. You might ask yourself why are so many companies offering to administer your Medicare benefits in Clallam County? The answer is both simple and not surprising - money.

The federal Medicare budget allocates dollars to cover each and every Medicare recipient. In theory if Medicare can pay a private insurer less than they would otherwise allocate, the government can save money.

Medicare is so hopeful about the success of these plans that they will allow people to enroll and if they are not completely satisfied with the plan, they can return to their existing Medicare Supplement at any time during the first 12 months. You do not have to wait until next year's open season to return.

The private insurers believe they can do things more efficiently than the Medicare system and still make money.

So why are the plans becoming so popular with the public? The answer is once again money.

Many of these plans have very low or even zero monthly premiums. However, members must be enrolled in both Medicare Part A and B and continue to pay their Part B premiums.

I use the phrase "coming of age" as I believe 2009 will be a watershed year for these plans where millions of people across the country will be tempted to review and try a Medicare Advantage plan. What began as a trickle in 2006 when these plans first were readily available has turned into a torrent for 2009. The reasons are quite compelling and once again driven by money.

The insurance companies receive a small amount of money from Medicare for each enrollee in a Medicare Part D plan, but the funds they receive are far, far larger if they can get you enrolled in a Medicare Advantage plan.

So, they raise the premiums on the Medicare Part D plans on a national average of 31 percent for 2009 and keep their premiums for a combination plan at either zero or very close to that for the Medicare Advantage plans.

Consumers are feeling the pinch financially with low returns on CDs and evaporating investments from the stock market and are eager to save money.

In Clallam County we have four plans that will cover doctors, hospitals and the Part D portion all for a zero monthly premium. These are offered by Secure Horizons, Wellcare, UniCare and Coventry Freedom.

All the plans are very similar in design, but the differences, while minor, could be costly if you are unaware of them. For example Secure Horizons has a $195 hospital co-pay for days 1-18, while Coventry has only $180 for days 1-6. On the other hand, the formulary (drug list) on Coventry can be sneaky and slip some drugs into a higher co-pay tier than the other plans.

Humana and Sterling are other programs with a large presence here on the peninsula. While they do not enjoy a zero premium, they have other attributes that might make them attractive for your particular circumstance.

All plans have co-pays and other out-of-pocket expenses that should be reviewed. While many people might be able to save money, we see the greatest savings for those people who do not use many services. In addition, people should be proactive about their health care and be willing to embrace change.

The bottom line is, before you jump at the first plan you see, you should compare your options. Once again, as I seem to do in every column, I recommend people go to www.Medicare.gov for details on all the plans and benefits. It really is an amazing Web site that easily can show you differences too numerous to go into in this short article.

Phil Castell is an independent insurance agent in Sequim and can be reached at 683-9284, or via e-mail at PhilCastell@msn.com.

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