Health Insurance

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The following are the planning services you want if you are approaching retirement or are already retired:

Health Insurance

Do you join the HMO, get a Medigap policy, or opt for the PPO? What do all of these terms even mean?
If you are not covered by a plan from your employer, health coverage is your number one priority. If you are an early retiree and don't yet qualify for Medicare, see our section on early retirement.

Finding group coverage

Perhaps the best route is to see if you can qualify for group coverage. A business, professional, or trade group might provide a cheaper alternative to an individual policy. The only drawback is that maintaining your professional license and paying dues to organization may cost hundreds or thousands of dollars per year, but you may still realize a savings after adding in these costs when compared to an individual health insurance policy.

If you aspire to the lifestyle of a "perpetual student," you may be able to get low-cost comprehensive health insurance from a college or university. At some institutions, taking as little as one or two courses per semester is enough to show "progress" towards a degree and keep your health coverage in force. Paying in-state tuition at a community or state college is a small price to pay for access to this benefit if you are shut out of other avenues.

Individual health policies

Individual health insurance policies are among the most complicated insurance products out there. They are difficult to shop for and hard to evaluate once you do find one. Your employer probably had a staff of experts handling the search for health insurance when you were working. This task falls to you now that you're retired.

The Internet is a convenient place to start your search. Two websites http://www.quotesmith.com and http://www.ehealthinsurance.com offer real-time quotes for individuals living in many of the 50 states. These sites don't always offer the best quote or the most comprehensive coverage, but they can give you a ballpark price on what to expect.

You should also contact an insurance agent in your area that specializes in individual life and health policies. If you have any pre-existing conditions, your agent may know which companies offer the most favorable rates to individuals with your health history.

The Medicare health plan choices include:

The Original Medicare Plan, available everywhere in the country.
Medicare + Choice Plans, available in certain parts of the country.

Medicare Managed Care Plans

Medicare Health Maintenance Organizations (HMOs)
Medicare Preferred Provider Organizations (PPOs), and
Medicare Private Fee-for-Service (PFFS) Plans
If you're happy with your current Medicare plan, you don't need to change. But depending on your needs, you may want to find out if another plan might be better for you.

Four Steps to Help You Choose

If you want to explore your options, take your time to work through the following steps:

Step 1: Find the Medicare plans in your area
Step 2: Think about what's important to you
Step 3: Compare the costs, benefits, rules for doctor choice and quality of each plan
Step 4: Choose the plan that's best for you

FYI: If you have other health care coverage, such as Medicaid or retiree health insurance from an employer or a union, find out how these will work with each Medicare plan. This information may help you determine which plan is best for you.

Step 1: Find the Medicare plans in your area

Not all the Medicare plans are in all parts of the country. Start by finding out if you have another health plan choice besides the Original Medicare plan by going to Medicare personal plan finder.

If you do not have any other Medicare plan available to you, you will be in the Original Medicare Plan. You don't need to read any further, since the rest of this article deals with the other plans. Read more about the Original Medicare Plan in other articles on this site.

If you do have another Medicare plan available to you, this article will help you choose a plan.

Step 2: Think about what's Important to you

Each person with Medicare has individual needs and concerns when it comes to health care. Some people are most concerned about keeping costs down. Others want the freedom to go to any doctor they choose.

Here are some key differences among the Medicare plans:

How much you pay,
How much choice you have to select your own doctors,
Whether you can go directly to a specialist, and
Whether you can get additional benefits, such as prescription drugs
As you review each plan in your area, think about the things that are most important to you.

FYI: Find out as much as you can about each Medicare plan you are considering. Don't only rely on information from the plan alone. Get additional information from Medicare, your State Health Insurance Assistance Program (SHIP) and from people and organizations you trust. The SHIP in your state provides information and health insurance counseling for people with Medicare.

Step 3: Compare the Costs, Benefits, Rules for Doctor Choice and Quality of Each Plan Costs

The amount you pay for Medicare depends on a number of things:

which Medicare plan you choose
how often you go to the doctor or hospital
if you have other insurance
On the surface, cost comparisons seem easy, but there could be hidden costs with some of the Medicare options.

For example, if you choose a Medicare HMO or PPO, you don't need to buy a Medicare Supplemental (Medigap) policy. (Medigap is insurance that helps pay for some of your costs in the Original Medicare Plan).

On the other hand, if you are in an HMO or PPO, and you decide to use a doctor outside the plan's network, you'll have to pay for some or all of that care yourself.

Find out how these costs are handled before you choose. Also keep in mind that cost alone can't tell you how good the care is.

To find out the specific costs of the plans in your area, go to Medicare Personal Plan Finder. By typing your zip code, you can find out the costs and benefits of the Medicare plans in your area - information such as what you will pay when you go to the doctor or hospital.

Here are some common situations to think about before choosing a plan:

If you travel frequently within the United States, or leave your hometown for long periods of time…

The Original Medicare Plan and some Medigap policies will pay your routine health care costs anywhere within the United States. But if you join a Medicare + Choice Plan, such as an HMO or PPO, your coverage may be limited to the area served by the plan.

A Medicare PFFS plan will usually pay your health care costs as long as the doctor or hospital accepts the plan's payment. Be sure to check on where the plan's payment is accepted before you sign up.

FYI:All Medicare plans must pay for your health care costs away from home if you have an emergency or need urgent care.

If you travel outside the country…

Your health care may or may not be covered, depending on the plan you are in. The Original Medicare Plan does not cover care outside the country, except in some emergency situations in Mexico and Canada. Some Medicare + Choice plans and Medigap policies do cover care outside the United States. Check your plan or policy before you travel.

If you have high prescription drug costs or if you want prescription drug benefits…

Consider the following:

Medicare Supplemental (Medigap) Plans
Some Medigap plans help pay for prescription drug costs, but there are limits on how much these plans will pay. These plans also usually cost more than Medigap plans that don't have prescription drug benefits.
You may only be able to buy Medigap plans with this drug benefit when you first sign up for Medicare Part B. Once you sign up for Medicare Part B, you have six months to buy any Medigap policy you choose. This is called your open enrollment period. An insurance company can't turn you down or charge you more because of past or present health problems. After these six months, your choice may be limited.

Medicare + Choice Plans
Medicare + Choice Plans often offer additional benefits, such as prescription drugs. But keep in mind that these benefits can change each year and might only offer limited benefits. Carefully check into the prescription drug benefits of the plans you're considering.
Prescription Drug Assistance Programs
Prescription Drug Assistance Programs offer free or discounted prescription drugs.
If you have retiree health insurance from your or your spouse's employer or from a union…

Before you retire find out what your benefits and costs will be under your retiree health insurance. Your retiree insurance, together with Original Medicare, may pay for more of your health care costs and cost you less than a Medigap policy. Your retiree health insurance might also be used with a Medicare Managed Care Plan.

FYI:Check out all the facts with the administrator of your retiree health insurance before making a decision about your Medicare plan. If you give up your retiree health plan, you usually can't get it back. For example, you might lose it if you switch from the Original Medicare Plan to another Medicare plan.

If you are not sure you can pay for your Medicare costs or are on a limited budget…

Consider joining a Medicare HMO or PPO, where your costs generally will be lower. Also find out if you can get help from your state to pay some of your health care costs.

Benefits

All Medicare plans offer the same basic set of benefits. However, some Medicare plans may have additional benefits, such as prescription drugs.

To find out the specific benefits of the plans in your area, go to Medicare Personal Plan Finder. For example, you can find out whether a plan offers prescription drugs, how long you can get care in your home, and whether chiropractic care is covered.

Rules for Doctor Choice

There are differences among Medicare plans in how much choice you have to pick your own doctors.

In the Original Medicare Plan, you can go to any doctor or hospital in the country that accepts Medicare. Most doctors and hospitals do.
In a Medicare HMO, you usually can only go to the doctors and hospitals in that plan's network. Some HMOs offer a Point of Service Option, which allow you to go to doctors and hospitals outside the plan network, but you may pay more.
In a Medicare PPO, you can go to doctors and hospitals outside the plan's network, but you usually have to pay more.
In a Medicare PFFS Plan, you can choose any doctor or hospital that accepts the plan's payment.
In all Medicare plans, you can go to the nearest doctor or hospital if you have a health emergency or need urgent care.

Another common concern about doctor choice is being able to go directly to a specialist. In the Original Medicare Plan, PFFS Plans and PPOs, you can go directly to a specialist. In Medicare HMOs, you usually are able to see a specialist only if your primary care doctor first approves your visit.

Find out the rules about getting care for each plan you are considering and be sure to ask for a list of the doctors and hospitals in each plan's network.

Quality

Information on the quality of care is available for the Original Medicare Plan and for Medicare HMOs in the Medicare Personal Plan Finder. You can also find this information in Medicare Health Plan Compare.

Quality information can tell you:

How well the plan does in keeping its members healthy
How well the plan treats those who are sick
How well doctors in the plan communicate with their patients
How easy it is to get a referral to a specialist if one is needed
For example, you may be able to find out how many women in the plan get a mammogram to check for breast cancer. You may also be able to find out how many people in the plan get a drug called a beta blocker after a heart attack. People who get this drug are less likely to have another heart attack.

Step 4: Choose the Plan That's Best for You

After you gather the information about your plan choices and have thought about what's important to you, take your time sorting through the information you have. Return to the Medicare menu to review the comparison chart of the key differences among the Medicare plans.

Ask more questions and talk to people and groups that you trust. Help is available to you if you need it.

The SHIP in your state often has specific information about the plans in your area and any state laws or regulations in your state that affect people with Medicare.

The more you learn about your Medicare choices, the better prepared you will be to make the choice that is right for you.

AARP Resources
Medicare Savings Programs
Information about programs that help people with low-incomes pay for some of their Medicare costs.

Understanding Medicare, Medigap, and Medicaid
AARP explains how these programs work.

State-by-State, Plan-by-Plan List of Pharmacy Assistance Programs
Prescription discount programs offered by states, drug makers, discount cards and discount pharmacies.

Additional Resources
Medicare Personal Plan Finder
Information on costs, benefits, doctor choice and quality of the Medicare plans in your area.

Prescription Drug Assistance Programs
Lists the programs that offer free or discounted prescription drugs and the Medicare and Medigap plans in your area that offer prescription drugs.

State Health Insurance Assistance Program (SHIP)
How to contact your State Health Insurance Assistance Program (SHIP), an important Medicare partner. Free one-on-one health insurance counseling to people with Medicare

U.S. Agency for Health Care Research and Quality (AHRQ)
Lead federal agency conducting research on health care outcomes, quality, cost and use of health care services. Read "Your Guide to Choosing Quality Health Care."