Taking Care of Mom and Dad: Medicare HMOs

Due to the increasing costs of Medicare supplement policies, many seniors are switching to managed care plans. In 1998, the federal government estimated that some 70,000 Medicare recipients a month were switching to some form of managed care. At that point, of the 38 million seniors and disabled eligible for Medicare, almost 6 million were enrolled in a Medicare HMO.

Medicare HMOs combine the benefits of Medicare and Medigap policies all in one. However, some people who've used these HMOs complain about the bureaucracy and non-responsiveness that seems typical of managed care programs.

Even though there are some complaints, Medicare HMOs can be a cost-effective alternative. The federal government funds most of the revenue for the plans, which makes the cost to your parents about the same as the premium they'd normally pay for Medicare Part B ($54 a month in 2002) -- depending on membership, geographic location and other factors that influence the HMO's cost structure.

Items such as eyeglasses and prescription drugs are covered under most HMOs. As long as your parents have Medicare Part B, continue to make the payments and live in a service plan's area, they're usually eligible for enrollment without health screening.

Your parents can find the names of HMO plans in their area by calling their state's insurance office. Once they enroll in a Medicare HMO, they can switch back to Medicare anytime; however, they may not switch back to a Medicare supplement policy they previously had without the insurance company's permission. And, they can be sure the company will review their health record if they do.

Problems with switching back are the reasons that some smart seniors hang on to their Medigap coverage while enrolled in an HMO. Doing so assures continuous coverage under the supplement if they go back to traditional Medicare service.

The other managed care option your parents have is through a program called Medicare Select. Basically, this is another form of Medigap insurance sponsored by the federal government. Congress proposed Medicare Select in 1990 as a pilot program for those seniors who wanted some level of choice in where and with whom they could secure health services. Service delivery is in the form of a Preferred Provider Organization (PPO) and provides standard Medicare supplement benefits.

If your parents buy a Medicare Select policy, they are buying one of the standard Medicare supplement policies. They can purchase a policy through an insurance company or HMO -- but be sure to inquire which policy they are buying. When they enroll in a Medicare Select policy, your parents choose a physician or medical provider from a list provided by the insurance company of "preferred providers." To receive full benefits, they must go to this provider.

If your parents choose to go elsewhere, Medicare Select policies are not required to pay any benefits for non-emergency services.