What To Do When Your HMO Quits: Know the Rules When Shopping For Health Plans

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What To Do When Your HMO Quits: Know the Rules When Shopping For Health Plans

Choosing a new health plan this fall will be tough. There are fewer plans, higher out-of-pocket costs, and limited information to help you compare plans. Every October the administrators of Medicare are required to mail some basic consumer information about Medicare managed care plans in your area. The booklet “Medicare & You” explains the general program and explains your choices. You should be receiving a copy soon, or download a copy online at http://www.medicare.gov/Publications/Home.asp.

If you receive a notice that your Medicare HMO is discontinuing service, you need to know the following information. Depending on where you live, you may have up to three types of Medicare arrangements to choose from:

The Original Medicare Plan which most beneficiaries supplement with a Medigap policy. This is the type of plan most beneficiaries have, available everywhere in the U.S. You may go to any doctor, specialist or hospital that accepts Medicare.
Another Medicare Health Maintenance Organization (HMO). Under these plans, you have a primary care physician who must refer you to specialists within the plan network. These plans may offer additional benefits such as prescription drugs.
A Private Fee-For-Service plan, which is NOT the same as original Medicare fee-for-service. These plans are new and limited in the areas they serve. Although they allow the freedom to see any doctor, your out-of-pocket costs may be very different than what is allowed under traditional Medicare and may be higher.

If your Medicare Health Maintenance Organization (HMO) discontinues service by the end of the year, you will still remain covered by Original Medicare, but you will need to decide whether to shop for a new Medicare HMO or a Medigap plan to be used with Original Medicare. In 2003, you can still enroll and disenroll from Medicare HMOs at any time during the year due to a rule change signed into law by President Bush on June 12, 2002.

If your HMO is no longer participating in Medicare at the end of this year, in October you should receive a letter notifying you. Make a copy of that letter-you may need it as proof of disenrollment. For more information, read “Ask the Advisor What is a Medicare Managed Care Disenrollment Form?” at http://www.tscl.org/NewContent/101046.asp. The letter should also tell you if any other Medicare managed care plans would be available in your area for 2003.

If you're comparing Medicare HMOs to Original Medicare with a Medigap policy you'll need to be familiar with the following rules:

If your Medicare HMO discontinues service at the end of this year, you have from October 1 until December 31 to enroll in a new policy that will take effect no later than January 1, 2003. You are guaranteed the right to buy Plan A, B, C, or F, regardless of your health status, but none of these policies offer prescription drug coverage. You may also be able to buy other Medigap plans that offer prescription drug coverage if they are offered in your state, but the guarantee that you can't be refused may not apply.
If you received a letter from your HMO notifying you of its withdrawal from Medicare next year, apply for a Medigap policy by late November to ensure coverage starting January 1, but DO NOT disenroll from your HMO. You will be automatically disenrolled on December 31. If you disenroll prior to December 31, 2002 you lose the above federally guaranteed right to coverage.

Special Tip on Disenrollment Rules:
You may have special rights to a Medigap policy if the following refers to you:

You joined your Medicare HMO within the last 12 months when you first became eligible for Medicare. In that case you may choose from all the Medigap policies offered in your state. To qualify you must disenroll and buy the policy before the 12 month period ends and before December 31, 2002, or
Before joining your HMO you had Original Medicare supplemented with a Medigap policy and you have been enrolled for less than a year. You have a right to repurchase your old policy if still sold.

Current information on managed care plans available in your area is available at 1-800-633-4227 and can be found on the Medicare web site at http://www.medicare.gov. Once on the site, click on "Medicare Health Plan Compare," then key in your state, and zip code. Many libraries and senior centers can help with web site access and information.

If faced with the daunting task of finding a new plan your state has free health insurance counseling assistance. Take advantage of the service. You may get the number for your State Health Insurance Assistance Program by calling 1-800-MEDICARE (1-800-633-4227) or the Eldercare Locator (1-800-677-1116). Or go to the Eldercare Locator web site at http://www.eldercare.gov.

The Medicare Rights Center, a national non-profit consumer service organization has a variety of publications to help you get the most from your Medicare choices, including tips on what to do if your HMO is discontinuing service. To learn more visit, http://www.medicarerights.org or write: Medicare Rights Center, 1460 Broadway, 11th Floor, New York, NY 10036.

Comprehensive consumer information about shopping for Medicare HMOs and Medigap plans can be found in Consumer Reports Complete Guide to Health Services for Seniors by Trudy Lieberman & the Editors of Consumer Reports, paperback, 568 pages, $19.95. 800-500-9760. This comprehensive book provides a solid foundation for helping you to understand what the options are, and what's best for you. It contains complete listing of Pharmaceutical Assistance Programs. Highly recommended.

Sources: "Nothing's Quiet on the Medicare Front," Kiplinger's Retirement Report, August 2001. "Protecting Medicare Beneficiaries When Their Medicare+Choice Organization withdraws," CMS fact sheet, September 27, 2001.

Updated 8/02/02.