Tuesday, November 17, 2009

Is there an IBM "best plan" choice? No

There is no "best plan". There are pros and cons to any option. Maybe if you start with your overall strategy and objectives. Uh, oh, that sounds so IBM. Another way of saying it in plain words - what is most important to you. For example - decide whether it is lowest monthly insurance premiums, maximum doctor and prescription flexibility cost be damned or maximum coverage for minimum cost. Then pick. What follows is some analysis for coverage for one person and does not include dental or vision coverage:
  • The cheapest monthly premium plan with the most flexibility is the IBM Medical Plan without drugs for zero premium, the medicare part B monthly premium ($110.50) and a separate Medicare D private insurance plan (national average premium is $33.20/month). You are betting $1,724.40 in 2010 that you will not get sick and not need much by way of drugs. If you do, the maximum out of pocket additional cost can be as much as $5,500 for medical and about $4,350 for drugs (at which point drugs are typically covered at about a 95% rate). The total downside of that bet is approximately $11,500 for the year.

  • The most flexible and most expensive montly premium plan is the IBM Prescription Drug plan ($166.00), the medicare part B monthly premium ($110.50), a top line private insurance insurance medigap policy such as plan J (estimate $250/month). You are spending $6,318 in 2010 (which is about a $4600 bet you will get sick as compared with the total premium cost above) to be covered. The maximum out of pocket you might face if you do get sick is the coinsurance on drugs.

  • The maximum coverage with the least flexibility comes with the Medicare Advantage plans. Medicare Advantage plans are provided by private insurers as an alternative to original medicare and have been around since 1997 because private insurers wanted a "piece of the senior insurance market". The government is subsidizing those plans over and above original medicare costs which is why they are able to offer more services. The current health care reform debate is circling around stopping those extra subsidies. Of those plans, Aetna PFFS is the most flexible and the cheapest but a doctor can drop out of the PFFS plan whenever they want which means you have to hunt to find another doctor that will accept the PFFS plan. Medicare Advantage plans can offer a great deal but you have to be willing to stay within their rules. For example, if you need a hip replacement your prosthesis choices may be limited. If you want a more advanced prosthesis (say ceramic) it is unlikely you can get it. You are also unlikely have an expert physician who has done hundreds if not thousands of operations for your particular hip replacement operation. On the other side, the medical cost containment of these plans is excellent.

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