ASK KIM
The Price of Free Insurance
by Kimberly Lankford

I recently I received information about Senior Secure Supplement insurance from Blue Cross of California. The solicitation says the monthly premium is nothing. How can that be?

The California plan is one of the few medicare HMOs that doesn’t charge a premium beyond what you pay for medicare Part B. When medicare HMOs were introduced in the 1970s, a key selling point was the extra coverage came at no extra cost. Now, 62% of enrollees in Medicare Advantage plans (most of which are medicare HMOs) pay a monthly fee. In 2003, the extra charge averaged $60.50 per month, according to the Kaiser Family Foundation.

The plan you’re being offered is an exception to the trend. But before you sign up, be sure you understand that with an HMO you’ll be limited to a certain group of doctors and hospitals -- any of which can pull out of the program. The number of plans has dropped significantly, from 346 in 1998 to 145 in 2004, leaving more than a million seniors scrambling for alternate coverage. And although premiums may be nonexistent, your total costs could be higher than with a policy that comes with a price tag. Out-of-pocket expenses for people with Medicare Advantage plans (including premiums and cost-sharing) have nearly tripled since 1999, according to the Kaiser Family Foundation, from $429 per year to $1,260 in 2003.

A medicare supplement policy (also known as a medigap plan) may charge more per month but covers any doctor in the U.S. To compare prices and coverage for HMOs and medigap policies in your area, visit your state insurance department’s Web site (see our insurance page for links to each state’s insurance department) or go to Medicare.gov’s Medicare Personal Plan Finder.