Medicare is not a one-size-fits-all program. When you go into Medicare you have to make a number of choices.

The first choice is whether or not to choose a fee-for-service (FFS) or a Medicare Advantage plan. Fee-for-service means your doctor bills Medicare directly, Medicare pays 80 percent of your bill at the Medicare-allowed rate, and you pay a 20 percent co-pay.  You can supplement FFS with a Medicare supplement plan, which covers part or all of the co-pay. AARP offers the most popular supplement plans. You can also choose a Medicare Advantage plan, where your bills are submitted directly to a private insurance company, which has an arrangement with Medicare to administer benefits for you. Medicare Advantage plans usually charge monthly premiums, and they may also have co-pays.

If you choose Medicare Advantage, you are going to have to do a lot of research to find the best plan for you. Medicare Advantage plans vary widely, from plan to plan and state to state, from managed care, or HMOs, where you have to go to their doctors, to PFFP (Private Fee For Service), where you can go to any doctor who is willing to take your Advantage plan. Medicare Advantage plans also vary widely from year to year, depending on the level of government subsidy that year. Premiums and co-pays also vary widely. Medicare has been through cycles of funding generously and then pulling back on Medicare Advantage. The various plans sign a contract with Medicare every year, but when subsidies are reduced, some plans pull out of the program, so you can’t count on keeping the same plan forever.

In certain states the choice is easy: If you’re in California you can choose Kaiser or in Massachusetts, Pilgrim—both highly regarded companies. In other states it’s not so easy to choose.

“I’ve told sick beneficiaries that they should move to South Florida because the premiums are lower and the benefits are better in Medicare Advantage,” says George Jacobs, author of Managing Your Medicare. “In areas with higher utilization, Medicare Advantage gets more money, so [it] can provide better benefits.”

The first thing to do when choosing a Medicare Advantage program is to call your doctors and see which plan they take. Ask to speak to your doctor’s billing department and ask them which plan they recommend. Billing departments have the best overview of who reimburses for what.  

Balance Premiums Versus Co-Pays
Some Medicare Advantage plans charge very low or no monthly premiums but higher co-pays. If you’re in good health, don’t go to the doctor often, or don’t use specialists, a no-premium, high co-pay plan might work for you. But if you do see a lot of specialists, the co-pays might be too high. Some co-pays might be higher than you would pay in an FFS plan. The people who are helped most by Medicare Advantage plans are low-income seniors who are not on the Medicare Savings program, which covers monthly premiums and co-pays.  

Check the hospital deductible for your Advantage plan. When you go into the hospital, you will owe a big deductible up front ($1,156 for 2012), which covers your first 60 days. Once you pay that, you don’t owe anything more to the hospital. Interestingly, what many Advantage plans do is charge you a co-pay for the first few days, which can come to as much as the $1,156 with straight Medicare. However, unlike straight FFS Medicare, there are catastrophic illness provisions in Advantage plans, which limit out-of-pocket expenditure to about $3,400 per year. There’s no such limit in FFS.

Be aware that information about what’s going to be available for each upcoming year will become available in early October. The restricted period where you can join Medicare Advantage is from October 15th to December 7th. During that time you can switch from any plan to any other that’s effective on January 1st.

Where to Get Help:

  • Call your state’s SHIP (State Health Insurance Counseling Program). You can look up the 800 number for your state’s SHIP on the website, or look on the back of the white Medicare & You booklet you got from Medicare. They can walk you through the process of getting on the computer and looking for the best plan.
  • Call your local Department for the Aging. Most offer Medicare counseling.   
  • Visit, a free site supported by advertising that helps people figure out what plan to get. “We are compensated by health insurance companies but we don’t care what you buy, or if you buy. We are only happy if you are happy long term,” says vice president Michael Mahoney. The site starts offering advice on October 1st through software or phone chat.