Dear Savvy Senior

How much will the new health care reform law affect Medicare Advantage? My wife and I have used an Advantage plan for the past three years and would like to find out if we should stay with what we have, or go back to Original Medicare. What can you tell us?

Concerned Retirees

Dear Retirees,

It is true that the new health care reform law will affect many seniors who have a Medicare Advantage plan, but how much change you can expect will depend on where you live and the plan you have. Heres what you should know.

Less Advantaged

Right now, around 24 percent of Medicare beneficiaries receive coverage through one of thousands of Medicare

Advantage plans rather than Original Medicare. Advantage plans private Medicare plans sold by insurance companies that are typically available through HMOs and PPOs

have become enormously popular over the past few years because they offer a host of extra benefits that Original Medicare doesnt provide like free eyeglasses, dental care, hearing aids and even gym memberships.

These extra benefits, however, have come at an extra cost. Since 2006, Medicare Advantage plans have received government subsidies that have been costing around 13 percent more than traditional Medicare.

But thats about to change. Starting next year, as a result of changes under health care reform, Medicare Advantage payments will be frozen at the current levels. And starting in 2012, Uncle Sam will begin reducing payments over the next two to six years to the insurers that administer these plans until theyre getting the same amount of money, on average, that Original Medicare spends.

What all this means is that many of the 11 million seniors that have a Medicare Advantage plan can expect their premiums to gradually increase or the extra benefits to be reduced, or both, over the next few years. And some insurance companies may stop offering Medicare Advantage altogether.

But, not all Medicare Advantage plans will be affected. Payment cuts will depend on whether Medicare costs in your county are high or low. And starting in 2012, high-quality plans that have been around for a while and receive a 3.5 to 5 star government rating will be rewarded with bonus payments from the government that will offset some of the fee cuts. These plans will most likely continue operating with few changes. Newer and low-quality plans are the ones that will change. To check how your plan rates visit www.medicare.gov.

What To Do

Your best course of action is to review your Medicare Advantage plan this fall you can expect to receive a mailing from your insurer sometime in October explaining any cost and/or coverage changes.

If you find that your insurer is dropping your plan, or if you dont like how your plan changes in the upcoming year, you can always switch to a different Advantage plan or move to Original Medicare during the annual open enrollment period, which is between November 15 and December 31. You can also make the switch during the Medicare Advantage open enrollment which is the first 45 days of 2011, between January 1 and February. If you do decide to go back to Original Medicare, youll probably want to purchase a Part D prescription drug plan and a Medigap supplemental policy to help cover deductibles and co-pays.

You can shop and compare all Medicare health plans, prescription drug plans and Medigap policies at www.medicare.gov/find-a-plan. Or, if you dont have Internet access, call 800-633-4227 and a Medicare representative can do the comparing for you over the phone.

Savvy Tips: If you need additional help or have questions, call the Medicare Rights Center helpline at 800-333-4114, or contact your State Health Insurance Assistance Program (SHIP) which provides free one-on-one Medicare counseling in person or over the phone. To find a local SHIP counselor visit www.hapnetwork.org/ship-locator, or call 800-677-1116.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org.

Jim Miller is a contributor to the NBC Today show and author of The Savvy Senior book.