He retired five years ago after a 23-year career with AT&T, using company-sponsored plans for his health care. When he turned 65 in 2003, Farbanec enrolled in an Aetna Medicare HMO through AT&T, and when his wife Bernice became eligible, she signed on, too.
Then last December, the Cranford man received the annual Medicare booklet and decided to compare his plan to other available coverage.
He found an individual Aetna plan — one of several offered in his county — that he thought had more benefits for a cheaper premium: $208 per month for the couple, compared to the $349.70 per month he’s paying for the AT&T plan.
“I kept looking for catches,” said Farbanec. “It was a generally accepted belief that any group health plan sponsored by a major corporation would be cheaper and offer better coverage than any individual plan.”
After writing several letters to the AT&T benefits department and company executives, Farbanec said he didn’t get an answer for the large disparity. Thinking AT&T may not be offering the best possible health care plans to retired employees, he contacted Bamboozled.
Major corporations like AT&T have leverage and bargaining power to negotiate with health insurers, and company offerings are often subsidized by the employer. AT&T, for example, spends $5.5 billion a year to subsidize health costs for 1.2 million people: 747,000 active employees and dependents and 485,000 retirees and dependents.
Those subsidies, plus the lower premiums usually offered for large groups, generally yield a lower health care bill for those who take advantage of the plan.
“It would be hard for me to see many situations where an open plan would compete with what we provide,” said Marty Webb, vice president of benefits at AT&T.
Farbanec doesn’t see it that way. For him, this particular individual Aetna plan does appear to be a better choice. It has lower out-of-pocket costs for hospital stays, more generous coverage for hearing aids and lower co-pays for primary care physician and specialist visits compared with the AT&T plan.
Another variation is prescription coverage, but this one is in the AT&T plan’s favor.
For example, on the individual Medicare Aetna plan, once total drug expenditures reach $3,200, there’s coverage for generic drugs only during the so-called “gap” period. Coverage kicks in again when the member incurs out-of-pocket costs totaling $4,350 for the year.
The AT&T group plan offers both generic and brand name coverage during that period, so essentially there is no “gap,” said Aetna spokeswoman Cynthia Michener. Depending on the drug needs of a plan member, the AT&T plan could give significant savings.
But if prescriptions aren’t an important consideration, the individual Aetna plan may offer more overall savings.
“A retiree whose prescription drug use is limited to one or two generic drugs but has a medical condition that requires frequent hospitalization might fare better on the individual plan,” Michener said.
Under the AT&T plan, a four-day hospital stay would cost $800, compared with no cost for the individual plan.
If Farbanec enrolled in the individual plan, he’d see annual premium savings of $1,700.70. He said that far outweighs the drug benefit “gap” savings of the AT&T plan, especially when considering other benefits, such as lower co-pays for doctor’s visits.
“Tell me what I’m missing here,” said Farbanec. “Maybe their basic arithmetic skills are not quite up to par.”
AT&T’s Webb said the company offers several plans for both retirees and active employees so each person can choose the benefits and premiums that are best for them.
The company reviews its health insurance offerings on an annual basis to make sure they’re performing as designed, said Webb, but so far it plans no changes to its offerings.
“We’re happy with their performance,” he said.
Farbanec said for him, the choice is clear. He will wait until the open enrollment period to see if AT&T changes its offerings. If not, he plans to switch to the individual plan. Farbanec has a safety net: if he drops his AT&T coverage, he retains the option to rejoin during the next open enrollment period if he’s not satisfied with the individual plan.
DO YOUR OWN RESEARCH
Saying any health insurance plan is “the best” or “the cheapest” is a very subjective call. Every patient has different needs, so two people could see a variety of advantages or disadvantages with the same plan. Don’t take anyone else’s word for it. Don’t assume your employer’s coverage is superior. Do your own research.
The Medicare web site (www.medicare.gov) offers a comprehensive comparison tool for Medicare plans. Most health insurance companies offer detailed plan descriptions on their own sites, but consumers need to realize coverage can be very different even on a county-by-county basis, and not every plan is available in every geographic location.
Have your company plan details in hand and invest some time online to compare individual policies offered in your area.
For help in understanding how health care insurance works and how to choose the plan that’s best for your family — both in cost and in benefits — check the website of the Agency for Healthcare Research and Quality (www.ahrq.gov), offered by the U.S. Department of Health and Human Services. In the “For Your Health” section, click “Choosing Quality Care.”