HMO or traditional Medicare?

For seniors who would like to cut insurance costs, this may be the moment to join a Medicare HMO or PPO. Such arrangements, called Medicare Advantage Plans, usually--but not always--charge an extra monthly premium. That's in addition to the $88.50 monthly premium you'll pay in 2006 for Medicare Part B. But the total will generally cost less than traditional Medicare plus a Medigap plan.

Medicare Advantage members often have lower out-of-pocket costs and sometimes receive services not covered by Medicare, such as eyeglasses and dental care. And HMOs now may offer the new drug benefit as part of their overall package for little or no extra premium. Members must, however, use the doctors, hospitals, and pharmacies within the plan network.

If you want to change from traditional (also refered to as original) Medicare to an Advantage plan, you can use the search tool on the Medicare Web site to find one. When you switch, you may never again have to think about Medicare's prescription drug benefit unless and until you leave your managed-care plan.

What if you're already in an HMO? You probably have already received a letter from the plan telling about the new coverage. You don't have to buy a Medicare drug plan; you get what your HMO offers. If you want to stay with traditional Medicare, however, you'll be shopping for one of the new Prescription Drug Plans, also known as PDPs.