Before reading the article below, two quick tips for new Medicare Beneficiaries:
1. Agents cannot telephone you regarding Medicare insurance plans without first having your ink and paper written permission, or having it on a detailed audio recording. Unfortunately, all too often this law is ignored.
2. It is important for you to wait until you have received your Medicare card, before enrolling in supplemental or Advantage plans. See more detailed instructions in the article below.
This article by Tom Russell appeared in the September 15, 2015 AND a year later in the September 20, 2016 editions of the Payson Roundup Newspaper, in the “Your Health” Section. This is an educational article, with no discussion of particular companies and their plans. For many years, Tom has been a frequent invited writer for our beloved local paper.
Understanding Your Options as a Medicare Beneficiary
by Tom Russell – Independent Health Insurance Broker
Medicare provides choices to beneficiaries as to how they receive their Medicare benefits. It’s an important decision and merits careful consideration. All too often people rush into a decision at a public seminar, or buy what their sister or neighbor has, which might be a poor decision for their own particular needs.
Fundamentally, there are three ways to receive one’s Medicare benefits:
1. Original Medicare, and the option of adding a Part D Rx drug plan.
2. Original Medicare and the addition of a Medicare Supplement, and the option of adding a Part D Rx drug plan.
3. Medicare Advantage, also known as Medicare Part C.
Medicare Part A
Original Medicare is divided into Parts A and B. (Part D is for prescription drug coverage). For example, Medicare Part A is primarily for hospital admissions. In 2017 there’s a $1316 hospital deductible per period of care, which is 60 days.
Medicare Part A has daily co-pays for unusually long hospital stays, starting at day 60, and it has a 2017 $164,5o per day co-pay for extended skilled and rehabilitative care on days 20 through 100. This is for a skilled level of medically related care – not custodial care. Medicare does not cover long-term care.
Medicare Part B
Medicare Part B covers doctor visits, outpatient surgery, ambulances (including air vac), emergency room visits when NOT admitted, tests and diagnostics, etc. In 2017 Medicare Part B has a $183 one time annual deductible, then Medicare pays 80% of approved charges. Providers can elect to charge an additional 15% called the “Excess.” When a provider “accepts assignment” it does NOT mean she is waiving the 20%, but that she does not charge the additional 15%. The beneficiary is still liable for the 20%.
In 2017 for those new to Medicare there’s approximately a $134 monthly charge for Medicare Part B (could be less if you’re already in Medicare). Those with higher incomes may pay more. If a beneficiary starts taking Social Security benefits at age 62, they will automatically be enrolled in Medicare Part B. If delaying Social Security benefits, one will need to contact the Social Security administration a few months before turning 65. Medicare coverage starts the first day of the month you turn 65.
Traditional Medicare Supplements
Medicare beneficiaries may elect to add a Medicare Supplement to help address these gaps. Medicare establishes the template for coverage, and insurance companies offer that particular template at a given price. This makes it easier for beneficiaries to compare plans from company to company, since a given letter plan is identical coverage.
Then why not just buy the cheapest one? One reason is ongoing yearly rate increases. All insurance companies can and do raise rates. Some insurance companies might offer a low price the first year, with definite marketing strategies to raise one’s rate (perhaps dramatically), starting next year, or sooner.
“No problem. I’ll just change to a different company if that happens.” Not so fast. When someone is turning 65, or getting Medicare Part B for the first time, they have a “Guaranteed Issue” window. The insurance company is required to take them without qualifying health questions. But in Arizona (some states differ) once this window closes one might be unable to answer the health questions to qualify for coverage with a different company. Thus, a company that charges more the first year may be a better, less costly and more secure choice for the long run.
Types of Medicare Supplements
Beneficiaries have choices of Plans A, B, C, D, F, G, K, L, M, N and high deductible Plan F. Fortunately Medicare provides an excellent chart and other resources to make help clarify the choices. Still, it can get at least a little confusing.
I call Plans F and G the Cadillac plans. Plan F covers all the gaps, if Medicare first approves the charge. Plan G covers everything that F does, except the one time Part B yearly deductible. It is well worth noting the difference in premium one pays for Plan F when compared to Plan G. Often it’s wise to pay the Part B deductible yourself, and save money with a Plan G.
Plan N could be considered a mid-level plan, and usually has a lower premium. It covers the Part A hospital charges the same as plans F and G; however, on Part B one pays the annual deductible (as one does in Plan G) but also picks up a $20 co-pay for doctor visits. Unlike Plans F and G, Plan N does NOT cover the 15% Excess.
With a traditional Medicare Supplement one needs only ask if the provider accepts Medicare. All Medicare Supplements (whichever one you choose) work with original Medicare in the same way. You never need to check if a provider takes a given company’s Medicare Supplement. One of the pluses of traditional Supplements is you need not worry about a limited network of providers, nor do you need to get referrals to see specialists. It’s all based on original Medicare.
Medicare Part D
If a beneficiary elects original Medicare or original Medicare with a supplement, they can elect to add prescription drug coverage. A window opens when they first become eligible for Medicare (including Medicare Disability Beneficiaries under age 65). Plus, a window to change Part D Rx plans occurs every year between October 15th and December 7th. Anyone can elect to change Rx plans during the Annual Enrollment Period without having to answer qualifying health questions.
www.medicare.gov is an excellent website. Just enter your prescriptions and the computer shops all the plans offered in your area. It’s wise to compare your prescription drug plan every year during the Annual Enrollment Period. Your plan may change its formulary (list of available prescriptions). What was covered this year may not be covered the next year, or it could be placed in a different tier (co-pay).
Medicare Advantage – Part C
Medicare Advantage usually combines Medicare Parts A, B and D into one program. Some companies add limited coverage for dental and/or vision. Your choice of Medicare Advantage plans depends on where you live. The plan must offer coverage in your county of residence.
Medicare Advantage plans work differently than original Medicare. In fact, Medicare Advantage is NOT, I repeat, is NOT a Medicare Supplement. It is against regulations for agents to refer to it in this way, or even hint that it is the same.
Companies that offer Medicare Advantage plans are required to thoroughly train and test their agents every year. The plan’s “Summary of Benefits” must be reviewed, and several crucial disclosures must be made. A decision to enroll in a Medicare Advantage plan should never be made quickly, for example at the end of a marketing seminar “just because other people are signing up.”
Take the information home. Review it carefully. Ask questions. Be clear about all the co-pays and potential out-of-pocket expenses. Check the provider directory and the prescription Rx list. What can be attractive is (usually) a lower monthly premium. However, a lower premium does not necessarily mean lower cost.
Furthermore, when beneficiaries join a Medicare Advantage plan they may not be able to answer the health questions to qualify to get their Medicare Supplement back. Medicare does provide a one year trial period in certain situations, for example, if one enrolls in Medicare Advantage when they first become eligible for Medicare at 65. See Section 3 on page 21 of Medicare’s publication Choosing a Medigap Policy for a list of guaranteed issue situations.
In most cases a Medicare Advantage enrollee must take the drug coverage that comes inside the plan. You cannot get a Medicare Advantage plan and add a separate Part D drug plan. If you do, you will be dis-enrolled from the previous plan you signed up for. This can be true even if the Medicare Advantage HMO or PPO plan you chose does not have a drug benefit. It’s true on all Advantage plans except a Private Fee for Service (PFFS) plan that does NOT have a drug plan.
Explore your options and be well-informed. If you choose to work with an agent, ask if they are independent and represent several companies, or if they are a “captive agent” with only one. A captive agent may still be experienced and helpful — you simply need to know. Medicare itself provides excellent publications and websites to assist you. When you take the time to understand your options, you always feel better about your choices.
About the Author: Tom Russell is an independent health insurance broker with 23 years of health an life insurance service to the Rim Country. (928) 474-1233 — 1.800.745.3570