by Rob Howard, Prime Timers Worldwide Editor
Like most of us, I watch for changes in Medicare. It is particularly interesting to me this year, because I turn 65 in April – my retiree healthcare policy terminates on March 31, after having it for nine years. I’m trying not to be overwhelmed, but really each of us could go through this every year, because every year you have an annual enrollment period when you can change plans, insurers, and restructure your health care for the next 12 months.
In addition, love it or hate it, the Patient Protection and Affordable Care Act of 2010 (or Healthcare Reform) also made several changes in Medicare – probably most for the better. But how to understand all the plans, changes, and data out there, and make an intelligent decision? Oklahoma’s Commissioner of Insurance calls it the “Medicare Maze.”
So, I will have to enroll in Medicare Parts A and B, and then dig through the maze of insurance plans to fill in the gaps, and provide me with something approaching the great drug coverage I’ve enjoyed for so long. Do I go with a Medigap policy? Or a Medicare Advantage plan? Should it have drug coverage or not? And if not, which Part D (drug coverage) plan should I purchase? You may be doing the same, or embarking on your annual review.
The first big thing I’ve learned after a few weeks of plowing through all the information is this: Whatever you think you know about your healthcare coverage check it out!
- I was sure that my health insurance coverage terminates on March 31. It does. But I thought that my former employer offered no Medicare Supplement plans. I was wrong about that – they do – and I have to look into that option.
- I was sure that, even though I am a veteran, I’m not eligible for VA coverage. And finding out if I am or not would be a huge task. Well, with the tender guidance of a friend who is covered by the VA, I at least looked into it. Because of my service, I may be eligible. And the VA has an easy to understand website that asks a series of questions, and then submits the application form electronically for consideration. I should know in a few weeks if I am eligible for VA healthcare.
- I was sure that my three doctors – an internist, a gastroenterologist, and a cardiologist – would be covered by the major companies, even in an Advantage plan. Wrong! Blue Cross/Blue Shield, for instance, doesn’t include my primary doctor in their Advantage network (but they probably do in their Medigap plans)
There are a lot of choices to be made! Join me in this issue as I explore the maze of the United States’ Medicare health insurance system for those over 65.
MEDICARE PARTS A AND B, AND SOME CHOICES
ORIGINAL MEDICARE PARTS A AND B
“Original” Medicare is hospitalization insurance (Part A) and medical insurance (Part B). Part A helps cover inpatient care in hospitals and skilled nursing facilities, hospice and home health care.
Coverage is based on a “benefit period” which begins the day you enter the hospital, and ends when you have been out of the hospital or skilled nursing facility for 60 days in a row. The deductible for each benefit period is $1,100 total for days 1-60, arguably one of the best deals in medical care.
But for days 61-90 you pay $275 a day, and for days 91-150 you pay $550 a day. After that, you are on your own. Part A also pays for skilled nursing facilities related to your hospitalization, with several conditions that must be met; home health care; hospice care; and some blood if needed. All of these services include deductibles and co-pays, some of them substantial.
Part B covers medical care including doctors’ services, outpatient medical services and supplies, diagnostic tests, outpatient therapy and mental health services, some preventive health care and a variety of other medical services. There is an annual deductible of $155, after which Part B generally pays 80% of the Medicare approved cost, and you pay 20%.
If you are drawing Social Security, you are automatically enrolled in those two programs. Part A costs nothing for most people; if you have less than 10 years of Medicare-covered employment, you can pay a premium to get Part A.
Part B currently costs $96.40 for most people, although those who sign up in 2010 pay $110.50 per month. If your income in 2008 was more than $85,000 you will probably pay more. You have to have Part A and B to qualify for any Medigap plan, any Medicare Advantage plan (Part C), and any Prescription Drug plan (Part D).
Medicare Parts A and B are the basic requirements for any reasonably priced medical care if you are over 65 and not employed.
HERE’S WHERE IT GETS COMPLICATED
Original Medicare provides good basic coverage, but most people need help with the deductibles and the cost of drugs. Here’s where it gets complicated, mainly because there are so many different plans and players in the field. The players are all insurance companies.
- You can buy a Medigap (Medicare Supplement) plan, which pays for some or most of the copayments, coinsurance, and deductibles in Parts A and B. They do not include drug coverage. Generally, you can continue to go to your current doctors if they are Medicare participants.
- You can buy a Medicare Advantage plan (Part C), which provides all Part A and B covered services, and may provide additional benefits; most Advantage plans include prescription drug coverage. You may have to go to network doctors or hospitals, and the benefits and cost-sharing may be different than in “Original” Medicare.
- If you have either a Medigap plan, or an Advantage plan that does not include prescription drugs, you can buy a Prescription Drug plan (Part D) that will help you with the cost of your prescription drugs.
In Oklahoma, there are 46 Medigap providers, 20 Advantage plans with drug coverage, and 9 without, and 46 Prescription Drug plans.
BUT THERE IS HELP
Fortunately, there is help at www.Medicare.gov – this is an excellent, excellent website, with easy access to many tools to identify providers, and in the case of Advantage and Prescription Drug Part D plans, filter down to plans that most meet your needs. You can enroll in an Advantage or Part D plan online at the Medicare website.
There is a lot of well organized information, and you can both view, or order a printed copy of a variety of publications that will be helpful in giving you detailed overviews of your Medicare benefits (I’ve listed some of these publications in a box accompanying this article.)
MEDIGAP OR MEDICARE SUPPLEMENT PLANS
And if you are not a computer user, or don’t feel comfortable sifting through the huge amounts of information you will find online, you can also seek help from the Medicare Helpline at 1-800-MEDICARE (1- 800-633-4227.) The Medicare Helpline can answer most questions, and can enroll you in the plan you choose. You can also call your State Health Insurance Counseling and Assistance Program (SHIP). You can find their numbers on the Medicare website, or the Medicare Helpline can give them to you for your state, or in the Yellow Pages.
MEDIGAP OR MEDICARE SUPPLEMENT PLANS
Medigap (or Medicare Supplement) plans cover some or most of the deductibles and co-pays for Medicare Parts A and B. There are 10 different Medigap plans (identified by letters (A, B, C, D, F, G, K, L, M and N) available (and some variations such as “F High Deductible, and “Select”).
All provide coverage for Part A coinsurance up to an additional 365 days after Medicare benefits are used up, full or partial coverage for Part B coinsurance, and full or partial payment of Part A Hospice Care coinsurance or copayment. Nine pay all or part of the Medicare Part A deductible ($1100 per benefit period, a not insignificant cost.) Only six cover foreign travel emergencies.
In general, you can get a Medigap policy without restriction in the six months beginning the first day of the month in which you are eligible for Parts A and B. After that period, and with some exceptions, an insurance company can refuse to sell you a policy, or not cover pre-existing conditions for six months.
There are 46 insurance companies in my state (Oklahoma) providing Medigap plans. Even though a plan with the same letter contains the same provisions regardless of the company, the costs vary widely. For instance, an “F” plan appears to be the most comprehensive; prices for that plan range from $74 to $202 per month. 23 companies offer the high deductible “F” plan which provides the same range of coverage, but only after you have paid $2000 in a year. Those range from $19 to $60 per month.
In Texas there are 32 companies providing Medigap plans; in Florida, 8 (and probably more in some areas); in California, 33.
Help in finding companies that provide Medigap plans in your area
To find what Medigap plans are available in your area, and which insurance companies offer them, go to www.medicare.gov; select “Resource Locator” on the menu bar; select “Medigap Policies” and fill in the information for your area and answer two questions, then click “Continue” to see a summary of Medigap plans. To view more details about each plan, click on “View Details” under the plan letter. You’ll see a summary page of the benefits provided by that Plan.
On the right of the screen is a topic “Where to buy policy” and under it is a button labeled “View All Companies,” click on that, and you will get a complete list of all the companies with their phone numbers, and in most cases their website address. Click on the web address to go to a company’s website.
Unfortunately, when you go to a company’s website, you are on your own. You will have to search for the pages that give Medicare Supplement plan information. Some will provide the monthly cost for their plans. Most do not. These websites are marketing tools to get you to call their agents for more information, and a sales pitch.
Some of the websites are wonderful, some terrible. Since I judge a company by its website, if it lacks information, or makes things more confusing , I don’t consider that company further.
Most companies will be happy to send you their plan information in the mail – I’ve gotten quick responses receiving very informative packages with full rate information from AARP/UHC, BlueCross / Blue- Shield of Oklahoma, and Mutual of Omaha. I’ll be searching a few more in the future.
You may wait a few weeks for their most up-todate information about 2011 plans, because there are significant changes resulting from the Health Care Reform act of 2010. Open enrollment starts November 15 this year, so most plans will have all their marketing materials updated this month.
MEDICARE PRESCRIPTION DRUG PLANS (PART D)
Everyone with Medicare can join a Medicare Prescription Drug plan (Part D) to help lower prescription drug costs and help protect against higher costs in the future. There are a lot of choices for Part D plans, for instance, 46 plans in my state.
Drugs are listed in what is called a “formulary” which is a list of the drugs that the plan will cover. You should be sure that each of the drugs you take, or one with the same effectiveness, is on this list. Each plan has a different formulary.
Part D plans work through three stages. In the first stage called “Initial Coverage”, after you pay a deductible that can’t exceed $310, you pay 25 percent (and sometimes less) of the cost of your drug. In this stage, your cost will be about $700 plus your deductible.
When you and the insurance plan have together paid $2830 for your drugs, you enter the “Coverage Gap,” which is usually called the “Donut Hole.” While in this “gap,” you pay the full cost of your drugs, until the amount you have spent in the first stage and the “gap” equals $4,550.
After that, you enter the “Catastrophic Coverage” stage, meaning that, for the rest of the year, you pay about 5% of the cost of your drugs, and your plan pays the rest. In addition, you will pay the monthly premium for the drug plan.
Paying attention to your drugs is important. In my case, changing just one drug to another that I know is effective, makes 35 plans available; without the change, only 8. You may be faced with similar situations for a drug you take. You can work with your doctor to find a more widely covered drug, with the same effectiveness, which is covered by more plans and/or costs less. There are often lower cost “generic” drugs available as well.
CHANGES DUE TO THE HEALTH REFORM LAW IN 2010
- Beginning in 2011, you can get help paying for a yearly Wellness Exam, basically, a physical.
- In 2010, when seniors reach the “donut hole” they receive a $250 check.
- In 2011, when they reach the “donut hole” they will be able to get a 50% discount on brand name drugs, and 7% on generics. For me, this is a savings of $1,828 dollars a year.
- Beginning in 2011 the Open Enrollment period for Advantage plans and Prescription Drug plans will be October 15 through December 7.
- There will be an Annual “Disenrollment Period” for Advantage plans between January 1 and February
- 15 each year if you find you don’t like Advantage plans.
With a drug plan in 2010, my drugs would have cost $4,559 a year. Fortunately, the “Powers That Be” recognized that this is economic catastrophe for most people.
GOOD NEWS FOR THOSE IN THE “DONUT HOLE”
In 2010, people who entered the “Donut Hole” got a $250 check to help them out. Starting in 2011, when people are in the “Donut Hole,” they will get a 50% discount for brand name drugs, and a 7% discount for generics. That means that in 2011, my prescriptions will cost me $2,730 - still almost three times what I have been paying, but a significant savings. Under the health care reform law, the “Donut Hole” will close completely by 2020.
AND GOOD NEWS FOR THOSE WITH LIMITED INCOME AND RESOURCES
In addition, there is “extra help” on drug plans for those who meet income and resource limits. Best way to find out if you qualify? Through your local Social Security office, or on the web at www.socialsecurity.gov, or at your State Health Insurance Assistance Program (SHIP.)
Some of these publications may be reissued due to changes by the Health Care Reform Act. The most current publication is listed on the website, where you can either order publications, or download them in pdf file format. To view or order them, go to www.Medicare.gov. You can also call 1-800-MEDICARE to order a printed copy.
- “Welcome to Medicare” A basic overview of Medicare and the key decisions people who are new to Medicare have to make.
- “Medicare and You” A summary of Medicare benefits, coverage rights, and FAQs
- “2010 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare”
- “Understanding Medicare Enrollment Periods”
ADVANTAGE PLANS (PART C) AND PLAN FINDER
Medicare Advantage Plans are health plan options that are approved by Medicare and run by private companies. There are two main types of Advantage plans:
- Health Maintenance Organizations (HMO).
- Preferred Provider Organizations (PPO). Similar to an HMO, but members can generally see any doctor including specialists that accepts Medicare. Network doctors usually cost less.
And three other types that include Special Needs Plans (SNP) usually limited to certain groups; Private Fee-for-Service (PFFS) plans where the plan decides its share and member’s share for services; and a Medical Savings Account (MSA) plan, a plan with a high deductible, and a Medical Savings Account funded by Medicare.
Advantage plans cover all Part A and B Medicare services, and some of them provide prescription drug coverage as well. Medicare pays a set amount of money for your care every month, whether or not you use services. Some of the plans (mainly HMOs) may limit your doctors and hospitals to their network. Benefits and cost-sharing in an Advantage plan may be different than in Original Medicare.
These plans are popular with a lot of seniors because they often have lower premiums than Medigap plans and include drug coverage. However, because of the way the plans are structured, and the difference in cost-sharing between these and Medigap policies, low premium doesn’t necessarily equate to lower overall costs for the year. You have to pay attention to the details. Fortunately, those details are available in the Plan Finder section of medicare.gov.
USING THE PLAN FINDER TO CHOOSE ADVANTAGE AND DRUG PLANS
In addition to all the other information at www.Medicare.gov, perhaps the centerpiece of the website is what they call the “Plan Finder.” If you haven’t used it recently, it has undergone a major rework and is even better than ever. The “Plan Finder” can help you see all the Medicare Advantage and Prescription Drug plans available in your area, and narrow them down by a set of filters which you choose yourself. By October 15, they expect to have new plan information for 2011 online.
To use the Plan Finder you enter your Zip code, answer a couple of questions, enter your prescription drugs, doses, frequency, choose two pharmacies for comparison (or none if you wish), and save your drugs. Don’t worry, your name isn’t associated with the list. You want to save the list! (I printed it out so I had the List ID and my password.) Otherwise, every time you visit the Plan Finder, you will have to put in all your prescriptions again.
Once you proceed to the results, you can filter the plans displayed. For example, you might want to limit the premium for the drug plan, the deductible you pay, and select drug options. I generally choose “have all my drugs on formulary.”
Click “Update Plan Results” and then “Continue to Plan Results,” and all the plans that meet your specifications will be listed. From there, you can click on the name of the plan that interests you to get an overview, and on the “Health Plan Benefits” or the “Drug Costs and Coverage” tabs to see detailed information, including medical deductibles, drug costs, and a whole lot more. At the time I was writing this article, the 2011 discounts for drugs while in the Donut Hole are not included in the calculations. You can also compare plans.
If you want to choose a plan, you can even enroll online by clicking the “Enroll” button.
THINGS TO WATCH OUT FOR
- Pay attention to the details. Deductibles and copays vary from one plan to the next.
- Look for ways to save money. For instance, mail order prescriptions can say you a lot over a year.
- Watch for “This drug may be subject to prior authorization, step therapy or quantity limits. View plan details or contact the plan for more information.” To get the drugs you need, be sure you have a doctor who will go to bat for you.
This has been a quick review of Medicare and the options available. The www.Medicare.gov website is a comprehensive and easy to use location to get answers to all your Medicare questions. You can also call 1-800-MEDICARE, or your State Health Insurance Counseling and Assistance Program (SHIP) for help. Good luck in your annual excursion through the Medicare Maze. I hope this has been a helpful review for you.
- Rob Howard