Working Past 65 and Medicare

Approaching retirement age?  Working past age 65?  You still have Medicare choices to make.  If you choose poorly, you’re going to be out quite a bit of money for coverage you don’t need.  The options are a bit confusing.  This post will help you understand your options.

The latest research is showing more and more people are working past the typical retirement age of 65.  Not only does it seem to be good for your health, but it’s good for your wallet, too.

In May of 2016, Pew Research reported  18.8% or nearly 9 million Americans reported being employed full- or part-time over the age of 65.

So clearly, there are a there are many people who continue working even when they reach 65, which is the stereotypical retirement age for most people. For these folks, there are undoubtedly going to be many questions they have about their medical insurance coverage.  These could include:

  • Do I need to take Medicare now?
  • Should I delay in enrolling in Medicare Part B? What happens if I do?
  • Should I Delay Medicare Part B Enrollment?
  • What about Part A?
  • What if I have a Health Savings Account (HSA)?

The simplest answer to these questions is…maybe.  I know that’s not very helpful, but stick with me.

Do I need to take Medicare now?

If your work doesn’t provide health insurance, then the easy answer is YES.  Get automatically enrolled in Part A, allow yourself to be enrolled in Part B and choose a Medicare plan. There are essentially only 2 options you need to consider:

  1. Stick with original Medicare and buy a Part D plan.  If you’d like (and I’d recommend you strongly consider it) buy a Medicare Supplement (Medigap) plan.  Medigap plan F is by far the most popular plan purchased due to its near-100% coverage for everything Medicare doesn’t cover, medically.  Check out my post comparing Medigap plan F with Medigap High-Deductible plan F by clicking here.
  2. Enroll in a Medicare Advantage plan that covers both medical and prescription drugs.  You can find out more about whether this is the right choice for you by reading by clicking here.

If your work provides health insurance with prescription drug coverage, you’re more than likely best served staying on your plan.  However, it would be wise to enroll for Medicare Part A. This is because it is free for most people who have been paying Medicare taxes as part of their payroll taxes. It would wouldn’t make sense to avoid Part A. The important thing to note is that Medicare Part A would only kick in after your group’s health insurance cover runs out.

Should I delay in enrolling in Medicare Part B?  What happens if I do?

If you’re over the age of 65 and are still working and staying on your employer’s health insurance plan, you should probably delay enrolling.  There are advantages to delaying Medicare Part B enrollment and Medicare Part D enrollment in most cases. Don’t worry.  It’s possible to get them later when you officially retire or if you lose your insurance due to a job loss.  There is a special enrollment period of eight months allowing people to enroll in Medicare Part B and Medicare Part D for people who fall in this category.  All you have to do is prove you had good, “qualifying coverage” for medical and prescription drugs through your employer and you won’t get penalized.

Here’s where the “maybe” from above comes in.  There are a few exceptions:
1.  If you are working (or your spouse is working) in a company with 20 or fewer employees, you may be required to sign up for Medicare, because for small businesses, your group health insurance automatically becomes  your secondary health coverage. That means it pays AFTER Medicare pays.  So, you’ll want to accept Medicare part A when you’re eligible, and accept Medicare part B when you’re eligible AND get a PDP.
2.  If you are currently in an unmarried domestic union, then you may not have the right to delay signing up for Part B without paying the late penalty.

Should I Delay Medicare Part B Enrollment?

1. If you are still working past the age of 65 and on your employer’s medical and prescription drug insurance, you don’t need Medicare Part B.  You can certainly sign up for it if you like, but it won’t actually do any good.  This is because your employer’s insurance is covering what Part B would have covered.  If you delay enrollment in Medicare Part B, you don’t have to pay for it until you retire.  REMEMBER our little lesson from above, however…  If you work for a small company under 20 employees, Medicare becomes PRIMARY – meaning they pay FIRST, and then your employer health insurance pays the rest.  In this case, you need to elect enrollment in Medicare Part B and pay for the monthly premium.  Check with your Human Resource department (or benefits person) at work for guidance.
2.  It is possible to delay your Medigap Open Enrollment period, which gives you the right to purchase Medigap insurance without any bias to pre-existing medical conditions. This means, no underwriting.

What about Medicare Part A?

Everyone is encouraged to enroll for Part A, as it’s actually an entitlement.  You’ve been paying for Medicare Part A from every paycheck you’ve ever received.  It’s no cost to most people.  The only time there could be a premium is if you haven’t worked the qualifying number of months/quarters.

What if I have a Health Savings Account (HSA)?

If you have a Health Savings Account (HSA) and are still working, and covered under your employer’s health insurance plan, you may want to push off your enrollment in Part A.  As soon as you sign up for part A, neither you nor your employer can legally contribute to your HSA anymore. However, once you retire or stop working, the funds left in your HSA can pay for Medicare Part(s) A, B, C, and/or D.  They can’t be used to pay for Medicare Supplement (Medicap) policy premiums.

The Takeaway:

Generally speaking, if you work past the age of 65 and you get insurance through your employer, keep it.  Take Medicare Part A when it’s given to you, opt NOT to take (and pay for) Part B when it’s offered, and don’t buy an MAPD, Medicare Supplement (Medigap) or Part D (PDP) plan.

If you work for a company with fewer than 20 employees, Medicare is primary.  This means it pays before your employer insurance does.  In this case, enroll in Medicare Part B.

If you’re working and your employer doesn’t offer insurance, take Medicare A, B and choose either C (Medicare Advantage) or Part D (PDP).  If you don’t choose a Medicare Advantage plan, you’ll need a PDP plan and probably a Medicare Supplement.

 

The Basics of Medicare and Enrolling

In this quick, easy post, I’ll provide the basics of Medicare, explain its different parts and highlight how and when you can enroll.

What is Medicare?

Medicare in the United States is a national social insurance program. Medicare has been around since 1966, after its enactment in 1965 by Congress under Title XVII of the Social Security Act, signed by President Johnson.  Did you know Harry Truman and his wife, Bess were the first two Americans to get Medicare?  Now you do.  Anyway, Medicare generally covers people who are 65 years and above. However, there are some exceptions for younger people living with disabilities, end stage renal disease and Lou Gehrig’s disease (amyotrophic lateral sclerosis).

The Alphabet Soup of Medicare

Medicare is divided into 4 parts, A-D:
1) Medicare Part A: hospital insurance that will cover Inpatient care, skilled nursing facility care, hospice and home health care.
2) Medicare Part B: medical insurance that mainly covers outpatient care and preventive treatment services such as Pap smear tests for cervical cancer.
3) Medicare Part C: this is also referred to as Medicare Advantage and is a combination of Part A and Part B. Part C is offered by private insurance companies that have been approved by Medicare. Under this plan, you may be able to access more benefits and services, though sometimes at extra cost.
4) Medicare Part D: this plan covers drug prescription costs you’d normally get at a pharmacy or mail-order pharmacy.

How Do I Enroll in Medicare?

When enrolling for Medicare, there are really only two options available when you break it down.  I know, there are millions of websites and publications out there that are confusing.  I call it, “analysis paralysis.”  Don’t spend hours and hours trying to figure out what options are out there, because there really are only two.

1) Staying in Original Medicare: this is Medicare Part A and Medicare Part B. If you are interested in a PDP plan (and you should be) then you will have to find a Part D plan (PDP). It is important to enroll for Medicare Part D when you are first eligible, as this will protect you from paying the late enrollment penalty if you decide to do so later. You may also opt for supplemental insurance (Medicare supplement, or Medigap) that will plug gaps in the benefits offered by Part A and Part B.  And believe me, there are a lot of gaps to plug if you decide to go “Bare with Medicare.” Click here for my post about why you really need to think about a Medicare Supplement policy if you decide not to go with a Medicare Advantage plan. Also, check out my post on whether or not Medicare Supplement plan F or Medicare Supplement plan High-Deductible F makes more sense by clicking here.

2) Joining a Medicare Advantage Plan (Part C): this is the other option available. In order to be eligible for this plan, you must first sign up for the Original Medicare Part A and B.  Check out my post on whether or not a Medicare Advantage plan is right for you by clicking here.

When Can You Apply for Medicare?

For starters, most people get Medicare coverage automatically. These people include:
1) People already receiving benefits from Social Security or the Railroad Retirement Board.
2) People under 65 years, living with disabilities and have been receiving disability benefits for 24 months.
3) People living with ALS (amyotrophic Lateral Sclerosis) receive coverage the month their Social Security benefits start kicking in.

Some folks do have to sign up, for instance:
1) People close to 65 and not receiving Social Security benefits.
2) People with End Stage Renal Disease.
3) People living in Puerto Rico will have to sign up for Part B separately.

There are three enrollment periods when you can initially sign up:
1) Initial Enrollment Period: this is a 7 month part that begins 3 months before you turn 65 up to 3 months after your 65th birthday.
2) General Enrollment Period: If you did not sign up for Medicare during the initial enrollment period, you can do so between January 1st and March 31st every year.
3) Special Enrollment Period: this is for people (or their spouses) who are still working and are covered by their group’s health plan, or during an 8 month period that begins the month that their employment ends.

Finally, there’s the Annual Election Period (AEP) which begins on October 15, and ends on December 7th.  That’s when folks already on Medicare get to choose the PDP or the Medicare Advantage plan they want for the following year, without underwriting.

 

Do Commissions Influence Medicare Insurance Agents?

It’s one of the biggest questions many people silently ask themselves: How do I know if my Medicare insurance agent has my best interests in mind, and not influenced by earning the highest possible commissions for themselves when enrolling me in a Medicare plan? Is my insurance agent selling the policy that best fits my needs, or simply selling me a product that pays him/her as much as possible?

Let’s start with the basics. First of all, 99.9% of independent insurance agents are fine, upstanding, moral, high-character people who ALWAYS put the best interests of their customers first. If they’re not, they will soon be found out and kicked out of the business and stripped of their insurance license. But like any industry (financial planning, stock market, etc.) there are always a few bad apples who don’t do the right thing and more often than not, end up on the news.

Independent insurance agents selling Medicare products go to extreme measures to remain compliant with Medicare regulations and laws, must be licensed as an agent and sit through hours of classes for each company they represent to remain “certified” to sell MAPD and PDP plans every single year. They also must take continuing education classes every year to keep their insurance license. Insurance companies have an extremely low tolerance for agents who do not follow the rules and are quick to terminate their ability to sell their products if they suspect any improprieties.

So (very good) odds are, the insurance agent you’re dealing with for your Medicare insurance needs are highly trained, ethical, honest and highly regulated sales professionals who know their business, know the local market and know what plans are (usually) the best for you.

How Much Do Medicare Insurance Agents Make?

Independent insurance agents selling a Prescription Drug Plan (PDP) or a Medicare Advantage plan (MAPD) … ANY MAPD or PDP are paid exactly the same, regardless of the policy they sell you. Around 10 years ago, these commissions were not regulated, and that led to different insurance companies offering some staggeringly high commissions for selling MAPD plans… at times as high as $850 or more per sale. That led to a number of folks complaining to Medicare their agents were inappropriately placing them into a plan based upon those high commissions, and not because it was the best plan for them and their health and financial conditions.

That all changed around 2007, when Medicare stepped in and mandated Medicare insurance companies pay exactly the same commission amounts, and proposed steep penalties for not doing so.

Current MAPD and PDP Commission Rates

For plans that go into effect in 2017, agents selling an MAPD plan are paid $443 for the first year, and $221 every year after that, usually for 6-7 years. That $443 is paid if you’ve recently enrolled in Medicare, or are buying an MAPD for the very first time. If your agent is merely switching you from one MAPD plan into another MAPD, they only get $221 per sale, and get that every year until you choose a different plan. So, if you buy an MAPD from an agent and stick with the same plan for 6 years, the total amount that agent is paid for your enrollment could be around $1,500. Yes, that’s quite a bit of money! But because every MAPD plan is not allowed to pay more than those amounts, it’s hard to argue there’s an incentive for agents to inappropriately steer people to one plan over another. Remember, the vast majority of independent insurance agents are just that: INDEPENDENT. That means they’re independent contractors, with no base salary and no benefits, no car allowance, no gas money and pay taxes on those commissions. Factor in all those costs and $1,500 over 6 or 7 years doesn’t seem quite as high.

For PDP, that commission amount is $71 for the first year, and then half of that amount in the following years, usually stopping around year 6 or 7, depending upon the company. The same logic applies as found in the MAPD scenario above; it’s hard to argue an insurance agent has an incentive to enroll you in one PDP plan over another… because they make the same amount of commission for every plan.

These commissions are not paid by you, nor do they directly influence the cost of your MAPD. Your premium does not go up or down if you buy a policy from an independent Medicare insurance agent. Online, over the phone or in your home on your couch with your insurance agent, the MAPD premium (if there is one) and the PDP premium you’ll pay stays the same regardless of where or how you buy it.The price as they say, is the price.

Medicare Supplement Commissions

The issue of commissions gets a little murky when talking about Medicare Supplements. Unlike MAPD or PDP plans, Medicare supplements are regulated by the states, not the federal government. And unlike MAPD and PDP plans, commissions are not the same and can actually vary quite a bit. For example, Company A might pay $15% sales commission for year 1, and 10% commission for years 2-6. Company B might pay 22% sales commission for year 1, and 15% commission for years 2-10. If one company pays more than the other for the exact same Medicare supplement insurance policy… are you sure your agent is putting you in the product that best fits your needs and budget? Let me remind you, 99.9% of the time that answer is YES. But how do you really know?

How Do I Know If I’ve Got a Trustworthy Agent?

Most independent insurance agents represent multiple Medicare insurance companies. So, if your agent only presents you one option, get suspicious and ask questions. Ask them, “Why this option and not the others?” Be active and challenge them! There’s usually a good reason. Medicare Supplement plan F is the exact same plan, regardless of the company logo. In that case, your agent may be recommending you take one option over another due to lower premiums, for example.  Maybe your doctors and preferred hospitals are in one plan’s network and not the others. The key here is to ASK. Ask them WHY they think this is the best plan for you.

The Best Way to Size Up Your Medicare Insurance Agent

Ask them how much commission they’re making if you enroll in the product they’re selling. If they say they don’t know, or refuse to tell you, end the sales presentation right then and there. If your independent insurance agent won’t disclose their commissions to you, what else are they not telling you? A good insurance agent will have no problem telling you how much commission they make on a sale. Heck, they should be proud to tell you. They’re professionals who know their stuff, work extremely hard and ALWAYS put the needs of their clients FIRST.

The Takeaway

Commissions paid to insurance agents are standard for Medicare Advantage and Medicare Prescription Drug Plans. Commissions paid to insurance agents for Medicare Supplement plans are NOT standard. These commissions do not directly influence the price you pay for your insurance policies and the price you pay is the same regardless of where you purchase your policy; phone, web or agent.

Good, professional insurance agents who specialize in Medicare coverage are all around, but like any profession, there are bad actors. When meeting with an agent for the first time, act like Dan Rather or Charlie Rose and interview them. How many clients do they have? How long have they been doing this? What companies do they represent and why? Finally, how much commission will they make if you buy a policy from them? Use your gut; if they can’t (or won’t) answer those basic questions, it’s best to thank them for their time and find a better agent.

You Must Read Your Medicare ANOC (Annual Notice of Change)

If you have a Medicare Advantage plan or a Medicare Part D plan, it’s very important you read at least a portion of the Annual Notice of Change (ANOC) your insurance company sends you.  This will usually arrive in your mailbox in a large, intimidating package with your insurance company logo affixed in the upper left-hand corner.  Medicare insurance companies are bound by regulation to have this delivered and in your hands by September 30 of each year.  Please resist the temptation to throw this in the recycling bin, or stash it near the phone in the, “I’ll get to it later” pile!

Here’s why:  The AEP (Annual Election Period) is coming on October 15, and ends on December 7.  If you don’t read your ANOC before then, you won’t know what changes are being made to your plan until they go into effect on January 1!  By that time, it’s too late to make a change for an entire year if you want to pick a new Medicare Advantage or PDP plan.

The bad news:  It can be a thick, heavy document.  It’s also in black and white, and very boring and bland.
The good news:  I’m not asking you to read the whole thing, just the important parts.  What are the important parts? Immediately go the section entitled, “Summary of Important Costs 2017.”  It should be right up front, either page 2 or 3.

Medicare ANOC
Medicare ANOC Sample

Your Benefits Change Every Year

I’ve never seen a Medicare Advantage plan NOT change at least SOMETHING from one year to the next.  Same goes for PDP plans.  Almost every plan makes some changes for the new year, so the costs and benefits in place on December 31 may very different on January 1. Here are some changes that can really throw you for a loop!

You May Have a Premium!

Surprise!  If you had a $0 Medicare Advantage premium, that may have changed! Every year thousands of people get surprised in this way, all because they do not read their ANOC and only realize this when they either get a bill, or notice a new deduction from their Social Security checks in January or February.

Your Premium May Be Going Up!

The ANOC is where (and when) Medicare insurance companies announce you’re going to have to pay more (or not) in the upcoming year for your PDP or Medicare Advantage Plan

Your Plan May Be Disappearing

This happens all the time.  Sometimes insurance companies stop offering certain plans.  This is usually because they can’t make money in that area, don’t have enough willing doctors, physicians or pharmacies to participate in their plans.  Sometimes, plans go out of business or are terminated by Medicare.

Other ANOC Changes to Watch Out For

The plan may change its charges for premiums, deductibles, and copays.

Your very important Maximum-out-of-Pocket (MOOP) may be increasing! The maximum MOOP for Medicare Advantage plans for 2017 remains at $6,700 annually, not including Medicare Part D costs.

Your Medicare Advantage or PDP plan may move drugs to different tiers so the copays change.

The plan may alter its formulary (the list of drugs it covers) by dropping some drugs or adding others.  They can also do this at any time during the year.

For other changes, the plan must send you details in an ANOC.

The Takeaway:

The Annual Notice of Change (ANOC) is a document listing any changes in plan coverage, service area, or costs that will go into effect the following January. All Medicare plans are required to send this to plan members by September 30, or 15 days before the start of the Annual Election Period.

You should review at least the Summary of Changes in your ANOC Annual Notice of Change especially if you’re worried about whether or not your medications are still included in the plan’s drug formulary (the list of prescription drugs covered by the plan). If a drug you take is no longer covered, you may want to consider switching to a different Medicare prescription drug plan.

If you have a Medicare Advantage plan and notice your out of pocket costs going up, it’s a good idea to shop and compare your current coverage against other Medicare Advantage plans during the Annual Election Period. 

If you haven’t received the Annual Notice of Change by the end of September, you should contact your Medicare plan to request it.

Remember to read your ANOC (or, at least some of it)!  If you miss making a new plan choice during the AEP, you’re basically locked in for the next year, unless you qualify for a Special Election Period (which you shouldn’t count on).

 

Social Security Notice for Extra Help Review

If you’ve applied for and received “Extra Help” from Social Security, September is the month where some of you will be audited. Social Security doesn’t actually call it an audit, but it’s essentially the same thing; they select a group of people who had previously qualified for Extra Help and ask them to send in proof they still meet the thresholds.  If those people don’t respond within 30 days, they automatically lose the extra help.

What is Extra Help?

Some people with limited resources and income may be able to get Extra Help with the costs — monthly premiums, annual deductibles, and prescription co-payments — related to a Medicare prescription drug
plan. The Extra Help is estimated to be worth about $4,000 per year.  To find out if you qualify, you will have needed to apply for this – it’s not automatic in most cases.  The form is here.  You will have to do a bit of legwork and disclose personal financial situation such as how much money is in your checking and savings accounts, investments, real estate (other than your home), and your income. If you’re married, this information needs to be provided about your spouse as well as your habitation status.

How Do I Qualify?

To qualify for Extra Help, your resources must be limited to $13,640 for an individual or $27,250 for a married couple living together.
Resources include the value of the things you own. Some examples are:
• Real estate (other than your primary residence)
• Bank accounts including checking, savings and certificates of deposit
• Stocks
• Bonds, including U.S. Savings Bonds
• Mutual funds
• Individual Retirement Accounts (IRAs)
• Cash at home or anywhere else.

What Does Not Count As a Resource?

Social Security does not count:
• Your primary residence;
• Your personal possessions;
• Your vehicle(s);
• Resources you couldn’t easily convert to cash, such as jewelry or home furnishings;
• Property you need for self-support, such as rental property or land you use to grow produce for home consumption;
• Non-business property essential to your self-support;
• Life insurance policies;
• Burial expenses;
• Interest earned on money you plan to use for burial expenses; and
• Certain other money you are holding is not counted for nine months, such as:
—Retroactive Social Security or Supplemental Security
Income (SSI) payments;
—Housing assistance;
—Tax advances and refunds related to earned income tax credits and child tax credits;
—Compensation you receive as a crime victim; and
—Relocation assistance from a state or local government.

To qualify for Extra Help, your annual income must be less than $17,820 for an individual or $24,030 for a married couple living together. Even if your annual income is higher, you may still be able to get some help.

Extra Help Eligibility Review

In early September, Social Security sends out a form to a select bunch of folks to check and see if they still qualify for this extra help.  Watch your mailboxes, folks.  Interestingly, they do not have an online form.  You must use paper (scratches head).

When you get the form, you’ll have to complete it and send it in within 30 days or you will automatically lose your subsidy.  It’s essentially applying again as the information they’re asking for is essentially the same Social Security asked for when you originally applied.  Have your checking, savings, investments, etc. all ready to go – you’ll have to re-enter that information again on a paper form.  Then, you must sign and return the form in the envelope they provide you.  Remember… 30 days is all you get!

Be Prepared and Be Precise!

To prepare:
• Identify the things you own alone, with your spouse,
or with someone else, but do not include your home,
vehicles, burial plots, life insurance policies, or personal possessions;
• Review all your income; and
• Gather your records in advance to save time.

The records you’ll need are:
• Statements that show your account balances at banks,
credit unions, or other financial institutions;
• Investment statements;
• Stock certificates;
• Tax returns;
• Pension award letters; and
• Payroll slips.
The Social Security Agency won’t ask for proof to support the information you provide, but they will match your information with data
available from other government agencies to make sure it
is correct.

The Takeaway:

Watch your mailbox in early September if you get Extra Help.  If you do not return the form they send you within 30 days, your help with Medicare prescription drug plan costs will end. If for some reason you need more time, you get to wait on hold with the federal government, folks!  The only way to get a 30 day extension is by calling  Social Security at 1-800-772-1213 (TTY 1-800-325-0778).  Be prepared.  Have your statements ready, because if you misrepresent your resources, they will be cross-checking what you put down with “other data available.”  Be honest, and be on time!

The Three Types of Medicare Websites

Over the years, I’ve spent thousands of hours online reviewing Medicare websites.  What’s available is confusing, incomplete, wrong or not quite objective enough for me.   These websites fit neatly into three distinct categories.

1.  Insurance company websites

Insurance company websites can certainly be helpful, but looking for Medicare information at an insurance company website is much like doing new car research:  The Ford website will tell you everything you need to know about all the Ford options they have, but don’t/won’t tell you anything about Honda… or Chevy… or BMW… you get the point.  They don’t offer the complete picture or landscape of choices, but they usually do a pretty decent job of providing you company-specific information and the ability to enroll online.  Let’s be honest: the ability to enroll online may exist, but your patience will be taxed doing so.  Every insurance company website has a different way to enroll, different forms and different pages to navigate to.  The experience can be horribly frustrating, leading many people to simply either give up or call the company.  If you’re 100% sure you want to buy a policy from a particular policy, then enrolling online is the way to go.  If you want to compare different plans from different companies, you’ll have to visit multiple sites and each of them have their own web navigation positives and negatives.

2.  Lead-generation websites

Lead-generation websites are usually insurance agents or agencies that set up a site (or a dozen) to generate leads for themselves or their employees.  Often, these sites urge you to share your personal information, and then sell that information to a local agent or agency in your ear.  From what I’ve seen, they give you just enough information to get your interest piqued, then encourage you to contact them, send them your email address, etc.  They then either hound you to BUY BUY BUY or sell/give your information to call centers and/or insurance agents.  Their sites are full of long, complex definitions and articles chock-full of keywords the search engines love. They have to do this in order for Google, Bing or Yahoo to pay attention to them in hopes that when somebody searches for, “Medicare” their site ends up on the first page of the search results.  In all cases, unless you want to be contacted by someone trying to sell you something, stay away from these.

3.  Medicare’s Website

Medicare.gov is the Centers for Medicare and Medicaid (CMS) homepage.  Those are the folks who run (you guessed it!) Medicare and Medicaid.  If you’re ready to enroll in Medicare or you’re all set to enroll in a particular product, this is a good place to go but it’s not perfect by any stretch of the imagination.  However, there is a ton of content, and you could easily spend thousands of hours on their site reading through various items.  Information overload is easy to experience on this site, especially if you’re brand-new to Medicare.

The Takeaway

Learn to love medicare.gov.  The site does a decent job of helping you search for Medicare Advantage and PDP (Part D) plans, but is woefully lacking on helping you choose Medicare Supplemental plans.  Medicare.gov allows you to enter in your prescription drugs and pharmacy of choice.  Unfortunately, it doesn’t do a great job of letting you know your doctor or hospital of choice is in the plan’s network.  This is mostly due to the fact that Medicare PPO and HMO networks are in a state of constant flux; doctors and hospitals get added and removed on a monthly basis.   My advice is to use this site to enter in your prescriptions and pharmacy, and see what spits out.  Once you’ve narrowed down your top 3 choices, call those insurance companies and ask them if your doctors are in their plan.  They’ll try to sell you a policy over the phone.  Go ahead and buy it, if you’re ready, or do so online.

-OR-

Use a good independent Medicare insurance agent.  Note I said, “good” Medicare insurance agent, because they’re not all good and finding the good ones can be a chore.  Good agents will be able to narrow down the choices based on your financial goals, coverage needs, doctor usage and health status.  I’ve got a series of posts queued up on Medicare insurance agents, so check back soon!

Medigap Plan F Versus High Deductible Plan F

Medicare Supplement (Medigap) High Deductible Plan F suffers from a horrible name, but don’t overlook it.  The premiums can be very affordable and the coverage is better than the name suggests.

Let’s begin with shortening up Medicare Supplement (Medigap) High Deductible Plan F for readability.  Let’s use HD-F from now on.

Deductible

Next, let’s make sure you understand with the word – deductible.  A deductible is the amount you pay each year before your health insurer begins to cover your medical services.

The deductible in 2016 for HD-F is $2,180.

Just to be crystal clear, this means before your Medicare Supplement insurance company pays anyone or anything… the first $2,180 is out of your wallet.

The thing is, the deductible really isn’t all that high, especially when you compare it to what they are in individual ACA (Obamacare) plans.  Right now, the average the average combined deductible for 2016 is $5,765 for bronze plans (up from $5,328 in 2015) and $3,064 for silver plans (up from $2,556 in 2015).  So, if you’re currently paying for your own individual coverage, odds are $2,180 doesn’t scare you.

If it does, I’m about to show you how the differences between premiums for these plans can more than pay for the deductible in a very short amount of time.

Price

Then there’s the price: They’re cheap.  Obviously, prices vary from state to state and carrier to carrier, but they’re generally half – if not less than half the price of a regular Medicare (Medigap) Supplement Plan F.

Let’s take a look at both of them side-by side (premiums are illustrative only).  Here’s a hint:  The only things different are the monthly premium and MOOP!

We’ll start first with Medigap Plan F

Medicare SupplementPlan F
Monthly Premium$180 per month
Annual Deductible ExpenseNone
Annual Coinsurance ExpenseNone
Annual Maximum Out-of-Pocket (MOOP)Zero
NetworkYou can see any doctor who accepts your coverage; no referrals needed for specialists
Other Out-of-pocket CostsNo copays for doctor's visits or hospitalization
Prescription Drugs Does not include prescription drug coverage

Well, that was nice.  Let’s now look at Medigap HD-F

Medicare SupplementHigh Deductible F
Monthly Premium$80 per month
Annual Deductible Expense$2,180
Annual Coinsurance ExpenseNone
Annual Maximum Out-of-Pocket (MOOP)$2,180
NetworkYou can see any doctor who accepts your coverage; no referrals needed for specialists
Other Out-of-pocket CostsNo copays for doctor's visits or hospitalization
Prescription Drugs Does not include prescription drug coverage

Break Even

I’ve done a bit of quick math for you below.  If you assume a monthly premium of $180 for Medicare Supplement (Medigap) Plan F, and an $80 monthly premium for HD-F, the chart shows you’ll break even in a little under 2 years.  Another way of saying that, is: by paying less monthly premium for HD-F, you’ll effectively save enough money (if you don’t use it) to cover the deductible in just under years.

 Medicare Supplement Plan F Monthly PremiumMedicare Supplement HD-F Monthly Premium
Jan$180$80
Feb$180$80
Mar$180$80
Apr$180$80
May$180$80
Jun$180$80
Jul$180$80
Aug$180$80
Sep$180$80
Oct$180$80
Nov$180$80
Dec$180$80
Total Annual Premium Cost$2160$960
Annual Savings$1200
Number of Years to Break Even1.81

But there’s yet another way of thinking about this: If you buy an HD-F when you turn 65, by the time you turn 67 you will have already saved enough money to cover an entire yearly deductible.  By the time you’re 69, you’ve already got more than two and on your way to three year’s worth of maximum deductibles saved up.

The Takeaway

So, which one is the right choice for you?  To get there, the central questions you must ask yourself (and answer) are these:

  1.  Do I want to give the insurance company $180 per month for 100% coverage and 100% peace of mind?
  2. Or do I want to give them $80, save $100 a month in premium and stick that $100 it in my back pocket just in case I get sick and need it?
  3. Should I just go with a Medicare Advantage plan?

 

Do I Have Medicare or Medicaid?

You may have Medicare, Medicaid or maybe both!  Other than sounding similar, the words Medicare and Medicaid are very different government-sponsored health insurance programs, but they can work together.  If you have both, you may qualify for a special type of Medicare Advantage plan.

Medicare and Medicaid are two government programs that help people pay for their health care.   By now, you already know Medicare is generally for people who are older or disabled.  If you need a refresher, head on over to the Medicare 101 page by clicking here.  Medicaid is for people with low incomes.  Essentially, these are the poor.  These folks don’t have the money to pay for their own health health insurance.

What is Medicaid?

Medicaid is an assistance program.  It serves low-income people of every age and benefits vary from state to state.  People on Medicaid usually pay no costs for medical expenses, however in some states small co-pays are required and they vary from state to state. It is run by state and local governments within federal guidelines.  Qualifying income and resource levels are set by the feds.  Every state decides what they’ll use to qualify applicants when calculating whether or not they’ll qualify.

Medicaid Is Not the Same as Medicare, but Both Can Work Together

If you are eligible for both Medicare and Medicaid, Medicare and Medicaid will work together to provide you with very complete health coverage.  This means both working together should cover most, if not all out of pocket costs and you won’t get a bill.

Can I Have Both Medicare and Medicaid?

People who qualify for both Medicare and Medicaid are said to be “dual eligible.”  If you have Medicare and Medicaid, you may be eligible to enroll in a special Medicare Advantage plan that can provide additional benefits above and beyond what you get with either.  This is accomplished by enrolling in a “Dual Special Needs Plan” also known as a “Dual-SNP” (pronounced “dual- snip”) plan.  These plans are exploding in popularity, mainly because the insurance companies are paid handsomely by the federal government to manage the dual-eligible (Medicare and Medicaid) population due to their health status.  The only problem is they’re hard to find and largely only available in metropolitan areas.  I’ve got an article I’ve got queued up all about D-SNP plans which I’ll publish in a week or so.  When I do, I’ll link back here.

In the meantime, if you think you qualify for Medicaid, click here to check out more information and apply.  If you’re brave enough to research D-SNP plans in your area before I post, click here  or call 1-800-MEDICARE (1-800-633-4227).

Why Choose a Medicare Advantage Plan?

Medicare Advantage plans (MAPD) have exploded in popularity since re-introduced around a decade ago.  Is it the best plan for you? What makes these plans so popular?

It’s no secret prescription drug costs are rising much faster than inflation, and overall health spending is up.  Every year, it seems the government raises the Medicare Part B premium, Medicare Supplement (Medigap) and Medicare Part D (PDP) plans cost more, too.  Although I assume by now you already know what a Medicare Advantage plan is (click here if you don’t for a primer) there are very distinct reasons why according to Kaiser Family Foundation 31% of all seniors are now enrolled in a Medicare Advantage plan.

Medicare Advantage plans come in 3 flavors.

  1.  PPO – “Preferred Provider Organization” – you can use doctors and hospitals in and out of the plan’s network.
  2. HMO – “Health Maintenance Organization” – you cannot use doctors out of the plan’s network
  3. HMO-POS – “Health Maintenance Organization – Point of Service” – while rare, these plans let you go out of the plan’s network, often requiring a referral from a doctor who is in the network.

So, why choose a Medicare Advantage Plan?

Combined Medical and Drug Coverage

Remember the acronym in the first sentence?  Medicare Advantage is the same thing as an “MAPD.”  That stands for Medicare Advantage Prescription Drug.  By far the biggest reason people enroll in these plans is because they get their medical coverage and their prescription drug coverage all in one plan, with one company.  It doesn’t matter if you’re at the pharmacy, in your doctors office or at the hospital; one card in your wallet is all you need.

Premiums Are Inexpensive (or $0!)

The number of plans available to you varies depending on where you live.  Cities get more choices, rural areas only a few.  Generally, the availability of these plans increase where there are more people in a geographic area who have Medicare.  For most of you, there are usually multiple insurance companies in your area offering $0 premium MAPD HMO plans.  They can afford to not charge you a premium, because they’re getting reimbursed from the government for your care and prescription drugs.  You can usually find HMO plans with better benefits for an additional premium ranging between $19-$40 per month.  PPO plans are available too, although typically there are fewer options and they’re more expensive at $30-$150 per month, depending on the plan.

Limit Out-of-Pocket Costs

Original Medicare Part A and Part B have significant drawbacks to them, and never cap the amount of money you can potentially spend should you get really sick.  Click here for a post I wrote a while back on this subject.  MAPD plans have a feature called the MOOP.  MOOP stands for Maximum Out OPocket.  Medicare mandates MAPD plans pay 100% of your medical care after a maximum of $6,700 out of your pocket in a calendar year.  Many plans have a lower MOOP and this is a KEY factor you should be shopping for, by the way.  The lower the MOOP, the better for you.

Low Co-pays for Doctor Visits and Prescriptions

Medicare Advantage insurance companies want you to see your primary care physician, and as soon as possible.  While that might not make much sense on the surface, it does if you have a medical condition.  If you have a medical condition and the doctor notes it in his or her chart, the insurance company can file for additional reimbursement from the government for your care.  Good for them.  All this really means to you is your doctor copays on a Medicare Advantage are low (usually $5-20 per visit, sometimes $0!).  Insurance companies also want to make sure you’re taking your prescriptions.  That’s right!  If you don’t, they get dinged in the wallet by the government in a variety of ways.  That’s why prescription drug copays are generally less expensive on MAPD plans than they are on Medicare Part D (PDP) plans.

Extra Benefits Not Offered by Medicare

The government allows Medicare Advantage plans to offer some bells and whistles to their plans to sweeten the deal for potential buyers.  Many, but not all plans offer built-in dental coverage, vision insurance, hearing aid coverage and even an over-the-counter purchasing allowance.  You get none of those items I just mentioned on Original Medicare, Part D or a Medicare Supplement plan.  If you were actually able to find a dental plan to purchase outside of an MAPD plan, I’d a) be amazed and B) tell you not to buy it because it’s not worth the money.  More on that in another post.

There you have it.  Four pretty good reasons to elect a MAPD plan for your Medicare coverage… low (or no) premiums, a limit on your yearly financial exposure, low co-pays for doctors and prescriptions and some dental, vision and other “freebies” thrown in for good measure.

Will Your Medicare Coverage Travel with You?

Summertime means the beach, BBQ and travel.  Will your Medicare coverage travel with you?  Should you buy a travel insurance policy before going overseas?  What if you have a Medicare Advantage plan?

The answer: It depends.

If you’re on original Medicare (not a Medicare Advantage plan), travel throughout the 50 states and US territories (District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) means your health care is covered just like it is at home, no problems.  If you have a Medicare Advantage plan, traveling overseas, and even traveling away from home within our 50 states gets trickier.  More on that below.

The Medicare website on travel offers an easy explanation that isn’t 100% complete, nor does it do a very good job of highlighting when you’re not covered while traveling.   I’ve pasted and excerpt from the webpage below for your convenience.

Medicare may pay for inpatient hospital, doctor, ambulance services, or dialysis you get in a foreign country in these rare cases:

You’re in the US when a medical emergency occurs, and the foreign hospital is closer than the nearest US hospital that can treat your medical condition.
You’re traveling through Canada without unreasonable delay by the most direct route between Alaska and another state when a medical emergency occurs, and the Canadian hospital is closer than the nearest US hospital that can treat the emergency.
You live in the US and the foreign hospital is closer to your home than the nearest US hospital that can treat your medical condition, regardless of whether an emergency exists.
In some cases, Medicare Part B (Medical Insurance) may cover medically necessary health care services you get on board a ship within the territorial waters adjoining the land areas of the US Medicare won’t pay for health care services you get when a ship is more than 6 hours away from a US port.

Medicare drug plans don’t cover prescription drugs you buy outside the US

Will My Medicare Part D Card Work?

Ooh, there’s a zinger right there at the end!  Did you miss it?  Here it is again:  Medicare drug plans don’t cover prescription drugs you buy outside the US.

Prescription drugs purchased overseas are never covered by Medicare Part D. Huh.  That means your PDP plan is worthless overseas.  Better stock up before you go. I must say, it’s also interesting to see if you go on a cruise, you better only get sick if you’re close to the US or one of its territories.  It also makes no mention of what happens if you have a Medicare Advantage plan.  Here’s one more item of note from the site.

Foreign hospitals aren’t required to file Medicare claims. If you’re admitted to a foreign hospital under one of the situations above, and if that hospital doesn’t submit Medicare claims for you, you need to submit an itemized bill to Medicare for your doctor, inpatient, and ambulance services.

This is a nice way of saying if you get sick overseas, you’ll very likely have to pay, either with cash or credit card for your health care at the time of service.  You’ll then have to take all of the paperwork home with you, and fill out gobs of Medicare paperwork.  Look, they make it easy for you on their website! (Heavy sarcasm here, folks)  There are only potentially NINE forms you need to fill out.  If you want your son or daughter to help out, they need to fill out a form, too.   You better do it right as you get home; if you wait 12 months you’re out of luck.

What If I have a Medicare Advantage Plan?

So, I’ve teased it twice already; what do you do if you have a Medicare Advantage plan?  First of all, if you’re on an HMO, you may be out of luck if you get sick even in the next county over from you.  An MAPD HMO plan has a defined service area (usually by county) and there are ZERO out of network benefits.  If you have an HMO and live in Sarasota, forget getting routine care while on your visit the kids in Denver.  Oh sure, there’s emergency care… if you’re admitted, if you’re in an ambulance, etc. In all seriousness, aside from what the government mandates HMO plans include in their coverage, most do NOT have travel coverage.  To get the skinny, you need to pull out your Summary of Benefits booklet that came with your policy, or call the company and ask.

If you have a Medicare Advantage PPO plan, those by nature DO have out of network coverage if you’re travelling out of your service area in the US.  Often it’s way, way less than you enjoy in the network, but at least it’s there.  They also must have out of pocket limits so you won’t go broke if you get really sick on vacation and need to be in the hospital for a long time.  However, that does NOT mean you have overseas coverage.  To find out, you need to look at your Summary of Benefits or call the company.

Some Medicare Advantage companies tack on an additional feature to their plans to include some sort of travel insurance.  Most do not.

The Takeaway

We know by now there are restrictions on getting medical care overseas if you’re on Medicare, and can be even more if you’re on a Medicare Advantage plan.  Your Medicare Part D plan will not work overseas. What are your options?  Buy overseas travel medical insurance if you have an MAPD plan that does not cover it, or are on Original Medicare only.

If you have a Medicare Supplement plan you are in luck, my friend.  Medicare Supplement (Medigap) Plans C, D, F, G, M, and N provide foreign travel emergency health care coverage when you travel outside the US and  Plans C, D, E, F, G, H, I, J, M, and N pay 80% of the billed charges for certain medically necessary emergency care outside the U.S. after you meet a $250 deductible for the year. These Medigap policies cover foreign travel emergency care if it begins during the first 60 days of your trip, and if Medicare doesn’t otherwise cover the care.

Be safe out there!