Medicare Advantage Disenrollment Period: Having Second Thoughts?

January 1 through February 14 is the annual Medicare Advantage Disenrollment Period, also known as the MADP.  This time of the year is strictly for folks who have a Medicare Advantage Plan (MAPD) and wish to drop it and revert back to Original Medicare.

If you’re like most people and you’re satisfied with your Medicare Advantage plan and all is well in the world.   By now, you should have received your ID cards in the mail and probably filled some prescriptions and all is well.  But…

If all is NOT well, or if  you’ve had some unexpected changes to either your health or your healthcare providers, this time during the year may become more important to you.  As an example, let’s say you just opened your mail and opened a letter from your beloved that your primary care physician is moving out of the plan’s network.  Could be one of your necessary prescriptions disappeared from your plan’s formulary.  If you want to go back to Original Medicare at this point (A and B) you can, and you also have to enroll in a stand-alone Medicare PDP plan, too.

Essentially, for whatever reason you choose, if you have an MAPD plan, during this timeframe you can drop it, no questions asked.  Any other time during the year you generally have to keep it.  The same time period does NOT apply to those already on Original Medicare, or those with Medicare Supplements.

To enact your rights during the Medicare Advantage Disenrollment Period, you can contact your current plan or get in touch with the folks at Medicare by calling 1-800-MEDICARE.  Your disenrollment will occur as of the first day of the month following its acceptance and at that time you will be back on Original Medicare only.  Again, you will want to pick up a PDP plan so you have prescription drug coverage and might also want to consider picking up a Supplement, also referred to as Medigap.  Check Medicare.gov to see which companies offer Supplements in your area.  Each company offers the same Supplements as their benefits are dictated by the state but each private insurance company prices the product differently.  You can compare all the plans prices at Medicare.gov.

Before you go dropping your Medicare Advantage plan , it’s important to remember you are absolutely not guaranteed enrollment in most Medicare Supplement policies unless it’s during your 6 month Open Enrollment Period that takes place when you turn 65 and/or when you enroll in Medicare Part B, whichever happens last. During this time, you have guaranteed acceptance and the insurance company cannot turn you down based on preexisting conditions and they also cannot make you wait for any treatment that was prescribed prior to your enrollment.  Which means if you’re not in your OEP that there is the possibility that you won’t be able to medically qualify for a Supplement.  If this happens, you’ll l remain on Original Medicare.   only until the fall when the next AEP rolls around.  Make sure that this is an acceptable outcome to you prior to dis-enrolling from your current plan.

The Takeaway:

Medicare Advantage Disenrollment Period can be a benefit to exercise if you’re dissatisfied with your current MAPD plan.  It can allow you to leave a plan that is not a good fit for you.  Just make sure you’re aware of the implications of doing so and are content with the benefits offered by Original Medicare.  Also be sure to pick up that Prescription Drug Plan if you don’t want to pay a late enrollment penalty down the road.

 

 

Medicare Part B vs. Part D Prescription Drugs – Are You in the Right Medicare Plan?

If you’re in the wrong type of Medicare coverage, you may be paying a whole lot of money for prescription drugs billed under Medicare Part B, not Medicare Part D.  This is especially true if you get cancer.  How can this be?  Read on.

Medicare Part D covers Prescription Drugs, right?  Not always… Medicare Part B can play a big role.  In fact, there are many instances when Medicare Part D actually doesn’t cover all drugs you may need during the course of your healthcare.  When medical conditions get serious, many medications aren’t covered by Part D.  Instead, they’re covered by Part B.  Knowing the difference between the two could save you hundreds if not thousands of dollars when choosing your Medicare coverage.  This is especially true if you have cancer as chemotherapy drugs and all the associated medications that come into play during cancer treatment are extremely expensive.  

Medicare Part D Covers Prescriptions at Retail Pharmacy Locations or Mail Order

Generally, Part D covers prescription drugs at a retail or mail-order pharmacy.  Let’s say you get bronchitis; you make an appointment with your primary care physician, he/she sends your prescription into your local pharmacy.  When you pick it up, you pull out your PDP or your MAPD card, swipe it and pay the associated copay or coinsurance.  Simple, right?  Right.  

But what if you need a prescription drug that’s administered by a doctor? Let’s say you have macular degeneration, and you’re seeing an ophthalmologist for treatment.  Many folks with this condition get very expensive shots in the eye to slow the degeneration.  Clearly (no pun intended) you can’t do this yourself.  When this happens, the doctor actually bills the prescription under Medicare Part B, not Medicare Part D. 

Same goes for prescription drugs that are administered in an outpatient setting.  If you’re having your knee scoped or drained, and the doctor shoots localized anesthesia into your knee before the procedure, that will hit Medicare Part B, not D.    

So, generally, Part B covers drugs that usually aren’t self-administered, which is a fancy way of you’re not taking them by yourself.  The doctor, nurse practitioner, surgeon, anesthesiologist, etc. are giving them TO you.

Here’s a short list of medical conditions that, when prescription drugs are used in your treatment, are covered under Medicare Part B, and not covered under Medicare Part D.  

Cancer
  • Oral cancer drugs: Medicare helps pay for some cancer drugs you take by mouth if the same drug is available in injectable form or is a prodrug of the injectable drug. As new oral anti-cancer drugs become available, Part B may cover them.
  • Oral anti-nausea drugs: Medicare helps pay for oral anti-nausea drugs used as part of an anti-cancer chemotherapeutic regimen. The drugs must be administered immediately before, at, or within 48 hours after chemotherapy, and must be used as a full therapeutic replacement for an intravenous anti-nausea drug
Hepatitis

Hepatitis B shots: Usually a series of 3 shots covered only for people at high or medium risk for Hepatitis B.

Osteoporosis
  • Injectable osteoporosis drugs: Medicare covers an injectable drug for women with osteoporosis who meet the coverage criteria for the Medicare.
Transplants
  • Immunosuppressive drugs: Medicare covers immunosuppressive drug therapy for people who received an organ or tissue transplant for which Medicare made payment.

Other Prescriptions Covered Under Medicare Part B, not Medicare Part D

  • Some other vaccines when they’re directly related to the treatment of an injury or illness (like a tetanus shot after stepping on a nail).
  • Durable Medical Equipment (DME) supply drugs: Medicare covers drugs infused through an item of DME, like an infusion pump or a nebulizer.
  • Injectable and infused drugs: Medicare covers most injectable and infused drugs given by a licensed medical provider if the drug is considered reasonable and necessary for treatment and usually isn’t self-administered.
  • Antigens: Medicare helps pay for antigens if they’re prepared by a doctor and given by a properly instructed person (who could be the patient) under appropriate
  • Blood clotting factors: If a person with Medicare has hemophilia, Medicare helps pay for clotting factors they give themselves by injection.
  • Parenteral and enteral nutrition (intravenous and tube feeding): Medicare helps pay for certain nutrients for people who can’t absorb nutrition through their intestinal tracts or can’t take food by mouth.

Are You In The Right Medicare Plan?  

Here’s where it gets interesting.  If you have a Medicare Supplement Plan (Medigap), these drugs are usually covered at 100%, especially for the two most popular plans, Medigap C and Medigap F.  That’s because these plans cover 100% of the Medicare Part B costs, which includes the deductible and any associated coinsurance.  The third most popular Medigap plan is Plan N, and if you have this one you’d be covered at 100% after paying the Part B deductible.

If you’re on a Medicare Advantage (MAPD) plan, odds are you’ll be paying 20% of the cost for Part B drugs, all the way up to the annual Maximum Out Of Pocket (MOOP).  To make sure, you need to pull out your Annual Notice of Change or your Summary of Benefits right now.  Flip to the Section entitled, “Medicare Part B drugs.”  If I were a betting man, (and I’m not) I’d bet you right now your MAPD plan doesn’t cover Medicare Part B drugs any more than at an 80% level, leaving you 20% to pay.  You stand a very good chance of hitting your MOOP very quickly if you have cancer, or any other serious condition requiring hospitalization involving prescriptions administered by hospital staff.  

The Takeaway:

If you’re turning 65 or otherwise now eligible for Medicare, this is an often overlooked “gap” in traditional Medicare, as well as most Medicare Advantage plans.  Most agents breeze right by this section in their presentations, and it’s not prominently one of the topics in “educational” presentations or seminars.  But, you clearly need to pay attention to it since over 1.6 Million people in the United States will get cancer in a given year.  Chemotherapy drugs are not cheap by any stretch of the imagination if you happen to be stricken with cancer and neither are osteoporosis drugs.  

If you’re playing it safe and this gap is of concern to you, I’d seriously consider getting a Medicare Supplement plan, if you can afford the monthly premium.  9 out of 10 times, a MAPD plan is going to be cheaper (along with a whole other set of considerations, click here for more on those) but you’ll have to cough up 20% of the Part B drugs if you need to.  

 

2017 Medicare Star Ratings Released

Medicare Advantage Star Ratings have been released for 2017 and for some large insurers, the news isn’t pretty. The news is substantially better for smaller, regional plans which follows a historic trend. However, whether or not a 5 star plan is available to you largely depends on where you live. What does this mean for you and your wallet? Read on.

Medicare Star Ratings – Why They’re Important to You

The Centers for Medicare & Medicaid Services’ (CMS) five-star ratings of private Medicare plans are a big deal for insurance companies, as higher ratings are tied to considerable bonus payments from CMS to them. Check out my post on Star Ratings for additional background by clicking here.

Some of these payments can be kept by the insurer as pure profit, however a percentage of these must be invested back into the Medicare Advantage plan as increased (better) benefits or lower monthly premiums. That’s good for you, the consumer as this essentially makes these products more attractive. Makes sense, right? Higher star ratings generally means better benefits and lower premiums which attracts more customers.

If a MAPD or Prescription Drug Plan (PDP) achieves 5-star status in any given year, the real “win” for that company is that they can enroll members year-round, while other insurance companies can only do so during the Annual Election Period (AEP) which runs from October 15 through December 7. Essentially, achieving five stars gives the plan a huge sales and marketing advantage over their competitors.

The Medicare Advantage (MAPD) landscape across the county is largely occupied by big insurance companies like United Healthcare (AARP brand) Blue Cross and Blue Shield, Humana, Cigna and Aetna. However, there are many smaller companies who also offer MAPD plans for sale that are regional in nature. Historically, it’s the smaller companies that have been awarded high star ratings, and that trend continues for 2017.

The Large Insurers – Star Ratings Performance

#1. Let’s start with Aetna, which also operates as Coventry in many states. Looks like they were the big winner this year among the large insurance companies. For 2017, 91 percent of the insurer’s MA members will be in four-star or higher Medicare Advantage and prescription drug (MA-PD) plans. Aetna recently noted it has the highest percentage of Medicare members enrolled in four-star plans among publicly traded companies. No Aetna plans achieved a 5 star rating for 2017.

#2. Anthem, the parent company of many Blue Cross and Blue Shield plans said nearly 51 percent of their Medicare Advantage members will be enrolled in plans that achieved four stars or higher and approximately 22 percent of members enrolled in plans that achieved four stars or higher in 2016. So while the overall number of members in a highly-rated plan is high, no Anthem plans achieved a 5 star rating for 2017.

#3. United Healthcare/AARP hasn’t sent out a press release, and didn’t address their Star Ratings in their latest earnings call. However a quick review of their plans shows they achieved one 5 star rating in an HMO that serves several Texas markets.

4. Cigna and Humana (which are in the middle of merger discussions) saw a reduction in its ratings, as next year only 20 percent of its MA customers will be in plans with four stars or higher. To throw gas onto the fire, Cigna is still on a government-imposed sales and marketing ban and isn’t expected to be allowed to enroll new members into their Medicare Advantage and PDP plans until early 2017.

Smaller Insurance Companies Perform Better…Again

CMS announcement of the 2017 Medicare star quality ratings, Kaiser Permanente’s Northern and Southern California, Colorado, Northwest and Mid-Atlantic States regions received 5 out of 5 stars each, the highest overall rating. Kaiser Permanente’s Georgia and Hawaii regions earned 4.5 out of 5 stars.

In fact, you won’t find any “household name” companies other than Kaiser and the one United Healthcare plan achieved 5 stars this year.

Overall MAPD and PDP Quality Improving

According to CMS, approximately 49 percent of MAPDs in 2017 earned four stars or higher, which is up slightly from 2015.

Overall, CMS said nearly 70 percent of Medicare Advantage enrollees will still be in plans that receive at least four stars for quality in 2017.
Just over half of private Medicare customers signed up for plans that received at least four stars in 2014. But the new figure is down slightly from this year, when just over 70 percent of the 17 million-plus Medicare Advantage customers enrolled in the high-quality plans.

There has been similar improvement in quality ratings for prescription drug plans. Just over 40 percent of Medicare beneficiaries who enroll in stand-alone prescription drug plans are expected to be in plans with at least four stars next year. That’s up from just 9 percent who were enrolled in such high-performing plans in 2014.

2017 MAPD 5-Star Rated Plans

KelseyCare Plan Administrators
Enrollment: 30,769
State: Texas

Kaiser Foundation Health Plan
Enrollment: 1,086,961
State: California

Kaiser Foundation Health Plan of Colorado
Enrollment: 104,117
State: Colorado

Kaiser Foundation of the Mid-Atlantic States
Enrollment: 68,575
States: District of Columbia, 11 counties in Maryland, 9 counties in Virginia

Tufts Associated Health Maintenance Organization
Enrollment: 107,311
State: Massachusetts

Blue Cross Blue Shield of Massachusetts HMO Blue
Enrollment: 10,302
State: Massachusetts

Group Health Plan
Enrollment: 53,633
States: Minnesota, Wisconsin

United Healthcare AARP Medicare Complete Plan 1
Enrollment: 31,035
State: Texas

Physicians Health Choice of Texas
Enrollment: 31,035
State: Texas

Capital District Physicians’ Health Plan Universal Benefits
Enrollment: 3,827
State: New York

Gundersen Health Plan
Enrollment: 14,462
States: Iowa, Wisconsin

Optimum HealthCare
Enrollment: 45,153
State: Florida

Kaiser Foundation Health Plan of the Northwest
Enrollment: 84,567
States: Oregon, Washington

The Takeaway:

Almost 18.5 million individuals will be enrolled in private Medicare Advantage plans next year, representing about one-third of all beneficiaries. The higher the Star Rating, the more money the insurance company receives from CMS. A portion of that bonus money must be spent on better benefits and lower premiums, which is good for you and your wallet. If you are lucky enough to live in an area boasting a 5-star plan in 2017, you may enroll in those plans anytime during the year; you don’t have to wait until the next AEP.

Medicare Advantage Star Ratings and Your Wallet

Assigning Medicare Star ratings to Medicare Advantage plans is attempt by the government to neatly rate the quality of a Medicare Advantage (MAPD) plan.   Like most attempts to aggregate lots of information into a small rating system for easy public consumption, it’s flawed. Plan Star ratings should be one aspect of your Medicare insurance coverage decision.  However, it shouldn’t overshadow other considerations like price, network, MOOP or your prescription drug coverage.  Star ratings are important to you, because ultimately if your plan is rated 3 stars or below, it generally means you’ll pay more money for your policy or your benefits won’t be as rich as plans with 4 Stars or higher.    

The Centers for Medicare and Medicaid (CMS)  established a five star rating system in order to help consumers identify and educate the consumer as to the overall quality of their Medicare Advantage (MAPD) Prescription Drug Plan (PDP) plans.  

The star rating system is numbered from 1 to 5, with 5 being the best and 1 being lowest in terms of quality of service:

5 Stars- Excellent

4 Stars- Above Average

3 Stars- Average

2 Stars- Below Average

1 Star- Poor

Medicare Advantage Star Ratings

Medicare Advantage (MAPD) health plans are rated based on the following categories:

1) Staying healthy: screenings, tests and vaccines. CMS evaluates whether members of a particular health plan got various screening tests and vaccines and whether they got other check-ups that would go a long way in keeping them healthy.

2) The management of chronic conditions: individual health plans are graded on their ability to ensure that members with long term conditions got tests and treatments that helped in managing their chronic conditions.

3) The experience of beneficiaries with the plan: the CMS routinely surveys members to elicit their experiences with different health plans, and this is factored into the STAR rating that each health plan will get.

4) Members’ complaints: beneficiaries under a certain plan can lodge complaints if they encounter problems when using their plan. Medicare also routinely evaluates the health plan of the private insurance company to plot the plan’s performance and improvement over time.

5) Customer service: this includes how often members with appeals and other problems are handled by the health plan’s customer service.

Medicare Stars Rating Flawed?

I mentioned above the ratings system is flawed. I say that, because every year, CMS changes the rules and how they score health plans.  Think about it:  There are over 54 million people on Medicare.  Can you really break down plan ratings across the country in only one way?  Can you really break down these ratings into a neat 5 star sliding scale?  The obvious answer is no, and policy professionals and insurance companies quietly (and sometimes not so quietly) let CMS know about it.  Differences in geography, access to hospitals and doctors, income and even attitudes about what it means to be healthy mean the results are suspect and imperfect.

I won’t spend any more time here on the flaws, as plenty of people smarter than me have already done so.  If you’re a policy wonk and would like to check those out, you can click here, here, or here.


Medicare Advantage Star Ratings Affect Your Wallet

Here’s what it means for you, the consumer.  In a nutshell, when you join a Medicare Advantage plan the federal government (CMS)  pays insurance companies a set dollar amount for your care every month.  Plans rated 4 Stars or higher get more money from the government for everyone enrolled in the plan.  This money really adds up, quickly.  Let’s say there are 10,000 people enrolled in the same MAPD plan.  And let’s say, for the sake of argument, that insurance company gets $1,000 per month, on average, from the government for every person’s medical and prescription drug care.  That’s $10 Million dollars per month, or $120 Million dollars per year.  Yes, that’s a big number, but remember the Medicare Advantage plan is on the hook for all the medical and prescription drug care (from the healthy to the very ill) of those 10,000 members.

So, let’s say the plan achieves a Star Rating of 4 Stars.  The insurance company will earn an additional 5% on top of the $1000 they get for all 10,000 people on that same plan.  Quick math means that’s an additional $500,000 every month MORE that insurance company makes, and $6 Million dollars more a year.  Some of that can be profit for the insurance company, but the government mandates a portion of this money MUST be spent on making the Medicare Advantage plan’s benefits better.  That’s where your pocketbook comes in.

Since Medicare Advantage plans need to take a portion of that additional 5% and put it back into the actual insurance plan, they usually do so in two ways.

  1. Lower the plan’s monthly premium
  2. Make benefits richer.  (Ex. Lowering doctor’s copay from $10 to $5, lowering hospital copays, etc.)

Medicare Advantage plans get a Star rating every year.  So if you think about it, if you’re in a 3 Star plan instead of a 4 star plan over the course of 5 years, and those Star ratings remain the same all 5 years, you’re missing out.  Why?  Because remember, a portion of the money the 4 Star plan gets over those 5 years MUST be put back into lower premiums or better benefits.  After 5 years, the Medicare Advantage plan rated 4 Stars should essentially, be cheaper (both in premium or by having better benefits) than the 3 Star plan will.

The Takeaway

Do Star ratings really matter?  Sure.  They matter because they give an overall indication as to the quality and customer experience of a given Medicare Advantage plan.  Is there a significant difference between a 3 Star plan and a 4 Star plan, from the consumer’s standpoint or experience?  No.  There are flaws, to be sure and the “rules” insurance companies must abide by change every year.  The real impact to YOU, the CONSUMER is that higher-performing MAPD plans that receive 4 Stars or higher are paid more from the federal government.  Half (or more) of that additional money MUST be put back into benefits or lower insurance policy premiums, which in the long run, is better for you and you wallet.  

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).

 

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.

Welcome to Prepare for Medicare

Hello, world!  Welcome to Prepare for Medicare. We’re going to cover a lot of ground on this site, hopefully a bit educational and some fun sprinkled in to make your life easier, save you money and hassle.  We’re talking about everything Medicare on this site with (I’m sure) some sidebars into retirement, money matters, etc.  Along the way, I’m going to teach you what you need to know and how to filter out all the noise.

Just before your 65th birthday (and for the rest of your life) insurance companies will absolutely flood you with ads. Direct mail will jam your mailbox, TV and newspaper ads with smiling celebrities or unassuming presenters will urge you to call for, “information” and blinking, flashing pay-per-click advertising online will promise the moon.  Meanwhile, news anchors and newspaper headlines blare out various injustices and scams perpetrated by insurance agents and companies that hurt normal Americans just tying to buy the right coverage.   Yet, for the more than 40 Million people already on Medicare and the estimated 10,000 Baby Boomers turning 65 every day, coverage choices must be made.

Sticking your head in the sand won’t help; the wrong choice could cost you thousands of dollars.  How do you know if you’re in the wrong plan?  Paying too much?  Enrolling in a quality, reputable plan?  Using a quality, reputable insurance agent?  Is the system beating you, or are you beating the system? If you’re a caregiver helping your parents or other family members decide, what’s your role?  Where can you turn for objective guidance?

It comes down to this: You can learn how to use the system to your advantage.  You either need to educate yourself and understand the tools to do it yourself, or be able to identify a professional independent insurance agent to help you navigate through the maze.  This site is a living, breathing opportunity for you to do both.

Welcome!