What if my claims are denied? Who will help me as a Liason to the company?
What if I need to retain an Attorney?
Does it cost anything extra to have a local Agent?
The IRS lists a number of minutes for the typical do-it-yourself Tax Preparer to complete a particular form. In that spirit, we recognize that Medicare has grown complicated. Therefore, in keeping with how the IRS provides an expected time allocation, A Senior or their Advisor, should give themselves about 30 minutes to read and comprehend the following:
Let's start with the traditional Medicare Supplement. If a Senior hasn't re-examined their Medicare Supplement in the last 2- 3 years, their policy might have become out-of-date or overly expensive, given the changes as legislated by President Obama's Health Reform ("The Affordable Care Act") as passed in early 2010. For instance, someone who is receiving Part B, or is typically retiring or otherwise leaving their group plan, will be asked by their Medicare Supplement Insurance Agent: "Would you like the "Select" (as in certain, lower priced "selected" hospitals) discount of about $220 - $400 per year?"
Their next question might be: "Would you prefer to pay the same rate as everyone in your geographic area, regardless of age?" (known as "community rating"). The next logical question would be: "Or, would you prefer to pay the same rate in the future as everyone is paying who enters at the same age when you entered? (called "issue age"). Finally, a Senior would be asked: "Would you trade-off a lower initial premium knowing that your rate was subject to an annual rate increase due to yearly age banding? (same as "attained age"). For more information on how rate increases are based on age, go to:
http://www.medicare.gov/Publications/Pubs/pdf/02110.pdf
and scroll down to page 19 and 20.
To start, let's presume that you understand that Medicare Part A covers your hospitalization (except a $1,157 co-pay) and Part B covers 80% of your Doctor's bills (after a $147 co-pay). For more details on this Part A and B, go to
http://www.medicare.gov/navigation/medicare-basics/medicare-benefits/medicare-benefits-overview.aspx
Note how this Medicare web site page has an easy-to-follow and informative grid which shows how the traditional Part A and Part B now interact with the newer Part C ("Medicare Modernization Act" in 2003) and Part D (madated in 2006). Again, presuming that you appreciate why a Medicare Supplement is called a "Medigap" policy, let's continue with our explanations of the differences in Part A, B, C and D and allow you to determine which is best for your budget and foreseeable health. Up until we had Part C and the new "select" version of Medicare Supplement, our decision was simple and easy: Pay about $155 per month (65 year old rate) for a Medicare Supplement Plan F (current rate from Blue Cross of IL, for a 65 year old) so that regardless of the number of times we went into the hospital, had surgeries, emergency room visits, X-rays, etc., what would have been out-of-pocket expenses are instead offset by our premium.
In 2005, the federal government passed landmark legislation regarding Prescriptions. We now have this choice: Either pay a non-enrollment penalty of 12% per year of the national average of the basic Part D (prescriptions) Plan, or enroll (even if we are only on $5 per month Generics) for another $38 (Blue Cross of IL price in 2012) per month in a Part D Drug Plan. So, our simple math is that we are paying $193 (the above described $155 Medigap + $38 for the Part D Drug Plan) per month, or $2,316 per year to cover all our medical gaps along with an extra $40+ per month copay for each brand drug. Let's take a step back and reflect . . . as husband and wife, that's $4,632 per year (not counting the $40 for each Brand Drug Prescription) even if we are in good health and only have a yearly physical and some blood work. Isn't there a way to save this almost $5,000 a year? We plan on maintaining our good health for the next 5 years, so we are motivated to learn about saving up to $25,000 during this 5 year time frame.
Medicare Advantage was designed for those wishing to save, while Medicare Supplement will always be a "money-in vs. co-pay covered". 15 million Medicare Beneficiaries have joined Part C, Medicare Advantage Plans. Surveys have consistently indicated that besides the typical zero premium (including the Part D), Seniors enjoy the same type of co-payments which they had when they had a group plan (HMO, PPO, etc) at work. Alternatively, the media reports the rising costs of Part A and B of Medicare, as it is designed as a fee-for-service.
Although the Doctors don't necessarily want to run so many diagnostic tests, they admit that much of this "defensive medicine" is to avoid lawsuits. Seniors in a Medicare Advantage Program appreciate that a Primary Care Physician and a Registered Nurse (RN) is appointed to serve as a type of central Organizer and Liaison. The newer trend is for Physician Assistants and Nurse Practioners to serve as Medical and Pharmaceutical Coordinators. This coordination of care has shown to have lower re-admission rates to hospitals and generally allows a Patient to feel that their prescriptions are not adversely reacting to each other and that their Specialists are communication with their Primary Care Doctor.
Medicare has rules about getting advice and obtaining the exact co-payment amounts from licensed Insurance Agents who are certified by the Medicare Advantage Insurance Companies (like Humana, United Health Care, Cigna,
http://www.medicare.gov/navigation/medicare-basics/medicare-benefits/part-c.aspx
First, notice about half way down the information about the Point of Service (POS). This is an important add-on feature to a HMO, which normally requires a Medicare Beneficiary to pay 100% of the medical bill, even if unknowingly they went out of the network. Scroll about 2/3's of the way down on the above described Part C page and click on the blue colored Medicare.Gov hyperlink which is entitled, "Compare Health Plans in Your Area". This list is defaulted and programmed to show the lowest out-of-pocket for the co-payments, and it is reconfigured every first or second week of October to allow ample shopping before the final December deadline for enrollment. January and February of 2011 are designed as a trail period for Part C, Medicare Advantage, which typically includes Part D. That is, by Feb 28, 2011, a Medicare Beneficiary can "disenroll" from Medicare Advantage. They would disenroll from Part C and simultaneously re-enroll in the same Part A (Hospitalization) and Part B (Doctors). This disenrollment would not require the purchase of a Medigap policy, although most Beneficiaries would be wise to realize that without a Medigap plan, their 20% of the Part B co-payments are unlimited. That is, if a Specialists or Surgeon's Part B charge for a complicated surgery is $20,000, their amount due would be $4,000.
Note that the Medicare website program also makes a pre-programmed input based on age, regarding the number of hospitalizations, Specialists visits, outpatient surgeries, etc. This list will even calculate the amount of your out-of-pocket (see the top line) if you have no Medicare Supplement and you pay the $1,157 deductible of Part A and your 20% of Doctor's bills. For instance, after clicking on "Compare Plans . . . " , then entering your zip code, check the "Medicare only" option and "no subsidy" option, then skipping the itemized listing of drugs, skipping the listing of pharmacies, $5,400 is listed on Medicare.Gov website under "original Medicare" (Part A and Part B only) as your presumed out-of-pocket cost for your medical expenses and drugs. Note that if you want to limit your selection to Part C, Medicare Advantage Programs which include Part D, on the upper left side box, labeled "Select Plan Types", unclick the first box (entitled "Medicare Plans without Drug Coverage). Also, unclick the last box (entitled "Prescription Drug Plans). Then scroll down and click the orange colored box, entitled "continue to plan results". Then, click on the particular company's plan and their list of co-payments will come up. From there, it is just a common sense annual cost calculation of adding up the expected co-payments. Typically, your Doctor and/or Specialist has told you what to expect in the 10 months following the March 1st lock down for the end of what Medicare refers to as the Open Enrollment Period of January and February (unless you move or go on government assistance). More simply, most Beneficiaries just add up their co-payments based on their expected medical utilization such as pending surgery, chemotherapy, extended treatment, and their prescriptions.
Again, the simplest approach is to download (or have an Agent provide a copy) of the Part C, Summary of Benefits, and write in the margin expected copays for each listed category, such as how many times you will go to the hospital and how long days you will stay, along with your Doctors and Specialists Office visits, and other events, even including accidents, such as a typical broken hip in a "slip-and-fall" in the ice or snow, or otherwise watery or slippery surface. Rather than adding for dental cleanings and dental x-rays, vision exams and glasses, hearings aid testing, etc, in this case, you'll subtract them as an out-of-pocket expense if they are offered as listed benefits. Note that many Part C Plans offer a Rider for around $35- $40 per month. This Rider provides for coverage for glasses, hearing aids and dental work which Medicare does not cover as these 3 areas do not meet Medicare's definition of "medically necessary".
Medicare Advantage Plans specialize in contracting Doctors, so it is a natural extension that they would also contract Hearing Specialist, Eye Doctors, and Dentists into a cost saving stand-alone Rider for those "non-medical" expenses. In the past, some Part C plans offered cash payments for hearing aids, free admission to gyms and non-medically necessary dental work. Most of the dental, vision, hearing aids, and gym memberships types of benefits are now reduced, have a separate monthly fee, like $10 for a gym membership, or are offered as a Rider for a nominal fee. As a cost saving tip, ask your Part C Plan if you are obligated to continue paying for the extra benefit Rider for a full or even partial year. It may be possible to avoid paying in the months, for instance, when you won't be going to the Dentist, and wish to stop your Rider payments before the 12 month period.
The basic money saving technique is to add up all your expected copayments, then compare that out-of-pocket total vs. your pre-set Medigap premiums + Part D monthly payments. If your health is declining or if you otherwise expect to be in a hospital a few times during this March 1st - Dec 31st time period (called "lock-in"), remember that these Part C Plans have a typical $3,800 annual stop loss when staying in-network and up to $6,700 for out of the network plus in-network. This means that once your co-payments add up a certain amount, you should compare this amount to what you would otherwise be paying for your Medigap + Part D. Once Seniors reach their early-to-mid 70's, their Medigap premium approaches $270 per month, + $40 per month for Part D premium . . . almost to same level as the "worst case scenario" of having several hospitalizations per year that would make the Part C stop loss equal to their premiums for Part D and Medigap.
Therefore, we observe that at ages 73+, there's not much financial reason to not have a Medicare Advantage when using the in-network services. Again, the stop loss when using the network becomes lower than the increasing premiums for the Medigap + Part D. At the younger ages of 65 - 70, healthy Seniors on this so-called pay-as-you-go plan can have a hospitalization, outpatient surgeries, numerous Specialists, testing, etc. and still save vs. the traditional Medigap + Part D. If you've been wondering why 14 million (as of mid-2010) Seniors (out of 36 million) have joined in since the Medicare Modernization Act in 2003, just do the calculations: Pay-as-you-go either beats "Medigap + Drug Plan", or at the upper ages, the Part C "stop-loss" is less than what you would have otherwise paid, even if you were in good health. In its most simplest of terms, those premiums for a Medicare Supplement + Part D Prescription Drug Plan are a definite out-of-pocket . . . whereas, the healthier you are on a Part C Medicare Advantage, the less you spend. Pay-as-you-go vs. planned premiums . . . it's that simple!
The other calculation Medicare Beneficiaries need to make is when using the Point of Service option on a Part C HMO in order to go out of network. After all, if a Beneficiary has been referred to a Specialist, such as an Oncologist or a Surgeon who is the best for a mandatory operation, they don't want to either be limited by a network directory of Doctors or listed Hospitals, or they don't want to have to wait until next January 1st to return to regular Medicare. Getting a second opinion from an out-of-network Specialist, even at the typical 30% co-payment isn't that much more expensive than staying in network. CMS (Center for Medicare Services), and their Telephonic Representatives at 800-MEDICARE can't provide the maximum medicare approved amount for a particular Doctors Office visit based on the CPT procedure code, zip code variance, etc. It is difficult for an untrained Layperson to navigate the Medicare.Gov and American Medical Association web sites to determine the precise amount.
When asked, the Benefit Specialists at Medicare respond that they are trained to simply tell a Beneficiary to just call the Doctors office. In theory, this answer should work, but in reality, calling that Specialist's Billing Manager or Office Manager seldom results in a fast or easy price quote. The Catch-22 is that you often must first be a patient to obtain a price quote for an office visit, yet don't want to commit to making the visit without first knowing that price quote. To simplify the matter, Billing Managers concur that in most cities, the medicare approved amount of the price range for an Office visit is from $125 - $175.
If we then take the mid-range of $150, and apply the 30% Point of Service copay, then the out-of-pocket would be only $50, only $10 more than an in-network Specialist copay. The standard advice on using the Point of Service Option on a Part C HMO is to limit yourself to just using this out-of-network option to Office visits to Specialists, and to avoid the testing, surgery, procedures and even blood work, and especially the hospitals at out-of-network facilities. The 30% copay in these areas can be excessive, but beginning in 2011, a calendar year cap (not prorated for those joining a Part C Plan in mid-year) of $6,700 will limit the annual POS exposure.
A common question is "if a Part C, combined with a Part D, is at a zero premium, where did this funding money come from? The simple answer is from the 1.65% FICA deductions from your income over the years. Most likely, you saw a 7.8% deduction on your pay statement? 6.15% of your salary (or twice that, 12.3%, if you were self-employed) was allocated to Social Security. This remaining 1.65% of your W-2 income was allocated the Medicare Trust Fund, along with another 1.65% from your employer. In short, 3.3% of your annual income was allocated Medicare during you most recent working years. When a Senior enrolls in a Part C, Medicare Advantage Plan, they temporarily suspend their Part A and B. Their Part B premiums of $96.80 continue regardless of whether they join Part C or not. When the insurance company, like United Health Care, branded by AARP, notifies Medicare that have another Enrollment, Medicare provides approximately $884 per month (more in urban locations, less in rural areas). To see the exact amount of your area's Part C subsidy, click here: www.StateHealthFacts.org.
Wouldn't it be great to say to AARP, or United Health Care, at the end of the calendar year: "I've been healthy (blood tests and a physical only, both of which are at no cost under Part C when done in-network), so I'd like a refund of that $10,068 which was allocated to me". Your reply would be that your allocation is pooled with the other Enrollees, and then paid out according to the list of benefits ($50 per Specialist visit, $325 per hospital day, $50 for emergency room visits, etc). You might be reminded by AARP or United Health Care that although you are disappointed that you are not eligible for your pro-rata refund for being in good health, should you have had a major surgery or hospitalization stay, your copay is capped at $1,500, again when using a in-network hospital.
The balance of that hospitalization is paid out of that risk pool from all the allocations of $884 per month. In short, many Seniors equate this $884 Medicare allocation to a type of major medical HMO or PPO with a zero deductible. In fact, many Seniors reading this web site might have a Spouse (or family member or friend) who is under age 65, needing traditional major medical type of health insurance. Their Premium (for a 63 year old) for a no-deductible HMO (with out of network benefits at a 30% copay) would average $500 - $700 per month.
Kathleen Sibilus, Chairperson of the Federal Government's Department of Health and Human Services has been vocal in the media recently that Blue Cross has raised its major medical premiums by over 39%, which was finally lowered to 24%. Blue Cross offers the justification that the poor economy and resulting high unemployment has caused the healthier premium paying customers to drop out. Their rationale is that their risk pool is now smaller, yet sicker, and their Actuaries have no choice but to raise rates. Blue Cross, Humana,
We are almost finished with this explanation of your new Medicare Options. We appreciate your endurance in this seemingly complicated description of Part C, Medicare Advantage. Have you ever known the Government to design one of the programs to be simple or otherwise easy to understand? If you don't have a son or daughter or other Financial Advisor to help your through this maze, help isn't far away. We'll conclude with how your tax dollars are hard at work at having educated national and local Representatives who can also explain all your rights and options. For instance, in addition to 800-MEDICARE, most states have a taxpayer provided public "Senior Health Insurance Program". Getting explanations and verifications from this SHIP public resource, or from 800-MEDICARE is a good starting point, but only a duly licensed Health Insurance Agent can recommend one Part C over another.
Medicare and SHIP typically don't have access or the time to allocate to research what networks your Doctors, Specialists, Hospitals, Labs, Urgent Care Facilities, Ambulatory Surgical Centers may be in. Most metropolitan areas have about 5 - 10 Part C Plans, some with a PPO and a HMO and some with and without the Part D included. An Independent Agent who serves as a Broker can save time and effort to establish which Part C plans and networks your Doctors and Hospitals participate in. Note that while your Doctor might be in network for office visits and treatments, that hospital where they want to perform the surgery must also be in the network. More simply, just because your Doctor is in-network doesn't mean that all the hospitals he or she has admission rights to, is in-network.
Are you now ready to more fully understand that complicated "Doughnut Hole"? We'll wrap up with an update on this more appropriately entitled "coverage gap". For now, it might help your understanding to realize that just after this complicated Part D structure was passed in the legislation, a Journalist had the burden to simplify the concept to his Readers. He explained that someone on Prescription Drugs starts in the hole, which is a metaphor for their $310 deductible. However, after that deductible is satisfied (on the less expensive "basic" plans), we now enjoy being "on" the doughnut, perhaps as in eating it? Our copays are fixed and low. While Generic drug copays aren't much different than our local Pharmacy ($4 - $6), our Brands at $35 - $40 are significantly lower than retail pricing.
However, although our out of pocket has been reasonable, Medicare is tracking our invoiced prices of our medications. The computer tells us that we've entered the coverage gap at $2,850 and we are back in that dreaded doughnut hole. However, to complete our travel on the doughnut, we finally find ourself back on the doughnut, but only after we have spend over $6,000 out-of-pocket before the end of the year. Then, our being "on" the doughnut is that we only pay 5% of our drug costs. On January 1st of the next year, we start with a new doughnut . . . For a more complete update on how Pharmaceutical companies will subsidize half of bran drugs, see our accompanying web page entitled "2011 update".
If you have taken about 20 - 30 minutes to have read this explanation, you'll appreciate the reasons why 1 out of 3 Seniors in many heavily populated states like CA and TX have switched from the traditional Medicare Supplement to Part C, Medicare Advantage. Based on the trending enrollment, Medicare estimates that by 2016, closer to half of Seniors would have made this switch. When Medicare first introduced the Part C alternative in 2004, our Federal Government spend a significant amount of taxpayer dollars to emphasize what they called the "Advantage" in the Medicare Advantage: no or low monthly premiums, the same Part D drug plan "inside" the Part C, focus on well care with no cost well care benefits, routine blood analysis, etc.
Medicare also pointed out their solution to give otherwise skeptical and reluctant Seniors an incentive to leave their Medicare Supplement as they pursued the money savings in the new Part C: At any time, for any reason, during their first 12 months, a Medicare Beneficiary prefers to leave the Medicare Advantage and re-join their traditional former Medicare Supplement . . . the new law, entitled the Medicare Modernization Act of 2003, allowed this "no questions asked" transfer. For details, see page 78 of the 2010 "Medicare and You" Handbook which is mailed out annually to all Medicare Beneficiaries around October or November of each year. This thick handbook is also downloadable on the front page of the Medicare.Gov website. Click on the 4th blue colored option (middle of the page) under the bold green lettering of "Getting Started".
Medicare's disenrollment figures have shown that only about 5% - 10% of those in Part C, have wished to return to Medicare Supplement. Virtually all of those transfers have been due to the onset of a major medical condition like Cancer, heart surgery, or copays on hospitalizations which are expected to reach the out of pocket calendar year limit, typically $3,800. In closing, call 800-MEDICARE and ask speak to a "Benefit Specialist" as the front line of Medicare Representatives are taught only a cursory overview of Medicare Advantage. The Benefit Specialist will confirm all the above information, but is unable to provide any suggestions on specific company's HMO, HMO-POS, PPO, network and Doctor/Specialist questions, etc. Since these plans typically have no cost, using an independent Agent wouldn't change any of the the cost or benefits of the plan. An independent Agent who serves as a Broker, as opposed to a "Captive" or "Career Agent", who lacks the ability to offer all local Plan C's, can provide network input, claims paying experience and can compare the differing copays of your Plans in your County. Exercise caution and diligence when reading someone's advice or listening to an unknowledgable source. Anyone has a constitutional right to speak on any topic, but it is when they accept payment that consumer protection laws take effect. Only a duly licensed Health Insurance Agent can solicit Part C plans and accept financial renumeration. Medicare has another level of consumer protection through special educational Part C, Medicare Advantage certifications with an acceptable examination score from each insurance company they represent. Ask anyone who gives you advice or induces you to favor one particular company, or even a Part A and Part B Medicare Supplement over a Medicare Advantage to provide a current paper or electronic copy of their Medicare Advantage certification as issued by the insurance company which is contracted with Medicare.
Rather than asking Billing Specialists in Doctor's Offices, or even Financial Advisors, who are not duly certified to discuss the merits of a Medicare Advantage, a Beneficiary might receive more accurate input and answers to their questions by phoning or visiting their state and taxpayer funded office of SHIP (Senior Health Insurance Program). Their State SHIP Counselor can answer any questions, and even might approach the position of giving options, but they are not allowed to make any recommendations. Every insurance company which is contracted by Medicare to offer the Part C, must certify their Insurance Agents via a written test with a passing score. An independent Insurance Agent, certified with several of the most popular Part C programs can provide each plans specific copays.
More importantly, unlike a Medicare or SHIP Representative, an independent Agent can compare the Medigap + Part D premiums to the anticipated copays based on your expected health conditions from the beginning of March to the end of the calendar year (10 month lock-in, unless eligible for a subsidized Drug Plans or relocating your residence). Remember that if you are a first time enrollee, at age 65 or having left a Medigap plan at any age, this March through December does not apply to you. In that case, you have the ability to return to Medicare Part A and B at any time during your first 12 months of having enrolled in Part C. Your Medicare Supplement will be effective the first of the following month.
Why is this important? The simple answer lies in timing your hospitalizations or expensive outpatient surgeries. The popular Medicare Supplements, like the Plan F and the Plan N (as introduced in the later half of 2010) cover the Part A Hospitalization deductible. Therefore, for first time Part C Enrollees during their 12 month trail period, they can anticipate their typical $250 - $325 per day hospitalization copay, and switch to a Medicare Supplement. As long as they time their switch prior to the end of the calendar month, and then are hospitalized after the first of the month, this strategy is sound, proven and will be confirmed by a "Benefit Specialist" (second Tier of assistance at 800-MEDICARE).
We trust that this above half hour tutorial has been time well spent to assist Medicare Beneficiaries and their Advisors on this "Medigap vs. Part C" question. Before 2003, the question was simple. Now, even the Medicare Supplements have become confusing. For instance, the most recently introduced Plan N is a hybrid: a $20 copay for a Doctor or Specialist (similar to the Part C), along with a $50 copay for an emergency room visit (again the same copay as most Part C plans). Now that Medicare Beneficiaries (only those who were previously in "coverage gap") have received their $250 stipend from 2010, we are relieved that our copay in coverage gap will gradually shrink over the upcoming years from 100% to 25%.
In 2020, the basic Part D Plan (usually the least expensive version) will only have a 25% copay "in" the doughnut hole (after the coverage gap begins). Most Part D Plans have set copays, like $4 - $6 for Generic prescriptions and $35 - $40 for Brands. The beginning of this coverage gap has gone up every year since it's inception in June of 2006, so we can easily predict that the $2,830 in 2010 will soon be over $3,000, resulting in $750/year out-of-pocket (25% of $3,000) for the basic (lowest cost) Part D Plans.
Even with the frozen allocation of 2011 funding for Medicare Advantage (to not exceed the 2010 funding), Experts have accurately predicted our current status that about 1 out of every 3 eligible Seniors have enrolled in a Part C, Medicare Advantage Program. In states where Blue Cross (which typically do not offer Medicare Advantage) is branded with a strong presence, fewer Seniors on a percentage basis are enrolled in Part C. As more Medicare Beneficiaries realize that the "worst case" scenario ($3,800 typical "stop-loss") is close to, or even below their Medigap + Part D premiums, Experts predict that 1 out of every 2 Seniors will stay enrolled in this newly popularized Part C. As with all things financial, Seniors are advised to be cautious and shop.
The best advice is to rely less on large, for-profit insurance companies, and instead rely more on where your tax dollars are being spent to educate you on this newer Part C alternative. Why not first call 800-MEDICARE, and then call your local taxpayer funded SHIP (Senior Health Insurance Program) and eventually find a licensed Health Insurance Agent who is certified by Medicare to discuss and enroll for all the major Part C plans which are shown in the back of your "Medicare and You" annual booklet. Good luck on your quest to reduce your Medicare Costs, but reserve ample time to research Doctor and Hospital Directories, itemizations of Co-payments and the Part C (usually with Part D included) vs. the Medigap + Part D decision.