Taking the Confusion out of Medicare
by Brian Bailey
Brian Bailey takes the confusion out of Medicare by answering frequently asked questions.
For more information or to get started with a quote, contact Brian.
What is Medicare?
Original Medicare is a federal health insurance program available to individuals 65 years of age or older. Original Medicare is also available to younger individuals with certain disabilities and people with end-stage renal disease. Original Medicare is a fee for service plan managed by the Federal Government and provides basic coverage for medical expenses.
What is Medicare Part A?
Part A covers inpatient care in a hospital or a limited stay in a skilled nursing facility. It also helps cover hospice care and home health care. A Medicare beneficiary will not pay a Part A premium as long as he or she has worked 40 or more quarters throughout his or her life (10 years on average).
What is Medicare Part B?Part B is optional but very important because it covers the majority the medical services a Medicare beneficiary will obtain. Medicare Part B covers doctor’s services, outpatient care, outpatient surgeries, physical therapy, occupational therapy, chemotherapy medications, air/ground ambulance, and many more services. In 2017, the majority of Part B beneficiary usually have to pay a monthly premium of $134.00 however some older recipients pay a monthly premium of $109; however this payment can fluctuate due to income guidelines, late enrollment penalties, and/or annually (not anticipating a standard increase for 2018).
What is Medicare Part D (PDP)?This is a prescription drug insurance program (PDP) available to everyone who has Medicare, regardless of income or health status. A Medicare beneficiary only must be enrolled in Medicare Part A to enroll in a Medicare Part D plan. Private companies provide the insurance coverage; beneficiaries choose the drug plan and pay a monthly premium. Due to the number of options available you should ask your advisor and/or review Medicare.gov’s website which provides you the tools to compare the coverage/cost of the 27+ options that are available to Montanans.
What is a Medicare Supplement Plan?Medicare Supplement policies are purchased in addition to Original Medicare. Supplement Plans are designed to pay some of the costs that Original Medicare does not cover – for instance Original Medicare’s deductibles and coinsurance. While these plans do not include prescription drug coverage, beneficiaries can purchase a separate stand-alone Medicare prescription drug plan (Part D). If purchased, Medicare is still the primary payer. An eligible Medicare beneficiary can apply for this type of coverage during any time of year. However, unless he or she qualifies for the initial 6-month open enrollment period (automatically starts the month the beneficiary turns 65 and enrolled in Part B) or qualifies for a Guaranteed Issue Right, Medicare Supplement carriers can turn you down if you do not meet their medical underwriting requirements.
What are the primary situations that would qualify me for a Guaranteed Issue Right for a Medicare Supplement (no underwriting)?You are in a Medicare Advantage Plan, and your plan is leaving Medicare or stops providing care in your area, or you move out of the plan’s service area.
You have Original Medicare and an employer group health plan (including retiree or COBRA coverage) or union coverage that pays after Medicare pays and that plan is ending.
(Trial Right) You joined a Medicare Advantage Plan or Programs of All-inclusive Care for the Elderly (PACE) when you were first eligible for Medicare Part A at 65, and within the first year of joining, you decide you want to switch to Original Medicare.
(Trial Right) You dropped a Medicare Supplement policy to join a Medicare Advantage Plan (or to switch to a Medicare SELECT policy) for the first time; you have been in the plan less than a year, and you want to switch back.
You relocate outside your current Medicare Advantage and/or Part D Plan Service Area
*If you are in a Guaranteed Issue period, it is important to act quickly. You have 63 days after the guaranteed issue trigger occurs to obtain coverage. Please refer to the Medigap booklet in Section 3 to learn more about your Guaranteed Issue Rights.
Which Medicare Supplement Plan and Insurance Carrier is Right for Me?
There are many different plans and carriers and plans to choose from. With that being said, Medicare Supplement Plans are standardized therefore each insurance carrier’s coverage is identical however their insurance premium rates are not. Therefore, price is very important. I generally recommend Plan G because this plan provides the best level of protection outside of Plan F. The only difference between Plan G and Plan F is that a Plan G participant would have to meet the initial Part B deductible (currently $183) each calendar year before the supplement carrier would provide 100% coverage for Part A and Part B services like Plan F. Plan G is therefore less expensive than Plan F. It’s also important to note that in 2020 newly eligible Medicare Beneficiaries will not have the option to enroll in Plan F. Without new (younger enrollees) I would anticipate Plan F rates for current enrollees to increase at rapid rate. With so many options to choose from the Montana Commissioner of Security and Insurance’s websites www.csi.mt.gov provides you access to a Medicare Supplement Rate Comparison chart that can provide you an easy way to compare each insurance carrier’s premiums. Secondly, request information regarding the insurance carrier’s premium rate history for the previous 5 years. This will give you a better idea of what you can anticipate paying in premiums over the next 5 years (not guaranteed). Thirdly, ask your advisor or potential insurance company how many Montanans are insured thru their company. If the carrier’s current Montana enrollment statistics are low there is higher probability that their future insurance premium rates could be more volatile due to their inability to spread their members’ risk. Finally, some Medicare supplement carriers are starting to pay for clients gym memberships which should be considered in planning to or currently utilizing a gym.
At Bailey Insurance Services we generally recommend BCBS, Humana, or Aetna Plan G currently. If you are losing your current Medicare Advantage coverage due plan termination we recommend BCBS because they are the only plan that is providing Guaranteed Issued Plan G (no medical questions), are competitively priced, include a gym membership program, and have a large customer base (law of large numbers). As an independent agency we work with many carriers and strive to always provide the most competitive products thru our many insurance company relationships.
If you enroll in a Medicare Supplement Plan you should consider enrolling in a Medicare Part D plan (Prescription Plan) as this is NOT included in your Medicare Supplement Coverage. We can assist you in reviewing/selecting a Part D Plans (23 options in 2017) based upon the medications you take by entering them in Medicare.gov Part D Plan Finder Tool. This amazing tool allows us to project your premium and out of pocket costs for each plan based upon your current medications for 2018.
What is a Medicare Advantage Plan?Medicare Advantage Plan — Medicare Advantage (MA) is also known as Medicare Part C. An MA plan is an alternative to Original fee-for-service Medicare. MA plans are sponsored by Medicare, which pays private insurance companies to provide health services to beneficiaries who enroll in these plans. In order to join an MA plan, a beneficiary must be enrolled in both Medicare Part A and Part B and must continue to pay the Part B premium. There are no age requirements to enroll in an MA plan. When joining a MA plan, a beneficiary still has Medicare and retains the full rights and protections entitled to all beneficiaries. Beneficiaries receive all Medicare-covered benefits through the private MA plan they elect. Some MA plans offer Medicare prescription drug coverage (these are known as MA-PD plans), but other plans do not (these are known as MA-only plans). If a beneficiary joins a MA-only plan, he or she may choose to select a separate Medicare Part D prescription coverage.
Why would I select a Medicare Advantage Plan?
Premium Savings: Medicare Advantage Plan’s monthly premium costs can be anywhere from $0 to $102 per month in Montana however the most popular Medicare Advantage Plans in the state of Montana have a monthly premium cost of $27-$75 (both include prescription coverage (Part D)).
You understand your potential financial risk: Medicare Advantage plans are required to limit your out-of-pocket expenses for Medicare Part A and B eligible services to no more than $10,000 annually (MA plans can have a lower out of pocket limit) whereas Original Medicare places no limit on what a Medicare beneficiary’s exposure may be. This can become particularly alarming if a claimant were to have to utilize expensive Part B medications (primarily injectable medications administered in an office setting) which include chemotherapy and rheumatoid arthritis and dialysis medications. Not only could a Medicare eligible patient have to pay 20% of the cost of each expensive medication but generally these medications are taken quite frequently over a long period of time. By selecting a Medicare Advantage plan (which requires the enrollment in Part B) you are provided a clearly defined level of protection that Original Medicare does not provide. In 2018 Medicare Advantage Plan Options could have anywhere between a $3900-6700 out of pocket limit for in-network services.
You have a higher tolerance for accepting risk and/or are healthy: Purchasing any insurance coverage requires you to not only examine your coverage and its costs but to predict the future. While you cannot predict the future you must evaluate the reason(s) you purchase insurance. Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. Utilizing that definition, are you better off paying potentially over $1250+ a year to an insurance carrier for Medicare Supplement Plan F coverage that you may not utilize yet have peace of mind of knowing your out of pocket costs will be limited (if any) if something unexpected were to happen. Or are you better off saving $1,000+ in annual premium by electing a Medicare Advantage Plan with prescription coverage with the understanding that the worst case scenario may cost you $3400-$9500 in maximum out of pocket costs for that calendar year. There is no right or wrong answer.
You are under the age of 65: Medicare Supplement insurance carriers now are required to provide Medicare Supplement coverage to all Montanans however the premium rates are 3 times higher than a 65+ year old. In this case I would highly recommend the purchase of a Medicare Advantage Plan which is available to you and where premiums are not based upon the applicants age. Not only does a Medicare Advantage plan define your risk more sufficiently than Original Medicare but often times Medicare Advantage Plan’s prescription coverage and additional benefits (gym membership, dental, vision) can provide you some additional benefits you may otherwise not receive.
So if you were in my shoes which coverage would you select?It depends and No we don’t have a crystal ball. However here are some things to consider –
I am just becoming eligible for Medicare due to turning 65?If you are just becoming eligible for Medicare due to turning 65 and in reasonable health you can try a Medicare Advantage Plan (potentially save monthly premiums) for up to 12 months from your Part A effective date while retaining your guaranteed issue right (no medical underwriting) to elect a Medicare Supplement plan. This defined as a “trial right”. This allows you to try a Medicare Advantage Plan (while saving premiums) but grants you the opportunity to switch to a Medicare Supplement Plan the first of the following month (during initial 12 month period) if you do not like this coverage or find it to be more beneficial to pay a higher premium for insurance protection (major medical issue were to arise). If you take this route you get the premium savings that come with a Medicare Advantage Plan but have the ability to switch to a Medicare Supplement if necessary. If things go well during that 12 month period you will need to decide if you have the risk tolerance to continue the Medicare Advantage Plan or you can transition guaranteed issue to a Medicare Supplement Plan (I highly recommend Plan F).
I am a Veteran with VA coverage. Should I consider a Medicare Advantage Plan?Maybe. Medicare Advantage Plans may provide more flexibility to go outside of the VA system, can include additional benefits (gym membership, vision, etc.), and more affordable generic medication co-pays for most. Price of this additional coverage should be considered.
What if I am currently 75, have a Medicare Supplement Plan and have had some major medical issues that are unresolved?In this case, I would recommend that you maintain your current Medicare Supplement Coverage – however, you need to make sure that the prices you are paying are still competitive. If not, you should retain your current coverage but explore alternative Medicare Supplement providers (recommend Plan F) to see if you can receive comparable coverage for a lower premium. This may limit your options as insurance carriers can make a coverage determination based upon your medical history. Also, you need to review your Medicare Part D prescription coverage during the Annual Enrollment Period (October 15th-December 7th) to ensure you are receiving the best prescription coverage for the lowest premium.
What if I am currently 75, I have a Medicare Supplement Plan F and I’m in good health?You could try a Medicare Advantage Plan if you have never tried it (for up to one year) with the guaranteed issue right to return to your Medicare Supplement if you would like. You could take advantage of this opportunity at the Annual Enrollment Period. You also could review alternative Medicare Supplement carriers to see if there is a coverage option that is more competitively priced. You can do this at any point during the year. Remember to review your Part D prescription coverage during the Annual Enrollment Period as well.
Is there any Assistance Programs that could help me pay for my Medicare coverage?Yes.
If a Medicare beneficiary has low income and/or assets, they may qualify for state and federal programs that provide assistance in paying their Medicare premium and/or out of pocket medical costs. These programs include the following:
Medicare Savings Program — These programs provide help paying Medicare premiums to beneficiaries and, in some cases, may also pay Part A and Part B deductibles, coinsurances, and co-payments if they meet certain guidelines. There are currently 4 kinds of Medicare Savings Programs:
Qualified Medicare Beneficiary Program (QMB)
Qualified Individual Program (QI)
Specified Low Income Medicare Beneficiary Program (SLMB)
Qualified Disabled and Working Individual Program (QDWI)
Extra Help/Low Income Subsidy — If a beneficiary meets certain income and resource limits, he or she may qualify for Extra Help from Medicare to pay the costs of Medicare prescription drug coverage. A beneficiary may qualify if he or she has up to $17,820 in yearly income ($24,030 for a married couple) and up to $13,440 in resources ($26,860 for a married couple). Drug costs in 2017 for most people who qualify will be no more than $3.30 for each generic/$8.25 for each brand-name covered drugs. Other people pay only a portion of their Medicare drug plan premiums and deductibles based on their income level.
State Pharmaceutical Assistance Programs (Big Sky Rx Program for Montana Residents) — Big Sky Rx provides financial assistance to Medicare clients to pay for Medicare approved prescription drug plan insurance premiums (up to $34.00/month). To qualify a single person’s annual income must be less than $23,760 and $32,040 for couples. This program does not consider assets in assessing an applicant’s eligibility therefore Many Montanan’s qualify for this State of Montana program that is funded by tobacco tax revenues the state receives!
Have more questions? Call or contact us.