Worth Noting About Medicare

By Steve Schulte of
Health Advocate Solutions

Please inquire or comment at (213) 999-1227

The Annual Open Enrollment Period for Medicare is November 15 through December 31. During this time Medicare eligible people may select or change a Medicare Advantage (MA) or Part D plan.

Please note that this annual period will be changed to October 15 through December 7 in 2011. Unlike now and in previous years, Medicare eligibles will NOT be able to change MA plans during the following January 1 through March 15 slot. That time slot will become a disenrollment period for Part D.

Although most of us think we understand Medicare fairly well the program is COMPLEX and CHANGES ANNUALLY. In this blog I want to cover several points in this regard in order to help those interested in Medicare for themselves or others.

Let's begin with how Medicare is constructed.

There is Part A which covers hospital, outpatient and some hospice services. This is available to people turning 65 who have paid into Social Security for 48 months.

Part A can also be a)offered to people under 65 who have specific chronic conditions and b) can be purchased for those who don't meet the criteria through employment history. The Part A monthly premium in this case ranges from $254 to $261 per month.

Part B covers medical services predominantly. This includes preventive screenings available under Medicare. It has a monthly premium and must be ACCEPTED or DECLINED when one has Part A. Signing up after initial eligibility for Part B usually invokes a penalty.

With BOTH Parts A and B one can enroll in an MA plan. This is an alternative to (but at least equal in benefits to...)Original Medicare. It includes HMO, PPO and Fee for Service models that are marketed by private insurance companies.

Part C covers Medicare Advantage plans. It was added in 1994 to encourage people to enroll in managed care options since this was believed to save money on Medicare.

Part D is the prescription drug coverage for Medicare. It can be purchased with Original Medicare or a stand-alone Medigap plan. It cannot be purchased with an MA-PD (prescription drug) plan since this would be duplicative coverage.

The new healthcare law made some changes to Medicare. In my view NONE of these reduced Medicare benefits.

The new law gradually reduces the SUBSIDY that has been given to MA plans so they could maintain lower premiums and thereby encourage people to join.

This amounted to about a 17% premium subsidy and did not apply to Original Medicare. So the new law simply corrects an imbalance and this change will save about $65 billion over ten years.

Additionally, the new healthcare law adds the following to Medicare coverage: a) pharmacies will cut brand drug costs by 50% in the donut hole this year---gradually "closing the hole" in future years; b) mandates more free diagnostic care for new enrollees and c) rolls back Part B premiums to 2009 levels (about $97 per month).

In order to save the hallmark and important program that Medicare has become since 1965 (the "safety net" for many) it is clear that changes will be needed soon to ensure financial viability.

It is important to understand that, in terms of policy and politics, Medicare symbolizes a sacred trust between Americans and their government. This bond needs to remain strong.

So, while I reject reducing benefits, I do understand the need for reshaping the financial underpinnings of Medicare.

For example, President Obama's deficit reduction commission (chaired by Alan Simpson and Erskine Bowles) will most likely recommend gradually raising the age limit for eligibility (now 65 and 66, respectively, for full Social Security)and most likely incrementally raise the Social Security tax rate.

Two comments: a) the age limit increase will still allow exceptions for those who require coverage earlier and b) any tax change should retain progressivity. These changes will keep the system financially strong for years.

But of key importance is implementing the annual recommendations of the panel of experts who review Medicare practices and pricing nationwide every year. This group recommends best practices, ways to cut costs and eliminate ineffective and unnecessary procedures and outlines proven methods for improving health outcomes.

A similar panel was created by the new healthcare law to review all healthcare, but, unfortunately, it's recommendations to Congress will only be advisory. If the bulk of recommendations from these review panels were accepted every year Medicare and healthcare waste and inefficiency would be cut literally by millions of dollars annually.

One more consideration for the beneficiary. Since the premiums for Medicare Advantage plans will probably go up as a result of the levelling of federal support it is worth looking at staying on Original Medicare and getting an affordable Medigap plan instead of going to an MA plan.

Medigap plans help pay the copays for Part B and supplement Original Medicare benefits. These private plans are ranked from A through N and offer a differing range of benefits. Look carefully before choosing.

As you can easily see, Medicare is both complex and an extremely valuable program. Take some time to get full advantage of Medicare benefits if you qualify for the prgram.

Sources: Center of Medicare and Medicaid Services (CMS), Kiplinger magazine, the New York Times, Kaiser Family Foundation.

To respond to this blog, email steve6schul@yahoo.com

Keeping Costs Lower----and Staying Healthy in an Uncertain Time

By Steve Schulte of
Health Advocate Solutions

Please comment at (213) 999-1227

This time of transition that will last till 2014 when everyone must be covered (assuming the Administration or Congress doesn't exert unexpected leadership before then...) poses some huge problems for both the insured and the uninsured. This blog will address both groups.

As background, there are several important things about the current private insurance market to note and to keep in mind.

First, insurers are already reacting against healthcare reform and its new responsibilities. They are denying more applications in the individual market (about 14 million in this group nationally), denying more claims and raising rates rapidly---especially for individuals. As a licensed agent I see evidence of this almost every day. (Is Secretary Sibelius aware of this?)

Second, the emphasis on high deductible policies is increasing---both for individual purchasers and for businesses buying small group coverage (2 to 50 employees). From 2006 to 2010 high-deductible plans ($1,000 or more per year)for employment-based policies shot up from just under 7% of total plans to just under 20%.

Third, if one purchases a higher deductible plan to reduce monthly premiums one should absolutely consider a health savings account (HSA). Originally a Republican idea that has greater benefits for those with a larger income, this concept now definitely advantages those who want the high deductible-lower premium combination. There are tax advantages in addition to the outright premium cost savings with HSAs.

Fourth, the danger---and trend---with getting a higher deductible plan is that one avoids routine exams and diagnostic tests that make health-sense in order to avoid paying out of pocket. This includes blood panels, colonoscopies, mammograms and so on. The Kaiser Family Foundation, among others, notes this tendency to avoid routine care with some alarm. Is it a sign of what's to come?

If I were to buy an individual policy I would definitely scout for a high-deductible HSA plan. This would require me to set aside an amount of cash (most likely the amount of the deductible) in a private bank that sets up such accounts. I can only use this account for health expenses---including putting my long-term care premium through the HSA.

Then, for all of my medical transactions---deductibles, prescription meds, needed diagnostic tests, doctors visits, and so on---I would use this new account. What I put into the account will be deducted from my taxes the following year, plus I can roll over any unused amount to the following year as well. At age 65 I can no longer use the HSA but I CAN use any unspent funds for longterm care expenses.

This clearly makes more sense than either paying a higher than necessary premium or foregoing the tax advantages an HSA provides.

Just make sure to get the routine visits and any needed diagnostic testing and immunizations. Judge what you may need by knowing your risk factors and family history. Discuss this information with your physician. In this way you can maintain good health and control your medical expenses in the long run.

Remember that the true cost of a health insurance policy is not just the premium and not even the premium + deductible + copays (all out of pocket). It is certainly the latter, but it is also the quality of health coverage benefits you get from your policy. In a word, you are not just avoiding the huge health disaster but are working to stay healthy. Strive to avoid health events that are preventable.

It should also be noted that, in choosing my high-deductible plan, I check carefully to see what I will pay for brand meds, hospital and outpatient visits, specialists---whatever is most important to me in getting coverage. Most high deductible plans will allow for a small number of annual office visits at a very low cost and perhaps will allow both generic and brand drugs with no separate deductible. Soon they will be required by the new laws to offer more preventative services. Just make sure to check before you buy the policy.

For all of these reasons I recommend against buying a policy on-line, no intermediary, just to get the "lowest" premium. Countless sad stories will reinforce why this is a bad idea generally. Get information, yes; buy a policy on-line, never.

So, even in this time of uncertainty when insurance pressures and costs are rising it is still possible to get coverage, maintain high benefits and control costs. Just make sure you do your homework and, preferably,find some expertise to help give you make the right choices.

Sources: LA Times, NY Times, Wall Street Journal, Kaiser Family Foundation, UCLA Center for Health Policy


To respond to this blog, email steve6schul@yahoo.com