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