Understanding the many faces of Medicare

 

Older senior citizens will recall how simple Medicare use to be. You turned 65, got your Medicare ID card, bought a supplement, and you were done. Today, with the prices of healthcare soaring out of control, new alternatives have been introduced, providing consumers with many choices. Along with these new opportunities come many challenges of understanding, as well as a handful of opportunistic sales people with somewhat dubious tactics.

 

For people first becoming eligible for Medicare, they are either disabled and under 65, have end-stage renal disease, are turning 65, or already 65 and over and just retiring. For people just turning 65, if you are already receiving Social Security benefits as an “early retiree” you will receive a welcome letter form Social Security/Medicare about four months before you turn 65. If you have not previously signed up for Social Security, you will need to call them at 1-800-772-1213. This should be done 3 months prior to the month you will turn 65. If you have been working past 65 and are now considering retirement, assuming you have group coverage, notify Social Security with 90 days notice.


Once enrolled in Medicare, you will learn there are two main parts; Part A, Hospital Insurance and Part B, Medical Insurance. All people when turning 65 should enroll in Part A, even if remaining on an employer plan. If you work for a small employer with less than 20 people, you will need to purchase Part B as well.


Assuming no work affiliation, there are several options you can consider. This is also true for people already covered by Medicare Parts A and B, but the timing is different. The ideal plan, as far as maximum coverage is to retain your “Original” Medicare. There is no insurance company telling you what you can and can’t have. If it is allowed by Medicare, it is typically covered. But just like other health insurance plans, there are deductibles and co-pays to consider. Typically, Medicare has a deductible for entering the hospital (Parts A), and a separate deductible each year for medical services (Part B). In addition to deductibles, Medicare only pays 80% of the bills they allow, and some doctors charge more than what Medicare deems reasonable (Excess Charges).


For insurance coverage to pay these deductibles, co-pays and excess charges you will want to purchase a Medi-Gap or Medicare Supplement policy. There are many types of policies available which are sold by many companies. Plan selection should be based on the service the plan provides and the cost. As plans are all standardized, benefits between plans are uniform. A “Plan F” is a “Plan F” regardless of the brand. Plans have standardized letter designations to make shopping easier.


In Kern County for 2010 a “Plan F” will cost a 65 year old about $118. Prices will vary depending on the insurance company, and will rise significantly with age and inflation. For this reason several alternatives are available. My office shops the various plan available in the county and recommends the lowest cost with the best service. 


The Centers for Medicare and Medicaid Services (CMS) is the governing agency in Washington for Medicare. They have a group of plans called “Medicare Advantage” or sometimes referred to as “Medicare Part C”, which provides similar benefits and services as in the Original Medicare, but are administered by private insurance companies. These companies are paid a monthly fee by CMS to assume all the risk and liability in your health care.


The oldest of these plans is the Medicare HMO (Health Maintenance Organization). Most of these plans in 2011 will not charge an additional fee in Kern County. Availability varies by zip code. If you were to join an HMO plan, you would pick and use a primary care physician (PCP) who is contracted with the plan. All referrals are through your PCP, including the choice of hospitals and specialists. Generally speaking, all Medicare HMO plans include a Medicare Part D prescription drug plan (see below).


While the downside to the Medicare HMO plan is the restriction of referrals, another type plan provides more flexibility. This is the Medicare PPO (Preferred Provider Network). The Medicare beneficiary has a choice of doctors and hospitals on this plan. The costs are lesser if you use participating providers, but there is still coverage if you go outside the network. There is only one company offering a PPO plan in Kern County. Unless you are not permitted to have prescription drug coverage, the PPO has a built in prescription benefit.


One of the newest Medicare Advantage plans is the Medicare PFFS (Private Fee for Service) plan. This plan is modest in cost, may or may not contain a prescription plan, and allows you to go to any willing provider. The downside is that a provider may accept the plan today, and not accept it tomorrow. The patient, like all Medicare Advantage plans, is locked into the plan for the year, but the providers are not. Due to Federal funding cuts and regulation changes, there are no plans of this type available in Kern County in 2011.


Medicare MSA (Medical Savings Account) plans allow you to purchase a high deductible health plan, pay $0 premium and Medicare deposits money into a bank savings account for you to use to pay your own medical bills. The deposits may accumulate over the years if undisturbed. You are responsible for the medical expenses once the account has been depleted and until the deductible is satisfied. There are no MSA plans available in California for 2011.


There are 33 Medicare Part D prescription drug plans available in Kern County in 2011. All of these plans differ, and the consumer needs to investigate to find the plan best suited to their needs. It is recommended that all seniors with a Medicare supplement as well as those in a PFFS without prescription coverage purchase a PDP plan.   There is a penalty imposed by the government if you do not purchase a plan when first eligible. This penalty is only applied if you purchase a Part D plan in the future. The penalty is 1% of the average national premium for each month you went without coverage. (About $3-$4 for every year you went without coverage).


One of the challenges with Medicare Advantage and especially prescription coverage is that the plans are on an annual contract with CMS. They are permitted, and do change the monthly premiums, the co-pays, the drugs covered (formularies) as well as restrictions on the medications annually. The plan that was perfect for you in 2010 can be overpriced and not cover your medications in 2011. Also, the plan which was perfectly priced in 2010 may have a lower priced competitor in 2011. You must review your coverage annually. 

 
The National Association of Health Underwriters provides an “agent finder” on their website at www.NAHU.Org to assist you in finding an agent to assist in selecting the right plan for your personal needs.