In this section I address topics that may not apply to everyone on Medicare, but still come up fairly regularly. For a basic introduction to Medicare, see our FAQ section. In the blog I will cover many of these same topics in more detail, plus some less common situations. For help with your particular situation, contact our office.
Posted on 6/20/2019
As with other forms of health insurance, such as employer group coverage, Medicare does not pay 100% of the costs when you receive Medicare-covered services. There are out of pocket costs such as deductibles and coinsurance. A Medicare supplement, also called Medigap, is an insurance policy that can be purchased to cover some or all of these out of pocket costs. As with other insurance, such as what you buy for your car, you pay a monthly premium for this coverage.
If you have had a Medicare supplement for a few years, you have probably noticed that your monthly premium has increased over this time. Many Medicare supplement policies are attained age rated, meaning the rate typically increases automatically according to your age. In addition, your Medicare supplement can also have an overall percentage rate increase for due to increased costs. It is these unexpected increases that can be the most frustrating, especially seniors on a fixed income. Once you have experienced a few of these increases in your monthly premium, you will probably want to consider shopping for a lower rate with another company.
The fact that you have had some rate increases does not mean that you have a bad a company or that you picked the “wrong” company. Rate increases are a fact of life with Medicare supplements as the group of people with a particular plan and company face more health issues and therefore incur more costs. By switching to a different company, you can potentially get in a group that is relatively younger and healthier and therefore benefit from lower rates.
Note that the information here primarily applies to the State of Tennessee. Many states have consumer protections that are more generous than the federal government requires, so your options can vary depending on where you live. For example, only four states (NY, CT, MA and ME) offer an ongoing or yearly guaranteed issue opportunity for beneficiaries to buy a Medigap policy regardless of current or past health issues. In Tennessee and other states, when you want to switch from one Medicare supplement company to another you generally have to answer health questions and may be turned down or charged more depending on your answers.
These health questions can vary from one company to another. So, a person who may be turned down by one company may be accepted by another. This is why it is important to work with an independent agent that represents multiple companies. Even if you have a health issue, you may have options.
The other fact to keep in mind is that Medicare supplement plans are standardized by the government, so it’s easy to compare plans based on which company has the lowest rates—the coverage will be exactly the same. For example, if you have plan G with your current company, you can shop for a lower rate on plan G with another company knowing that you will have the exact same benefits when you switch to the new company.
So, the takeaway is that if you have had your current Medicare supplement for a couple years, you may be able to save some money by shopping around. Contact our office for a free quote. You can click the consultation button above or call 615-429-3512.
Posted on May 21, 2019
There is no “right’ answer to this question, since every individual’s situation is different.
Most people will at least enroll in part A (hospital coverage) of Medicare at age 65, since there is no premium for this coverage if you have at least 10 years of work history in the Social Security system. (See note below if you have an HSA). The issue for most people is whether to enroll in part B of Medicare since this is the portion that most people pay a monthly premium for ($135.50 per month in 2019, more for higher income individuals).
If keeping your employer coverage, you can tell the Social Security Administration that you would like to delay part B of Medicare so that you don’t have to pay the part B premium. Just make sure you enroll in part B as soon as you are ready to leave your employer plan to avoid a gap in coverage. Note: these types of coverage do not qualify as employer coverage for purposes of delaying part B: retiree plans, COBRA coverage, coverage through your non-spouse domestic partner’s employer plan.
These are the main factors to consider when deciding whether to keep your employer coverage when you become eligible for Medicare:
Which coverage is “primary?”
Generally, if you are over age 65 and your employer has 20 or more employees, the employer coverage is primary (pays first) and Medicare is secondary. If you work for a smaller company, you will want to go ahead and enroll in both Medicare parts A and B because Medicare is considered the primary coverage. If you don’t then your employer plan could refuse to pay at the time you receive Medical services and you would be responsible for the bill. There are exceptions to the 20-employee rule, so make sure and verify with your benefits administrator which coverage is primary. Just remember: if Medicare is primary, enroll in both Medicare A and B. Also, if you are eligible for Medicare under age 65 due to disability, the employer size guideline for determining which coverage is primary is 100 employees instead of 20.
Whether family members need coverage
If your spouse or other family members are covered on your employer plan, you may want to keep the employer plan so your family members can keep the coverage that they are used to. If you drop your employer coverage, your family members would need to explore other options such as coverage through their own job or the individual marketplace. Comparing all these options can get complicated, so if you need assistance, contact our office.
Comparing the premium
If you don’t have family members that need to stay on your plan, then it comes down to comparing the costs and benefits of your work plan with the costs and benefits of Medicare. The first cost to consider is the monthly premium. You will need to verify your Medicare part B premium amount with the Social Security administration and compare this amount to what you are paying for your employer coverage. Also take into account any additional monthly premiums you might need to pay along with Medicare, such as a Medicare supplement, Dental plan or prescription drug plan. If the premium for your employer coverage is significantly more than what you would pay under Medicare, then this might be a reason to consider dropping the employer plan in favor of starting Medicare.
Comparing out of pocket costs
The next factor to consider is the various costs that you pay when you receive healthcare services. For your employer plan, refer to the paperwork provided by your benefits administrator. For Medicare, these amounts will vary depending on whether you have original Medicare (with or without a Medicare supplement) or a Medicare Advantage plan. These are some of the costs to compare between Medicare and your employer plan:
Deductible: The amount that you have to pay to healthcare providers for certain services before your health plan starts to pay.
Copays: A fixed amount that you have to pay for a specific service (such as a doctor visit), with your health plan paying the balance of charges.
Co-insurance: A percentage of health care charges that you have to pay after the health plan has paid their portion. For example, many health plans are 80/20, meaning the plan pays 80 percent of the bill and you are responsible for paying the remaining 20% co-insurance.
Maximum out of pocket: The most you will have to pay in out of pocket costs for the year after which your plan kicks in and pays the rest. For example, if your plan has a $2,000 maximum out of pocket, once you have paid $2,000 in medical bills in a calendar year, your plan is going to pick up 100% of the charges for the rest of the year.
Comparing the benefits
Does your employer plan have routine dental or vision coverage? These are typically not covered by original Medicare, though they may be available if you decide to enroll in a Medicare Advantage plan or by purchasing a separate dental policy.
Another important area of comparison is drug coverage. If you are currently taking prescription medications, you will want to compare your current drug copays to what you would pay under the various Medicare drug coverage options available in your area. Our office can help you do a plan comparison based on your specific medications to see which option would be most economical.
Note regarding employer plans with a Health Savings Account
The one exception to keeping part A of Medicare along with employer coverage is if you have a Health Savings Account (HSA). IRS rules prohibit deducting the value of HSA contributions if you have any other health plan and Medicare part A would trigger this restriction. So, you would likely want to decline all parts of Medicare if you are staying with your employer High Deductible Health Plan (HDHP). Consult with your tax adviser if you plan to continue to claim the HSA deduction.
Posted on May 14, 2019
Sometimes a person who is about to start Medicare will tell me: “I don’t take any prescriptions; do I really need drug coverage?” Or, similarly, “All my medications are inexpensive generics, why would I pay an additional monthly premium if my copays are already low?” There are two main reasons to enroll in a Medicare drug plan when you first start Medicare, typically at age 65.
If you don’t enroll in drug coverage when first eligible for Medicare, you may be subject to a late enrollment penalty (LEP) when you enroll later. (Unless you have other coverage—see note below). The LEP is a permanent increase in your monthly drug plan premium. The penalty increases the longer you have been without coverage. If subject to the penalty, you will pay your monthly drug plan premium plus a penalty amount times the number of months you were without coverage. The penalty amount is equal to 1% of the national base premium (In 2019 this is $33.19 times 1% times the number of months you were without coverage).
For example: If you have been without drug coverage for three years, this is 36 months times 33 cents for a penalty amount of $11.88. So, if you enroll in a drug plan with a $20 monthly premium, your actual monthly premium will be $31.88.
Note: you can avoid the penalty if you have other drug coverage that Medicare considers “creditable” (at least as good as what Medicare offers). Examples include coverage from the Veterans Administration (VA), TRICARE (military health plan) or employer coverage from yourself or your spouse. Make sure you verify with the employer that their coverage qualifies as creditable. As soon as the employer coverage ends (for example at retirement), you have 63 days to enroll in Medicare drug coverage before the penalty starts.
You are also exempt from the Late Enrollment Penalty if your income and resources are low enough to qualify for the Prescription Drug Extra Help Program through Social Security. In addition, if you have Medicare when younger than 65 (such as due to drawing Social Security disability income), any penalty resets to zero when you turn 65
The Late Enrollment Penalty is actually not the main reason to enroll in prescription drug coverage. The main reason is avoid having to pay the full cost of unforeseen expensive medications. No one says, “I don’t need car insurance because I’m a careful driver.” Neither should you say, “I don’t need drug coverage because right now I’m healthy.” We have insurance because we all know bad stuff can happen to anybody.
It’s also a mistake to think that you will just wait until your doctor prescribes an expensive medication, and then enroll in drug coverage when you need it. This is like waiting until you have a wreck to try to buy car insurance. Unless you qualify for a Special Enrollment Period (SEP), you would likely have to wait until the next Annual Election Period (AEP) in the fall to enroll in drug coverage, which would then start January 1. So, you could potentially have several months where you would have to pay the full retail cost of your prescriptions. This could amount to hundreds or even thousands of dollars. (The next time you see a prescription drug ad when watching TV, google the drug name and the word “cost” and see what I mean). With a drug plan, you will still have copays, but these are usually much less than the full cost. Many people are surprised by the affordability of the monthly premium for these plans, and financial assistance is available through Social Security for those with limited income and resources.
Besides enrolling in a stand-alone Part D prescription drug plan, another way to get affordable drug coverage is to enroll in a Medicare Advantage Prescription Drug Plan (MAPD). These are plans offered by private insurance companies that contract with Medicare. Your hospital, medical and prescription drug coverage are combined in one plan. There are many factors when considering one of these plans, such as premium, copays and provider network. As an independent agent in Tennessee, I can help you evaluate the many companies available in our area and decide if one of these plans is right for you. Contact me for more assistance.