Medicare primer, part II

Part 1 of this article appeared in the February 2015 issue of the Senior Lawyers newsletter. Part 1 discussed Medicare basics, Part A and Part B. This article addresses supplemental insurance, Part D and Part C.

What is a Medigap policy or supplement?

These two terms are used interchangeably. A Medicare supplement is a specific type of health insurance available to people who have Medicare Parts A & B. It is private insurance designed to pay the major benefit gaps in Medicare, like deductibles and co-payments.

There are 10 standardized supplements that are sold through licensed insurance agents based on the benefits they cover. When you decide which benefits you want, it would be wise to shop around for the best premium price because a Plan F means the same thing, with every insurance company. It’s a real apples to apples comparison.

When should I sign up for a supplement?

If you enroll in a supplement plan within the first 6 months of your Medicare Part B enrollment, the insurance company cannot turn you down, regardless of your health status, claims experience, or medical condition. You are considered “guaranteed issue” although there could be a waiting period for pre-existing conditions. All standardized plans must also be guaranteed renewable, meaning the policy cannot be cancelled by the insurer because of frequency of claims, deteriorating health or increased age.

What can I expect to pay for a supplement?

Your premium depends on your gender, city in which you live and, of course, which of the 10 benefit plans you choose. There are also high deductible and Medicare Select options where the insurer requires you to use specific hospitals and doctors.

Insurance companies use different methods to determine premium prices. Most companies sell supplements that will increase in price as you get older. Another method is “issue age” where your premium will always be based on your age at the time you purchased the plan. Your costs may still increase from year to year due to higher medical costs, but not just because you grew older. Another methodology is “no age” rating which means everyone over age 65 pays the same amount, regardless of their age.

In Illinois, disabled people who are under 65 and on Medicare have the same open enrollment rights as people 65 and older. When a disabled person turns 65, they have an additional six-month open enrollment period due to age. They may purchase a policy based on age 65, which may significantly reduce their premium.

Where can I get unbiased help in selecting a Medigap plan?

You can contact your local Area Agency on Aging, your state’s local SHIP (Senior Health Insurance Program) office, or call 1 800- MEDICARE for advice.

What is Part D?

Medicare Part D is prescription drug insurance offered by private insurance companies that are approved by Medicare. Part D plans are necessary because the Medigap policies that are currently sold are not allowed to cover prescription medicines. If you purchased a supplement prior to 2006 that includes drug coverage, you may keep that policy.

Who is eligible for a Medicare Part D prescription plan?

Anyone who has Medicare Part A and/or Medicare Part B can enroll in a prescription drug plan, but there are rules regarding when you may apply.

When may I apply for Medicare Part D?

If you are new to Medicare, you have a seven-month window to enroll: three months prior to your 65th birthday—the month of your birthday—and up to three months after your birthday. Your prescription coverage would be effective the month of your birthday or the month after you enroll.

If you miss this initial enrollment opportunity, you may apply during the open enrollment period: October 15th - December 7th of each year. Your coverage would begin January 1st of the new year.

If you are awarded Medicare due to disability, you can join a Part D plan three months prior to the month of, and up to three months after, your 25th month of disability.

How do I enroll in a Part D plan?

You have several options. You may enroll with a licensed insurance agent or a state SHIP counselor; you can sign up yourself on Medicare.gov; enroll over the phone with the insurance company of your choice; or you can call 1-800-MEDICARE.

It is very important to choose a plan based on the medicines you take, not just the cost of the monthly premium. The best way to pick a plan is to ask your agent or SHIP counselor to do a plan comparison. Also, you do not have to have a drug plan from the same company that insures you for your supplement.

What costs will I have with a Medicare Part D plan?

Most plans have a monthly premium; some plans have yearly deductibles (as high as $320 in 2015). Usually you will have co-pays for your medicine depending on whether your medicines are in the company’s formulary and if they are generic or brand name.

You may incur additional costs for your prescriptions if the cost of your medicine exceeds the initial coverage limit (donut hole). In 2015, you will pay 45% for brand name and 65% for generics once you and your insurance company have paid $2,960 for your medicine.

Why should I enroll in a Part D plan? I don’t take any medicine.

Individuals who are eligible for Part D but do not enroll when they first become eligible will incur a penalty if they enroll in a Part D plan anytime in the future. The late enrollment penalty is 1% of the annual national base premium for every month you did not have coverage but were eligible. For example, if you delayed enrollment seven months and the average premium was $32.00, you would have to pay an additional $2.24. The $2.24 would be added on to your monthly premium for as long as you keep a drug insurance plan.

The exception to this is an individual who has creditable prescription coverage (at least as good as Medicare’s standard coverage) through an employer, union, VA, TRICARE, etc.

What is Part C, Medicare Advantage?

A Medicare Advantage plan is a different way to have hospitalization, medical benefits, and drug coverage all in the same insurance policy. Although you still have Medicare, it is the private insurance company that is covering you, not Medicare. These companies must follow rules set by Medicare; however, they can charge different out-of-pocket costs and have their own rules regarding networks of providers, and referrals.

Who is eligible to enroll in a part C plan?

You must have Part A and Part B of Medicare and you must live within the plan’s service area. Generally, you cannot have End Stage Renal Disease. There are some exceptions.

When may I apply for Part C?

When you first become eligible for Medicare, you can join three months before your 65th birthday—the month of your birthday—and up to three months after your birthday. Your effective date would be the month of your birthday or the month after you enroll.

You may also apply or change plans during the open enrollment period: October 15th through December 7th. Your coverage would begin on January 1st of the new year.

If you are awarded Medicare due to disability, you can join a Medicare Advantage plan three months prior to the month of and up to three months after your 25th month of disability.

How do I enroll in a Medicare Advantage plan (Part C)?

You have several options. You may enroll with a licensed insurance agent or a state SHIP counselor; you can sign up yourself on Medicare.gov; enroll over the phone with the insurance company of your choice; or you can call 1 800-MEDICARE.

Because these plans include drug coverage, it is very important to select a plan based on your prescription needs as well as your medical needs and not just the cost of the monthly premium.

It is also imperative that you are aware of which preferred pharmacies, network hospitals and network providers you are allowed to use.

What costs will I have with a Medicare Advantage Plan?

You will still have to pay for your Medicare Part B premiums because Medicare pays a fixed amount to the Advantage plan for your coverage. Some plans have their own monthly premiums, deductibles, and co-pays for prescription medicine and co-pays or co-insurance for medical services provided.

You might incur additional costs for your prescriptions if the cost of your medicine exceeds the initial coverage limit (donut hole). In 2015, you will pay 45% for brand name and 65% for generics once you and your insurance company have paid $2,960 for your medicine.

 

Where can I get unbiased help in selecting a Medicare Part D or Medicare Advantage plan?

You can contact your local Area Agency on Aging, your state’s local SHIP (Senior Health Insurance Program) office, or call 1 800- MEDICARE for advice. ■

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This article was prepared by Janet Morgan. Janet became a SHIP (Senior Health Insurance Program) counselor in 2006 and currently works for the Boone County Council on Aging as the Information and Assistance Supervisor.

The information contained in this article is a compilation acquired from three major sources; the Senior Health Insurance Program Counselor’s Manual 2014 edition, the Medicare & You 2015 Handbook, and the 2013-2014 Medicare Supplement Premium Comparison Guide.