In last week’s blog, we discussed the basics of Medicare. This week, we are going to look at Medigap and Medicare Advantage plans and what they mean to you. Here at Connelly Law Offices, we have discussions about Medicare with our clients who are doing Estate Plans to make sure that they are in the right Medicare plan for them. The right Medicare plan is just as important as other parts of their estate planning needs. Are the paying too much for their plans? Are they protected should a illness occur? These are all questions that arise.
As we mentioned last week, October 15 begins open enrollment for Medicare. For those who are unhappy with the Medicare Advantage Plan they bought last year, they can explore other plans and for those who want to opt out altogether from these plans and just return to their original Medicare, they can do that as well. But one area of confusion that does arise with the enrollment season is an understanding of the difference between Medicare Advantage Plans and Medigap Plans.
In this week’s blog, we are going to discuss this as well as repeat our section on the individual State SHIP offices, which are invaluable resources to all those wanting clarification on different plans. In that section, we have provided a link that will allow you to find the SHIP offices in your state. Now on to our discussion.
This has been confused by many seniors with Medicare Advantage Plans. Medigap is a supplemental Medicare insurance that can be purchased usually when the person begins Medicare coverage. These plans consist of A, B, C, D, F, G, K, L, M and N plans.
If Medigap is not purchased at that time (and for some they may not be eligible at that time anyway), trying to buy it after you have been on an Advantage Plan may be next to impossible.
Medigap covers some or all out of pocket costs that are associated with original Medicare. This may include deductibles, co-payments and even coinsurance. This minimizes a seniors financial liabilities and under original Medicare, there is no limit to the out of pocket costs as compared to Medicare Advantage Plans which limit these costs to $6700 annually.
Private insurers are required to offer Medigap policies only when people first enroll in Medicare (there are a few special situations that allow this to happen at other times). If this is not done at that point, insurers can refuse to rite this policy for those with pre-existing conditions like heart disease and diabetes.
There are ten different types of Medigap plans, each with standard benefits to the senior and all covering coinsurance and copayments for Part A, Part B and hospice care. Some plans pick up coinsurance costs for skilled nursing homes while some do not. Drug costs, however, are not included in the benefits.
Premiums for Medigap depends on the seniors age, gender, where they live (yes, some areas of the country are more risky than others) and smoking history. Costs for these policies run from around $100 a month to as high as $250.
If you originally just had Part A of Medicare and now want to enroll in Part B, insurers are required to offer you a Medigap policy, no matter what your health status is, for the next six months.
However, insurers can exclude you from coverage or even charge higher premiums if you have been recommended for a surgical procedure or have pre-existing conditions like asthma, chronic bronchitis or rheumatoid arthritis.
A couple of final things to be aware of with Medigap, if you’re on Medicare, have a disability (SSDI) and are under 65, you aren’t eligible to enroll in a Medigap plan. Contact your state insurance assistance program for more information. Another warning: If you drop your Medigap policy for any reason, you might not be able to get it back. Before dropping a plan, be sure you fully understand the Medigap laws in your state.
Medicare Advantage Programs
The ads you are currently seeing on television, for the most part, are for Medicare Advantage Programs (however AARP is running a Medigap ad with United Healthcare). These programs, known as Medicare Part C, can provide you with more help at a lower cost than the traditional Medicare with Medigap. Instead of paying for Parts A, B and D, you enroll through a private insurance company that may cover everything that is provided by Parts A, B and D as well as additional services. In most cases, you pay your Medicare Part B ($134 a month) along with your Medicaid Advantage premium.
These programs work like private health insurance plans with services such as office visits, lab work, surgery and other medical procedures covered after a small co-pay. These programs range in cost from area to area and could offer HMO or PPO network plans that place a limit on your total out of pocket costs.
Just like private plans, each has its own rules and benefits and most provide
prescription coverage. Some plans may require a referral from your PCP to see a specialist while others have no such provision. However, most Medicare Advantage plans limit you to doctors within the HMO or PPO and have limitations on out of network providers.
Also like private plans, each has different benefits and rules. Most provide prescription drug coverage; some may require a referral to see a specialist while others won’t. Some may pay some portion of out-of-network care, while others will only cover you for doctors and facilities that are in the HMO or PPO network. Traditional Medicare and Medigap policies cover you if you go to any doctor or facility that accepts Medicare.
The other drawback to most Medicare Advantage plans is that they only operate within a certain region. So if you are a resident of Rhode Island with a house in Florida, you may not be covered. In cases like that Medigap is a better option however, there are some Medicare Advantage plans that do cover seniors almost anywhere, even when traveling out of the country. So doing your research on what works best given your situation is important. Once again, we recommend sitting with a SHIP counselor.
Costs to Consumers
As we mentioned before, Medigap programs usually cost more than Medicare Advantage plans but on the plus side, they have lower out of pocket costs. Medicare Advantage plans can cost less while covering more services however may have higher co-pays or deductibles. The bottom line is that doing your homework is the best bet. When you are on a limited income, every dollar saved is important.
One other thing, some unscrupulous insurance brokers have been caught in the past trying to sell both Medigap and Medicare Advantage programs to seniors. This is illegal.
Additional Benefits in the Future
The Trump Administration and a bipartisan majority in Congress are moving to allow Medicare Advantage Plans to offer more and varied services such as home meal delivery, transportation to medical appointments, adult day-care, in home health hardware such as shower and toilet grab bars and even respite care for caregivers. The battle lines that are being drawn are not about offering the services but about who will offer them – Medicare itself or the insurance companies who provide the Medicare Advantage plans. So we’ll keep an eye on this as the proposal works it way through Congress.
Do You Really Need Anything Other Than Medicare
This is a question we hear a lot in our offices when discussing long term care
planning with clients. The clients often point out that they have been “very healthy” their entire lives and see no reason for that to change. They may also say that they have enough assets to cover any minor illnesses so paying extra money every month for Medigap or a Medicare Advantage plan is “just a waste of money”.
In such cases, we must be brutally honest. No one gets out of life without dying and we all die of something. You could be healthy today and have a stroke tomorrow. And as we age, our health will surely deteriorate – its part of the life cycle.
In some cases, seniors can self-insure but remember the rates will increase as they age and become a higher risk. So this route could be taken but the drawbacks must be taken into consideration. And there is one more thing that must be considered.
If a senior decides at some point that they do need Medicare after passing on it,
they will be hit with a lifetime enrollment penalty for Part B and Part D and may not be able to get a Medicare Advantage Plan. Even worse, the seniors could face a six month waiting period before Medicare becomes effective.
So even if a senior or couple have substantial assets, a serious illness could result in tremendous medical bills that could wipe out what someone has worked and saved for. Remember, Medicare is about insuring a future when you will not be as healthy. Even the most fit and health living people face significant medical bills as they get older.
The State Health Insurance Assistance Program (SHIP) provides Medicare beneficiaries with information, counseling, and enrollment assistance. Its mission is to strengthen the capability of grantees to support a community-based, grassroots network of local SHIP offices that assist beneficiaries with their Medicare-related questions.
SHIPs present and distribute information to groups and individuals to inform them
on Medicare benefits, coverage rules, written notices and forms, appeal rights and procedures, and more. They also provide free, in-depth, one-on-one insurance counseling and assistance to Medicare beneficiaries, their families, friends, and caregivers.
SHIPs assist people in obtaining coverage through options that include the Original Medicare program, Medicare Advantage (Part C) Plans, Medicare Prescription Drug (Part D) Plans, and programs designed to help people with limited incomes pay for their health care, such as Medicaid, the Medicare Savings Program, and the Low-Income Subsidy. They can help people compare Medicare Supplemental (Medigap) insurance policies and explain how these and other supplemental insurance options (e.g., insurance plans for retirees) work with Medicare.
SHIPs also provide information on long-term care insurance and, when needed, refer beneficiaries to agencies such as the Social Security Administration and local Medicaid offices for additional assistance. Many SHIP counselors are volunteers who are trained and certified to help navigate systems for older adults and some people with disabilities.
And, by the way, SHIP offices are always looking for volunteers to train and help provide information to seniors.
We at Connelly Law Offices encourage you to contact your local SHIP office and make an appointment if you have insurance questions. You can find the SHIP offices in your state by clicking on the photo below:
In next week's blog, we will be discussing Dual Eligibility - those individuals who qualify for both Medicare and Medicaid coverage.
Attorney Connelly practices in the area of elder law. This area of law involves Medicaid planning and asset protection advice for those individuals entering nursing homes, planning for the possibility of disability through the use of powers of attorney for the both health care and finances, guardianship, estate planning, probate and estate administration, preparation of wills, living trusts and special or supplemental needs trusts. He represents clients primarily in the states of Rhode Island, Connecticut and the Commonwealth of Massachusetts. He was certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation (NELF) in 2008. Attorney Connelly is licensed to practice before the Rhode Island, Massachusetts, Connecticut, and Federal Bars.