In the previous blog we did on the Medicare open enrollment period, we discussed the basics of Medicare. And now, we have less than three weeks left, with the closing date being December 7, 2019. Given that, this week we are going to look at Medigap and Medicare Advantage plans and what they mean to you plus, we are also going to discuss a sometimes confusing aspect of coverage, the dual eligibility client -- someone who is covered by both Medicare and Medicaid. But first, let's start with Medigap and Medicare Advantage plans.
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 and their healthcare needs. The right Medicare plan is just as important as other parts of their estate planning requirements. For instance, are they paying too much for their plans given the health conditions present? Maybe the plan they are thinking of choosing could cost them more in the long run given their rehab or prescription needs. These are all questions that arise and need to be discussed - and not just once, but every time the enrollment period rolls around. With age, needs often change, sometimes dramatically.
During this enrollment period, those who are unhappy with the Medicare Advantage Plan they bought last year can explore other plans and for those who want to opt-out altogether from these plans and just return to their original Medicare with a supplement, they can do that as well, but make an informed choice. And one area of confusion that does arise with the enrollment season is an understanding of the difference between Medicare Advantage Plans and Medigap Plans. 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 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 an annual amount.
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 senior's age, gender, where they live (yes, some areas of the country are riskier than others) and smoking history. Costs for these policies run from around $100 a month to as high as $250 or more.
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 (the standard monthly premium for Medicare Part B will be $144.60 for 2020, up $9.10 from $135.50 in 2019) 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.
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 ensuring a future when you will not be as healthy. Even the fittest and healthiest living people face significant medical bills as they age.
Now on to one of the most complicated parts of health coverage and government benefits, – the dual eligibles – those who qualify for both Medicare and Medicaid coverage. Here’s a quick review of these programs separately.
Medicare is health insurance for people 65 or older, certain people under 65 with disabilities, and people of any age with End-Stage Renal Disease.
Medicare consists of four different parts:
Part A - Hospital coverage
Part B – Medical insurance (physician services, outpatient care, durable medical equipment, home health services, and many preventive services);
Part C – Medicare Advantage (MA) (Medicare-approved private insurance companies provide all Part A and Part B services and may provide prescription drug coverage and other supplemental benefits); and
Part D – The Prescription Drug Benefit (Medicare-approved private companies provide outpatient prescription drug coverage).
Medicare beneficiaries who meet certain income and resource limits may qualify for the Extra Help Program, which helps pay for monthly premiums, annual deductibles, and co-payments (click on the photo below to see if a senior you know may qualify).
Medicare beneficiaries can obtain their Medicare coverage in the following ways:
Receive Part A and Part B services through the Original Medicare Program. To obtain Part D coverage, they must join a stand-alone Prescription Drug Plan;
Receive Part A and Part B services from an MA Plan (Medicare Advantage) if they reside in its service area. Most MA plans include Part D coverage;
Qualify for a Medigap plan.
The Medicaid Program is a joint venture funded at the Federal and State levels that pay for medical care for families and certain individuals with low incomes and/or limited resources. The Federal Government established guidelines which allow each state to:
Establish its own eligibility standards;
Determine the type, amount, length and scope of services;
Establish rates of payment for services; and
Oversee its own program.
Dual Eligible Beneficiaries
“Dual eligible beneficiaries” is the term that describes individuals who are enrolled in both Medicare and Medicaid. Individuals must separately qualify for both Medicare and Medicaid coverage to become dual-eligible beneficiaries. Roughly half of the dual eligibles first qualify for Medicare based on disability (compared with 17 percent of Medicare beneficiaries who are not dual eligibles) and roughly half qualify when they turn 65.
Medicaid’s eligibility rules vary somewhat across states, but most dual eligibles qualify because they receive Supplemental Security Income (SSI) benefits, need nursing home care or have other high medical expenses, or meet the eligibility criteria for the Medicare Savings Programs (MSP) categories.
These categories are as follows:
Qualified Medicare Beneficiary Program (QMB) – This helps pay for Part A and/or Part B premiums, deductibles, co-insurance, and co-payments;
Specified Low-Income Medicare Beneficiary Program (SLMB) – This program helps pay for Part B premiums;
Qualifying Individual Program (QI) – Also helps pay for Part B premiums; and
Qualified Disabled Working Individual Program (QDWI) – This pays the Part A premium for some people who qualify that have disabilities and are still working.
Now, this alphabet soup of programs comes with a number of qualifiers and disqualifiers. There is also a Dual Eligible Special Needs Plan. This plan is a type of Medicare Advantage plan that is individually designed to provide specialized benefits, provider networks, and medications/pharmacies to meet the unique needs of the individual.
To be eligible for the Special Needs plan, the individual must:
Be eligible for both Medicare and Medicaid;
Live in a service area of a Dual eligibility Special Needs plan;
Not have an end-stage renal disease (unless a waiver is granted).
Unlike others on Medicare, dual-eligible have much more flexibility to make changes to their Medicare coverage throughout the year. If someone is a dual eligible, there is a Special Election Period available during an ongoing basis which can be used to:
Switch from Original Medicare to a Medicaid Advantage plan;
Switch Medicare Advantage plans;
Disenroll from a Medicare Advantage plan and return back to original Medicare.
For an individual who is dual eligible, they can use this Special Election Period to enroll in, switch, or disenroll from a Dual Eligible Special Needs plan at any time. If an individual loses their Medicaid eligibility, they get a Special election Period that allows them to switch Medicare Advantage plan or return to Original Medicare.
This special period starts the month the individual receives notice that they are no longer eligible for Medicaid services plus an additional two months. If an individual receives notice that they will lose Medicaid eligibility for the upcoming year, they can make these changes from January 1 to March 31.
Got all that? We know, quite confusing but information that those working in senior care facilities need to know and for those with senior family members who may be enrolling in Medicare for the first time or thinking about changing plans.
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:
Don Drake oversees Connelly Law's Community Education Programming. He is a retired licensed clinician in the Commonwealth of Massachusetts with over three decades of experience working with older adults diagnosed with HIV/AIDS, substance abuse disorders, chronic homeless and mental illness. Prior to his retirement, he was the director of a unique treatment program for older adults with histories of mental illness, cognitive disabilities, and addiction at Shattuck Hospital in Boston. He was also a director at Steppingstone, Inc. in Fall River, Massachusetts where he was the clinical trainer, program and curriculum developer for the agency and oversaw treatment programming for older adults. He has over 40 years of human service and law enforcement experience and has worked as an administrator at programs in Boston, Hartford, Providence, and Philadelphia, helping to structure, hire and train staff in providing behavioral and addictions treatments for adolescents and adult clients. Drake also worked as a trainer for the Massachusetts Department of Public Health presenting training on QPR, a suicide prevention curriculum for the general public, the Massachusetts Council for Problem Gambling and the Crisis Prevention Institute, an international training organization that specializes in the safe management of disruptive and assaultive behaviors. He is also a retired professional wrestler who is in the New England Professional Wrestling Hall of Fame. Drake can be reached at Connelly Law Offices, Ltd. at firstname.lastname@example.org