The last column introduced the types of insurance that an individual will apply for once he/she is 65 years old or has been disabled for two years. Although an individual may elect to retire and take his/her Social Security as early as 62 years old or as old as 70-plus years old, Medicare still is an entitlement program that for most older adults takes effect at age 65 years old. Part 2 will review the process once the individual has applied for and received his or her Medicare card.
The educational component or learning curve around understanding government-sponsored health insurance, i.e. Medicare, doesn’t end with applying for and receiving the Medicare card (white with a blue and red stripe). Prior to a person’s 65th birthday, the mail may be filled with solicitations to purchase Medicare and Medicare supplemental insurance from a plethora of insurance companies. In California there is a conformity that must be followed with supplemental policies ranging from A–J with A policies being the basic, bare minimum and J policies including maximum benefits but at the highest cost. Since the policies have to conform, the only issue is insurance reliability and cost of the policy. It is important to evaluate the pros and cons of the Medicare supplement you purchase in light of what Medicare already covers (medicare.gov “Medicare & You — a comprehensive easy to read booklet on Medicare benefits”) and if the additional costs for the more comprehensive plans are worthwhile. For example, some Medicare supplements may cover the annual Medicare deductible for Part A and/or Part B. However, it is important to review what that annual deductible is in light of the annual premium for the Medicare supplement. See “Medicare & You” for Part A deductibles and co-pays. In 2013, Part B deductible for the year is $147.
Open enrollment for all types of Medicare policies occurs every fall for several weeks for the following calendar year (Oct. 15–Dec. 7, 2013) should a person want to switch a Medicare supplement. Once a supplement is chosen, it is in place for a year and will automatically roll over from year to year sending the insured coupons or notices of monthly premiums due. It is not unusual for these premiums to rise annually and have an increased deductible amount that must be met prior to the insurance paying benefits. A separate card attesting to a Medicare Supplement will now be added to the Medicare card with A and B sections on this card.
A third card (Medicare D) is required as well unless the individual is already receiving prescription drug coverage from an employer’s insurance coverage. The prescription drug portion of Medicare assists Medicare enrollees with reimbursement for prescription drugs ordered by the physician. This is a specific supplemental insurance (Prescription Drug Coverage) that operates in a fashion similar to the Medicare supplemental insurance above. It is not optional and all Medicare enrollees must either purchase a Medicare part D plan or have prescription drug coverage through an employer’s plan. If that is the case, documentation must be forwarded to Medicare proving the drug coverage or the individual may risk a fine for refusing to enroll in Medicare Part D.
Note: Individuals retiring from federal or state service or retire from the military may have benefits that include prescription drug coverage and will have a supplemental insurance such as Tri Care that covers eligible retired military members.
How is coverage paid for?
Once an individual begins receiving Social Security after age 65, Medicare Part A and Part B premiums are deducted from the monthly Social Security check. If a person applies for Medicare prior to receiving Social Security benefits, premium invoices are mailed quarterly and will be paid out of pocket.
Medicare supplemental insurance usually is paid monthly by the enrollee with other a direct check to the insurance company or a voucher to send in the mail. Medicare Part D–prescription drug coverage is a separate policy and may be through a separate insurance company. Payment for this benefit is usually billed monthly as well. So a retired individual choosing traditional Medicare will likely have three insurance payments either deducted from Social Security or paid directly to the insurance companies with the coverage you’ve chosen.
A separate alternative to traditional Medicare is to choose an “all-in-one” capitated program with an HMO such as Kaiser, Secure Horizons or Health Net. There are advantages and disadvantages to these programs as well.
Many people choose this type of Medicare Advantage programs for the simple reason that all coverage is bundled into one policy, i.e. Senior Advantage. It may also include treatments that are outside of Medicare coverage as well such as eye exams, dental work and other health related classes or workshops to encourage healthy living at little or no cost. In years past, joining an HMO (Health Maintenance Organization) cost nothing. The older individual signed over their Medicare to the HMO (called a locked in program) and the HMO agreed to treat the individual for everything. In addition, prescription drugs were available through the HMO pharmacy with little or no cost. The premise remains the same and HMOs continue to be popular. There are now costs and co-pays with HMOs and these costs have been generally rising annually with more of the financial burden on the patient than ever before.
Several important considerations should be reviewed when looking at choosing a Medicare Advantage program. First: Medicare coverage is turned over to the HMO you sign up with. You must seek treatment within the HMO system and cannot use your Medicare with any other healthcare provider unless it is an emergency. Even during an emergency situation, you may receive a bill for the ER visit that you may have to dispute with an out of network hospital particularly if the hospital did not seek permission prior to treatment. If an individual travels or moves out of the network, Medicare may not be used for routine medical appointments or tests. If an individual wishes to seek a second or additional opinion, the HMO is likely to grant the wish but only with physicians who are within their network.
Note: Traditional Medicare coverage allows the individual to carry their coverage with them to see any physician who accepts Medicare within the continental United States including all specialists.
The second issue when considering a Medicare Advantage program is the restricted nature within the locked in plan. For example, you may choose your primary care physician but may be referred to a specialist that you don’t have confidence in. It is not unusual for long wait times for an appointment to see a specialist due to demand and lack of that specialty. You do not have the liberty to go out of the network without either disenrolling from the HMO or paying privately which can be costly.
If an individual chooses to disenroll either by choice or when there’s a move out of the service area, make sure and plan on 4-6 weeks time to disenroll and concurrently re-enroll in traditional Medicare, purchase a Medicare supplement and a Medicare Part D drug coverage plan. It is a big decision not to take lightly and again, unless there is a compelling reason can only be done during the open enrollment period in late fall each year.
Although most physicians take Medicare and a Medicare supplement, it is important to notify your physician’s office when you’re approaching 65. You want to make sure the doctor will continue to see you and that the continuity of care for your health will not be jeopardized. Carry your cards with you whenever you go to a health appointment. Make a copy of all cards and keep at home “just in case,” they are lost or misplaced. As with any health insurance doctor’s offices, labs and hospitals always ask for health insurance cards to be able to verify and bill for your visit.
How much of the bill is paid by Medicare?
Generally speaking, Medicare overall pays 60-80 percent of your healthcare costs buy varies widely based on diagnosis and treatment. It should not be used as a “stand alone” policy and expect that all healthcare costs will be paid for. This does not include your annual deductible and items or procedures that are not included within your Medicare coverage. Usually the doctor’s staff will notify you if/when there is a procedure that is not covered by Medicare and its supplement.
If you give your doctor’s office(s) your Medicare and Medicare Supplement cards, they will bill Medicare and Medicare will subsequently bill the supplemental policy. If there is a co-pay on your policy or you know you are responsible for an annual deductible amount, the doctor’s office may ask for payment at time of your visit. If upon billing and non receipt of payment from Medicare, the office will bill you. Not all healthcare costs are paid for by Medicare. Many healthcare providers have “accepted assignment” of Medicare however which means they have agreed to accept as full payment the amount that Medicare has paid for the process or procedure. If there is a balance on the account, the invoice then is sent to the Medicare supplement who will make an additional payment based on the Medicare approved amount. The doctor’s offices will bill both insurances with payments going back directly to the physician’s office. The patient will receive an Explanation of Benefits (EOB) quarterly from Medicare A, B and Medicare D–Drug Plan showing date of service, diagnosis code and payments. Supplemental insurance will also send an EOB regularly to insureds with similar information. If there is a deductible to be met, these EOBs will indicate how much of the deductible has been met so the individual will know whether to expect an invoice from the doctor’s office. The deductible amount begins again at the beginning of the insurance calendar year (Jan. 1) and may increase depending on the insurance company, state and federal legislation.
Utilizing Medicare and Medi-Cal as a health insurance package
For individuals receiving SSI (Supplemental Security Income) or qualifying as low income with a pension or Social Security, their health insurance consists of Medicare (A and B) and Medi-Cal. In many cases Medi-Cal will cover the monthly Medicare premium along with the annual deductible amounts since these patients have no discretionary income to pay the necessary fees. Again, Medicare is applied for several months prior to the person’s 65th birthday even when the individual may already be on Medi-Cal due to low resources. It is important when applying for Medicare to notify Medicare and the Medi-Cal worker of the advent of Medicare coverage because Medicare will be the primary insurance with Medi-Cal moving to secondary. One distinct advantage with this dual coverage is the availability of medical coverage increases due to the improved reimbursement from Medicare versus Medi-Cal which is considerably less in reimbursement. Few physicians will take Medi-Cal and most patients must access Medi-Cal treatment through community health clinics and ERs at local hospitals.
Although there are restrictions through the Medi-Cal formulary (a list of approved/reimbursed prescriptions), Medi-Cal acts as the prescription drug plan for these Medi-Medi patients. Nationally as well as in California policy experts are reviewing pilot projects whereby patients on Medicare and Medi-Cal will be grouped into a type of health maintenance organization (HMO) whereby the individual’s federal Medicare and federal/state Medi-Cal (Medicaid) will be reviewed for cost containments and better patient treatment and outcomes. California currently has a pilot project in several counties throughout the state working with these Medicare/Medi-Cal clients with the anticipation that it will go statewide within the next few years.
Next: Part 3 — long term care insurance — how does it affect your health?
Carol S. Heape, MSW, CMC is CEO of Elder Options, Inc. providing geriatric care managed home care since 1988. www.elderoptionsca.com. For questions, e-mail [email protected]