Ask a care manager: Understanding health insurance as an older adult
With the passage of the Affordable Care Act, the topic of health insurance is moving from the back burner to the front. With the growing numbers of baby boomers on the cusp of Medicare eligibility, questions arise almost daily about eligibility, costs and coverage. For those older adults with existing coverage, they may be wondering how the implementation of the ACA will affect them as they depend on this guaranteed coverage. As if that isn’t enough, hospital systems are facing penalties for specific diagnoses if Medicare recipients are readmitted to the hospital within a 30-day period. Going forward, how will that affect older adults who need to go to the hospital and may need the three-day admission to transfer to a skilled nursing facility with Medicare coverage?
This column begins a series around these very important issues.
When should I apply for Medicare?
Current law specifies that once individuals reach age 65, they are eligible to apply for and be accepted into the Medicare program. For relatively healthy older adults the only criteria is a person’s age. Adults younger than 65 are eligible to apply for Medicare sooner if, after two years of diagnosed disability and certified by a physician, they are determined to be permanently disabled (medicaredisability.org). Medicare eligibility also applies when an individual is diagnosed with end stage renal disease at which point they are eligible for Medicare benefits (cms.org/medicare/endstagerenaldisease). For the great majority of individuals, however, turning 65 allows them the opportunity to apply for Medicare. In fact, not only are individuals encouraged to begin exploring Medicare up to six months before their 65th birthday, individuals not applying to Medicare in a timely manner will be subject to penalties after they turn 65 and are not enrolled. Medicare is a required benefit (medicare.gov).
If I apply for Medicare a few months before I turn 65, does that mean I’ll receive my Social Security then as well?
It can be confusing when approaching 65 to understand the relationship between Medicare and Social Security. These are two separate benefits. Medicare is health insurance issued by the federal government that covers a percentage of healthcare expenses. Social Security is a pension that eligible individuals can access as early as age 62 with full benefits at 66 or older (ssa.gov). A separate application to Social Security is necessary to begin Social Security payments. Applying for and receiving Medicare at age 65 does not impact Social Security. However, Medicare is a means-based insurance which means that earned income can impact the amount of an individual’s monthly Medicare premium. The topic of Social Security benefits will be discussed in another column.
I’m concerned that Medicare may not have as good coverage as I have with my current insurance. How do I know what I need and the costs involved?
As a health insurance policy Medicare covers a percentage of healthcare costs for enrolled individuals and has Part A, covering approved in-patient hospital costs, and Part B, covering approved physician charges, lab tests and home healthcare visits by an RN, physical therapist, occupational therapist, social worker and home health aide. Part D is the Prescription Drug benefit and is accessed with a separate insurance policy. All Medicare enrollees are required to have prescription drug coverage. Medicare usually covers 60 to 80 percent after the deductibles are met so older adults are encouraged to purchase a Medicare supplement (Medi-gap) policy separately from a local agent.
What are the differences between “traditional” Medicare and the Medicare Advantage plans?
Medicare Advantage Plans offer a comprehensive plan of treatment within one healthcare system i.e., Health Maintenance Organizations: Kaiser, Health Net, Secure Horizons, etc. An older adult signs up for Medicare but then surrenders their Medicare coverage to the HMO for the complete package of coverage. If an individual is a HMO member prior to turning 65, HMOs will encourage the older adult to enroll in the Medicare Advantage plan i.e. Kaiser Senior Advantage. This is called a “locked in” system. In return, the HMO will cover additional care, covered services and prescription coverage. Co-pays are common with HMOs and it is difficult to go out of the network if there is need for additional treatments or placement not covered by the HMO. Except for approved emergency treatment, HMOs are limited to their service area and may not be the plan to choose should the older adult retire and plan on extensive travel. Note: Standard fee for service Medicare and Medicare supplements are accepted throughout the United States regardless of the health incident or occurrence.
Since their inception some years ago, Medicare Advantage Plans are reimbursed at a 14-percent higher rate for healthcare services than traditional Medicare fees for service. In order to address rising Medicare costs, the ACA legislation has targeted the additional reimbursement for Medicare Advantage Plans. Although the Medicare Advantage Plans will continue, the 14 percent will expire in 2014. Medicare Advantage Plans are marketed as a low-cost healthcare alternative but there are expectations that these changes will affect the consumer with higher health care costs (medicare.org/medicare-advantage).
I am retired and am on a very limited income. How can I afford to pay the Medicare premiums and purchase a second or third policy to help with my healthcare needs?
Medicaid is called Medi-Cal in California. The basis for funds for this program are federal although states can and do supplement federal funding. This is also health insurance and is available for individuals who are eligible through age and income limitations. Older adults who fit the income/resource criteria may have their Medicare premiums paid for as well. For older adults on Medicare who qualify, Medi-Cal is their supplemental insurance and covers medications as well (medi-cal.ca.org).
There have been national pilot projects for several years testing the benefits of grouping these “Medi-Medi” clients together to provide services rather than treat them separately. Note: Medicare reimbursement is higher and more readily accepted by healthcare providers than Medi-Cal (and Medicaid) in general due to low reimbursement rates and cumbersome billing requirements. The ACA is looking closer at this dual eligible population. There is a belief from some experts that considering this as one group will generate considerable Medicare savings and provide overall better quality of care for the individual. California Department of Health Care Services is monitoring a pilot project currently operating in three counties but expected to eventually expand statewide (calduals.org).
If an individual is younger than 65 years old, disabled less than two years and without any health insurance, this person may solely qualify for Medi-Cal if they meet the eligibility criteria — age and income guidelines. Called Medi-Cal CMSP, it is administered by each county under the Medi-Cal umbrella (cmspcounties.org).
I retired several years ago but still am covered under my employer’s health insurance. What happens to my coverage when I turn 65?
Under most circumstances when an individual enrolls with Medicare, Medicare becomes the primary insurer for this individual. If the person is covered under an employer’s plan, it is important to verify that the private insurance will continue as the secondary supplementary insurance. Some company plans do allow the employee to convert the policy to a Medicare supplement policy and may continue to cover prescription drugs thus alleviating the need for a Medicare Prescription Drug plan. Other employer-sponsored plans automatically take individuals off the plan at their 65th birthday. Be sure and get sufficient documentation from your employer certifying that you have the necessary and required coverage (seniorcorps.org/medicare).
My father told me he has long-term care insurance. How does that help him with his medical expenses?
Long Term Care Insurance is always purchased by you or a member of your family to cover long-term care needs for the client at home, in the community or in a nursing home. Although it is insurance and can be a good resource in retirement planning, it is not considered health insurance and should not be lumped in with Medicare and Medicare supplemental insurance. It is considered a long-term commitment, should be reviewed and purchased at a younger age, is normally approved for only healthy applicants and requires a benefit claim to be approved by the insurance company before benefits can be paid (longtermcare.gov).
Next column: I’m enrolled in Medicare. What comes next?
Carol S. Heape, MSW and CMC, is CEO of Elder Options Inc. a care managed home care company serving the Sacramento Region, Placerville and South Lake Tahoe. For more information visit elderoptionsca.com.
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