Medicare can be very confusing for those newly eligible, and often I see the same issues coming up for those who are trying to navigate the Medicare maze. Here are few points to try and help clarify the process.
Many confuse the Parts of Medicare with the various Supplemental Plans available to them to fill the gaps in Medicare. The reason is that some of the Supplemental Plans have the same letter name as parts of Medicare. You have Parts A, B, and C with Medicare, but these are also names of Supplemental Plans that go with Medicare. Basically, Medicare has Part A – Hospital Coverage, Part B – Medical or Doctors’ Coverage, Part C – Medicare Advantage Plans, and Part D – Prescription Drug Coverage. You also have Plans A, B and C which are Supplemental Plans that cover the gaps in Medicare. A Medicare Advantage Plan is not the same as a Medicare Supplemental Plan. When you sign up for a Medicare Advantage Plan, you are signing up for Part C with Medicare, even though these plans are administered through private insurance companies. The insurance companies handle all costs associated with your care, but are subsidized by the Medicare program. These plans are usually HMO’s that require referrals to see specialists, and you must use Network providers in your service area to be covered. Supplemental Plans are PPO’s with no Network restrictions. However, you must use providers that take Medicare. Cobra is not considered creditable coverage for Medicare. If you lose your job and are Medicare-eligible, if you go on Cobra, it is not considered creditable coverage, which means you could be charged a penalty on your Medicare Part B and Part D premiums once you do sign up for Medicare. If your employer has 20 or more employees, you can remain on your employee group plan (as well as your dependents) if you are actively working, even though you are eligible for Medicare. The prominent word here is actively working, which means you cannot be on Cobra or laid-off from work. Higher earners pay more for their Medicare Part B premium and their Medicare Part D premium. If you make over $88,000 (as a single person) or over $176,000 (as a couple), you will pay more for your Part B and Part D premiums. It is called IRMMA (Income-Related Monthly Adjusted Amount), and it increases in increments based on income level.
With the cost of insulin nearly tripling over the past decade, many Americans with diabetes face difficult decisions when it comes to their health – whether to limit or stop taking their insulin because of the staggering cost. Seniors on fixed incomes may be even more vulnerable to the dire consequences of not being able to afford their medications.
In an effort to address the growing problem, the Centers for Medicare and Medicaid have implemented the Senior Savings Model for Part D Drug plans starting in January 2021. This new model limits copays in the deductible, initial and coverage gap phases for certain brands of insulin to a maximum of $35 per 30-day supply. The cost could even be less, depending on the medication. These rules apply to both stand-alone Part D drug plans and those imbedded in Advantage plans. Plans do not have to participate in the new model, and there are a limited number of plans that have opted into the new program.
In California, the stand-alone Part D plans that have agreed to participate are as follows: AARP Medicare Rx Preferred, Cigna Secure-Extra Rx, Express Scripts Medicare Choice, Express Scripts Medicare Saver, Humana Premier Rx, Mutual of Omaha Rx Premier, WellCare Medicare Rx Value Plus, WellCare Value Script, WellCare Wellness Rx. Advantage plans participating in the Senior Savings Model vary by county.
Part D drug plans are how Medicare recipients receive their prescription drug coverage. Whether you have a Medicare Advantage plan or a Supplemental plan, your Part D works the same way with 4 levels of coverage. The 4 levels of coverage are:
Deductible Phase – If your plan has a deductible, you must pay the full amount of your medications until the deductible is met. Some plans exclude Tier 1 and Tier 2 drugs from the deductible.
Initial Coverage Phase – You pay a portion of your drug cost via a copayment or coinsurance until your total costs reach $4,130.00 (Initial Coverage Limit for 2021 plans). Once this is met, you move into the Coverage Gap.
Coverage Gap or Donut Hole – You pay 25% of drug costs for brand and generic drugs until total out-of-pocket (TROOP) costs reach $6,550.00 (TROOP for 2021 plans) at which time you move into Catastrophic Coverage.
Catastrophic Coverage Phase – You pay the greater amount of 5% of the drug costs on any tier or $3.60 copay for Tier 1 & 2 drugs and $8.95 copay for all other tiers.
Part D drug plans may have changes every year which might include, premium and deductible increases (or decreases), formulary changes (the drugs covered under the plan), tier changes (changes to tiers of covered medications) and changes in preferred pharmacies. You will receive an Annual Notice of Change every year from your drug plan. You should check to make sure your medications are still covered under the plan, the tiers haven’t changed and whether a deductible has increased or been added.
The Annual Enrollment Period starting on October 15 and lasting to December 7 is the time to switch coverage, with your new plan going into effect on January 2021.
A Medi-Medi plan, also often referred to as a dual-special-needs plan or “look alike” plan, is a type of Medicare Advantage plan for people who qualify for both Medicare and Medicaid or Medi-Cal in California. Medicare is the primary payer on these types of plans with Medi-Cal being the secondary payer. You must go to doctors who accept both Medicare and Medi-Cal, and your share of cost is determined by your asset level. In California, to qualify in 2020 as a single person, your asset level is at $2,000 or below ($3,000 or below for couples). There are many things that are not included in your asset level like your primary residence, household items, pre-paid burial expenses and your car.
The advantages of having a Medi-Medi plan are that they coordinate your care with a provider network and often include extra benefits such as vision, dental and transportation services. You do, however, have to use the doctors and specialists in the plan’s network to be covered (except in cases of emergency). These plans are provided by private insurance companies, and the benefits and costs can vary from company to company. Prescription drugs are included in the plan with copays at no more than $1.30 for generic drugs and no more than $8.95 for brand drugs. If you pay no share of cost, your copays would be $0 for your medications.
You will automatically be enrolled in Medi-Cal if you qualify and sign up for Supplemental Security Income (SSI) through Social Security. You may qualify, as well, if you don’t get SSI, but you must contact your Medi-Cal county office to see if you meet eligibility requirements. If you are considering a Medi-Medi plan, be sure and check that your current doctors are in the plan’s network (if you wish to remain with them), and that your medications are in the plan’s formulary. You can also apply for one of these plans if you become newly eligible for assistance or during the Annual Enrollment Period from October 15 to December 7.
Trump recently signed four executive orders in hopes of curbing high drug prices in the United States. One of the orders targets how Medicare reimburses physicians for the administration of medications in hospital or office settings which is covered under Medicare Part B. The standing rule is that doctors can charge up to an additional 6% of the average sales price of a medication, which would incentivize physicians to use higher cost drugs. Trump’s order reduces the amount that can be charged to the lowest price paid by industrialized nations under an International Pricing Index.
Another executive order revamps the rebate rule which allows pharmacy benefit managers to pocket these payments instead of passing these discounts to the consumer. Under the order, patients would receive the savings instead of these middlemen, who would receive a fixed dollar amount instead of a percentage of the price of the medications.
Obtaining low-cost drugs from other countries is addressed in an order which allows FDA-approved medications to be imported, and the final order targets lowering the cost of insulin and epinephrine. Insulin prices have more than doubled in the last five years and the average cost of a two-pack EpiPen continues to soar. The order would require Federally Qualified Health Centers who serve low-income patients to pass on savings to their consumers instead of pocketing the discounts made available to them under the federal drug discount program or 340B.
When you are considering your options to cover the gaps in Medicare, i.e. deductibles, copays and coinsurance (yes, Medicare has all those), you might be looking at Supplemental or Advantage plans. There is a lot of confusion about how these types of plans differ and how they cover what Medicare doesn’t.
First, let’s take a look at Medicare Supplemental plans. These plans work similar to a PPO. With a regular PPO plan you can go to doctors in or out of network, but you generally pay more if you go out of network. Medicare Supplemental plans work a little differently because there are no networks. The only stipulation is that you must go to doctors that take Medicare whether they are primary care doctors or specialists. You can go to any doctor throughout the United States, including specialists, and be covered under your Supplemental plan. Supplemental plans are standardized, which means they have the same coverage regardless of carrier or region and are offered by private insurance companies. Premiums are determined by age and geographic location. You don’t need referrals from your primary care doctor to see a specialist. Supplemental plans do not include prescription drug coverage so you would have to purchase a separate Part D drug plan to cover your prescription medications.
Advantage Plans are also called Medicare Part C. Most Advantage plans work like an HMO. You must go to network doctors or you won’t be covered. They are specific to a certain geographic location, usually by county, and, in most cases, you must get a referral from your primary care doctor to see a specialist. Advantage plans are offered through private insurance companies and combine your Medicare Parts A, B and D (prescription drug coverage) into one plan. There are some plans that don’t have the Part D added if you have other drug coverage like Veteran’s Benefits. When you sign up for an Advantage Plan, you opt out of Original Medicare and the plan administers all your benefits. These plans may offer extra coverage like vision, hearing, and transportation to and from medical facilities, although some Supplemental plans are beginning to add these benefits as well. Advantage Plans include Special Needs Plans for people with certain chronic conditions like diabetes or heart disease and those that are eligible for both Medicare and Medi-Cal.
Balance Billing is a common problem when you go to out-of-network doctors not covered or partially covered by your health insurance. The consumer is charged for these costs in bills that could come weeks or months after the initial visit or procedure.
There are steps you can take, however, to mitigate these surprise medical bills. First, be sure to check your Explanation of Benefits (EOB) which usually comes with the bill. Check the dates to make sure the service you are being billed for is accurate and which services were actually performed by out-of-network providers. Be prepared. Get an itemized copy of your bill and know what the “usual” charge is for the procedure. Sites like FAIR Health can help you determine what costs are common for medical procedures in your area. Call the provider and ask to speak to someone in billing who can assist you with the bill. You can also write to your insurer and request that they cover a portion or all of the balance billing.
Ultimately, one of the best ways to avoid balance billing is to make sure you go to network providers. Call your insurer in advance, if possible, to make certain all your care is being handled by in-network doctors, from the surgeon to the anesthesiologist. Make sure all lab work and tests needed in preparation for the surgery is covered as well.
IRMAA stands for Income-Related Monthly Adjustment Amount, and what it means is that you are being charged more on your Medicare Part B premium and your Medicare Part D Drug Plan premium based on your income. If your Modified Adjusted Gross Income, or MAGI, is over $87,000 as a single person or over $174,000 as a couple, you will have this surcharge added to your monthly premiums. It goes up incrementally as your income rises to an additional $347.00 on Part B and $76.40 for Part D if you are in the highest brackets (above $500,000 for individuals or $750,000 for couples). The amount is added to the standard premium which is $144.60 for 2020. The good news is that it doesn’t affect what you pay for a supplemental or advantage plan.
Only about 5% of people on Medicare pay the extra charge which was implemented on Part B in 2003 and on Part D in 2011 as a way to save the federal government money on the burgeoning cost of the Medicare program. What can be even more frustrating is that Medicare looks at income tax records from two years prior. That means if you sign up for Medicare in 2020, your IRMAA will be based on your 2018 tax records. Most people are making less money once they retire and go on Medicare, so what can you do if you are in this situation? You can appeal the extra charges to Medicare directly. By filing form SSA-44, Medicare may adjust the amount you owe to reflect your current income levels. If you don’t appeal, your income is re-evaluated yearly, so you won’t be paying the higher premiums forever if your income does decrease.
If you’re approaching Medicare eligibility, it is important to know the various times to sign up for this important milestone. Below are the enrollment periods that will help you determine what your eligibility is or whether you need to sign up for Medicare at all:
Annual Enrollment Period – Period every year between October 15 and December 7 when you can change your Medicare Advantage Plan or Prescription Drug Plan.
Open Enrollment Period – Additional period of time from January 1 through March 31 when you can change your Medicare Advantage Plan. You can also return to Original Medicare with or without a drug plan.
Retirement/Loss of Group Health Insurance – Period of time once you retire or lose creditable group coverage to sign up for Medicare and a Supplemental, Advantage Plan and/or Part D Drug plan.
Supplemental Plan Birthday Rule – Period that allows you to change your Supplemental plan that begins 30 days before your birthday up to 60 days after your birthday.
Special Enrollment Period – Period of time to change your Medicare Advantage plan or Part D drug plan because of a life event, i.e., moving out of service area, qualifying for Low Income Subsidy. If you are still actively working and have a creditable (as good as Medicare) group employee health insurance plan, you may be able to keep the plan until you retire and delay signing up for Medicare without incurring penalties. Check with your benefit’s administrator to see if this is a viable option for you.
While most peoples’ health insurance costs go down when they sign up for Medicare, many are surprised that Medicare doesn’t pay 100% of their medical expenses. There are deductibles, copays, and coinsurance which can add up to hundreds, if not thousands, of dollars per year of out-of-pocket costs if you have Medicare alone.
How can you bridge the gaps and keep more money in your pocket? There are basically two ways you can go. Below is an explanation of each:
Medicare Supplemental Plans – You remain in Original Medicare and can go to any doctor who takes Medicare throughout the United States. Your plan travels with you, and you do not have to get a new plan if you move out of state. You don’t need to get referrals to see a specialist. If you want prescription drug coverage, you would have to purchase a stand-alone Part D plan to go with your Supplemental Plan since none of these plans cover prescription drugs.
Medicare Advantage Plans – You opt out of Original Medicare and go with a private company that combines Parts A, B and D into one plan (which is also called Medicare Part C). Most plans require you to see network doctors and get referrals to see a specialist. Some plans exclude Part D if you have other drug coverage such as VA benefits. Advantage Plans include Special Needs Plans for people with certain chronic conditions and Medi-Medi plans for those who qualify for both Medicare and MediCal.