I recently wrote about Governor Brewer’s plan to cancel Arizona’s Medicaid program for people who have large medical bills and no health insurance. The program is one part of  AHCCCS (Arizona Health Care Cost Containment System, pronounced “access”).  The title of my post was, “Arizona should not help people with their medical bills”.  Some of the comments made in response to my post were misinformed about how AHCCCS works, and I responded with my general knowledge gained from working with low income Arizonans.  I now have better information on AHCCCS as I recently I had the opportunity to participate in a  conference call with the Director of the Phoenix Area Agency on Aging, who provided an overview of Arizona’s Medicaid program.

The speaker, Ann Marie Grande, talked about the differences between the Arizona Long Term Care System (ALTCS) and Acute Care Services, which is the health insurance program for low income Arizonans.

Arizona Long Term Care System (ALTCS, pronounced “alltex”)

ALTCS pays nursing home costs for low income Arizonans and has several programs to help frail, sick people stay in their homes.  People who apply for ALTCS cannot exceed the asset limit of $2,000 – but a house and car are not counted. However, the state will seek reimbursement once a person who participates in ALTCS dies (or after the surviving spouse dies). The state will require the person’s estate or family to sell the person’s house and reimburse the state for what it spent on long term care for that individual.

For people applying to any of the AHCCCS programs (not ALTCS), the state of Arizona does not consider assets. An insurance agent on the conference call asked Ms. Grande if a person on AHCCCS could own a Bentley, and the answer was “yes”. Ms Grande went on to say that, “in fact, they could have two Bentleys”.  This is because Arizona only asks people about their income when they apply for Medicaid.

Ms Grande also said that if a person has a large amount of money in the bank, this is not counted by AHCCCS.  Money in the bank is only counted if it provides a steady stream of income. A pension, annuity payments, alimony, dividends, and other steady payments are considered income.  But money sitting in a bank account is not a consideration when someone applies for help from AHCCCS.

So it turns out, as I thought, that Arizona is a very liberal state when it comes to helping people with their medical bills.  This is due to Proposition 204, which was approved by a majority of Arizona voters in 2000.  Proposition 204 required that money received from a tobacco lawsuit would be spent on expanding eligibility for AHCCCS programs. Between 2000 and 2025 the state is supposed to receive about $3.2 billion from the tobacco settlement, and this money is supposed to be spent on AHCCCS programs.  AHCCCS has several programs, including the following:

Medical Expense Deduction (MED) program

A person can be enrolled in this program if they end up in the hospital, have no health insurance, and can’t pay their bills.  (I have talked to people receiving treatment for cancer who are on this program as well.)  If person’s income over three months, minus three months of medical expenses, equals 40% of the federal poverty level, that person qualifies for MED.  40% of the federal poverty level would be $363 for an individual and $486 for a couple.  In this case, AHCCCS pays the person’s medical bills. This is supposed to be short-term coverage and is reviewed every six months.  Only income is considered as part of an application for MED – not assets.

Medicare Cost Sharing

This is a program for people on Medicare whose income is below $1,239 (individual) or $1,660 (couple), but above the federal poverty level of $908 (individual) or $1,219 (couple).  Once approved for Medicare Cost Sharing, the state of Arizona will pay the person’s Medicare Part B premium.  Part B premiums range between $96.40 and $115.40. People new to Medicare in 2011 will pay the higher premium.  There is no asset limit to apply for this program.

More help for these folks: When the state of Arizona accepts a person into the Medicare Cost Sharing program, the state will then send information to Social Security so the person gets signed up for a limited income subsidy (LIS) for their Part D drug plan and drug costs.  If a person applies for this help directly to Social Security, they will be asked about their assets.  So the best way to get this LIS help for drug costs is by going through AHCCCS, especially if an individual or couple has some money in the bank.  The application can be found on-line by googling “arizona medicare cost sharing”. When approved for LIS, a person pays only $2.50 for generic drugs, or $6.30 for any brand drug. People on LIS do not have to worry about the Part D donut hole. LIS is a really big help to people with large drug costs and limited income.

Dual Eligible

If a person is on Medicare and Medicaid (with income of less than $908/month), they are called “dual eligibles”.  For these people with very low income, AHCCCS will pay co-pays that come with Medicare coverage.  If a person is enrolled in a Medicare Advantage plan, the person’s AHCCCS health plan may or may not pay co-pays.  This is why it is a good idea to enroll in a Medicare Advantage plan designed specifically for “dual eligibles”, so the Medicare Advantage plan coordinates care to make sure a person’s co-pays are covered and the patient pays nothing for their medical care.

If a person is over 65 and leaves work or loses his job, he should not use COBRA, the federal law that allows people to keep their employer health insurance for 18 months after their employment ends.

I recently heard from a woman who was very upset with Medicare because she used COBRA after she was 65 and, when it ran out, she was planning to move to Medicare. When she went to sign up for Medicare she was told she had made a big mistake, and she would be penalized for late enrollment in Medicare Part B.

Then she was told that she could only enroll in Medicare Part B during the General Enrollment Period, which is January through March. Medicare would take her application during this period, but her coverage would not start until July 1. Fortunately for her, she signed up for Medicare in February and will get her coverage this July. But, in the meantime, she has no health insurance because her COBRA ran out.

This rule related to COBRA is set in stone and will not be modified for anyone. So why do employers allow people to use COBRA if they are over 65? It should not be allowed, so people get the right information and are not penalized for getting bad advice.

Yesterday I wrote about Jerry, who moved to Tucson and was able to drop his Colorado Medicare Advantage plan and enroll in a Medicare supplement without answering any medical questions.  Because the move from Colorado to Arizona required Jerry to drop his Colorado Medicare Advantage plan, Jerry had “guaranteed issue” for  a Medicare supplement.

The Medicare supplement choice was simple, but then Jerry had to sign up for a stand-alone Part D prescription drug plan.  Jerry takes several prescriptions, so selecting a Part D plan requires doing some research to make sure all of his prescriptions are covered by the plan he chooses. So I went to Medicare.gov and clicked on “Health and Drug Plans”. Then I clicked on “Compare Health and Drug Plans”.  I put in each of Jerry’s prescriptions, and the Medicare “Plan Finder” gave me a list of Part D plans that covered his drugs, starting with the plan that would cost him the least amount of money for monthly premiums and co-pays.  The first plan on the list was the Humana-Walmart Part D plan for $14.80 per month.

I was going to have Jerry call up Humana to enroll over the phone, so I called him up and began to explain what he needed to do. Well….. this is where I remembered that Part D is rather confusing. You see, the plan that the Medicare Plan Finder gave as #1 for Jerry has a $310 deductible, so I began to explain this. Then I went on to explain co-pays for drugs on the Humana-Walmart plan, which can vary based on where he buys his drugs: at a Walmart store, by mail, or at a non-preferred pharmacy like Walgreens.   Things got complicated and confusing pretty quickly, so I told Jerry I’d drop by his house and explain everything in person. (Note to Medicare insiders: I had gotten a scope of appointment form signed by Jerry before we met to talk about the Medicare supplement.)

To prepare for my meeting with Jerry, I went to the Humana website and put in his list of prescriptions. The Humana website, if you can figure out how to use it, provides a monthly breakdown of what a person will pay for their prescriptions and how much Humana will pay.  The Humana Rx calculator provides lots of details, and I printed them out to help me explain the plan to Jerry.

So I went to Jerry’s house and showed Jerry the printouts, drew him diagrams, and explained the difference between the monthly premium and the co-pays for his drugs. And then there was the $310 deductible….. and we spent nearly an hour talking about this Part D plan.  After going over the details several times, Jerry got the full picture, but he still asked me to write up a summary of everything he had signed up for and what his monthly costs would be.

Jerry wants to use use the Humana mail order service for his prescriptions, and this will save him a lot of money.  I told Jerry to call me when he gets his package of information from Humana so I can help him set up the mail order.  This is another confusing process, but once it’s set up it should be simple to use – I think.

Why is Part D so complicated?

During our meeting, I apologized several times to Jerry for how complicated Part D is,  and I reassured him that it was not his fault that he was confused by it.  In 2011 there are over 1,000 Part D plans offered throughout the country. Why?   What value is provided by hundreds of insurance companies each offering several Part D plans?  Has this saved Medicare money?  Has this made drug coverage selection easy for seniors? Why not have one or two plans administered by Medicare (which could contract out the plans’ management to the private sector)?

I just can’t  understand why Part D is so complicated.