If you are turning 65 in the next few months, you have choices to make concerning your Medicare coverage.  Do you think a Medicare Supplement will be better coverage? Will you consider enrolling in a Medicare Advantage plan? If you’re still working and have employer coverage, do you even need to enroll in Medicare?

Here is some information to get started in understanding your Medicare choices:

MEDICARE ONLY: You will be responsible for the Part A hospital deductible and other co-pays. You will pay the Part B deductible. You will be responsible for 20% of the bills for doctor visits and services, lab tests, emergency room treatment, ambulance, chemotherapy, radiation therapy, physical therapy, and most medical care you receive outside a hospital.  THERE IS NO CAP TO YOUR 20% CO-INSURANCE.   Having just Medicare is risky because your medical bills can be overwhelming. The Medicare Part B premium is $99.90 per month.

MEDICARE SUPPLEMENTS: These work with your Medicare to give you more complete coverage. Also known as “Medigap ” plans, these fill the gaps in Medicare, some of which I listed in the previous paragraph. A Medicare Supplement Plan F will generally leave you with no medical bills because Medicare will pay first and your Plan F Medicare Supplement will pay the balance of the bills after Medicare has paid.  I always say, “think FULL coverage when you think of PLAN F”.

Medigap plans are named by letters: A, B, C, D, F,  G, K, L, M, N   and each one covers the gaps in a slightly different way. Because Plan F offers the fullest coverage, it has the highest monthly premium.

Plan F in Arizona will cost between $110 and $136 per month, depending on the company.  A Plan F is exactly the same from company to company. Beware of companies offering low premiums. They start out with the lowest premium and then raise the rate 30% or more the next year – and perhaps every year.  If you end up with health issues, you might not be able to change to a lower-priced Medigap plan in the future.

MEDICARE ADVANTAGE:  These are private Medicare plans offered by insurance companies, and they replace your Medicare. If you enroll in an Advantage plan, you won’t use your Medicare card because Medicare doesn’t pay your bills.  You will use the card given to you by your Medicare Advantage (MA) plan and your MA plan will pay your bills.  Many MA plans in Arizona have a $0 premium, though you must pay your Medicare Part B premium ($99.90/month). You will have co-pays for every medical service. For example, you might pay $15 when you see your primary care physician.  And you might pay $45 to see a specialist. Then there are hospital co-pays, emergency room co-pays, co-pays for labs, x-rays and other services.

Each Medicare Advantage plan is different, so you need to compare plans’ co-pays, doctor and hospital networks, and how they cover your drugs.

PART D: This is the drug plan which Medicare wants you to have (and pay for). If you get a Medicare Supplement, you should also sign up for stand-alone Part D plan.   Part D is offered by insurance companies that are contracted with Medicare.  Each Part D plan has a different monthly premium and a different formulary (list of drugs covered). Stand-alone Part D premiums range from $15 to $90 per month.

If you enroll in a Medicare Advantage plan with $0 premium, you get Part D at no additional cost.

Before signing up for a Part D plan or a Medicare Advantage plan with Part D included, you need to be sure your drugs are covered by that plan and what your co-payment will be.

STILL WORKING: If you are 65, working, and have good employer health insurance, you might not need to enroll in Medicare and pay the Part B premium ($99.90/month).  If you work for an employer with fewer than 20 employees, Medicare should be your primary insurance. If you work for a slightly larger company, you need to compare Medicare with your employer coverage. Small business health insurance often has high deductibles and high premiums. Medicare might be a better choice than your employer’s coverage.

You can see a video explaining these choices by clicking here: Intro to your Medicare choices

HOW TO PICK A PLAN

If you’ve decided to go with Medicare Advantage, you have quite a few plans to choose from. You need to check to see if your doctors are in the plan’s network and how your drugs are covered and at what cost.  This is what I do for my clients and sometimes it’s a lot of work.

If you’ve decided on a Medicare supplement, the only difference from company to company is the premium – although some companies raise their premiums more than others.

If you need a stand-alone Part D, you’ll need to compare plans (30 in Arizona) and figure out which one will cost you the least amount of money – and covers all your prescriptions.

Call me if you have questions or need help with your Medicare choices: 520-820-8639

Yesterday, I was talking with a client who has a Medicare supplement Plan F and a stand-alone Part D plan.  Kathy was telling me how tough things are financially now that her husband, who is 70, got laid off from his job.

Kathy and her husband are living on their Social Security, and their combined income is around $23,000 per year.  She said they spend $9,600 on their Medicare premiums, their Medicare supplements, their Part D plans, and drug co-pays all together.  They are going through their retirement savings to keep their heads above water.

Kathy told me that politicians in Washington don’t seem to realize how frightening the future is for people like her and her husband.

Later in the day, I read about the latest proposal by Republican Congressman Paul Ryan to privatize Medicare and push more costs onto elderly and disabled Americans.  The central ideas in the Republican plan are:  1) Limit government responsibility for the cost of Medicare;  2) Make people covered by Medicare pay more of their health care costs;  3) Turn Medicare over to private insurance companies (turning the program into a for-profit business).

Rick Ungar, who writes a blog for Forbes, wrote a review of the latest Republican plan for Medicare, and I share some of his thoughts with you:

The proposal would create an Obamacare style health exchange system (seriously) where seniors would go shopping for their health insurance policies. And just as is the case with Obamacare, insurance companies seeking to participate on the exchanges would be required to follow federal government regulatory standards and meet minimum coverage requirements in their offerings.

…the Ryan plan turns on the concept of government provided subsidies, in the form of vouchers, to assist seniors in paying for their care.

…According to the non-partisan Congressional Budget Office (CBO), under the Ryan proposal, a senior aged 65 could end up paying 68 percent of the cost of their health care out of their own pocket by the year 2030. That’s quite a change from how things work today with good, old-fashioned Medicare—and it is a change that should frighten even the most stalwart small-government fanatic.

…The only way RyanCare makes any sense is if we are prepared, as a society, to let our elderly die because they have been priced out of the health care market. That may be okay with some of you – but it will never be okay with me and it will never be okay with America’s senior citizens, now or in the future.

Then I thought about Kathy and her husband, two people who worked hard all their lives and saved some (but probably not enough) money for their retirement. They are very frightened by the future because they’re spending around 40% of their income on health care costs and coverage. They are spending down their retirement savings for their living expenses – and they don’t know how long their retirement funds will last.

Republicans are positioning their Medicare plan by saying Americans who are 55 and older won’t be affected by changes to the program. Republicans are betting that current senior citizens will say, “I’ve got mine,  so I don’t care about younger people”. But I’m betting that a lot of people like Kathy and her husband – who are very conservative when it comes to politics – understand how financially tough the current Medicare system is, and would not wish an even more costly program on anybody, especially their children and grandchildren.

The Medicare.gov Plan Finder has 2012 information available, and there will be 30 stand-alone Part D plans sold in Arizona next year.

From a quick review of 2012 Part D plans, it looks like the two most popular stand-alone plans increased their monthly premiums by less than one dollar. (I can’t mention the names of plans because I am an insurance agent and somebody might say I’m promoting them.)

I had a call from a client who said her Part D premium is going from $25 to $70. At first I thought she was probably confused by the materials she received from her Part D plan.  But I discovered that her premium is, indeed, going up that much!  This Unicare Part D plan was one of the lowest cost plans without a deductible.  I don’t know why anyone would stay in this plan – and I have a few clients in this plan I need to call!

If a plan has a large premium increase, or drops coverage of some drugs, thousands of seniors who don’t pay attention will get a very big shock in January when they get their Part D bill or go to fill a prescription. But in January they will be locked into that Part D plan for all of 2012 – and Medicare won’t make an exception for them just because they didn’t read their mail.

Everyone enrolled in a Part D or Medicare Advantage needs to read the mail they have recently received from their plan, called the “Annual Notice of Change” (ANOC). The ANOC provides information on any changes that are being made to their plan for 2012.

Part D Changes to look for: 

Did the premium increase substantially?

Are all your drugs still covered by the plan – and will the co-pay be around the same price as for 2011? Sometimes plans will move a drug from tier 2 (with a co-pay of $45) to tier 3 (with a co-pay of $80).

Medicare beneficiaries have until December 7th to put in an enrollment form for a new Part D plan that would start on January 1.  Insurance agents can talk about plan details as of today, October 1, but they can’t take an enrollment form until October 15th.  The Medicare Open Enrollment Period is now October 15th to December 7th.