I met yesterday with a woman who is an artist here in Tucson. She is turning 65 soon and when her Medicare kicks in she will have health insurance for the first time in 15 years. She had health insurance back when Arizona had an insurance program for small business owners that was subsidized by the state. But when the subsidy ended and premiums skyrocketed, she decided to take her chances and go without. She couldn't afford to pay $400 or more per month for a high deductible plan and she was healthy so she dropped her insurance.
Now she is looking forward to getting a checkup and not worrying about getting a health problem that could bankrupt her. We talked about her options for her Medicare coverage and she said her mother is on a Medicare Advantage plan. But she wants to stay with Medicare and get a Medicare Supplement because she figures she can afford the $90/month premium for a Plan F with United of Omaha. (Arizona has very good rates for certain supplement plans.)
The one thing she did not want was the Part D drug plan. She doesn't take drugs and doesn't plan to, so she can't see why she should pay $15 per month (for a Standard plan) for something she won't use. I told her she would be penalized if she finds she needs drug coverage in the future, but she said she'd take her chances.
I guess, having been self-employed for many years, she is a risk taker and knows what it means to deal with "taking chances".
Medicare beneficiary in financial trouble
I got a phone call the other day from a man on Medicare who is in big financial trouble because of the 20% of his medical bills that Medicare doesn't cover. He has limited income ($1100 per month) and gets help with his drug costs, but he never got himself a Medicare Supplement plan to cover the 20% co-insurance and deductibles in Medicare.
Last month he was rushed to the hospital in an ambulance. Upon arrival at the hospital he was told he needed to pay the Part A deductible of $1,068 in order to be admitted. After three days in the hospital undergoing multiple tests he got a bill for thousands of dollars for his 20% of doctor services and lab tests. He was shocked because he thought he had coverage through Medicare - which he did - and he was surprised to learn how much his 20% co-insurance would be.
This man is a good candidate for a private Medicare insurance plan which would have limited his co-payments. Private plans, called Medicare Advantage, each have different benefit structures, but all cover hospitalization the same way - there is a co-payment by the patient and all services provided during the stay are covered. There are no separate bills for doctors and tests and there is a limit on what the patient pays. Some plans have hospitalization co-pays of $200 per day. Others have "per stay" co-payment of $500.
As an insurance agent, I tell seniors that their best coverage is to stay with Medicare and get a Medicare Supplement (plan F). If this man had a Medicare Supplement he would have had no co-payments. However, on an income of $1100 per month, he might have felt he could not afford to spend $120 per month (the AARP Plan F Med Supp price in Arizona) plus another $35 per month for a Part D drug plan.
This man would be a good candidate for a Medicare Advantage plan which would have limited his co-payment to somewhere between $500 and $1,000, depending on his plan. And his monthly premium for such a plan would be $0.
I go back and forth on my view of Medicare Advantage plans because I have concerns about Medicare paying out billions of dollars each year to private insurance companies. These companies take a big chunk of this money for marketing and commissions (to agents like me) along with sizable profits for themselves (plus multimillion dollar salaries for their CEOs).
But when I hear from people like this man, I see Medicare Advantage more positively. And I wonder if Democrats, in their desire to stop the "privatization of Medicare", are not throwing out the baby with the bathwater. And I wonder what seniors' reactions will be when the see their Medicare Advantage co-payments rise and benefits reduced. In states like California, Arizona, and Florida, where over 30% of seniors are on Medicare Advantage plans, there could be some serious backlash.
Last month he was rushed to the hospital in an ambulance. Upon arrival at the hospital he was told he needed to pay the Part A deductible of $1,068 in order to be admitted. After three days in the hospital undergoing multiple tests he got a bill for thousands of dollars for his 20% of doctor services and lab tests. He was shocked because he thought he had coverage through Medicare - which he did - and he was surprised to learn how much his 20% co-insurance would be.
This man is a good candidate for a private Medicare insurance plan which would have limited his co-payments. Private plans, called Medicare Advantage, each have different benefit structures, but all cover hospitalization the same way - there is a co-payment by the patient and all services provided during the stay are covered. There are no separate bills for doctors and tests and there is a limit on what the patient pays. Some plans have hospitalization co-pays of $200 per day. Others have "per stay" co-payment of $500.
As an insurance agent, I tell seniors that their best coverage is to stay with Medicare and get a Medicare Supplement (plan F). If this man had a Medicare Supplement he would have had no co-payments. However, on an income of $1100 per month, he might have felt he could not afford to spend $120 per month (the AARP Plan F Med Supp price in Arizona) plus another $35 per month for a Part D drug plan.
This man would be a good candidate for a Medicare Advantage plan which would have limited his co-payment to somewhere between $500 and $1,000, depending on his plan. And his monthly premium for such a plan would be $0.
I go back and forth on my view of Medicare Advantage plans because I have concerns about Medicare paying out billions of dollars each year to private insurance companies. These companies take a big chunk of this money for marketing and commissions (to agents like me) along with sizable profits for themselves (plus multimillion dollar salaries for their CEOs).
But when I hear from people like this man, I see Medicare Advantage more positively. And I wonder if Democrats, in their desire to stop the "privatization of Medicare", are not throwing out the baby with the bathwater. And I wonder what seniors' reactions will be when the see their Medicare Advantage co-payments rise and benefits reduced. In states like California, Arizona, and Florida, where over 30% of seniors are on Medicare Advantage plans, there could be some serious backlash.
Medicare Supplement Changes in 2010
Changes will be coming to Medicare Supplements in 2010. Amidst all the chatter over changing the health insurance system and ever-rising budget deficits, Medicare beneficiaries will see changes starting in 2010. Medicare Supplements, which are offered by private insurance companies, but closely regulated by Medicare, will see the following changes.
1. Plans E, H, I and J will be eliminated.
2. Plan G will be modified. Home Care benefit will be removed and excess charges covered at 100%.
3. Lower cost Plans M and N will be offered. Co-pays will be included in these new plans.
4. Companies offering Plan A must offer Plan C and Plan F.
5. A hospice benefit will be included in all new plans being introduced.
Plans M and N will both use cost-sharing (co-pays and deductibles) which will allow them to have lower monthly premiums. With Plan M, the insured will be responsible for 50% of the Part A (hospital) deductible. With Plan N, the insured will have a $20 doctor’s office co-pay and a $50 emergency room co-pay. Both plans project to have premiums 15-30% lower per month than current Plan F premiums.
All companies will be allowed to reset rates with the introduction of new plans and the addition of the hospice benefit. Rumor has it that companies with high premiums that are no longer competitive will be able to reset their pricing (meaning lower their prices), thus creating more competition between supplement companies.
Will the Medicare Supplement market be wide open in 2010? Perhaps. And with less money going to Medicare Advantage companies, the entire Medicare market could be very interesting in 2010 and 2011 - for seniors and for insurance agents.
1. Plans E, H, I and J will be eliminated.
2. Plan G will be modified. Home Care benefit will be removed and excess charges covered at 100%.
3. Lower cost Plans M and N will be offered. Co-pays will be included in these new plans.
4. Companies offering Plan A must offer Plan C and Plan F.
5. A hospice benefit will be included in all new plans being introduced.
Plans M and N will both use cost-sharing (co-pays and deductibles) which will allow them to have lower monthly premiums. With Plan M, the insured will be responsible for 50% of the Part A (hospital) deductible. With Plan N, the insured will have a $20 doctor’s office co-pay and a $50 emergency room co-pay. Both plans project to have premiums 15-30% lower per month than current Plan F premiums.
All companies will be allowed to reset rates with the introduction of new plans and the addition of the hospice benefit. Rumor has it that companies with high premiums that are no longer competitive will be able to reset their pricing (meaning lower their prices), thus creating more competition between supplement companies.
Will the Medicare Supplement market be wide open in 2010? Perhaps. And with less money going to Medicare Advantage companies, the entire Medicare market could be very interesting in 2010 and 2011 - for seniors and for insurance agents.
Medicare Advantage in Crosshairs
When asked how Medicare can cut costs, President Obama seems to have only one definitive answer, and he uses it every time the question is asked. He says overpayments to Medicare Advantage plans, or "subsidies to private insurance companies", will be cut. These cuts will save billions of Medicare dollars over five years.
Cuts in payments to the private insurance companies running Medicare Advantage plans will start in 2010. The companies got the bad news back in March and had to determine how they should change their plans' benefits which they needed to submit to Medicare in June. Enrollees in these plans won't learn of any changes for 2010 until October when the get a packet of information from their plan sponsor. Only then will we know how the private insurance companies have reacted to the payment cuts. And only then will the 23 percent of Medicare beneficiaries who are enrolled in Medicare Advantage plans know how it all effects them.
Some History
For decades, people on Medicare have had the option of leaving traditional Medicare and enrolling in privately-run health insurance plans, known as Medicare Advantage plans. In 2009, the government will pay these private plans an average of 14 percent — or about $12 billion — more than it would pay for people in traditional Medicare. “This added cost contributes to the worsening long-range financial stability of the Medicare program,” said the Medicare Payment Advisory Commission (MedPAC), a nonpartisan group Congress established to monitor Medicare, in a March 2009 report to Congress.
In 2009, 23 percent of all Medicare beneficiaries (about 10.4 million out of the 45 million people in Medicare) are enrolled in a Medicare Advantage plan. In some states, like California, Arizona, Pennsylvania, and Oregon, over 30 percent of Medicare beneficiaries have enrolled in these private plans.
Enrollment in Medicare Advantage more than doubled during the Bush years, especially with the introduction of the Part D prescription drug plan in 2006. That year, all seniors were encouraged to sign up for the drug plan or face a penalty for delayed enrollment. Part D drug plans were offered by the same companies offering Medicare Advantage plans, most of which included a prescription drug plan for no cost. So when sales agents were meeting with seniors to review Part D stand-alone plans (which had premiums ranging from $10 to $50 per month) they would introduce the idea of enrolling in the company’s zero premium Medicare Advantage plan and getting the drug coverage for free. This was not a hard sell with many seniors on limited budgets.
In 2009, most Medicare Advantage enrollees are in health maintenance organizations (HMOs) in which members are limited to a network of health care providers in certain areas. Local and regional preferred provider organizations (PPOs) are another type of network plan that allows access to out-of-network providers at additional cost.
The fastest-growing Medicare Advantage option has been private-fee-for-service (PFFS) plans, which allow members to go to any provider who is willing to bill the insurance company without having a contract with that company. These plans were designed to operate much like Medicare, which is a "fee-for-service" plan. Private fee-for-service plans are not required to have a network of providers, although this will change in 2011.
All Medicare Advantage plans are required to offer at least the same benefits that traditional Medicare offers. But they have become increasingly popular because they frequently offer benefits not covered by traditional Medicare, such as vision, hearing, and dental care; health club memberships; preventive and wellness care).
Below are some examples of Medicare Advantage enrollment by state.The numbers are the percentage of Medicare beneficiaries enrolled in Medicare Advantage.
Oregon 41%
Pennsylvania 36%
California 34%
Rhode Island 34%
Arizona 32%
New York 28%
Florida 28%
Texas 17%
Georgia 13%
Kansas 9%
New Hampshire 6%
Vermont 3%
More information can be found on the Kaiser Family Foundation web site (kff.org) on the Medicare Advantage Tracker page. Data is provided on the number of Medicare beneficiaries as well as the average amount private insurance companies are paid per month per enrollee in each state. Monthly payments per enrollee range from $1,013 in Florida to $726 in Vermont.
While the various health insurance reform bills in Congress are being loudly debated, it appears the changes that are coming soon to Medicare Advantage plans are flying under the radar. Some companies will pull out of the Medicare Advantage market, requiring seniors to find a new plan. Other companies will increase co-payments and perhaps raise premiums. Many plans now have no premium, which has been a major selling point for cash-strapped seniors. October should be interesting when the details of 2010 Medicare Advantage plans are released.
Cuts in payments to the private insurance companies running Medicare Advantage plans will start in 2010. The companies got the bad news back in March and had to determine how they should change their plans' benefits which they needed to submit to Medicare in June. Enrollees in these plans won't learn of any changes for 2010 until October when the get a packet of information from their plan sponsor. Only then will we know how the private insurance companies have reacted to the payment cuts. And only then will the 23 percent of Medicare beneficiaries who are enrolled in Medicare Advantage plans know how it all effects them.
Some History
For decades, people on Medicare have had the option of leaving traditional Medicare and enrolling in privately-run health insurance plans, known as Medicare Advantage plans. In 2009, the government will pay these private plans an average of 14 percent — or about $12 billion — more than it would pay for people in traditional Medicare. “This added cost contributes to the worsening long-range financial stability of the Medicare program,” said the Medicare Payment Advisory Commission (MedPAC), a nonpartisan group Congress established to monitor Medicare, in a March 2009 report to Congress.
In 2009, 23 percent of all Medicare beneficiaries (about 10.4 million out of the 45 million people in Medicare) are enrolled in a Medicare Advantage plan. In some states, like California, Arizona, Pennsylvania, and Oregon, over 30 percent of Medicare beneficiaries have enrolled in these private plans.
Enrollment in Medicare Advantage more than doubled during the Bush years, especially with the introduction of the Part D prescription drug plan in 2006. That year, all seniors were encouraged to sign up for the drug plan or face a penalty for delayed enrollment. Part D drug plans were offered by the same companies offering Medicare Advantage plans, most of which included a prescription drug plan for no cost. So when sales agents were meeting with seniors to review Part D stand-alone plans (which had premiums ranging from $10 to $50 per month) they would introduce the idea of enrolling in the company’s zero premium Medicare Advantage plan and getting the drug coverage for free. This was not a hard sell with many seniors on limited budgets.
In 2009, most Medicare Advantage enrollees are in health maintenance organizations (HMOs) in which members are limited to a network of health care providers in certain areas. Local and regional preferred provider organizations (PPOs) are another type of network plan that allows access to out-of-network providers at additional cost.
The fastest-growing Medicare Advantage option has been private-fee-for-service (PFFS) plans, which allow members to go to any provider who is willing to bill the insurance company without having a contract with that company. These plans were designed to operate much like Medicare, which is a "fee-for-service" plan. Private fee-for-service plans are not required to have a network of providers, although this will change in 2011.
All Medicare Advantage plans are required to offer at least the same benefits that traditional Medicare offers. But they have become increasingly popular because they frequently offer benefits not covered by traditional Medicare, such as vision, hearing, and dental care; health club memberships; preventive and wellness care).
Below are some examples of Medicare Advantage enrollment by state.The numbers are the percentage of Medicare beneficiaries enrolled in Medicare Advantage.
Oregon 41%
Pennsylvania 36%
California 34%
Rhode Island 34%
Arizona 32%
New York 28%
Florida 28%
Texas 17%
Georgia 13%
Kansas 9%
New Hampshire 6%
Vermont 3%
More information can be found on the Kaiser Family Foundation web site (kff.org) on the Medicare Advantage Tracker page. Data is provided on the number of Medicare beneficiaries as well as the average amount private insurance companies are paid per month per enrollee in each state. Monthly payments per enrollee range from $1,013 in Florida to $726 in Vermont.
While the various health insurance reform bills in Congress are being loudly debated, it appears the changes that are coming soon to Medicare Advantage plans are flying under the radar. Some companies will pull out of the Medicare Advantage market, requiring seniors to find a new plan. Other companies will increase co-payments and perhaps raise premiums. Many plans now have no premium, which has been a major selling point for cash-strapped seniors. October should be interesting when the details of 2010 Medicare Advantage plans are released.
Problem with AARP Enrollment over Phone
Elaine is a friend of mine in Rhode Island who is 80 years old. She had seen the advertisements on television for AARP's Medicare Supplements. When she talked to her friends they said they had supplements to fill the gaps in their Medicare coverage, so Elaine called AARP to sign up for their Medicare Supplement policy which would cost her $175/month.
I was visiting Elaine last summer and the topic of Medicare came up, so I asked Elaine what coverage she had and asked to see her Medicare-related cards. When Elaine went through her wallet she pulled out not one, but two cards that said AARP on them. One was for a Medicare Supplement and one was for a Medicare Advantage plan - both from AARP.
I was puzzled and so was Elaine. Which coverage did she have? Elaine wasn't sure herself, but she knew she had called AARP three months earlier to sign up for the Medicare Supplement policy (at a cost of $175/month). So, even though it was Saturday, I called 1-800-MEDICARE and asked the question, "What do you see in Elaine's Medicare record that shows if she is covered by "Original Medicare" or a "Medicare Advantage plan?".
The answer from the Medicare representative was that Elaine was in the AARP Medicare Complete plan (which is a Medicare Advantage plan that includes a Part D drug plan). I asked if Elaine's Medicare Supplement policy would work with Elaine's Medicare Advantage plan. (I knew the answer but wanted the Medicare Rep to tell Elaine.) The answer was that a Medicare Supplement only works when a person is on "original Medicare". The "Med Supp" covers the gaps in Medicare - but when a person signs up with a Medicare Advantage plan (some call them "Medicare Replacement plans"), the plan pays their bills, not Medicare. Therefore, Elaine's AARP Medicare Supplement was "useless".
"Let's call AARP."
So, with Elaine's Medicare coverage clarified, I called AARP to find out how Elaine got signed up for a Medicare Supplement and was paying $175/month for a useless policy. The AARP representative said all callers are asked "if they have coverage already and are switching to AARP coverage". When I asked if customers are required to answer more specific questions about their "coverage", the AARP rep said that was not part of the phone interview.
So, what was Elaine to do? Her friends all had Medicare Supplements, so Elaine thought she should have one too. But, as it turns out, Elaine had no choice but to keep the Medicare Advantage plan because there is a "lock-in" for people in these plans. This conversation was taking place in July and Elaine could not change her Medicare Advantage plan until January. She could make changes as of November 15th and they would take effect on January 1.
I told Elaine to cancel the Medicare Supplement policy and to ask AARP to refund the premiums she had paid. Medicare Supplement policies can be cancelled at any time - but Medicare Advantage plans and Part D Drug plans can only be cancelled at the end of the year.
I supposed I am biased when it comes to advising people against signing up over the phone for something as important as Medicare coverage. I have met several seniors who thought the AARP Medicare Supplement would cover the co-payments in their Medicare Advantage plan - and when they called the AARP phone number, they were signed up without questions being asked about what kind of coverage they had.
I was visiting Elaine last summer and the topic of Medicare came up, so I asked Elaine what coverage she had and asked to see her Medicare-related cards. When Elaine went through her wallet she pulled out not one, but two cards that said AARP on them. One was for a Medicare Supplement and one was for a Medicare Advantage plan - both from AARP.
I was puzzled and so was Elaine. Which coverage did she have? Elaine wasn't sure herself, but she knew she had called AARP three months earlier to sign up for the Medicare Supplement policy (at a cost of $175/month). So, even though it was Saturday, I called 1-800-MEDICARE and asked the question, "What do you see in Elaine's Medicare record that shows if she is covered by "Original Medicare" or a "Medicare Advantage plan?".
The answer from the Medicare representative was that Elaine was in the AARP Medicare Complete plan (which is a Medicare Advantage plan that includes a Part D drug plan). I asked if Elaine's Medicare Supplement policy would work with Elaine's Medicare Advantage plan. (I knew the answer but wanted the Medicare Rep to tell Elaine.) The answer was that a Medicare Supplement only works when a person is on "original Medicare". The "Med Supp" covers the gaps in Medicare - but when a person signs up with a Medicare Advantage plan (some call them "Medicare Replacement plans"), the plan pays their bills, not Medicare. Therefore, Elaine's AARP Medicare Supplement was "useless".
"Let's call AARP."
So, with Elaine's Medicare coverage clarified, I called AARP to find out how Elaine got signed up for a Medicare Supplement and was paying $175/month for a useless policy. The AARP representative said all callers are asked "if they have coverage already and are switching to AARP coverage". When I asked if customers are required to answer more specific questions about their "coverage", the AARP rep said that was not part of the phone interview.
So, what was Elaine to do? Her friends all had Medicare Supplements, so Elaine thought she should have one too. But, as it turns out, Elaine had no choice but to keep the Medicare Advantage plan because there is a "lock-in" for people in these plans. This conversation was taking place in July and Elaine could not change her Medicare Advantage plan until January. She could make changes as of November 15th and they would take effect on January 1.
I told Elaine to cancel the Medicare Supplement policy and to ask AARP to refund the premiums she had paid. Medicare Supplement policies can be cancelled at any time - but Medicare Advantage plans and Part D Drug plans can only be cancelled at the end of the year.
I supposed I am biased when it comes to advising people against signing up over the phone for something as important as Medicare coverage. I have met several seniors who thought the AARP Medicare Supplement would cover the co-payments in their Medicare Advantage plan - and when they called the AARP phone number, they were signed up without questions being asked about what kind of coverage they had.
Subscribe to:
Posts (Atom)