This article is a contribution by my Medicare expert colleague, Paul Davis. He is a wealth of information and would welcome your questions. He can be contacted through his email address,paul@pdinsure.com, , or by phone at 818-888-0880
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Confused by Medicare health plan options? You’re not alone.
Every person I meet with or speak with has some level of confusion or misunderstanding about Medicare Health plan options.
Medicare is designed for people 65 and over. Sometimes people get this confused with the eligibility for Social Security which has several potential start dates. Medicare can also be for someone under 65 if they have been on SSDI for 24 months, have ESRD (End stage renal disease/kidney failure) or ALS (Lou Gehrig’s disease).
Medicare Part A has no cost if you have paid taxes for 40 quarters (10 years). Part A covers Hospitalization, Skilled Nursing, Home Health Care and Hospice. You can often qualify for no cost part A through a spouse or former spouse.
Medicare Part B will have a cost for most people of $135.50/mo. in 2019. This gets indexed up yearly. Your cost for Part B can be significantly more depending on your Modified Adjusted Gross Income. For 2019 the look back is to the tax year 2017. If your file singly/jointly and your MAGI is under 85000/170000 you will be paying the $135.50. There are 6 brackets with the top end being $460.50 per month per person for Part B plus $77.40 per person per month for the IRMAA (Income Related Monthly Adjustment Amount) for Part D. As you file new tax returns, these amounts will be adjusted yearly. If you’ve had a significant life event you can appeal to have these amounts reduced.
Part B covers Physician Services, Ambulance, Therapy, Medical Equipment, Laboratory, X rays, Diagnostic tests and Preventative services to name a few.
Part C is the part of Medicare that created alternative delivery systems. Part C plans are Medicare Advantage plans. With these plans, you assign your Medicare benefits to an insurance company which then becomes your provider of Medicare services. Availability of these plans varies by county. Los Angeles currently has 42 plans available, not including Special Needs Plans. All but one of the plans in LA County is an HMO model. Most of these plans include coverage for Part D prescription drugs and the majority of these plans have no monthly premium. You are still obligated to pay your Part B premium.
These plans can be of great value if you are comfortable with an HMO model and have a primary care physician and medical group you want to work with. They also work well for people that are retiring on a budget. Most of these plans have zero copays for doctor visits, lab work and hospitalization. There are typically cost exposure for chemotherapy, radiation therapy, expensive scans, ambulance rides and skilled nursing. But, those costs are capped at a specified amount. These plans are required to have benefits at least as good as basic Medicare. Many of these plans have also added extra benefits for dental, vision, gym membership, personal emergency response systems, chiropractic, podiatry and more.
Special Needs Medicare Advantage plans are becoming increasingly available. There are plans available that address people with chronic disabling conditions or people in certain long term care facilities.
Part D is the part of Medicare created in 2006 to address the cost of prescription drugs for people on Medicare. It has a lot of moving parts, but provides much better coverage than what existed previously. There are currently 30 such plans available in Los Angeles. When these plans first came out the coverage gap or so called “donut hole” was extreme. Once you purchased drugs with a retail value of $2250 you were responsible for 100% of the retail cost until you hit the $3600 mark. For 2019 the threshold increased to $3820 at and you were only responsible for 25% of the cost of generic or 37% of the cost of brand named drugs. This gap is scheduled to shrink to 25% for all drugs in 2020. If you don’t sign up for Part D when you are first eligible and then sign up later you will likely incur a penalty for every month you didn’t have it. You also open yourself up to a catastrophic cost exposure if you don’t have coverage in place and yet need an expensive medication. Some prescribed cancer medications are now over $10000 a month.
Standalone Part D plans in California currently range from $12.90 to $117.80/mo. A persons eclectic assortment of drugs will dictate which plan provides the lowest overall cost.
Several notes on Medicare. Medicare parts A and B pick up a lot of expenses. But, if all you have is Part A and B you have significant cost exposure. Part A has $1364 cost for the first 60 days in a hospital. After day 60 your cost is $341/day. After 90 days your cost is $682/day. Your maximum coverage is 150 days. Part B has a $185 deductible and then you have a 20% share of cost with no stated maximum. So, if you need chemotherapy or radiation therapy you will be responsible for 20% of that cost which could be significant. You also need to add Part D. I suggest that everyone should have additional coverage to augment Medicare.
Medicare does not cover long term care. Yes, they cover up to 100 days in a skilled nursing facility, but that is only if you need significant medical attention and/or only for as long as you’re showing improvement. Expect a likely discharge within 20 days for most situations.
Medicare Supplement Plans (aka Medigap Plans) are a different way to augment your Medicare coverage. These plans are designed to fill in the cost exposure of basic Medicare and allow you access to all Medicare contracted providers (except those in exclusive networks, such as Kaiser). With these plans you can see providers anywhere in the U.S. These plans are technically not PPO plans and cannot be referred to as such. Medicare supplement plans do NOT include coverage for prescriptions, so you would need to enroll in a standalone Part D plan to have that coverage.
People who want the freedom to access providers directly gravitate towards these plans. There are currently 11 modernized Medicare supplement plans available for enrollment. The richest and most popular plan is Plan F. With this plan you have no deductibles and no share of costs as long as you’re using Medicare contracted providers for Medicare covered services. For someone turning 65 and new to Medicare in Los Angeles you’re looking at $138/mo. including a $25 new to Medicare 12 month discount. My oldest clients are paying between $287 and $359 a month. So, rates do go up as you get older.
Anyone born after 1/1/1955 will not be able to enroll in Plan F. It is being closed to new 65 year olds effective 1/2/2020. Plan G by default becomes the richest plan. The only difference between plan F and G is that with G you have to pay the Part B deductible, currently at $185. So, the first time you access Part B services in a calendar year you must pay the Medicare negotiated rate up to $185. If you turned 65 this year or in previous years you will maintain access to Plan F and if you’re on a plan F you can continue it. We have moved a number of clients over to Plan G already as for many it is the better value proposition.
We have seen the emergence of “innovative” and “extra” Medicare supplement plans that have added benefits such as vision and hearing.
_____________________Paul Davis is an independent insurance agent licensed for over 35 years and focused on Medicare plans for over 10 years. His practice now is entirely devoted to this market segment. With exclusive concentration on Medicare health plans he’s gained tremendous insights into how to help people figure out their most suitable solution. He doesn’t charge a fee, but is paid a commission if someone enrolls in a plan he represents. Paul is a tremendous resource for people unsure whether to transition off a group health plan or what type of plan to enroll in. CA licenses 0669770, 0M47932 (818)888 0880 www.pdinsure.com.
