Posts Tagged "Medicare Advantage"

Medicare

Enrollment Trends in Medicare Options

Most retirees manage to get by on less than they earned as workers. Yet they devote a much larger percentage of their income to medical care than working people.

To limit their annual spending on care, retirees usually buy some type of insurance policy to help pay the bills Medicare does not cover. But a big shift is under way: the Medigap and employer plans that once dominated are now in decline. Only about a third of retirees have one of these two supplementary arrangements, down from two-thirds in 2002.

Retirees are instead swarming into Medicare Advantage plans  – HMOs run by insurance companies – which doubled enrollment in the past decade to become the most popular form of coverage. A small minority of retirees go without any policy at all, so the only premium they pay is for Medicare Part B’s physician coverage. (The Part A hospital coverage has no premium.) At the same time, the vast majority of retirees today enjoy prescription drug coverage, either through a stand-alone Part D plan or as part of an employer or Advantage plan.

Helen Levy at the University of Michigan digs into what the market changes mean for retirees’ bottom line in recent research funded by the U.S. Social Security Administration.

With fewer employers offering retiree health insurance, new Medicare beneficiaries focus on the tradeoffs between Medigap and Advantage policies. A big reason the Advantage plans have taken off is lower premiums, which are, on average, substantially below the premiums on Medigap plans. Advantage plans’ other appeal is that they frequently cover extra services like dentists and eyeglasses.

Both Advantage and Medigap plans can still leave beneficiaries with high out-of-pocket spending. The federal limit on Advantage plans’ deductibles and copays increased this year to $7,550 per year, though insurers are permitted to reduce this cap. Many Medigap plans do not have out-of-pocket maximums at all. However, these plans tend to give more protection from large medical bills overall.

Just as important to retirees as paying the bills is the risk of being socked with inordinately high spending on hospital and physician care in a bad year. Levy defines this unpredictability as retirees having to shell out more than 10 percent of income out of their pockets, excluding all premiums.

Under this standard, about 23 percent of the retirees in the study with Advantage plans spent more than 10 percent of their income for care – versus 17 percent of Medigap buyers.  About 28 percent of those without any coverage outside of Medicare exceeded the 10-percent threshold. …Learn More

False teeth

Retirees Ration or Forgo Dental Care

In April, Trudy Schuett will have a procedure to save a tooth, which she estimates a dentist would charge $3,000 to $5,000 to do.

But Schuett, who lacks dental insurance, will pay about $1,000, because the procedure will be performed by dental students at Midwestern University Clinics in Glendale, Arizona. Her cleanings at the school are affordable too.

Regular clinic visits have saved “buckets of money,” she said.

She is one of those resourceful retirees who always finds a way. But two out of three people over 65 do not have dental insurance, according to the Henry J. Kaiser Foundation, often because they lose the coverage when they leave their employer. Medicare does not pay for routine dental expenses, though it sometimes covers care for medical procedures considered integral to a retiree’s health, such as jaw reconstruction or heart surgery; some Medicare Advantage plans offer dental insurance.

Bar graph showing percentage of people over 65 who haven't seen a dentist in at least a yearBut retirees who lack dental insurance are often forced to forgo care or limit their visits to the dentist. Half of seniors haven’t been to a dentist in over a year, Kaiser said. When they do see a dentist, they spend an average $922 out of pocket. For the half of Medicare beneficiaries trying to live on $26,200 or less, dental care consumes, at minimum, 3.5 percent of their income.

Poor dental care also causes health problems. Dry mouth, a side effect of some medications, can cause teeth to loosen or fall out. Tooth loss makes it more difficult to eat. For a variety of reasons, 15 percent of retirees have lost all of their natural teeth – in West Virginia, a low-income state, 30 percent of retirees have no teeth, Kaiser said.

Schuett, who is 67, is working five hours a week for extra income, but she would rather not spend it on expensive dental care. By saving money at the university clinic, she gets to “blow some cash on the grandkids.”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.Learn More