Posts Tagged "Medigap"

Using Home Equity Improves Retiree Health

Retirees spend $1,500 more per year, on average, for medical care after a diagnosis of a serious condition like lung disease or diabetes.

Often, the solution for individuals who can’t afford such big bills is to scrimp on care or avoid the doctor altogether. But older homeowners can get access to extra cash if they withdraw some of the home equity they’ve built up over the years.

While the money clearly provides financial relief for retirees, a new study out of Ohio State University finds that it is also good for their health. Every $10,000 that Medicare beneficiaries extracted from their homes greatly improved their success in controlling a chronic or serious disease.

Among the retirees who had hypertension or heart disease, for example, one standard used to determine whether the condition was under control was whether blood pressure levels stayed below 140/90, which the medical profession deems an acceptable level. The people who tapped their home equity were more likely to stay below these levels than those who did not.

This is one of several studies in recent years to tie financial security to home equity, a resource many retirees are reluctant to tap. A study in 2020 found that older homeowners were less likely to skip medications due to cost after they had extracted equity through a refinancing, home equity loan, or reverse mortgage.

But this new research is the first attempt to connect the strategy to retirees’ actual health. The analysis followed the health of more than 4,000 homeowners for up to 15 years after they were diagnosed with one of four conditions – lung disease, diabetes, heart conditions, or cancer. …Learn More

Medicare’s Tricky if You’re Employed

Medicare optionsI’m employed (obviously), turning 65 in June, and writing this blog to answer a question that is nagging at me and probably many of our readers in the same situation: do I have to sign up for Medicare, and if so which parts?

No one is actually required to sign up for Medicare. But everyone will need the health insurance eventually and failing to follow the rules can subject retirees to a lifetime of higher premiums.

And that surcharge can be substantial. Medicare adds 10 percent onto the Part B premium for every year a 65-year-old worker who should’ve, under the rules, signed up for the coverage for doctors and medical services but did not. Late enrollment in Part D drug coverage also triggers a penalty. More on the penalties later.

Part A is easy. Go ahead and sign up for Medicare’s Part A hospital coverage if you have employer health insurance, says Richard Chan, chief executive of CoverRight, an insurance broker with a consumer-friendly website. The federal Centers for Medicare and Medicaid Services agrees.

Part A won’t incur a late penalty if you paid your Medicare taxes for 10 years while working, because, in that case, Medicare does not charge a monthly premium – and Part A is added financial protection. “It’s free, and if you go to the hospital, Medicare can help cover the gaps that your work insurance doesn’t,” Chan said.

Eligibility for Part A begins three months before the 65th birthday. A couple of important caveats. People who didn’t put in 10 years of work will pay a fairly large Part A premium. And, under federal tax law, people who sign up for Part A are not allowed to contribute to a Health Savings Account, or HSA, which the government views as a health plan.

Part B is trickier. Older workers who have health insurance from a large employer – 20 or more employees – do not have to sign up for Part B until they retire and give up their employer’s coverage.

However, it’s good practice to confirm with the benefits office that the coverage does, in fact, meet Medicare’s requirement that the employer has at least 20 workers because employers with fewer than 20 employees are subject to completely different rules. And it’s not always clear cut whether the threshold has been met if, for example, the company has contractors or part-time employees.

When you eventually do sign up, you’ll need documentation, which is provided by your employer, to prove to Medicare that you were eligible to defer Part B without penalties. …Learn More

Minority Retirees: More Healthcare Access

The pandemic has dramatized the grim consequences of Black and Latino Americans having less access to healthcare than whites: disproportionately high death rates from COVID-19.

Medicare Advantage figureBut there has been some progress toward racial equity in an unlikely place: Medicare Advantage plans sold by insurance companies. Enrollment in the plans has increased unabated for years, and minority enrollment more than doubled between 2013 and 2019.

During that time, Advantage plans increased from about a third of the various Medicare options purchased by Black, Latino, Asian and other minority retirees to nearly half, according to the non-profit Better Medicare Alliance.

Dr. Elena Rios, president of the National Hispanic Medical Association, and Martin Hamlette, executive director of the National Medical Association representing Black physicians, said Advantage plans provide retirees with access to preventive services like mammograms and cholesterol checks that keep them healthy.

Advantage plans are “a needed tool in the work of building a more just health care system,” they wrote in a recent Health Affairs article.

The appeal is upfront affordability. The monthly premiums are significantly lower than Medigap premiums, and many Advantage plans charge no premium. They frequently include prescription drug coverage, eliminating the need to pay for a separate Part D drug plan.

The reason Advantage plans are especially popular with minorities is that they tend to have lower incomes than whites and less room in their monthly budgets for medical care. Three out of four minority retirees in Advantage plans have incomes below 200 percent of the federal poverty level, compared with half of the whites in the plans.

Like all insurance, however, Advantage policies are a mixed bag. Medicare beneficiaries in poor health may face higher costs down the road if they experience a major medical crisis. In one study, the sickest retirees with Advantage plans had more risk of inordinately large annual out-of-pocket expenses for copayments and deductibles than retirees with Medigap plans. …Learn More

Open enrollment

Need Help Choosing Your Medicare Options?

This blog is for the procrastinators. The last day of Medicare open enrollment for people who want to switch their Medicare Advantage or Part D insurance plans is Dec. 7.

The hoopla around this open enrollment period can be confusing, because Medigap supplemental plans are on a different schedule. The optimal time to buy a Medigap plan is during a six-month window after your 65th birthday, which is the only time insurers are required under federal law to sell you a Medigap policy. Switching to a different Medigap plan during the current open enrollment is trickier, because you can be denied coverage, though several states have made it easier to enroll or switch from Medigap or Advantage to a new Medigap plan.

Retirees with Advantage or Part D plans can freely change plans during open enrollment but are usually reluctant to shop around. But insurance experts warn that the terms of existing policies can change, and this is the time to see if there’s a better deal out there. The Kaiser Family Foundation said retirees have a record number of Advantage plans to choose from for 2022 – double the number available five years ago. But this can be a double-edged sword if choices sew confusion.

If you haven’t plunged into researching your Advantage or Part D options, the resources listed below can help.

Free counselors. Every state has a counseling program to explain the Medicare options. The counselors are free, and this website lists every state with a link to that state’s contact information. Although volunteer counselors may not be as knowledgeable as insurance brokers who sell the policies, many volunteers are former health care professionals or are themselves enrolled in Medicare and know the system. …Learn More

People of various occupations

Retirement Saving is Focus of Popular Blogs

U.S. retirement preparedness can best be described as mediocre: about half of workers are not saving enough money to continue their current standard of living once they retire.

Judging by a dozen blogs that attracted the most web traffic in the third quarter, our readers understand the importance of the issue. Some felt strongly that workers need to take responsibility for their retirement finances. Workers “disregard the notion of saving for the future,” one reader said in a comment posted to “Onus of Retirement Planning is on Us.” “They have lived their lives like there is no tomorrow and spend money on any and everything they want.”

To boost savings, growing numbers of state officials and employers are taking charge. The article, “State Auto-IRAs are Building Momentum,” was a roundup of states that are either implementing or weighing a requirement that employers automatically enroll their employees in an IRA. The workers can always opt out if they want to, but they often remain in the plans.

And automatic enrollment in 401(k)s and 403(b)s is gaining traction in the private sector. The plans, which were virtually nonexistent in 2003, now make up a significant minority of corporate and non-profit plans, according to a unique database that tracked the changes in plan design. A summary of this research appears in “401(k) Plans Evolve to Boost Workers’ Savings.”

Baby boomers never seem to get enough information about the nuts and bolts of retirement. In “Enrollment Trends in Medicare Options,” readers had a vigorous debate about the advantages and disadvantages of supplemental Medigap plans versus Medicare Advantage insurance policies. The article revealed a major shift away from Medigap and into Medicare Advantage, which has the benefit of relatively low premiums, with the tradeoff being that Advantage plans tend to provide less protection from large medical bills than Medigap.

Our readers are also interested in the difficult decisions boomers are making about when to retire. The article, “Not Everyone Can Delay their Retirement,” highlighted the racial and educational disparities driving these decisions. And “Disability Discrimination and Aging Workers” dealt with the choice facing aging workers whose bodies are breaking down but who can’t afford to retire.

Here are a few more articles that attracted readers’ attention – some about retirement and some not: …Learn More

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

maze

Switching Medigap Plans is Tricky

Thomas Uttormark

When Thomas Uttormark turned 65 in 2010, he researched his Medigap options on the Medicare.gov website and chose a plan with a premium of around $100 a month.

As his premium inched up over the next two years, he decided to apply to another insurance company to see if he could reduce the cost of his policy. Since the federal government dictates the coverage amounts under each of the 10 Medigap plans, he reasoned, his existing insurer’s Plan N provided exactly the same coverage as any other insurer’s Plan N – and the new plan might be cheaper.

“I thought it was no big deal to switch,” said the 73-year-old Uttormark.

However, switching did prove to be a big deal. His application was denied. He suspects it was due to his pre-existing conditions, which included a routine gallbladder surgery before he retired, and his cholesterol, blood pressure and acid reflux conditions, which are fully controlled with medications. The insurer didn’t give him a reason for the denial.

Uttormark ran headlong into a maze of federal regulations that determine whether, when, and how a retiree can transfer from one insurer’s Medigap plan to another insurer’s Medigap. One in four people enrolled in traditional Medicare have Medigap supplemental insurance – about 10 million retirees – and are affected by these restrictive regulations.

They are “particularly confusing,” said Casey Schwarz, the senior counsel for education and federal policy for the Medicare Rights Center in New York and Washington.

She said that people who’ve just signed up for Medicare Parts A and B routinely call her organization because they are having trouble sorting out their options and what they will be permitted to do in the future if they choose either Medigap, which is supplemental coverage for traditional Medicare, or Medicare Advantage private insurance after initially signing up for Medicare Parts A and B.

A handful of states have looser regulations than the federal rules – California, Connecticut, Maine, Massachusetts, Missouri, New York, and Oregon – and allow retirees to move more freely among various Medigap plans, though the states also have their own restrictions.

Schwarz explained that the insurance company denied coverage to Uttormark because he did not qualify for what the federal government calls “guaranteed issue.”

Under guaranteed issue, there is only one time when every Medicare beneficiaries is assured access to a Medigap policy: when they first sign up for Medicare Part B. At this time, insurers can neither deny coverage based on a pre-existing condition nor charge a higher premium if an applicant has a specific health condition.

Another guaranteed issue period applies to limited numbers of retirees. It gives retirees the right to buy a Medigap policy – even people with pre-existing conditions – if they lose their previous coverage through no fault of their own. Perhaps their current Medigap or Medicare Advantage insurer went bankrupt or left the state, or their employer ended its Medicare supplement for retirees. When this occurs, however, the retiree must select a new policy within 63 days of losing their old coverage.

Uttormark didn’t qualify for guaranteed issue because he was choosing to drop his Medigap policy for a less expensive one. Insurers can rightly “refuse to sell him a policy, can charge him more for pre-existing conditions, or refuse to cover his pre-existing conditions,” Schwarz said.

The federal rules also provide an opportunity to switch plans if retirees selected Medicare Advantage as their first form of insurance when they enrolled in Medicare. In this case, they are permitted to move into any Medigap policy sold in their area but they, too, have a restriction: they must do so within the first year of their initial Medicare enrollment.

“Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life,” the Kaiser Family Foundation said in a recent policy brief detailing the federal and state regulations.

The Medicare.gov website describes the circumstances in which beneficiaries qualify for federal guaranteed issue. …Learn More