Posts Tagged "Part B"
November 10, 2022
Traditional Medicare or an Advantage Plan?
Medicare Advantage or traditional Medicare with supplemental insurance: which should you choose?
A compelling reason so many 65-year-olds are flocking to Medicare Advantage insurance policies is that they tend to have significantly lower premiums than enrolling directly in traditional Medicare. Retirees are also inundated with advertisements on television, online and in the mail urging them to sign up for the Advantage plans, which sometimes cover vision and dental care.
But the premium alone is a superficial test for such a consequential decision. Traditional Medicare plans combined with a Medigap or Part D drug plan might, in the end, be less costly. Differences in the quality of care and the out-of-pocket costs can weigh more heavily over the long haul as retirees get older and their health declines.
The federal government spent $321 more per person in 2019 on Medicare benefits in Advantage plans than on each person enrolled directly in traditional Medicare, according to Kaiser. “The growing role of Medicare Advantage and the relatively high spending on this program raise the question of how well private plans serve their enrollees,” Kaiser said.
To shed light on the advantages and disadvantages of each route, Kaiser’s researchers combed through more than five dozen academic studies and packaged them into a report comparing the care provided under Medicare Advantage policies and traditional Medicare.
Kaiser, a healthcare non-profit, found that both choices had some important things in common, including similar levels of patient satisfaction with care, wait times, care coordination, and the ability to find a doctor or specialist.
Medicare Advantage plans are separate insurance policies, and the federal government pays the insurance company for some of the care. Traditional Medicare in this report covers people who pay the federal Medicare premium for Part A and B coverage, and people who enroll in Medicare and also buy a Medigap supplement or Part D drug policy from an insurer.
A decision made at 65 isn’t irreversible. But most retirees tend to stay put once they choose between an Advantage insurance policy and traditional Medicare. It’s also important to remember that migrating from a Medicare Advantage policy to a Medigap supplement is more difficult than going from Medigap to Medicare Advantage.
Here’s a rundown of the most salient differences in cost and care in Kaiser’s summary. But this is a complicated decision, and many of the findings are subtle. So read the full report to understand the nuances. …Learn More
September 29, 2022
Healthcare’s Big Bite Out of Retiree Budgets
This year, retirees were jolted by the 14.5 percent hike in Medicare’s Part B premium for medical services. It was the second-largest percentage increase in at least 20 years.
The monthly premium, which rose to $170, will drop to $165 in 2023. But medical care is an expensive proposition that consumes a big chunk of many retirees’ income from Social Security, 401(k)s, and other sources.
According to a new analysis of 2018 health care data, typical retirees had 88 percent of their total income left to buy everything else after paying for medical care. And one in 10 retirees with inordinately large health care costs had 63 percent or less left over for living expenses, said Melissa McInerney, Matthew Rutledge, and Sara Ellen King in their study for the Center for Retirement Research.
Interestingly, Medicare does protect against the larger cost burdens that follow health declines. As retirees age or develop chronic physical or medical conditions, the researchers found, the share of income consumed by medical costs doesn’t change very much.
Medicare covers virtually all retirees, and the lion’s share of their out-of-pocket medical expenses are premiums – for Part B, Part D drug coverage, Medigap, or Medicare Advantage insurance plans. The other medical expenses included in this study were cost-sharing and copayments for basic Medicare, prescription drugs, eyeglasses, hearing aids, and visits to the doctor, dentist, and hospital. Long-term care costs were excluded.
The analysis was restricted to people who have signed up for both Medicare and Social Security.
Paying for care puts the most strain on low-income Americans, many of whom rely almost exclusively on Social Security and have few, if any, other income sources. The exception is people with such low incomes that they qualify for Medicaid; they pay only 4 percent of their income for health care. …Learn More
August 23, 2022
Good Riddance Medicare Donut Hole!
Medicare’s donut hole is the bane of existence for retirees with expensive medications.
They will get substantial relief in 2025, when the Inflation Reduction Act, signed by President Biden last week, will cap all retirees’ annual drug copayments at $2,000. Monthly drug plan premiums are not included in this cap.
The cap will effectively eliminate the donut hole that currently requires retirees to pay 25 percent of the cost of their prescription drugs until they reach a threshold amount. The threshold increases every year and hit $7,050 this year.
A relatively small group of about 1.5 million retirees pay more than $2,000 for their prescriptions. But many of them are spending $5,000, $10,000 or more.
“It’s going to be an amazing thing” if the cap is implemented as Congress intended, said Ashlee Zareczny, compliance supervisor for Elite Insurance Partners, a Medicare health insurance broker outside Tampa.
Some of her firm’s retired clients pay so much for their medications that they have to make difficult choices between medications and food or other essential items. People who rely on Social Security “shouldn’t have to make those choices,” Zareczny said.
The cap will apply to all Medicare beneficiaries, whether they get their prescription drug coverage through a Part D plan or Medicare Advantage insurance plan, she said.
Under the current system, insurers that sell Medicare drug plans have a $480 maximum they are permitted to charge for the deductible. After meeting the deductible, retirees make their predetermined copayments under the insurance plan. They enter the donut hole after they spend $4,430 out of pocket, and then they are required to pay 25 percent of the cost of their drugs until they reach a threshold that pushes them into the catastrophic phase of Medicare’s drug coverage.
Once the catastrophic coverage kicks in, however, they are still responsible for 5 percent of the remaining drug costs. In 2024 – a year before the $2,000 cap goes into effect – the new healthcare law will eliminate the 5 percent copay.
The cap on total spending will protect any retiree who develops a medical condition requiring them to take very expensive medications. Currently, there is no limit on how much they may have to spend.
And, Zaraczny said, “They’re not prepared to put forth this money.” …Learn More
March 8, 2022
Medicare’s Tricky if You’re Employed
I’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.