My client’s Medicare coverage has been canceled, now what?

Some beneficiaries may receive a letter that says their policy will no longer be offered in 2017

Stress and Frustration

October 7, 2016
By Katy Votava for Investment News

This is the time of year when everyone who already has a stand-alone Medicare Part D prescription drug plan or a Medicare Part C Advantage plan that includes Part D gets a letter from their current plan. There are two types of letters. Most people receive a renewal notice for the current plan with next year’s premium. Others receive a more unwelcome communication that says their policy will no longer be offered in 2017. As a result, their coverage ends Dec. 31. They must make other arrangements or face the consequences of no coverage.

Most people are upset and anxious when they receive these notices. Typically, the insurance company has decided not to offer a particular plan as a business decision. That company may even offer other policies that are quite similar to the existing one. There has been lots of news coverage about various insurers withdrawing offerings in some parts of the country. Even though most of those changes pertain to coverage for people under 65 and not on Medicare, the stories can cause heightened angst about finding alternatives.

(More: Social Security timing can affect Medicare premiums)

I recently received a question from a client who heard their insurance provider is pulling out of many states and wondered if I knew if they were affected. I explained that generally pertains to folks who are not on Medicare. I advised them to look at their individual notice to see if there has been any change to their coverage.

For individuals who are losing coverage, it is imperative they take action to put another plan in place by Jan. 1 or face coverage gaps that can be very costly. The good news is that discontinuation of a current Medicare Part D or C plan offers Medicare beneficiaries extra protection regarding additional time to find a new policy and other coverage options.

If people don’t take action before Dec. 31, they will no longer have insurance to pay for prescription medications and other out-of-pocket expenses on Jan. 1. They will only have original Medicare Parts A and B starting Jan. 1. Those who apply for a new policy by Dec. 31 will not experience a costly gap.

Beneficiaries are granted additional time beyond year-end to identify and sign up for a replacement plan or plans. They can buy a new policy with prescription drug coverage by Feb. 28. If beneficiaries wait to enroll until January or February 2017, that coverage starts on the first of the following month.

(More: Small Social Security cost-of-living adjustment likely for 2017)

Those who do not join a new plan by the end of February 2017 will not, most likely, have another opportunity to sign up for Medicare prescription drug coverage in 2017. They will have to wait until 2018. That can be a long lag resulting in a costly coverage void in several ways. First, they will have to pay for their prescription medications in full during the interim, which can cost thousands of dollars. Second, these people will have to pay the deductibles, copayments and coinsurance for health care services under original Medicare Parts A and B if they had a Medicare Part C Advantage plan that previously reimbursed those charges. Third, those folks will pay a lifelong late-enrollment penalty of 12% per year when they sign up for coverage in the future.

Another advantage that beneficiaries over 65 have are guaranteed issue rights to purchase a Medigap supplemental policy. Guaranteed issue can be a valuable exemption from usual and customary health insurance issuing practices and pricing for individuals who are beyond the Medigap initial enrollment period which ends, for most people, at 65 ½ years of age. That means that a Medigap plan must accept the applicant. The person does not face additional underwriting, exclusions or higher premiums.

People need to keep the discontinuation letter that they received from their current insurance company as evidence of that entitlement. To exercise the guaranteed issue right, they must purchase Medigap within 63 days of Dec. 31, which translates into no later than March 4. Medicare beneficiaries under 65 may find they are not able to buy a Medigap policy. Even if they can identify a Medigap policy, the prices are often extremely high and not a great value.

(More: Make Medicare easier by using auto pay)

An excellent source of free advice and assistance to identify new coverage are the State Health Insurance Assistance Programs, otherwise known as SHIP. SHIP services are available in every community in the United States. The programs offer one-on-one counseling and information to people with Medicare, and their families. To locate the particular SHIP program that covers your area or that of a loved one, go to ShipTalk.org and look up the service in any county in the U.S. Make sure to contact SHIP early in the shopping process to increase the likelihood that they can help, as their resources are stretched thin during this time of year.

A word to the wise for those who are caregivers for someone who is on Medicare is to watch that person’s mail for Medicare coverage notices. When that isn’t feasible, ask your loved one if they have received any notices. If they are unsure, you can assist them in contacting their insurance provider. It is much easier to deal with securing new coverage now than wait for a nasty surprise later.

Posted in Medicare, Medicare Enrollment Periods

Now is the time for an annual Medicare check-up

money-and-steth

This is the time of year when everyone on Medicare can reevaluate features of their contracts to see if they’re getting the best coverage at the best price

Sep 9, 2016
By Katy Votava for Investment News

Just like it’s a good idea to have an annual check-up for your health, it’s smart to have a Medicare check-up to make sure the coverage will work when folks need it, and not break the bank. The best time of year for everyone in Medicare to have that check-up is in the fall during the Medicare Annual Enrollment Period, which is fast approaching.

The Annual Enrollment Period cycle starts Saturday, Oct. 15 and ends Wednesday, Dec. 7. Coverage goes into effect Jan. 1. This is the time of year when everyone on Medicare can reevaluate features of their contracts to see if they’re getting the best coverage at the best price for their Medicare Part C and D plans.

Ninety to 95% of beneficiaries overspend on Medicare. Those are startling statistics. The most common reason beneficiaries overspend; they purchase Medicare Part C (Advantage) and Part D (prescription drug) plans that do not meet their individual health care needs. People tend to buy based on premium and overlook the benefits they use. Couples often purchase the same plan when they would be better off with different plans. Individuals may not realize what the full cost to them is until the new plan year has started and then it is too late to make a change.

All plans announce new pricing and benefits every fall. Cost increases are more likely to be hidden in other out-of-pocket costs, such as increasing deductibles, medications in higher more expensive drug tiers and greater use of co-insurance as opposed to co-payments.

It’s particularly important for your clients to perform their annual Medicare check-up if any of the following have happened this past year:

• Prescription medications have changed

• Diagnosis of major health conditions

• Medicare premiums and out-of-pocket costs have crept up over time

• Customer service has been poor

• Carrier has discontinued the Medicare Part C or D plan

• Legal residence has changed

If any of these events have happened, then a Medicare check-up is in order. September is a perfect time for clients and caregivers to pull some information together to make the task easier when new plan information becomes available Saturday, Oct. 15.

Here is a helpful checklist to help people get organized.

• Put together a detailed list of medications. Use the exact spelling and dosage of the medication on the prescription container. Pictures can be surprisingly helpful.

• Collect an accurate list of health care providers’ names, addresses and phone numbers. Make sure to include all healthcare providers such as physical therapists, medical equipment suppliers, laboratories, etc.

• Read the new plan benefit summary the insurance company sends each beneficiary at the end of September. Look at more than just the premium. See if copayments, co-insurance, deductibles and other plan features will increase next year; call the company or go online to find if all of the medications will be covered this next year and at what costs. Plans are allowed to discontinue coverage of specific drugs as well as increasing the cost; do the same for doctors and other health care providers. Ask the health care providers if they expect to continue to participate in the plan.

• Don’t assume that a better plan is not available.

• Don’t wait until the last minute to shop: Enrollment systems tend to bog down; People who enroll near the end of the Annual Enrollment Period usually start the new year without their new insurance card in hand, making it hard for them to get the care they need.

Right about now you might be thinking that the Medicare check-up can be challenging and certainly time-consuming.

While both are true, just like holiday shopping it is easier if you get organized and start early. The good news is that there are several sources of free assistance available to consumers and their caregivers to assist as they sort and sift through options. That said, to assist.d, free support services become overwhelmed quickly. The earlier folks contact them, the more likely they will be available.

Eldercare.gov is a public service of the U.S. Administration on Aging that connects people to services for older adults and their families. This free information and referral assistance, including the State Health Insurance Assistance Programs (SHIP), is available all over the U.S. Visit the elder-care locator online or call 800-677-1116 Monday-Friday, 9 a.m.-8 p.m.

I also recommend cultivating a relationship with a well-established Medicare broker. That professional can be very helpful to your clients and assist them with shopping for Medicare coverages.

If your clients are on Medicare or help someone who is, I encourage them to shop for Medicare Advantage (Medicare C) and Medicare D (for drugs) plans this fall to make sure they are getting the best value for their money. Your clients do not want to be part of the 90% to 95% of folks who overspend on Medicare and waste their hard-earned savings. Once the Annual Enrollment Period window of opportunity closes on Dec. 7, most Medicare enrollees will have to wait until 2018 for new coverage.

Posted in Medicare

The alphabet soup of Medicare enrollment periods

Medicare enrollment periods

It’s essential to be familiar with the many varieties of Medicare enrollment periods so your clients can make the best choices

Aug 12, 2016
By Katy Votava for Investment News

There are many enrollment periods for the various parts of Medicare. These windows of opportunity provide beneficiaries the chance to sign up for Medicare coverage. It is critical to understand these enrollment periods, which involve requirements and acronyms that are confusing.

This easily leads to consumers missing out on valuable Medicare coverage. They face long waiting periods and coverage gaps resulting in expensive out-of-pocket costs, some of which go on forever in the form of lifelong penalties. It’s essential to be familiar with the many varieties of Medicare enrollment periods.

INITIAL ENROLLMENT PERIOD

The Medicare Initial Enrollment Period (IEP) is a beneficiary’s first opportunity to enroll in the cornerstones of Medicare coverage, Parts A and B. For most people, the IEP begins three months before the 65th birth month and concludes at the end of the third month after the 65th birthday month. As always, there is an exception. If the 65th birthday is on the first day of the month, the IEP starts and ends one month early.

Supposing that a person is already receiving Social Security retirement benefits, then they are automatically enrolled in Medicare. The same goes for folks with Social Security disability after 24 months. In either of these cases, automatically enrolled beneficiaries must keep Part A but have choices to make about respect to Part B. If they have Medicare-equivalent health coverage, they may be entitled to a Special Enrollment Period (SEP). If so, they can decline Part B and re-enroll in Medicare Part B at some point in the future.

Given that Medicare-eligible individuals are not automatically enrolled, they need to sign up for Medicare themselves during their IEP. If they do not enroll on time and are not eligible for a future SEP, they will pay lifelong penalties and have coverage gaps. Given that many people are in the workforce beyond the age of 65 or are delaying starting Social Security retirement benefits, I see an increasing number of folks caught in an unfortunate misunderstanding about whether or not they should have signed up for Medicare during their IEP or are eligible for a SEP.

SPECIAL ENROLLMENT PERIODS

Special Enrollment Periods (SEP) are the windows of opportunity to enroll in Medicare or elect different Medicare plans outside of the IEP or another Medicare enrollment period. There are multiple categories of SEPS.

The SEP that causes so many misunderstandings about whether or not people should have signed up for Medicare during their IEP or are eligible for a SEP is the employer group health plan.

People may qualify for a SEP if their coverage is from an employer group health plan that meets certain Medicare standards. If so the SEP lasts for eight months after the employment coverage ends. Usually, there is no late enrollment penalty for signing up during a SEP.

If you have coverage through your employer or your spouse’s employer consider:

• The employer provided health plan needs to be with a group of 20 or more insurance eligible members. If the group is smaller than 20, Medicare Parts A and B must be primary and cover 80% of costs. The employer plan only covers 20%. In those cases, many folks are better served by leaving the employer plan and signing up for Medicare Part D and a supplemental plan.

• The employer coverage needs to be Medicare Part D creditable, meaning that the employer coverage includes a prescription drug benefit comparable to Medicare Part D. The employer or insurance plan can provide the Medicare creditable coverage notice. Get a copy of this letter every year when your employer coverage renews. That way no one is caught off guard down the road. If a plan has not been Medicare creditable, lifelong penalties of 12% per year are levied when the individual enrolls in Medicare Part D.

Once the person leaves a health plan and is entitled to Medicare, it is important to remember a few key factors:

• Sign up for Medicare as soon as possible. Medicare enrollment can begin three months before employer coverage ends.

• While there is an eight-month window to sign up for Medicare Parts A and B, there is no primary health coverage until Medicare enrollment is complete. Even COBRA coverage is secondary coverage to Medicare. That means Medicare Parts A and B cover 80% of costs, leaving COBRA to pay 20%. The result is that when Medicare-eligible individuals do not have Medicare Parts A or B they are left to pay 80% of their costs out-of-pocket.

• Whenever someone misses the eight-month SEP window after leaving employment, they will have to wait an extended period to of time to enroll, have coverage gaps and pay lifelong penalties.

The more familiar you become with Medicare enrollment periods, the more efficient you will be in helping your clients make smart choices.

Posted in Medicare, Medicare Enrollment Periods
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