Trusts, Estates and Succession

In this final blog about Medicare, we will discuss some highlights regarding prescription drug coverage. 

• Check your plan for Part D as to covered prescription drugs and which are formulary and non-formulary.  Each plan has lists of drugs fitting into each category.  If your drugs are not on the approved list, you may have to process an exception, pay a higher cost or file an appeal. 

• Also consider whether you can visit a local pharmacy or if you are required to use mail order.  There are also preferred and non-preferred pharmacies to be considered. 

• Finally, know your options with regard to name brand vs. generic drugs.

If you have a very limited income, there is assistance which may be available to you to help with your health costs.  These programs include:

Medicare Savings Programs (MSPs) help pay the monthly Part B premium and may help with Medicare cost sharing, depending on the program (there are three types of MSPs). Contact your SHIP at www.shiptacenter.org to learn if you are eligible for an MSP.

Extra Help is a federal program that helps pay for some to most of the costs of Medicare Part D prescription drug coverage. Contact the Social Security Administration at 800-772-1213 or visit www.ssa.gov to learn if you are eligible for Extra Help and to start an application. 

State Pharmaceutical Assistance Programs (SPAPs) are offered in some states to help eligible individuals pay for prescriptions. Contact your SHIP at www.shiptacenter.org to learn if there is an SPAP in your state.

Do your homework before turning 65 to know your options with regard to Medicare.  Avoid costly mistakes.  Healthcare coverage can be overwhelming and very confusing.

Last week, we talked about enrollment periods and what happens if you fail to enroll at a specified time.  This week, we will discuss the different types of Medicare.   

There is confusion with original Medicare and Medicare Advantage plans.  When you are eligible for Medicare, you have a choice which is dependent upon your health care needs, insurance your doctors accept (yes, not all doctors accept Medicare), where you live, whether you travel often and your financial situation. 

Original Medicare is the traditional program offered directly through the federal government. It comprises Part A, which covers hospital costs, and Part B, which covers doctor visits and other outpatient services. The vast majority of doctors in the country take this insurance. To help pay for your out-of-pocket costs, you can buy a Medigap policy, which has its own separate monthly premium. Original Medicare does not include Part D (prescription drug coverage), so you must sign up for a stand-alone Part D plan if you do not have other drug coverage. Original Medicare does not have a limit on your annual out-of-pocket costs.

Medicare Advantage is a private insurance alternative to original Medicare. These plans provide Part A, Part B and usually Part D benefits. They may also offer certain benefits that original Medicare does not cover, such as dental or vision care, and they may also have different costs and rules than original Medicare. For example, a Medicare Advantage plan can require you to get a referral from a primary care physician before it will cover care from a specialist. And, Medicare Advantage plans generally have a network of providers in your geographic area and may not cover care if you see an out-of-network provider (except in emergencies). Medicare Advantage plans have an annual out-of-pocket limit, and you cannot buy a Medigap policy when you are enrolled in Medicare Advantage.

Medigap insurance is supplemental health insurance that works with original Medicare.  Without a Medigap policy, you will have to pay part or some of the out-of-pocket costs not covered by Medicare.  These include Part A hospital deductible or the 20 percent coinsurance in Part B.  There are many different Medigap plans, the premiums for which vary from company to company.

What happens if you don’t buy a Medigap policy during your open enrollment period?  If you suffer from any preexisting conditions, you cannot be denied coverage and you must be offered a plan at the best available rate.  Buying a plan outside of this window could result in your being refused a policy or being denied coverage for existing health problems.  (Some states have rules governing Medigap policies, so if you made this mistake, check with your State Health Insurance Assistance Program at www.shiptacenter.org for more information. 

Even though you have Medicare, you may be required to pay substantial out-of-pocket costs.  You have monthly Medicare premiums for each Medicare Part B and D coverages.  If you are receiving Social Security, these premiums will be deducted from your monthly benefits.  If you enroll in a Medicare Advantage (MA) plan or a Part D plan, you may also owe a monthly premium, depending on the plan you select.  You may have a deductible before Medicare begins payment.  Often times, Medigap policies will cover Medicare deductibles.  You may have a copayment for services.  NOTE:  If you have original Medicare, make certain your health care provider accepts Medicare and takes the assignment – meaning that the provider is willing to accept the amount on Medicare’s fee schedule.  If the provider is not participating in Medicare, they could charge up to 15 percent more than Medicare’s approved rate. 

What happens if you choose a Medicare Advantage plan that doesn’t include your health care providers?  We are all familiar with networks in medical insurances.  So, you need to be familiar with in-network providers and facilities or out-of-network providers.  You need to be diligent with checking with your providers if you decide to enroll in a Medicare Advantage plan as to what the cost of services will be for out-of-network services. 

CONTINUED NEXT WEEK.

Medicare open enrollment is upon us.  It can be a daunting time with choices to be made.  Choosing the best Medicare options that will work best for you can be complicated. This is the first of a three-part series which will help you avoid some common Medicare mistakes.

• That magical birthday of 65 is approaching.  Do you have to do anything or does Medicare happen automatically?  Unfortunately, you will have to enroll during what is called your initial enrollment period.  The initial enrollment period begins three months before the month in which you turn 65 until three months after.  If you fail to sign up during your initial enrollment period, there is a general enrollment period from January 1 through March 31 each year.  But, if you enroll in January, February or March, your coverage doesn’t begin until July which impacts your monthly premiums for Medicare Part B which covers doctor visits and other outpatient service. 
• There is often confusion about the special enrollment period.  If you are 65 or older, when you no longer are working and thus don’t have health insurance coverage, or when you no longer have insurance coverage through your spouse, you need to sign up for Medicare.  There is a special enrollment period that lets you sign up without being assessed a late enrollment penalty.  This special enrollment period is only available when you are no longer covered by job-based insurance or for eight months after you no longer have job-based insurance.  (Retiree health insurance of COBRA is not considered job-based coverage.) 
• There is often a misunderstanding about insurance coverage when you are employed when you turn 65.  Some employers can designate Medicare as your primary health coverage when you turn 65 so you need to check with your human resources department or benefit department on this item.  Just because you are employed when turning 65 does not mean you should ignore Medicare enrollment.    You need to determine whether Medicare or your job-related insurance is primary.
• Delaying your enrollment in Part B will cost you.  Your monthly Part B premium could be 10 percent higher if you don’t have job-based insurance. 
• For every 12 months you delay in signing up for Part D (prescription drug costs), your premiums could be 1 percent higher.  If you have job-based prescription drug coverage but lose the same, you will have a two-month special enrollment period to sign up for Part D without a penalty. 

TO BE CONTINUED NEXT WEEK.