And Know They Love You

“And you, of the tender years can't know the fears that your elders grew by,
And so please help them with your youth, they seek the truth before they can die.”

Teach Your Children, Crosby Stills Nash & Young

“In a sane, civil, intelligent and moral society, you don’t blame poor

 people for being poor.” Andrew Young

Nearly twenty million senior citizens in America are economically vulnerable.  That is nearly half of all of the country’s elderly.  Furthermore, eight percent of all seniors are home-bound.  A large number of these folks are economically home-bound… too damned poor to go anywhere.

Income from the federal Social Security program, and health insurance benefits from the federal Medicare program, are godsends for economically disadvantaged seniors.  Even so, participation in the Medicare program carries some costs that many enrollees have difficulty meeting:  monthly premiums, co-insurances, and co-payments.

Federal aid programs currently exist to provide cost-sharing relief to eligible enrollees who are economically unable to meet the costs of participating in Medicare.  These programs are collectively known as Medicare Special Needs Programs.

 

The vast majority of the Medicare enrollees who qualify for federal cost-sharing relief do not know that these aid programs exist.  Medicare enrollees who are confined to their homes stand very little chance of EVER knowing that these programs exist.  And that’s just nuts.  This is where we come in… as the bearers of good news.

Eligibility for Medicare cost-sharing relief is predicated on two simple tests:  limits on net income, and on personal assets.  If enrollees pass the standards posed by both tests… they qualify for much needed financial assistance to help pay for Medicare costs.

The following is a summary of the available Medicare Special Needs Programs:

 Medicare Cost Sharing Special Needs

Programs SNP

Medicare Cost Sharing Special Needs Programs help cover some of the costs of services for individuals who enroll in Medicare.  Qualification is based upon both an asset limits test, and an income limits test based upon the current Federal Poverty Level Income.

Current Federal Poverty Level Income:

                1 person - $11,770

                2 people - $15,930

There are 3 different kinds of Medicare Cost Sharing Special Needs Programs.

Qualified Medicare Beneficiaries Program (QMB) pays Medicare Part B premiums and deductibles, the 20% copayment of Medicare approved amounts, and co-payments for Medicare-approved, skilled nursing home care.

How to Qualify:

Your Taxable Net Income (after deductions like a $20 income deduction and a portion of your earned income are taken out) must not be more than 100% of poverty.  The income of a spouse who is not eligible for QMB is counted.

                You must meet the income limits test:

                1 person - $11,770

                2 people - $15,930

                You must meet the asset limits test:

                1 person - $7,160

                2 people - $10,750

 Specified Low-Income Medicare Beneficiaries (SLMB) pays the Part B Medicare premium only.

How to Qualify:

                                                                                                             

Your Taxable Net Income (after deductions like a $20 income deduction and a portion of your earned income are taken out) must not be more than 120% of poverty.  The income of a spouse who is not eligible for SLMB is counted.

                You must meet the income limits test:

                1 person $14,124

                2 people $19,116

                You must meet the asset limits test:

                1 person - $7,160

                2 people - $10,750

Qualifying Individuals Program (QI-1) pays the Part B Medicare premium only.

How to Qualify:

Your Taxable Net Income (after deductions like a $20 income deduction and a portion of your earned income are taken out) must not be more than 135% of poverty.  The income of a spouse who is not eligible for QI-1 is counted.

                You must meet the income limits test:

                1 person - $15,890

                2 people - $ 21,506

                You must meet the asset limits test:

                1 person - $7,160

                2 people - $10,750

There are 2 different kinds of Medicare Cost Sharing Special Needs Programs to help with Medicare Part D prescription drug programs.

Poverty Income Part D Subsidy Program pays the annual deductible, and the monthly premium, and limits prescription co-pays:  generics $2.50 and brand name $6.30.

How to Qualify:

Your Taxable Net Income (after deductions like a $20 income deduction and a portion of your earned income are taken out) must not be more than 135% of poverty.  The income of a spouse who is not eligible is counted.

                You must meet the income limits test:

                1 person - $15,890

                2 people - $ 21,506

                You must meet the asset limits test:

                1 person - $8,100

                2 people - $12,910

Limited Income Part D Subsidy Program  reduces the annual deductible to $63, reduces the monthly premium on a sliding scale that goes no higher than the national averaged monthly premium, and reduces prescription co-pays to 15%... all the way through to the end of the donut hole.

How to Qualify:

Your Taxable Net Income (after deductions like a $20 income deduction and a portion of your earned income are taken out) must not be more than 150% of poverty.  The income of a spouse who is not eligible is counted.

                You must meet the income limits test:

                1 person - $17,655

                2 people - $ 23,895

                You must meet the asset limits test:

                1 person - $12,510

                2 people - $ 25,010

This new-found knowledge about Medicare cost-sharing assistance programs lends you the unique power to make a big difference in the lives of needy senior citizens in your own community.  Mother Teresa once counseled, “If you can’t feed a hundred people… then feed just one.”

Well, if you can’t help a hundred needy Medicare enrollees in your hometown, then seek out and educate just one.  Encourage your family, friends, and professional colleagues to do the same.

Teach your parents well.  Nourish them with knowledge, and feed them on your dreams…

and know they love you.

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1-2-3 Count With Me

“One and two and three police persons spring out of the shadows
Down the corner comes one more
And we scream into that city night, three plus one makes four!
Well, they seemed to think we're disturbin' the peace
But we won't let 'em make us sad
cause kids like you and me… baby, we were born to add!”

Sesame Street, Born to Add (Bruce Springsteen Born to Run Parody)

“He who refuses to do arithmetic is doomed to talk nonsense.”

John McCarthy

New Medicare enrollees agonize over the decision about which combination of basic Medicare insurance coverage PLUS Medicare supplemental insurance coverage to choose. The puzzle pieces seem too numerous and too ill-fitting: Medicare Part A, Medicare Part B, Medicare Part D, Medicare Part C (Medicare Advantage), Medigap.

Is the Medicare retirement plan recommended by an employer or by a union really the best available choice? Which is the better insurance option Medicare Advantage or Medigap? What are the consequences of making a bad choice of coverage? What options are available if a change in coverage becomes necessary? Is there such a thing as a bad Medicare Part D plan?

These questions, and many others, render choosing appropriate Medicare supplemental coverage spooky enough and uncertain enough… to make dodging the decision seem like the sensible option. Paralysis by analysis… please, just make it stop!

A simpler way to make an important decision… is to ask simpler questions:

• How much will my Medicare insurance program cost me to OWN each year?
• How much will my Medicare insurance program cost me to USE each year?

Basic arithmetic becomes the compass… and savvy price shopping the lode star.

Total up the expenses associated with each available Medicare supplemental insurance option: premiums, deductibles, co-insurances, co-pays, and the annual cap on these expenses. The option that gobbles up the smallest amount of personal treasure, that demands the least amount of skin in the game… is usually the right choice.

Consider a worksheet that could be used to run a tab of the annual out-of-pocket costs of Medicare insurance PLUS supplemental Medicare insurance:

Medicare Part B Premium                               Monthly: _____   Yearly: __________

Medicare Part D Premium                               Monthly: _____   Yearly: __________

Medicare Supplement Premium                        Monthly: _____   Yearly: __________

Annual Cap on Deductibles/Co-insurances/Co-Pays                    Yearly: __________

Maximum Yearly Expense Risk                                                    Yearly: __________

(Medicare Part D co-pays and deductibles will be extra… and are not included
in this Annual Cap!)

Following are some examples of various Medicare coverage options, using the worksheet from above. Andy just turned sixty-five and is newly enrolled in Medicare. He needs to choose a Medicare supplemental insurance option:

Example 1.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He purchased a supplemental Medicare Advantage (Medicare Part C) program online from AARP for $65.00 per month with the following features: Medicare Part D is included at no additional charge, the plan has an Annual Cap on Deductibles/Co-Insurances/Co-Pays of $6800.00. (Medicare Part D co-pays and deductibles will be extra… and are not included in this Annual Cap!)

Medicare Part B Premium                               Monthly: $104.90 Yearly: $1258.80
Medicare Part D Premium                               Monthly: $00.00   Yearly: $00.00
Medicare Supplement Premium                       Monthly: $65.00   Yearly: $780.00
Annual Cap on Deductibles/Co-insurances/Co-Pays                    Yearly: $6800.00
Maximum Yearly Expense Risk                                                    Yearly: $8838.80

Example 2.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He purchased a High Deductible F Plan Medigap program for $35.00 per month with the following features: Medicare Part D costs an extra $35.00 per month, the plan has an Annual Cap on Deductibles/Co-Insurances/Co-Pays of $2100.00. (Medicare Part D co-pays and deductibles will be extra… and are not included in the Annual Cap!)

Medicare Part B Premium                               Monthly: $104.90  Yearly: $1258.80
Medicare Part D Premium                               Monthly: $35.00    Yearly: $420.00
Medicare Supplement Premium                       Monthly: $35.00     Yearly: $420.00
Annual Cap on Deductibles/Co-insurances/Co-Pays                      Yearly: $2100.00
Maximum Yearly Expense Risk                                                      Yearly: $4198.80

 Example 3.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He enrolled in a union controlled company retirement plan that offers discounted insurance pricing. The union plan is a Medicare Advantage (Medicare Part C) program that costs $15.00 per month with the following features: Medicare Part D is included at no additional charge, the plan has an Annual Cap on Deductibles/Co-Insurances/Co-Pays of $4500.00. (Medicare Part D co-pays and deductibles will be extra… and are not included in the Annual Cap!)

Medicare Part B Premium                               Monthly: $104.90  Yearly: $1258.80
Medicare Part D Premium                               Monthly: $00.00    Yearly: $00.00
Medicare Supplement Premium                       Monthly: $15.00     Yearly: $180.00
Annual Cap on Deductibles/Co-insurances/Co-Pays                      Yearly: $4500.00
Maximum Yearly Expense Risk                                                      Yearly: $5938.80

Example 4.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He purchased an F Plan Medigap program for $160.00 per month with the following features: Medicare Part D costs an extra $35.00 per month, the plan covers ALL Deductibles/Co-Insurances/Co-Pays. (Medicare Part D co-pays and deductibles will be extra… and are not included in the Annual Cap!)

Medicare Part B Premium                               Monthly: $104.90  Yearly: $1258.80
Medicare Part D Premium                               Monthly: $35.00   Yearly: $420.00
Medicare Supplement Premium                       Monthly: $160.00  Yearly: $1920.00
Annual Cap on Deductibles/Co-insurances/Co-Pays                     Yearly: $00.00
Maximum Yearly Expense Risk                                                     Yearly: $3598.80

Notice that Andy did not consider the choice of simply enrolling only in Medicare Part A and Part B without ANY form of Medicare supplement protection. Medicare Part A and Part B alone do not offer any cap on annual Deductibles/Co-Insurances/Co-pays. The sky is the limit.

Medicare supplement products insure against the risk that the coverage purchased will likely be used to the maximum allowable amount… due to chronic illnesses. Enrollees over the age of sixty five are highly at risk of becoming chronically ill and tend to use full coverage.

A chronic health condition like cancer, heart disease, stroke, or lung disease would likely force a policyholder to use insurance to the limit each and every year of remaining life.

An enrollee would be exposed to an unlimited insurance risk without a supplement program… which is often jokingly referred to as practicing unsafe Medicare. Think twenty percent of infinity.

Any one of the four examples of choices illustrated above would be an adequate insurance option. They all offer essentially identical quality of insurance coverage. However, some choices offer more attractive expense outcomes than the others. Which option do you reckon Andy selected?

A reputable insurance broker can prepare a comparison of choices just like the examples above. The process is as simple as filling in some blanks.

Additionally, once you have decided on a particular type of Medicare supplement insurance product a broker can show you an assortment of that one particular product type from several different competing companies… to allow you to buy at the most competitive price. Insurance brokers with regularly upgraded portfolios of multiple competing insurance companies are usually the best way for value seekers to go.

Taking an in-depth look at the details and particulars of several complex Medicare supplemental insurance plans can be a bewildering and discouraging process. It can also be a big waste of time if it leads to over-thinking about what should be a simple shopping choice. One needn’t know how to build a watch… to learn how to tell time.

Ask what your choice of insurance coverage will cost you to OWN… then ask what it will cost you to USE. Perform some simple arithmetic to compare the costs of the different insurance options evaluated… then pick the best deal.

The choice really is that simple…easy as 1-2-3.

This article is dedicated to Andy… who recently died quite unexpectedly just after his sixty fifth birthday. Good pharmacist. Good friend. He shall be missed.

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Nothing from Nothing

“Nothin' from nothin' leaves nothin'
You gotta have somethin' if you wanna be with me

Billy Preston, Nothing From Nothing

“I love to talk about nothing. It's the only thing I know anything about.”

Oscar Wilde

It is once again annual Medicare Open Enrollment time. Medicare enrollees are encouraged to review their annual Medicare Part D prescription drug insurance policies to make sure that the terms of the chosen insurance contracts best fit their personal needs and circumstances.

Confused, vulnerable, and elderly Medicare enrollees are bombarded with insurance sales pitches touting the benefits of one insurer’s Part D product, over those of all other competitors. Each insurer croons the same siren song to draw these consumers onto the rocks of a policy switch: big savings, big savings!

In reality, the promise of big savings is pure balderdash. The structure of a Medicare Part D insurance contract is stipulated, closely regulated, and monitored by the federal government. The ante is fixed. The total annual out-of-pocket insurance costs to consumers from one insurance product to the next seldom differ. The only possibility of any true savings would need spring purely out of the goodness of an individual insurer’s heart… which presupposes the presence of an insurer’s heart. Risky business.

These contracts can be repackaged to smear annual costs out over the twelve month period of the policy, (think twelve easy payments), but the total of the costs incurred does not vary much from company to company. An understanding of how Medicare Part D contracts are assembled for mass consumption will help to demonstrate why this is true.

 All Medicare Part D prescription products are built out of the same elemental list of federally designed and mandated ingredients:

• Initial prescription insurance benefit period (before entering the Donut Hole)
amounting to $3310.00
• Baseline monthly premium of $15.00 creating an annual patient cost obligation equal to $180.00
• Annual front end deductible (co-insurance) patient cost obligation
equal to $360.00
• Co-pay patient cost obligation of 25% of the $3310.00 initial prescription
benefit period equal to $827.50
• Prescription purchase patient cost obligation (before any Affordable Care Act Donut Hole discounts) while in the Donut Hole $3662.50

• It is worth mentioning here that all Medicare Part D enrollees currently qualify for American Affordable Care Act prescription drug discounts while in the Donut Hole, according to the schedule provided below. The discounts are left out of the arithmetic of the following examination of insurance benefits, because they would needlessly cloud the picture.

2016 Brand Co-Pay 45% (Discount 55%)   Generic Co-Pay 58% (Discount 42%)
2017 Brand Co-Pay 40% (Discount 60%)   Generic Co-Pay 51% (Discount 49%)
2018 Brand Co-Pay 35% (Discount 65%)   Generic Co-Pay 44% (Discount 56%)
2019 Brand Co-Pay 30% (Discount 70%)   Generic Co-Pay 37% (Discount 63%)
2020 Brand Co-Pay 25% (Discount 75%)   Generic Co-Pay 25% (Discount 75%)

A sum of the patient cost obligations required to carry the enrollee completely through the Donut Hole amounts to $5030.00. After leaving the Donut Hole the contract converts to a more comprehensive prescription drug coverage plan with only a 5% co-pay.

Insurers must offer insurance terms that are as good, or are better than, those detailed above. By definition, for a prescription insurance contract to offer big savings over other contracts, it would need to reduce annual patient cost obligation to some amount much less than the mandated standard $5030.00. That’s not what happens.

Instead what happens is arithmetical sleight of hand. Insurers use cost-shifting to spread out the patient cost obligation over the full twelve months of the contract by chopping it up into twelve easy pieces… and then tacking it on to the monthly premium. The annual front end deductible (co-insurance), part-or-all of the 25% co-pay from the initial prescription benefit period, or BOTH of these patient cost obligations… are converted into a twelve-easy-payments plan by cost-shifting them onto the monthly premium.

The total annual patient cost obligation for these insurance contract variants remains steady. Patient cost obligations are merely rendered more palatable… by stringing them out over a longer period of time. A spoonful of sugar. Convenience, however, does not equal big savings.

For the sake of demonstration four different cost-shifting schemes are demonstrated below. Notice that they all shake out the exact same annual out-of-pocket patient cost obligation. Other variations on the theme could be offered in place of these four very basic examples. The possibilities are limited only by degree of imagination. Each approach offers an advantage, (by increasing degrees), of ease of payment of costs… but none offer any big savings to the enrollee.
   
NOTE: multiple Co-pay tiers and/or prior authorization requirements may be in effect for these coverage plans to force enrollees to share cost burdens up front… for highly expensive drug products. The insurers do not like to risk being stuck with the cost of these drugs if an enrollee unexpectedly dies, stops paying premiums, or drops the drug plan at the start of the Donut Hole.

BASIC COVERAGE: Annual deductible of $360.00 NOT Cost Shifted to Premium and NO Portion of the 25% Co-Pay Cost Shifted to Premium

                                                                                                                   OOP             PREMIUM

Base Premium                                                                                                                   $15.00/month

Annual Deductible Expenditure:  $360.00

Co-pay of 25% for initial $3310.00 benefit period:  $827.50

Donut Hole Expenditure:  $3662.50

TOTAL PREMIUM                                                                                                         $15.00/month

OOP of $4850.00 plus premium @ $15.00/month ($180.00/yr)

TOTAL= $5030.00/yr

BRONZE-ish PLAN: Annual Deductible of $360.00 Cost Shifted to Premium and NO Portion of the 25% Co-pay Cost Shifted to Premium
                                                                                                  OOP                            PREMIUM

Base Premium                                                                                                                 $15.00/month

Annual Deductible Expenditure
     Cost Shifted to Premium: $(360.00)                                                                  $30.00/month

Co-pay of 25% for initial $3310.00 benefit period: $827.50

Donut Hole Expenditure: $3662.50

TOTAL PREMIUM                                                                                                       $45.00/month

OOP of $4490.00 plus premium @ $45.00/month ($540.00/yr)                 

TOTAL= $5030.00/yr

SILVER-ish PLAN: Annual Deductible of $360.00 AND a 15% Portion of the 25% Co-pay Both Cost Shifted to Premium: 10% Co-pay with Minimum Co-pay of $6.00 for Generics and $12.00 for Brand Name

                                                                                                     OOP                          PREMIUM

Base Premium                                                                                                                 $15.00/month

Annual Deductible Expenditure
     Cost Shifted to Premium: $(360.00)                                                                 $30.00/month

Co-pays of 10% portion of 25% for initial
     $3310.00 Benefit: $331.00

Co-pays of 15% portion of 25% for initial
     $3310.00.00 benefit Cost Shifted to Premium: $(496.50)                         $41.38/month

Donut Hole Expenditure:  $3662.50

TOTAL PREMIUM                                                                                                         $86.38/month

OOP of $3993.50 plus premium @ $86.38/month ($1036.56/yr)

TOTAL= $5030.00/yr

GOLD-ish PLAN: Annual Deductible of $360.00 AND a 20% Portion of the 25% Co-pay Both Cost Shifted to Premium:  5% Co-pay with Minimum Co-pay of $3.00 for Generics and $6.00 for Brand Name

                                                                                                       OOP                       PREMIUM

Base Premium                                                                                                                $15.00/month

Annual Deductible Expenditure
     Cost Shifted to Premium: $(360.00)                                                                 $30.00/month

Co-pays of 5% portion of 25% for initial
     $3310.00 benefit:  $165.50

Co-pays of 20% portion of 25% for initial
     $3310.00 benefit Cost Shifted to Premium:  $(662.00)                                $55.17/month

Donut Hole Expenditure: $3662.50

TOTAL PREMIUM                                                                                                      $100.17/month

OOP of 3828.00 plus premium @ $100.17/month ($1202.04/yr) 

TOTAL= $5030.00/yr

Repackaging these insurance products does offer enrollees some measure of convenience by spreading costs out over twelve months to make them easier to pay for. That’s a good thing. However, in terms of big savings these contracts offer zip, zero, zilch, nada…nothing. Nothin' from nothin' leaves nothin’.

Medicare Part D insurance products are difficult enough to understand under the best of circumstances. They are doubly difficult for most elderly Medicare enrollees to comprehend. Peddling convenience in the guise of savings only makes things worse.

Marketing these Medicare Part D products to a bunch of old folks, based on an empty promise that they will save big money… is insincere at best, and dishonest at worst.

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Taking Advantage

“We grow a little every time we do not take advantage of somebody's weakness.”
Bernard Williams

“I need an easy friend,
I do with an ear to lend,
I do think you fit this shoe,
I do, won't you have a clue?
I'll take advantage while
You hang me out to dry
But I can't see you every night
Free. I do.”
Nirvana, About a Girl

Question: when is an advantage not truly an advantage?  Answer: when it is a Medicare Advantage Plan, (Medicare Part C), chosen by a Medicare eligible senior… who is sick enough to be forced to use it too often. Let me elaborate.

Traditional Medicare, (Medicare Part A plus Medicare Part B), is a terrific health insurance program for our nation’s seniors. The insurance carries affordable premiums, deductibles, and co-pays; and it offers flexible and comprehensive health expenses coverage. Medicare’s one glaring shortcoming is that it provides no annual cap on out-of-pocket insurance expenditures. The sky is the limit when it comes to paying Medicare deductibles and co-pays… to infinity and beyond!

Two different types of proprietary Medicare Supplemental programs exist that address the issue of Medicare’s lack of an annual patient cost cap: Medicare Advantage Programs (Medicare Part C), and Medicare Supplement Programs (Medigap). Each of these programs is defined and closely regulated by the federal government; which dictates the standards, parameters and benefits of these supplemental private insurance products. Both types of insurance are sold by commercial insurers under the close scrutiny of Medicare. Both place a limit on a patient’s annual out-of-pocket expenses, excluding the expense of insurance premiums. One is a better deal than the other.

A Medicare Advantage Program is a commercial insurance product that acts as a total replacement for traditional Medicare Part A plus Medicare Part B. Recipients who enroll in a Medicare Advantage policy actually leave the Medicare insurance system entirely, and have their defined benefits completely administered by a commercial insurance company. Benefits offered must be at least as good as, or better than, those benefits provided by the traditional Medicare program. The federal government guarantees this level of coverage to be the case.

Medicare Advantage Programs (Medicare Part C) offer low insurance product premiums, along with an annual out-of-pocket insurance expenses cap of up to sixty-seven hundred dollars. Enrollment does not require a record of previously good health for qualification; applicants do not need to “health-qualify” to be eligible to apply. Medicare Advantage Plans are closed-network health plans that require enrollees to use contracted health providers within a defined care network. Care networks are usually geographically small; and network coverage does not travel well outside of home turf.

Medicare Supplement Programs (Medigap) offer insurance premiums ranging from low to high. Enrollees remain in Medicare Part A plus Medicare Part B; while the supplemental commercial insurance policies work to pay some, or even all, of the deductibles and co-pays levied by Medicare.  Enrollees are also liable to pay the monthly Medicare Part B insurance premium.  Lower priced policies pay some expenses, while higher priced policies pay all expenses. A wide price-range of policies are available.

Medicare Supplement Programs offer annual out-of-pocket insurance expenses caps ranging from as low as zero dollars to as high as twenty-one hundred dollars. Medicare Supplement Programs with higher annual caps are available for premiums that compare favorably to most Medicare Advantage Programs. Medicare Supplement Programs are not restricted by closed care networks, are widely accepted by most health providers, and travel well to all corners of the nation.

Enrollment in Medicare Supplement Programs is restricted by a record of previous health; applicants do need to “health-qualify” to be eligible to apply. However, persons who are newly enrolling in Medicare must be guaranteed admission to a Medicare Supplement Program. Even an applicant with morbidly or mortally debilitated health MUST be accepted. This once-in-a-lifetime guarantee is a federal mandate. This offer is good for the three months before your birth-month, your birth-month, and the three months after your birth-month… in the year that you turn sixty-five years old.

An enrollee’s health at the time of the sixty-fifth birthday and afterward is the key to deciding which of these two supplemental insurance product options to choose. A person with chronically poor health is likely to pay the maximum annual out-of-pocket health expenses cap required for every single year of remaining health. Unwise enrollment in a Medicare Advantage Plan by a critically ill senior can result in an annual financial burden of up to sixty-seven hundred dollars plus insurance premiums; compared to an annual payment of zero to twenty-one hundred dollars plus insurance premiums for a comparable Medicare Supplement Program.

Switching from a Medicare Advantage Plan to a more affordable Medicare Supplement Plan is not usually feasible after the initial federally guaranteed Medicare enrollment period; because a chronically ill enrollee would not “health-qualify” for the change. The enrollee is effectively trapped by poor health in the more costly option for the remaining years of life.

Similarly, an enrollee who is in good health at the time of the sixty-fifth birthday needs to consider that they are entering into a period of life when health can decline rapidly and unexpectedly. Even a healthy and robust senior whose circumstances later decline can be trapped by poor health in a costly Medicare Advantage Plan. Pay me now, or pay me later.

Comparing the financial burden posed annually by a Medicare Advantage Program versus a Medicare Supplement Program is a simple exercise in arithmetic. Add all of the monthly premiums paid annually, to the total at-risk annual out-of-pocket liability for each of the types of supplemental insurance program to make the comparison.  This comparison does not take into account the additional Medicare Part B monthly insurance premium.  Consider the following real-life example of product comparisons:

o A Medicare Advantage Program enrollee with a sixty-five dollar per month premium and a sixty-seven hundred dollar cap on out-of-pocket insurance expenses is at-risk to spend seventy-four hundred and eighty dollars for every remaining year of life.
o A Medicare Supplement Program enrollee with a forty dollar per month premium and a twenty-one hundred dollar cap on out-of-pocket insurance expenses is at-risk to spend twenty-five hundred and eighty dollars for every remaining year of life.

The extent and quality of insurance coverage in each of the above examples is identical. The financial risk involved is seriously dissimilar. The math don’t lie.

My charity work as a Consulting Pharmacist and Medicare Educator regularly puts me in contact with chronically ill Medicare seniors who are trapped by poor health in too-costly Medicare Advantage Programs. Their number is legion, and their stories are sad. Nothing can be done to help them out of their financial bind.

Hard work is needed to better educate future Medicare enrollees… and to inform the trusted health providers who consul them and advise them. Our advice can help. Increased awareness of this cautionary tale can educate patients who are approaching that critical sixty-fifth birthday, and allow them to choose more wisely. A caring pharmacist, better knowledge, and simple mathematics can become a new enrollee’s real Medicare advantage.

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You Better Shop Around

 “My mama told me, "You better shop around, (Shop, shop)
Oh yeah, you better shop around" (Shop, shop around).”
Smokey Robinson and The Miracles, Shop Around

“The way to build your savings is by spending less each month.”
Suze Orman

There has been, of late, a sea change in the way that many Americans procure health insurance. Recipients are now often required to purchase their own health insurance… to evaluate an assortment of insurance options, and to compare prices on the open market or in specialized insurance exchanges. Acting as savvy insurance consumers in search of the very best bargains… what could be more American?

Such is the case for elderly Medicare enrollees shopping for suitable Medicare supplemental insurance products. These supplemental products place caps on the annual out-of-pocket costs routinely associated with utilizing federal Medicare insurance, and most often pay for costs not covered by Medicare.

The sky is the limit for individual Medicare costs for enrollees who foolishly leave Medicare insurance coverage un-supplemented and uncapped. Coinsurances and co-pays for enrollees practicing unsafe Medicare might total hundreds of dollars, thousands of dollars… or even hundreds of thousands of dollars in any given year. To infinity and beyond.

Words to the wise? Use protection, buyer beware and… you better shop around.

Consider the process of shopping for the Medicare supplemental insurance products commonly known as Medicare Supplements, or Medigap. Medigap is a very affordable private insurance product that is sold to Medicare enrollees by large, private insurance firms.

Medigap policies work in direct concert with Medicare to: pay for all or most of the co-insurances and co-pays generated while utilizing Medicare insurance, and to place a finite cap on annual Medicare out-of-pocket expenses. Medigap plugs Medicare gaps.

Medigap policies are designed by and closely regulated by the federal Medicare program. There is an alphabet of different types of Medigap products to choose from; varying in extent of insurance protection, risk coverage, and monthly premium assessed.

Federal oversight guarantees that any one particular type of Medigap product will offer the exact same extent of insurance protection as all others of the same type… regardless of which insurance company sells the policy.

However, premiums for identical types of Medigap products can vary crazily from one insurance company to the next. Federal control over these products assures uniformity of insurance protection for each and every particular flavor of Medigap product… but offers zero uniformity of price or premium. There are some very good reasons for these price differences.

Like most health insurance products, Medigap insurance generally requires that an enrollee be in good health to qualify to purchase the insurance. History of poor health, pre-existing medical conditions, extensive use of prescription drugs, family health history… can each-or-all serve as disqualifiers of insurability.

However, the folks at Medicare have mandated a sweetheart deal for all new Medicare enrollees regarding the purchase of Medigap. All new Medicare enrollees MUST be allowed to purchase a Medigap policy regardless of health status and of health history. Even gravely ill and terminally ill new enrollees must be accommodated.

This guarantee is offered for only a limited seven month period of time: the three months prior to a sixty-fifth birthday, the month of a sixty-fifth birthday, plus the three months after a sixty- fifth birthday.

If Medicare enrollment is delayed until after a sixty-fifth birthday because of documentable other credible health insurance coverage, the same generous guarantee is offered to latecomer new enrollees… for the three full months following the month of new Medicare enrollment.

After these limited guaranteed enrollment periods expire, all bets are off… and all enrollees must health-qualify to enroll in Medigap policies. Do not procrastinate, or otherwise squander this golden enrollment opportunity. You snooze, you lose.

The federal mandate that Medigap insurance enrollment must include even unhealthy and dying Medicare enrollees wreaks holy havoc on the underwriting of risk for these insurance products… and creates a climate perfect for big fluctuations in the premium costs of the policies.

In effect, the longer a particular insurance company’s Medigap policy hangs around, the larger becomes the number of seriously ill and dying enrollees that populates its pool of insured persons. Over time these policyholder pools get sicker, and riskier. The pools become more expensive to insure against risk… and premiums for coverage are necessarily increased to cover the enhanced risk. In a nutshell, older products are always sicker, riskier, and more expensive.

Several geographically distinct Medigap insurance territories are carved out in each State for use by the collective of insurance companies that sell Medigap policies… to make fluctuating insurance risk easier to analyze and manage. Each territory operates as its own micro-market for Medigap policies.

Each geographically defined area generates localized insurance premiums based on the collective risks presented by the policyholders in that pool. A State that contained five separate territories might list five different insurance premiums from a particular insurance company… for the exact same type of Medigap insurance product sold in each of the areas. The level of risk in each area is the pricing key.

Similarly, the insurance premiums charged for Medigap policies by several different insurance companies operating concurrently in the same territory can vary greatly based on how sick and risky each firm’s Medigap policies have become.

Ten individual insurance companies operating in five separate State territories might each present a set of five distinct insurance premiums for each type of Medigap insurance product. It is likely that each set of five different insurance premiums for each type of product… would be unique for each and every one of the ten competing insurers.

In practice, a crazy quilt assortment of insurance premiums for each type of Medigap product is exactly what occurs. Consider the following true example of a distinct type of insurance product from the Medigap alphabet, a Medigap-N-Plan. This product is sold by several different insurance companies in a geographically defined territory situated in southeast Michigan:

o Company #1 Monthly Premium: $174.00 (men) $151.00 (women)

o Company #2 Monthly Premium: $131.00 (men) $115.00 (women)

o Company #3 Monthly Premium: $120.00 (men) $112.00 (women)

o Company #4 Monthly Premium: $113.00 (men) $106.00 (women)

Michigan has multiple different territories… and premiums for this Medigap-N-Plan product could differ in each of the distinct areas for each of these companies. The situation is the same for each and every other type of Medigap insurance product, (Medigap-F-Plan, Medigap-G-Plan, etc).

The need to shop wisely when purchasing a Medigap insurance product should by now be abundantly clear. If you lived in the territory described above, which of the identical Medigap-N-Plan products would you buy?

Shopping is the only way to winnow out a shopping list of available premium prices like the list above. Picking the least expensive product in your geographic area will result in significant annual savings. Because these products are designed to serve for decades, the savings will continue to mount as time goes by.
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It is important to buy a Medigap insurance product from an insurance agent who brokers for many different insurance companies. The agent who provided the information for the example shown above, brokers for each of the four listed companies… and is able to offer the best available pricing based on the most current conditions.

Brokers continually add companies and drop companies from their portfolios as circumstances dictate… to be able to continue to offer the best wide variety of pricing as market conditions change. They maintain a stable of young, healthy, low-risk insurance products with the best pricing… to keep their offerings current and competitive.

A smart shopper should ask an insurance agent to provide a shopping list of product choices for each of the many available types of Medigap insurance products. The more choices contained on the list… the better. Expect four or more choices for each type of Medigap product from a good broker.

Ask the insurance agent to help you isolate the type of Medigap product that best meets your insurance needs and your budget… then pick the most affordable of that type of Medigap product from the shopping list.
Agents who work directly for a single large insurance company are called captive agents. They are not brokers. They are only able to offer one choice, (the parent company choice), of each type of Medigap insurance product. That choice never changes... take it, or leave it.

As these one-choice-only Medigap products get older and sicker, premiums tend to increase. If these products are already old and sick when you buy one… you will pay dearly for that unwise choice for many, many years.

It is important to remember that Medigap products are standardized by the federal Medicare program. Under federal law, all apples of the same variety must perform comparably to all other apples of that variety… so you cannot make a bad pick from the barrel.

To follow through on the pricing example from above; each of the Medigap-N-Plans on the shopping list will work exactly the same… no matter the insurance company of origin. This is true for all types of Medigap products.

The only thing that distinguishes one insurer’s apple from the next in the barrel… is the monthly premium. There are no bad apples… only bad price choices. Always pick the lowest priced product out of the lot.

If you have already bought a Medigap insurance product without first shopping around, consider revisiting your choice with the help of a reputable insurance broker. If your current health and health history are good, and if you are lucky… you may still health qualify to switch to a more suitable and more affordable insurance product.

If your health is poor and your luck is bad… you may just have to live with your choice.
Live and learn… and happy shopping.

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