ABC Baby…You and Me!

"Health care is vital to all of us some of the time, but public health

is vital to all of us all of the time."

C. Everett Koop, U.S. Surgeon General 1981-1989

“Education is the most powerful weapon we can use to change the world.”

Nelson Mandela

One of the community services offered by our small pharmacy charity, “Sociably Secure-NGO,” is teaching seniors in rural Monroe County, Michigan about their rights and benefits as enrollees in the federal Medicare program.  We offer free quarterly seminars at library locations throughout the county, book individual appointments upon request, offer free one night classes through the county community education apparatus, and offer a free online webinar via our web page.  We also educate pharmacists and other health care providers about Medicare.

No matter the target live audience, every session starts out with the same simple query.  I ask for a show of hands from those in the room who know little or nothing about Medicare.  The response is usually unanimous.

In the popular movie, “Philadelphia,” a lawyer, (played by Denzel Washington), referring to the legal dilemma of a new client, (played by Tom Hanks), requests:  “Now, explain it to me like I'm a four-year-old.”  Most folks are thoroughly baffled by Medicare… and appreciate having it explained to them like they were four years old.

Pharmacists are uniquely positioned in most communities to act as educators and consultants about the Medicare program.  Medicare enrollees already depend upon us for providing immunizations, for offering Medication Therapy Management services, and for guiding them through the maze of picking a Medicare Part D prescription program.  General Medicare expertise and advocacy seems only a sensible professional services complement.

A role in your community as the Medicare guru can return the practical dividend of identifying prospective new patients in need of such services as immunizations and Medication Therapy Management.  Your assistance will be appreciated in kind.  Hakuna matata.

What follows is our equivalent of a “Reader’s Digest Condensed Version” of a program that introduces the rudimentary features of the federal Medicare program.  I hope that the information proves useful. 

Qualifying for Medicare

Medicare is available to each of the following individuals:

o       Americans sixty five years of age and older who qualify for Social Security benefits.

o       Americans sixty five years of age and older who do not qualify for Social Security benefits, but enroll at an additional expense.

o       Americans of any age who qualify for Social Security Disability Benefits.

A worker qualifies for Social Security benefits by contributing to the Social Security program for forty full quarters of work as a full time employee.  Spouses of qualified workers also qualify for special consideration as Social Security beneficiaries.  However, younger spouses of qualified workers do not themselves qualify for Medicare benefits until also reaching the age of sixty five.

Enrolling in Medicare

An eligible person who is sixty five years of age and who is drawing a Social Security benefit will automatically be enrolled in parts A and B of the Medicare program.

An eligible person who is sixty five years of age who is not yet drawing a Social Security benefit will be automatically enrolled in Part A of the Medicare program (with full waiver of monthly premium), but must separately enroll in Part B.

An eligible person who is sixty five years of age who is not eligible for a Social Security benefit must separately enroll in the Medicare program.

An eligible person, who is enrolled in Medicare Part A, or in Medicare Part A and Part B, must enroll separately in a Medicare Part D prescription program.

Premiums for both Medicare Part A and Part B, and for Medicare Part D may be deducted directly from a Social Security benefit check.  Premiums for Medicare Part A and Part B that are not set up for a Social Security deduction will be billed quarterly through the mail.  Premiums for Medicare Part D that are not set up for a Social Security deduction will be billed by the insurance company that sponsors the insurance.

Participation in the Medicare program is mandatory for all eligible individuals.  Failure to enroll in Medicare will result in the assessment of financial penalties.  You are excused from Medicare enrollment ONLY by demonstrating “other credible health insurance coverage.”

An eligible person who cannot afford to participate in the Medicare program due to economic hardship should qualify for assistance in paying for Medicare expenses through a state run State Health Insurance Program (SHIP) that administers the Medicare Special Needs Program (SNP).

Finding Answers to Medicare Questions

You can find answers to all of your important Medicare program questions in one of several different ways:

  

o       Visit the local Social Security Office.

o       Call the toll-free telephone number:  1-800-MEDICARE.

o       Visit the online website:  MEDICARE.gov

Questions about assistance in paying for Medicare expenses should be directed to the State Health Insurance Program (SHIP) in your state.  That contact information can be gotten by calling 1-800-MEDICARE.

The Medicare Program Alphabet

You can best understand the basic structure of the Medicare program by learning the meaning of the Medicare Alphabet; A-B-C-D:

Medicare Part A:  is a form of hospitalization insurance designed to cover the costs associated with a hospital stay.  Part A is administered directly by the federal Medicare system.

Medicare Part B:  is a form of major medical health insurance designed to cover health care costs incurred outside of the hospital.  Part B is an 80/20 health insurance program that assesses a twenty percent co-pay for all covered medical services.  Part B is administered directly by the federal Medicare system.

Medicare Part C:  is not a federal Medicare program at all.  Part C is a private insurance product designed to provide all of the same services provided by Medicare Part A and Part B.  Medicare Part C is also called Medicare Advantage; and is administered by a commercial insurance company under the strict supervision of the federal Medicare system.  Medicare Part C offers the ‘advantage’ of eliminating SOME insurance deductibles and co-pays, closing some coverage gaps associated with regular Medicare coverage, and putting a manageable cap on annual out-of-pocket medical expenses.

Medicare Part D:  is a Medicare prescription insurance program.  Part D is also a private insurance product that is administered by a commercial insurance company under the strict supervision of the federal Medicare system.

The Long Term Care Crisis

It is crucial to understand that the Medicare program offers very little insurance coverage to offset the cost of a lengthy stay in a nursing home.  Medicare does not offer traditional nursing home long-term care coverage.  Enrollees commonly assume that the Medicare program will cover nursing home costs.

The current cost of residing in a nursing home can exceed eighty thousand dollars per year.  It is estimated that seventy percent of all Medicare enrollees will spend at least two years of a lifetime in a nursing home.  A separate commercial insurance product that offers long-term care coverage is strongly recommended.

Medicare Part A:  Hospital Insurance

Medicare Part A is designed to cover the costs normally associated with a stay in the hospital, including:

The daily room rate often referred to as the “bed and Jell-O” charges.  The room rate covers the cost of staying in a hospital room, the housekeeping costs, and the cost of meals.

Inpatient medical insurance that covers the costs of medical treatment and medical testing incurred while in the hospital.

Limited convalescent care which covers the cost of a short-term stay in a nursing home only if required as a part of the recovery process for the condition that required hospitalization.  Long-term care in a nursing home is not covered.

Hospice care is fully covered for the duration of the period of time that any such treatment is deemed medically necessary.

Facts and Figures

Monthly Premium:  Medicare Part A carries a monthly premium of $407.00.  The premium is waived for all enrollees who are eligible for a Social Security benefit; whether or not they are yet drawing the federal retirement benefit.

Annual Deductible:  Medicare Part A carries no general annual insurance deductible.

Hospital Admission Deductible:  Medicare Part A carries a $1260.00 front-end deductible for each separate hospital admission.  You pay the first $1260.00 of admission costs, and this deductible can occur multiple times in a single year.

Hospital Admission Co-pay Schedule:  Medicare Part A carries a hospital admission co-pay schedule that works as follows:

o       Days 0-60 you pay $0.00 per day in co-pay

o       Days 61-90 you pay $315 per day in co-pay

o       Days 91-150 you pay $630 per day in co-pay

o       Days 151 and after you pay all costs.

Qualified Convalescent Care Co-Pay Schedule:  Medicare Part A carries a co-pay schedule for qualified convalescent care that works as follows:

o       Days 0-20 you pay $0.00 per day in co-pay

o       Days 21-100 you pay $157.50 per day in co-pay

o       Days 100 and after you pay all costs

Annual Cap on Out of Pocket Expenses:  Medicare Part A does not offer an annual cap on out of pocket medical expenses.  The sky is the limit!

Medicare Part B:  80/20 Major Medical Insurance

Medicare Part B is designed to cover costs for medical expenses incurred outside of the hospital.  The program generally covers eighty percent of eligible medical expenses, and requires the enrollee to pay the remaining twenty percent.  Covered medical services are comprehensive and include:

 

o       Physician office call charge

o       Outpatient diagnostics

o       Outpatient medical treatments

o       Durable medical equipment

o       Immunizations

o       Outpatient surgery including dental surgery and optical surgery

o       Outpatient chemotherapy

o       Outpatient intravenous drug therapy

Routine Dental services and routine Optical services are not covered benefits.  Prescription drugs are not covered.

                                                         

Facts and Figures

Monthly Premium:  Medicare Part B carries a monthly premium of $104.90.

Annual Deductible:  Medicare Part B carries an annual front-end deductible

of $147.00

Co-pay Schedule:  Medicare Part B assesses a co-pay of twenty percent on all eligible medical expenses.

Annual Cap on Out of Pocket Expenses:  Medicare Part B does not offer an annual cap on out of pocket medical expenses.  You are liable for a co-pay equaling twenty percent of infinity.

It is important to note that many costly outpatient medical treatments can generate bills totaling tens of thousands of dollars with cripplingly large co-pays.  Your co-pay responsibility amounts to $200.00 for every $1000.00 of medical expense.  Costly treatments can include, but are not limited to:

o       Outpatient physical therapy for an illness or injury

o       Outpatient chemotherapy or radio-therapy

o       Outpatient intravenous drug therapy

o       Outpatient general surgery, dental surgery, or optical surgery

o       Prosthetic devices

o       In-home skilled medical care

Medicare Part D:  Prescription Insurance

Medicare Part D is a commercial insurance product that is sold apart from the federal Medicare program that provides enrollees with a very affordable prescription drug insurance option.

  

                                                   Facts and Figures

Monthly Premium:  Medicare Part D monthly premiums vary depending upon the insurance product, but premiums average out to around $33.13

Annual Deductible:  Medicare Part D carries an annual front-end deductible

of $360.00.

Co-Pay Schedule:  Medicare Part D has a rather complex and convoluted co-pay schedule that runs as follows:

The enrollee pays contracted prescription insurance co-payment amounts, and the prescription insurance company pays all other unpaid prescription balance amounts; until combined payments from both parties reach an initial policy prescription benefit limit of $3310.00 in total purchased prescription prices, (cost of drug plus dispensing fee). The initial period enrollee co-payment amount is twenty-five percent; equivalent to roughly $827.50 in prescription co-payments for this portion of the policy.

A second annual participation deductible of $3662.50 kicks in when the $3310.00 initial policy benefit limit is reached. This second annual deductible is often referred to as the coverage gap or the “donut hole.” The “donut-hole” lasts until a total out-of-pocket cost amount of $4850.00 is reached.

When the second $3662.50 “donut hole” deductible obligation is met, the policy converts to a standard prescription drug coverage insurance policy with a five percent of prescription price co-payment requirement, (cost of drug plus dispensing fee). Minimum co-payment amounts for these policies are federally set at this point at approximately $3.00 for generic drug prescriptions, and $6.00 for brand name drug prescriptions; and these minimums vary from year to year.

The typical out-of-pocket burden required to reach the final stage of coverage is equal to the sum of: the $360.00 annual deductible, $827.50 in co-pays in the initial coverage period, and a $3662.50 deductible paid toward coverage while in the “donut-hole.” This total amount equals: $4850.00 before any “donut-hole” drug discounts from the American Affordable Care Act. Discounts currently cut the “donut-hole” nearly in half, and will reduce it by 75% by 2020; leaving the enrollee with a 25% co-pay.

Concurrent to the American Affordable Care Act, prescription drug manufacturers have voluntarily contracted to participate in a graduated drug cost discount program that applies to all prescriptions filled while an enrollee is paying a “donut hole” annual deductible. The applied discount value will increase annually between the years of 2014 and 2020, to reach a maximum drug cost component discount amount of 75% of all drug cost. The discounts are, in truth, a combination of contributions from both drug manufacturers, and the federal government. The enrollee will pay the dispensing fee plus 25% of all drug cost as a co-pay.

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%)

These escalating discounts are applied by prescription insurers at the time that a prescription is filled to give enrollees their savings amounts in real time. The prescription insurers are reimbursed by drug manufacturers. However, the majority of the pre-discount prescription price is applied in order to meet the $3662.50 annual “donut hole” requirement.

Medicare Part C:  Commercial Medicare Advantage Programs

Medicare Part C, also called Medicare Advantage, is a commercial insurance product administered by an insurance company, under the strict supervision of the federal Medicare program.  A Medicare Part C enrollee actually leaves the care of Medicare Part A and Medicare Part B to become a client of the insurer that administers the Part C policy.

Medicare Part C offers all of the insurance coverage and benefits of Medicare Part A and Medicare Part B that we have discussed… in strict accordance to federal law.  However, these insurance policies often offer medical coverage in a fashion that reduces or minimizes the deductibles and co-pays associated with regular Medicare.  Medicare Part C policies usually have a Medicare Part D prescription program built right into them.

Medicare Part C also offers the huge advantage of placing a cap on annual out-of-pocket expenses… something that is so conspicuously missing from regular Medicare coverage.

Premiums, deductibles, hospital admission deductibles, and co-pays all vary widely depending upon the insurance product purchased.  Medicare mandates that these policies all offer a maximum annual out-of-pocket cap on medical expenses of $6800.00.  The cap is often much less depending upon the policy terms.

*Important Tip:  make sure that the Medicare Advantage plan that you choose does business with the local hospital and the local medical community as part of the service network!

  

Medigap:  Commercial Medicare Supplement Programs

Medigap, also called a Medicare Supplement Program, is also a commercial insurance product administered by an insurance company, under the strict supervision of the federal Medicare program.  Medicare supplement programs are designed to be added on to existing Medicare Part A and Medicare Part B coverage.  These products do not include Medicare Part D policies, which must be purchased separately.

These insurance products are designed to pay for all, or most of all, of the deductibles and co-pays that are normally left by Medicare coverage to be paid by the enrollee.  This includes all of the Medicare Part A deductibles, hospital admission deductibles, and co-pays; as well as all of the twenty percent co-pays associated with Medicare Part B.  All of theses expenses are covered benefits under a Medigap policy.

Monthly insurance premiums for these products vary according to the insurance product type; running as low as $50.00 per month to as high as $175.00 per month.  Out of pocket expenses, not including the monthly Medicare Part B premium which you must still pay... are reduced to as low as $0.00 per year to as high as $2100.00 per year.  Expenses can be limited to payment of only the monthly Medigap premium, plus the monthly Medicare Part B premium… with the best of these commercial insurance products.

Medicare Part A and Medicare Part B offer terrific insurance coverage.  The addition of a Medigap policy offers additional coverage for everything that Medicare misses… resulting in phenomenal insurance coverage!

*Important Tip:  buy your Medicare Supplement from an insurance broker who represents many companies that sell the plans.  Although the coverage for each plan from each company must be identical under federal law… prices from company to company will vary widely.  An insurance broker will offer a variety of prices from which to choose from an assortment of competing companies.

*Important Tip:  beware of Medicare Supplement policies that offer special lowered premiums for the first two policy years.  Premiums may skyrocket after the second year… and the enrollee would be required to health qualify to switch to a more affordable plan!  

The Importance of Medicare Annual Reviews

It is important to annually review your Medicare supplement insurance products.  The premiums on Medicare Advantage products, Medicare Supplement products, and Medicare Part D products can all go up over time.  An annual review will give you the perfect opportunity to examine the premiums that you are paying and to perhaps shop around for better values.

Federal law guarantees that you will qualify for any Medicare Supplement insurance product that you want for an enrollment period that starts ninety days before your enrollment in Medicare, and running for 90 days after enrollment.  You cannot be refused participation for reasons of bad health… enrollment is guaranteed.

After that one-time grace period you must demonstrate good health to qualify for the purchase of these insurance products…. this is called health qualifying  For as long as you remain in good health during the years after the initial purchase of a Medicare Supplement, you can shop around on an annual basis for the best premium values.  If you are lucky enough to stay healthy as you grow older… you have the right to save money on insurance premiums.

Only Medicare Supplement programs require you to health-qualify to switch products. Medicare Advantage programs and Medicare Part D plans have no health qualifications; and can be shopped around annually for the best deals.

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.

  The ABC’s of Medicare Enrollment

Tuesday  January 12, 2016   8:30pm

Monroe Public Schools Community Education & Recreation

Monroe Middle School    503 Washington St.    Monroe, Mi 48161

Program Information:  (734) 265-3170

Jonathan Shores is an independent educator not connected with the federal government, with CMS, or with the Medicare program.  This FREE program is designed solely for educational purposes