"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
