By former Hickman & Lowder attorney Lisa Montoni Garvin
Now that the din of television political ads has thankfully passed, you may have noticed the many Medicare health insurance plan advertisements that have taken their place. That is because the annual Medicare Open Enrollment Period started November 15, 2010, and continues until December 31, 2010. People currently on Medicare can make certain changes to their Medicare coverage during this annual open enrollment period. Also, the Patient Protection and Affordable Care Act (PPACA) that was signed into law in March 2010 included a number of mostly positive changes to Medicare in 2011.
The Medicare Alphabet Soup
Medicare is the federal health insurance program for people who are age 65 or older and for some people with disabilities who are under age 65. Medicare provides the base for a retiree’s protection against large medical expenses, but does not cover 100% of a patient’s medical bills.
Original Medicare consists of Part A and Part B. They act as two separate insurance policies. Medicare Advantage is an alternative to Original Medicare and is known as Part C. Part D is Medicare’s prescription drug coverage. Medicare recipients can also purchase Medicare supplement insurance, also called MedSup or Medigap insurance.
Medicare Part A is hospital insurance and helps pay for inpatient hospital care, limited care within a skilled nursing facility, some home health care and hospice care. For most people, Part A is an “automatic” part of Social Security or Railroad Retirement, with no premium charge.
Medicare Part B is medical insurance. It helps pay for doctors’ services, outpatient hospital services, durable medical equipment and some home health care. People with Medicare must pay a monthly premium for Part B, which is usually deducted from their Social Security check. The monthly Part B premium for 2011 is $96.40 for people who started receiving Part B benefits prior to January 1, 2010, or $110.50 for people who started receiving Part B benefits on or after January 1, 2010, who paid the premium directly from their Social Security check, and who had income less than $85,000 (single) or $170,000 (married couple). People who start receiving Part B benefits in 2011 with income less than $85,000/$170,000 will have a monthly premium of $115.40. Higher-income Part B benefit recipients—people with income greater than $85,000/$170,000—will pay $115.40 in 2011, plus an additional amount based on their income.
Medicare Part C, also called “Medicare Advantage,” is an alternative to Part A and Part B. A Medicare Advantage plan is a health care plan offered by a private insurance company or HMO (health maintenance organization) approved to do so by Medicare. All Medicare Advantage plans must offer at least the same basic benefits as Original Medicare (Parts A & B), with some plans offering additional benefits as well. Many plans include Part D prescription drug coverage. Medicare Advantage plans offered by participating private insurance companies vary by county in Ohio and may require you to live in a specific service area to qualify for participation in a specific plan. Normally, the plan pays full benefits only if you use doctors, health care facilities and other providers that are part of the plan. As with Original Medicare, you must pay the Part B monthly premium in addition to the particular monthly premium, if any, for the Medicare Advantage plan you select.
Medicare Part D is prescription drug coverage available through Medicare-approved drug plans offered by private insurance companies. Anyone with Medicare benefits can enroll. Some people enrolled in a Medicare prescription drug plan may face a gap in coverage often referred to as the “doughnut hole.” In 2011, this gap in coverage starts after your total prescription costs (what you pay plus what the plan pays for your prescriptions) reach $2,840 and ends when your total prescription costs reach $4,550. Some Part D and Advantage plans cover this gap, but these plans have higher premiums than plans that do not cover the gap. Changes in 2011 as a result of the Patient Protection and Affordable Care Act, discussed later, soften the blow of paying for your prescriptions while you are in the “doughnut hole.”
Medicare supplement insurance (or MedSup or Medigap insurance) is private health insurance that may supplement the Part A, Part B and Part D coverage you may have. It is not used along with Part C (Medicare Advantage). You must have both Medicare Part A and Part B before you may apply for this insurance. Medicare supplement insurance helps pay amounts not covered by Original Medicare – such as all or part of the Part A deductible, Part B deductible, Part B coinsurance, and/or skilled nursing facility coinsurance. Private health insurance companies offer several standardized plan designs approved by Medicare that provide various levels of additional coverage. Which plan design is right for you is a personal choice based on what your medical needs are. Medicare supplement insurance DOES NOT cover long-term nursing home care, vision or dental services, eyeglasses, prescription drugs, private duty nursing or hearing aids.
It’s All About Timing – Initial Enrollment Periods
Individuals who are approaching their 65th birthday must enroll in Medicare during their initial seven-month enrollment period. The seven-month enrollment period begins three months prior to the month of a person’s 65th birthday and ends three months after the month of the person’s 65th birthday. This initial enrollment period applies to both Medicare Part B and Part D. If a person signs up late for Medicare, they face a 10% penalty of the Part B premium for each year of delay and 1% in premium cost for each month of delay in joining a Part D plan.
A person may decline Part B and enroll later without a penalty if he or she is covered by an employer’s group health plan through active employment or through a spouse’s active employment. Later, he or she may enroll in Part B during a special eight-month enrollment period that begins when the employment ends.
A person who has “creditable” coverage under a prescription drug plan from a source other than Medicare can delay in enrolling in Part D. Creditable coverage is defined as being as good as Medicare Part D or better. If creditable coverage ends, you have 63 days to enroll in Part D before you would owe a premium penalty.
Medicare supplement insurance has its own open enrollment period and it occurs ONLY ONCE. A person must be at least 65 years old to take advantage of this open enrollment period. You are guaranteed coverage under a Medicare supplement insurance plan regardless of your health as long as you apply for coverage during this open enrollment period. It begins the first day of the month in which you are both 65 years old and enrolled in Medicare Part B. It ends six months later. If you work past age 65 and delay enrolling in Part B, open enrollment for Medicare supplement insurance begins the same day as Part B coverage begins. An insurance company must accept all applicants during this open enrollment period and there can be no discrimination on the basis of age or health. A sick person and a healthy person pay the same premium; however, an insurance company may impose a six-month waiting period on pre-existing conditions.
Annual Open Enrollment – Prescription Drug Plans and Medicare Advantage Plans
Every year, between November 15th and December 31st, you have a chance to make changes to your Medicare, Medicare Advantage or Medicare prescription drug coverage for the following year. During annual open enrollment you may:
- Change from Original Medicare to a Medicare Advantage Plan.
- Change from a Medicare Advantage Plan back to Original Medicare.
- Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
- Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to one that does.
- Switch from a Medicare Advantage Plan that offers drug coverage to one that doesn’t.
- Join a Medicare Prescription Drug Plan.
- Switch from one Medicare Prescription Drug Plan to another Medicare Prescription Drug Plan.
- Drop your Medicare Prescription Drug coverage completely.
What changes you make to your Medicare coverage depends upon your personal situation and what you anticipate your personal health needs to be in the upcoming year. You may choose not to make any changes at all to your Medicare coverage. You should remember, however, that dropping coverage altogether may result in premium penalties and loss of guaranteed issue opportunities.
Health Care Reform and Changes to Medicare
The Patient Protection and Affordable Care Act, signed into law in March 2010, contained several changes to Medicare:
Improvements to Original Medicare:
- Preventive care – Beginning in 2011, Medicare beneficiaries will receive free preventive services including diabetes screening, mammograms, some vaccines and colorectal cancer screenings.
- Annual physical exams – Beneficiaries are eligible for a yearly wellness exam to develop or update a personalized prevention plan.
Medicare Prescription Drug Coverage
- In 2011, some Medicare beneficiaries who enter the “doughnut hole” will get a 50% discount on Medicare-covered brand name drugs and a 7% discount on Medicare-covered generic prescriptions while in the “doughnut hole.”
Medicare Advantage Plans
- Beginning in 2011, Medicare Advantage plans cannot charge you more than traditional Medicare for chemotherapy, dialysis, skilled nursing care, and other services deemed appropriate.
- Check with your plan to see if preventive care and wellness improvements to Original Medicare will be available to you.
Getting Help with Your Medicare Questions
You can use the website www.Medicare.gov to compare and review plans available in your county: https://www.medicare.gov/find-a-plan/questions/home.aspx. By inputting your personal information on this secure site, you can find possible plan options based on your needs.
You can also contact the Ohio Senior Health Insurance Information Program Consumer Hotline with any questions you may have about Medicare and Medicare Annual Open Enrollment: 1-800-686-1578.
Best Wishes for a Happy and Healthy 2011!