Medicare 2013: It’s That Time of Year Again and Medicare’s Still Not Simple

September 18, 2012 in Medicare, Member Stories

In 2011 I wrote that signing up for Medicare is not simple (link broken). Well it’s time for an update and the bad news is that Medicare is still not simple.  Here is an update to my 2011 explanation:

If you’re turning 65 soon and looking forward to the simple life… 

No, this post is not about shuffle board, falling and failing — and now again rising — 401Ks, bingo, or problems with Social Security debt (which most about to be 65-year-olds don’t have to worry about until they’re 66 or 67). This is a “welcome to Medicare” blog post and I signed up last year. If you were already collecting Social Security when you turned 65 like I was, you should get a 150-page version of this information from the government in the mail two or three months before you turn 65.

 

 

(NOTE: The above photo is the 2012 cover of the Medicare and You booklet. A 2013 version will be released shortly and mailed to all Medicare beneficiaries as well as those turning 65 who are already on Social Security. Do your bit for the national debt and a forest in Orgegon and go online and say you only want electronic distribution.)

You will not receive the book automatically before you turn 65 if you are not signed up for Social Security. If that applies to you, go to your Social Security office or go online to sign up for Medicare even if you do not want Social Security yet.

If you’re anywhere north of 63, you already receive about three mailings a week about Medicare from AARP, Blue Cross, Cigna… (I can run the alphabet with the return addresses on Medicare-insurance-company mailings).

I’ll start with the bad news. 

  • If you’re familiar with signing up for health insurance once a year during open enrollment, sorry but Medicare is not that simple. Medicare has at least a half dozen different open or special enrollment periods each year.
  • The health insurance you’re probably used to probably is the same everywhere in the state in which you live. Sorry but Medicare is not that simple. Much of what I’ve written below varies by county within state; read the fine print on anything you sign (good advice for all senior-citizen issues of course).
  • If your employer typically gave you a choice among three plans, sorry but Medicare is not that simple. Get ready for a brain teaser of a flow chart designed to gauge your genetic disposition to dementia (see below). In Massachusetts there are as many as 50 choices as you work your way through this chart; in many states there are more.

 

 

  • “Original Medicare” includes high-deductibles and co-pays, lifetime limits (that is, no catastrophic coverage), no drug/vision/annual-physical/aural/dental coverage, and geographic restrictions (especially important to those of you who live in northernVermont, New Hampshire or Maine).
  • To overcome these limitations, over 80% of Medicare recipients nationally buy private supplemental insurance in one of the ways indicated in the Medicare and You booklet. These supplemental choices include:
    • Medicare Part C – This is the choice of about one in five in Massachusetts. Typically but not always, a Part C plan is an HMO. On the plus side Part C (also called Medicare Advantage) is typically less expensive than “rolling your own” (to use an expression from our generation). In some counties in Massachusetts, at least one Part C plan is available free (but only after you’ve paid your basic monthly Medicare Part B premium–Oh, did I tell you even Original Medicare costs money?).
    • Medicare Part D – This is newest form of Medicare, begun in 2006 to cover some prescription expenses. This is where the infamous donut hole comes in; the “hole” is basically a deductible in the middle of a year’s prescription expenses rather than at the beginning the way most insurance works. There are some free D plans in almost all counties and almost everyone, in Massachusetts at least, can change Part D plans twice a year if prescription needs change. No low income seniors are affected by the donut hole and often get free coverage and very low co-pays.
    • Non official Medicare private supplement choices include:
      • Medigap is private insurance although it is checked out and OK’d by the United States Center for Medicare and Medicaid Services (CMS), the same group that runs Medicare Parts A, B, C and D. There are a half dozen choices of Medigap insurance plans in most states from multiple insurers but Massachusetts only offers two choices and a few insurers, I call the Massachusetts Medigap policies  “expensive” and “very expensive.”  But they are very comprehensive; premiums vary among insurers.  
      • Insurance from a former employer or union is typically the best type of supplement but is decreasingly a choice for those turning 65. Make sure you check.
  • Oh, did I mention that all of this changes every year? Like I said, Medicare is not simple. The feds change it usually each fall… well because they’re the government.  The Open Enrollment period for Medicare Parts C and D for 2013 begins October 15, 2012 and that’s a good time to check all your options. (The state changes its rules usually each summer… based on budget approvals.)

Here’s the good news. As of 2011, “Original Medicare” now includes some common preventative diagnostic tests because of the Patient Protection and Affordable Care Act (PPACA) of 2010. Your parents had to pay for these out of pocket. And the infamous donut hole in Part D is scheduled to become moot over the next 6 years (although the tradeoff will be a higher premium or a larger up front deductible according to the Medicare actuaries). Of course PPACA itself is subject to change (as is everything I’ve written here). In particular, PPACA made major cuts to Medicare Part C and the number of Part C plans available is likely to drop going forward, also according to the Medicare actuaries (Harvard Pilgrim already dropped its C plans in Massachusetts).

(NOTE: Last year I said that Medicare included an annual physical because of PPACA but that turned out not to be true. It does include an “annual wellness visit” but that is not the same as an annual physical.  Also I said that PPACA closes the Medicare donut hole.  That is also not literally true — the “hole” concept will still be there — but the statement that it closes is effectively true because the average co-pay in the hole will be the same as before reaching the hole as of 2020. Also it is important to remember that only one in 20 Medicare beneficiaries reaches the hole.)

More good news. In Massachusetts there is a lot of public assistance particularly if your only source of retirement income is Social Security. Because of that, in addition to the more than 80% of Medicare beneficiaries that choose some kind of private supplement as noted above, another 14% receive Medicaid to help them “pay” for Medicare (many such Medicaid beneficiaries even use their savings to buy private Medicare supplemental insurance so there is some overlap between the “over 80%” and the 14%.)

And even more good news. There is an easy way to simplify all of this. When you’re about to turn 65 or during the various open enrollment periods, go to your local senior center.  Ask for SHINE (outside Massachusetts, ask for SHIP). CMS has certified tens of thousands of volunteer counselors around the U.S.to help you wade through all this “government simplicity.”

Then sit back and enjoy turning 65.

17 responses to Medicare 2013: It’s That Time of Year Again and Medicare’s Still Not Simple

  1. Good summary. I would add that the easiest way to avoid the headache of change each year is to opt for a Medicare Supplement (Medigap Policy) instead of a Part C plan. Although Original Medicare itself may change deductibles and copays each year, a Medicare Supplement policy will automatically adjust annually to keep up with the changes. And, unless you stop paying your premium, a Medicare Supplement company can never cancel your coverage; nor can they single you out for a premium increase due to your health or utilization of the policy. All Medicare Supplement premium increases must be approved by the State Department of Insurance, and must effect all policyholders uniformly. That may only be 1/2 an Advil compared to the migraine of Medicare, but hopefully it helps a bit :)

    • Some may benefit from a supplemental plan. My wife and I, however, each had one for about 8 years. We recently added the premiums and weighed them against what was actually paid out. We discovered that we were wasting on average $2000 a year. So it was not cost effective for us to keep. Also, it should be noted that you can go back to a supplement any time you need to. No pre-existing conditions apply. Just our experience, so far.

  2. Thanks for the comment, Chris

    I agree that Medigap has some advantages over Part C Medicare Advantage. The most important one is the full choice of Medicare doctors as compared to the usual network or tiering of providers tied to a Part C Medicare Advantage, If your doctors are all in the network that’s not a problem of course. It’s the same decision non-seniors face every open enrollment time (unless their employer only offers an HMO).

    However I disagree that having a Medigap plan would save you from thinking about this issue each year. Medigap plans — at least in Massachusetts — do not cover prescriptions so Medicare beneficiaries really need to go through at least the Part D comparison exercise yearly. Once you’re doing that, comparing C vs Medigap is the easy part.

    (And, as I’m sure you realize but just so no reader is confused, the Medicare Part C plans are all regulated by CMS the same way the Medigap plans are regulated by the DOI and offer the same guranteed issue rules as Medigap plans.)

  3. To Chris Fenton

    A couple of things:
    1. I am not an insurance agent. I am a SHIP (SHINE in Massachusetts) volunteer certified by the Medicare bureaucracy to help seniors (I am one). I tell you that because what I am about to say will make you think i am an insurance agent:

    – You don’t decide if insurance is worthwhile based on whether you recovered your premiums. You are buying protection for the future.
    – If you haven’t recovered your premiums over the last 8 years, that’s good. It means you’ve been healthy
    – Believe me, one accident or illness and you’ll recover them and more. Without a supplement (I am assuming you are talking Massachusetts Medigap) you are subject to 20% copays for almost everything Medicare covers except actually being admitted to a hospital (where there is an $1156 deductible per incident this year and both annual and lifetime upper limits) and some skilled nursing services (where there are also hard dollar deductibles and limits on days covered rather than 20% co-pays)
    – Without a supplement of some type, your share of one fairly typical hospitalization with doctors’ bills would run you what you pay for the insurance

    2. You are right, enrollment for Medigap in Massachusetts is open and continuous. But you can’t enroll in the ambulance and have it effective when you get to the ER. It goes into effect the first day of the month after you sign up. (And for people reading this from outside Massachusetts, check your state’s rules. Every state’s are different)

  4. Just an FYI…you have Medicare Part C as a supplemental option. Part C is an alternative to the Traditional Medicare System (Parts A&B) and is not a supplement. Maybe I’m splitting hairs, but this is one of the most often confused parts of Medicare, probably because many agents still refer to Part C as a supplement. Not trying to be critical, just want to keep things as clear as possible.

  5. Dan H

    You are correct that I should be more careful how I use the word “supplement.” As you know I am meant it generically and I hope I didn’t use it upper case.

    Seniors think of it as a supplement and MedPAC data books show Part C — or Medicare Advantage or ‘managed care’ — as one of the supplemental options along with MediGAP policies, employee retiree insurance, etc. I am a researcher by trade not a marketer so I do fall into that trap set by MedPAC. (To further confuse things, the Medicare bureaucracy calls Part B “Supplementary Insurance.”)

    However I do not think it is wrong for seniors or agents to think of it as a supplement. I will admit to also splitting hairs when I say you are not correct in characterizing Part C Medicare Advantage health plans as an alternative just to “the Traditional Medicare System (Parts A and B).” See page 14 of Medicare and You 2013. Part C Medicare Advantage is an alterantive to Parts A, B, D and Medigap.

    Most important, as I said, that’s the way seniors think of it too.

  6. What is the deductible for Part B in 2013?

  7. Mary

    Still haven’t heard (as of 11/14).

    Apparently the announcement of the Part B premium for 2013 was delayed until after the election although in most years of the last 20 years the new Part B rate was released in October (one notable exception, was the last election year of the Obama administration, 2010). The cynic in me says the delay means it’s going to be a high percentage increase but although the administration can control the timing of the announcement of the new rate, it can’t really manipulate the rate too much. And there’s nothing we seniors can do about it either except pay it no matter what it is.

    An estimate put out in March 2012 by the Medicare bureaucracy is that the base part B premium would increase to $107 a month for 2013 from $99.90 in 2012 (7% increase).
    – However higher income people pay more than that and Obamacare changed the rules so that more senior citizens are now considered “higher income.”
    – On the other hand, the rate is affected by the Social Security “hold harmless” rule which means some seniors rates will only go up by the amount their SS goes up; that means the base rate may come in higher than it otherwise would have as other seniors make up the difference for those “held harmless.” the non cynic in me says that the rate announcement has been delayed as the government figures out the effect of the hold harmless rule although I would think a good Excel program could figure that out in a nanosecond after the new SS raise was announced.

    Dennis

    • The base Part B premium for 2013 will be $104.90. This of course exceeds the Social Security Cost of Living Adjustment (COLA) of 1.7%, which means that most Medicare beneficiaries will see an increase in their Part B premium of 1.7% or an increase from $99.90 to $101.60.

  8. Wow, apparently I haven’t been getting the email updates on comments, and I can see that this sparked quite an informative discussion. Thanks Dennis for starting this all off. I did want to correct one small misnomer before answering Mary’s question. If you are on a Part C plan and want to return to Original Medicare and a Medicare Supplement you are not guaranteed to be issued a Medicare Supplement in every situation. In many (if not most) states, there are only a few circumstances in which a person can qualify for guarantee issue rights. Otherwise, a Medicare Supplement company will underwrite the application and may decline it if a person’s health does not meet certain criteria.

    • the most protection you can have with Medicare is a Medicare Supplement Plan F.a0 This Medicare smlppeuent will pay the 20% that Medicare Part B does not pay without a cap.a0 It

      • micro…

        FYI, this web site is based in Massachusetts and — I think — so are most of its readers. Plan F is not availalbe in Massachusetts (nor are any of the plans with letters following them). The Massachusetts Medigap Supplement 1 is similar to Medigap Plan F

  9. Chris Tweedy

    Thanks. You are correct, I misread Mary’s question to be about the Part B premium not the Part B deductible.

    However, I think it is incorrect for you to say “most Medicare beneficiaries will see an increase in their Part B premium of 1.7% or an increase from $99.90 to $101.60.” I don’t think the “hold harmless” feature of SS uses percentage but instead it uses absolute dollars. An article on Reuters says only those getting less than $300 in monthly SS payments will be held harmless, clearly not “most Medicare beneficiaries” (about 3% according to Reuters). The other 97% of us will pay the $105.

    Secondly, I am not sure where the “misnomer” about returing to Original Medicare from Part A/B/C is in the comments above so I cannot adequately comment on your statement that “there are only a few circumstances in which a person can qualify for guarantee issue rights.” The only time I mention Medigap it is not in the context of switching from Part C. Where I mention Medigap I clearly say to check your states’ rules. In Massachusetts, where WBUR is located, Medigap enrollment is open, continuous and guaranteed (but I think a senior might have trouble getting a standalone D plan if he or she changed from A/B/C to Original Medicare outside of the annual enrollment window unless he or she was on Extra Help?LIS from SS or Massachusetts’ Prescription Advantage SPAP or had some other exception I can’t think of–getting bad advice from me at the senior center might be such an excuse :) ).

    • I hope you’re right on the hold-harmless provision. I know several years ago when there were no SS COLA increases, the Part B premium remained level. And when there was a SS COLA increase, the Part B premium was limited to the same percentage increase as the COLA.

      And yes, there is an SEP for mis-information :)

      Thanks for all your hard work helping and informing the Medicare and retired population. Have a very Merry Christmas!

  10. Medicare offers all enrollees a defined benefit. Hospital care is covered under Part A and outpatient medical services are covered under Part B. To cover the Part A and Part B benefits, Medicare offers a choice between an open-network single payer health care plan (traditional Medicare) and a network plan (Medicare Advantage, or Medicare Part C), where the federal government pays for private health coverage. ‘`–

    Take a peek at our own internet site as well <http://www.healthdigest101.comgs

  11. Hee

    I don’t believe anyone will be reading your comment and my reply so long after my original blog post but just for the record your wording could be very misleading to seniors.

    1. Not all “hospital care” is covered by Part A.
    2. “Traditional Medicare” is not currently (if it ever was) the term used by the Centers for Medicare/Medicaid Services (CMS) when communicating with seniors. I assume you mean Parts A and B and the current term is Original Medicare.
    3. There is no “open network” associated with Original Medicare; there is no network at all; there is no coordinated care with Original Medicare.
    4. All Parts of Medicare are “single payer” if you don’t count the fact that over 95% of Medicare beneficiaries find the need to get one or more additional insurance plans on top of Medicare and that the Medicare beneficiary pays more than 50% of his or her health care expenses out of his or her own pocket (that latter fact is not usually associated with single payer plans)
    5. The last sentence about the “Federal government paying for private health coverage” is very confusing and therefore potentially misleading. Of course that is the idea behind all Parts of Medicare so I am not sure what you were intending

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