Posts Tagged ‘Medicare’

 

What do Halloween and Medicare Advantage Open Enrollment Periods have in common?

A. They both are spooky.

B. They happen at about the same time.

C. They leave many people in the dark.

D. Too much of either can make you sick.

E. All of the above.

The correct answer, of course, is:  E.   All of the above.

By the end of this brief post you will understand what a Medicare Advantage Open Enrollment Period is. We are currently in it. This year (enrollment for 2012) it runs from October 15 through December 7. You will also understand the differences between Medicaid Parts A, B, C and D and the importance of a Medigap policy.

First let’s take a look at what Medicare Advantage is and how it is different from “Original” Medicare. If you bear with me to the end, I’ll even mention a few neat tricks (or treats?).

Original Medicare

Medicare, as originally set-up and as it remains currently, has two principal parts (in fact, I read somewhere that Medicare was actually patterned after Blue Cross and Blue Shield). Part A provides hospital and other inpatient facility benefits . . . which is why it is called “Hospital Insurance” (imagine!). Part B covers other medical expenses (physician and other provider services, various diagnostic and screening services and durable medical equipment –like walkers and heavily advertised motorized chairs).

If you have the required work history you can signup for Medicare Part A and Part B (if it hasn’t been done automatically upon going on to Social Security) three months before the month of your sixty-fifth birthday, the month of the birthday, and three months following. If you are working and receiving group health benefits at work, you can delay signing up for Part B without a premium penalty for up to eight months after terminating employment. If you miss one of these sign up periods, be prepared to pay an extra 10% for every twelve month period you go without Part B. Take a look at a downloadable chart comparing the various sign-up periods on this site.

Part A is free (unless you didn’t have enough work credits for Social Security . . . but even then you can “buy-in” to Part A). Part B is not free. It costs $96.40 for most folks in 2011 ($99.90 in 2012). Part B premiums are more for others depending on income. And for the first time in a few years, premiums will go up in 2012.

Medicare expects you to chip in with coinsurance and deductibles. In fact, without extra help, the coinsurance and deductibles can get pricey (very). That is why, if you decide to go with “original Medicare” a good Medigap or Medicare supplemental policy is highly advisable (in fact, not purchasing a policy to save a few dollars is foolish). If you sign-up within six months of signing-up for Part B, the Medigap insurer must charge you the same premium it charges everyone else. If you wait too long, they can ask all sorts of nosey questions about your health and charge you accordingly. You may read more about Medigap insurance elsewhere on this site. We also have a great downloadable chart comparing the different types of Medigap plans (look at the second page).

Part C or Medicare Advantage

Congress decided to set up a mechanism to allow private insurers to join the Medicare party and provide coverage as an alternative to “Original Medicare.” Part C of Medicare provides for Medicare Advantage plans that are in lieu of Part A and Part B. The plans must provide all of the basic Medicare Part A and Part B services – but they can also offer other services that Original Medicare does not cover (perhaps dental, hearing aids, and other exotic benefits like gyms) – and they can (and do) charge various amounts for their plans. The federal government then pays the plans a fixed amount per plan participant. There are several delivery models to choose from (notably health maintenance organizations, preferred provider organizations, and private fee for service plans).

Medicare Advantage plans are gaining in popularity. I’m coming around, but I have been suspicious of them. Often folks sign-up beguiled by extra services only to discover they are paying more for the core services they really need.

Now this is really important: Some Medicare Advantage Plans offer a Part D drug benefit – but not all do. Understand what is being offered, because it could have serious consequences later if you decide to switch out of a Medicare Advantage Plan that doesn’t offer a drug benefit.

Generally, you can sign up for an Advantage plan when you first become eligible to sign-up for Medicare. Once in an Advantage plan you’re generally stuck with it until the next Open Enrollment Period although you can bail out of an Advantage plan anytime between January 1 and February 15 as long as you go back to original Medicare. If you had a Part D drug plan with your Advantage plan (discussed below) make sure you sign up for a new Part D plan when you make that switch. You will not have to wait to an Open Enrollment Period to make a switch if you move out of the coverage area, go on Medicaid.

Check out the downloadable chart illustrating the various Advantage plan sign-up periods as well as a discussion of the different types of Advantage plans.

No one may sell a Medigap policy to an Advantage plan enrollee. Remember, the idea behind Medicare Advantage is that it is all “bundled.”

Medicare Part D

Medicare Part D is the drug benefit that has been around a few years. This is the home of the famous “donut hole.” Like other Medicare plans you can sign-up in the seven month window beginning three calendar months before the month of your sixty-fifth birthday and ending three calendar months after the month of your sixty-fifth birthday.

Really important: Do NOT go more than 63 days during ANY period of time after you first become eligible for Medicare without being in a Part D plan or having other “creditable coverage.” If you do, you’ll pay a premium penalty of about $.32 for every month that you went without coverage when you try to sign-up again. If your other drug coverage is “creditable coverage” you’ll know – they have to tell you in writing if it is.

Generally speaking, if you’re in a Part D plan, you’ll be stuck with it until the next Open Enrollment Period rolls around, and at that time you can make changes effective for the first of the year. There are exceptions, however, in case you move out of the coverage area, lose other “creditable coverage” or move to a nursing home.

I have not left out Part D drug plans . . . you may download a Part D enrollment period chart on this site.

So Here We Are . . .

In the middle of the 2012 Open Enrollment Period. If you are happy with your coverage, ignore all the commercials. If you are in an Advantage plan and not very happy, or if you are in original Medicare and are thinking about an Advantage plan, then do some comparison shopping. Do not take the first sales pitch that comes along.

Here is a Neat Trick: Go to www.medicare.gov/find-a-plan for a great comparison shopping tool. It works for both Part C Advantage plans and for Part D drug plans. It is easy to use.

And Here is Another Neat Trick . . .

Beginning December 8, 2011, you can switch out of a Medicare Advantage Plan or Drug Plan anytime as long as you are switching to a 5-Star Plan. Medicare has begun collecting consumer health care provider input to rate plans. 5-Star Plans are the top of the heap. The idea is that the more lowly starred or unstarred plans will be a bit more customer friendly if they know you can walk at anytime. It will be interesting to see how that works.

In a nutshell:

• Part C Advantage Plans replace Original Medicare Part A and Part B.
• You may have either Parts A and B or Part C, but not both.
• If you stick with Original Medicare, you should stick with a good Medigap policy.
• If you drop (or fail to sign-up for) a Medigap plan anytime after you enrolled in Part B, you may have to pay more premiums based on your health (and may even be denied coverage).
• You may have a Part D drug plan with either Parts A and B or with Part C (although many Advantage plans have a drug plan “built in”).
• Do NOT go more than 63 days without a Part D drug plan or other “creditable coverage” if you want to avoid a penalty.

Download these handy charts (they’ll help you through the maze):

Part A and Part B Enrollment Calendar and Medigap Plan Type Grid

Part C (Medicare Advantage) Enrollment Calendar and Plan Type Grid

Part D Drug Plans Enrollment Calendar

 

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What does cashing in an IRA, or perhaps converting to a Roth IRA, have to do with Medicare premiums? Maybe a lot . . . a lot of your money.

Occasionally a person going into a nursing home may have to cash in an IRA. In other situations converting a traditional IRA into a Roth IRA may make financial sense. At the right time and with the right advice these may be smart moves. But there can be a hidden cost that many advisors never think of.

Medicare Premiums and Income

First a bit of background on Medicare Part B premiums. Medicare is a federal health insurance program. Part B covers visits to and services by various providers. The insured pay for coverage with premiums, usually by deductions from monthly Social Security checks.

Most Medicare enrollees (72%) have been paying $96.40 monthly Medicare premiums the past few years and may be surprised to learn that the 2011 premiums are actually $115.40 a month. But federal law provides a “hold-harmless” provision that says that for most people the premiums will not go up more than any Social Security cost of living adjustment for the year. As we all know, Social Security has not gone up the past few years, so neither have the Medicare premiums. Had there been a Social Security adjustment for 2011, the monthly premiums could have been as high as $115.40.

The other 27% are not so lucky. For people who do not have premiums deducted from their Social Security checks and for new enrollees the 2011 $115.40 a month applies.

For those pulling in a bit more than average the premiums get even steeper. Individuals with annual income of between $85,000 and $107,000, and married couples with income between $170,000 and $214,000 will pay monthly premiums of $161.50. An individual with income between $107,000 and $160,000 ($214,000 and $320,000 for a couple) will pay $230.70 monthly premiums. There are a number of other brackets that scale upwards until premiums hit $369.10 monthly. You may review the 2011 Medicare premiums, co-pays and deductibles here on this website.

The Social Security Administration looks at income reported two years ago to determine Medicare premiums. In other words, 2009 income is used to determine 2011 premiums.

The Rub: Converting IRAs to Roth IRAs

When someone cashes in an IRA – for whatever reason – the cash-in will probably be a taxable distribution. In other words, if Granddaddy converts a $100,000 IRA to a Roth IRA, he will likely have an extra $100,000 gross income for tax purposes.

The result:  If Granddaddy had other income of $40,000, with his IRA conversion he will have reportable income of $140,000. That means in two years, he will be paying $230.70 in monthly Medicare premiums (using 2011 figures). That amounts to $1,611.60 extra that year.

I am not saying converting to a Roth IRA does not make sense. It may be a great move. Do be aware of the extra costs.

A reader asked me if that was a “hidden tax” and I disagreed with him. There is nothing hidden about it!

I could retire if I had a dollar (better make it five dollars) for every client who had been told she would not qualify for further Medicare nursing home coverage because she was no longer improving or had “plateaued”.

Nonsense. Time to bust a myth!

Medicare Nursing Home Basics

Medicare pays a limited amount of nursing home care, but the care that is paid can be critical to the patient. In order to qualify, however, the patient must meet specific requirements.

First, the patient must have been hospitalized for at least three days. Second, the patient must be admitted to the nursing home for at least one of the underlying conditions treated in the hospital.

Third, the nursing home resident must receive skilled level of care on a daily basis. “Skilled services” actually cover a broad array of services. A common reason given for cutting off Medicare coverage is that “skilled services” are longer needed when, in fact, the patient indeed requires skilled services as broadly defined under the Medicare regulations.

What is “Skilled”?

Skilled services require technical or professional personnel such as registered nurses, licensed practical nurses, physical, occupational or speech therapists. In order for a service to qualify as “skilled”, it must be so inherently complex that it can only be safely and effectively performed by, or under the supervision of, professional or technical personnel.

Importantly, skilled services can include “observation and assessment of a changing condition” as well as “overall management and evaluation of a care plan”. So, for example, monitoring of fluid and nutrient intake might be necessary to prevent dehydration.

The Level Truth About Plateaus

Often nursing homes may mistakenly require a resident to be improving or showing progress in order to continue skilled services and maintain her Medicare coverage. If a resident “plateaus”, or the nursing facility says the resident no longer has rehabilitation potential, the facility may deny her further coverage. Denying Medicare coverage for this reason is improper.

The Medicare regulations are clear that “restoration potential” is not a valid reason for Medicare coverage denial. Other regulations provide coverage for “maintenance programs based on initial evaluations and periodic assessments”. A number of court cases prohibit the use of “rules of thumb” and require individual assessment of an individual’s needs.

Unfortunately, the “improvement standard” has wriggled its way into the system and is improperly applied at all levels, from nursing homes to the appeals level. One reason may be that there are so few advocates who are aware of the rules and who have the skills to appeal a coverage denial.

There may be some help on the way from the courts. Two recent federal court decisions in the past few months agree with my position. Both courts, relying on the regulations discussed above, held that Medicare can pay for skilled care if it is needed simply to preserve a patient’s current functioning or prevent further decline.

Papciak v. Sebelius

In September the US District Court for the Western District of Pennsylvania found in favor of Wanda Papciak, an 81 year old who had Medicare covered services denied by a nursing home on the basis that she was unlikely to improve.

Ms. Papciak sued the Obama administration claiming that Medicare should have considered whether she required skilled nursing care to maintain her current level of functioning.

The court held that “[t]he restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.”

Anderson v. Sebelius

Sandra Anderson, a 60-year-old buy percocet online woman who had been receiving home health care covered by Medicare following a second stroke, sued when Medicare cut off her benefits.

In October , the US District Court in Vermont ruled in Anderson’s favor holding that “[a] patient’s chronic or stable condition does not provide a basis for automatically denying coverage for skilled services.”

The Pols Weigh In

Recently a group of House Democrats wrote the administration on the issue. “Beneficiaries are frequently told that Medicare will not cover skilled services if their underlying condition will not improve. . . . For example, as people with multiple sclerosis are often not likely to improve, skilled services such as physical, occupational and speech therapies that are necessary to slow the progression of the disease, or maintain current function, are denied. As a result, these individuals’ conditions deteriorate –frequently leading to more intense, more expensive services, hospital or nursing home care.”

Unfortunately, the administration has so far been unwilling to correct its guidelines. That leaves the courts as the last resort. While the recent court opinions add fuel to the growing clamor to enforce the law as written, as district court decisions they have little more than persuasive relevance outside of western Pennsylvania or Vermont.

Fortunately, the nonprofit Center for Medicare Advocacy recently announced an effort to combat this myth. The first approach is to prod the federal regulators to issue clear guidance. If that does not work, litigation will follow.

Wish them luck! Improper denials often harm those most in need of help. These include not only older patients, but also those with disabilities such as Multiple Sclerosis, Alzheimer’s, Lou Gehrig’s, spinal cord injuries, diabetes, and others.

Stay tuned.