Q+A: Exploring Medicare and Medicare Part D issues

Editor's Note Sarah and Scott Welsh, independent insurance brokers who specialize in assisting seniors find the most effective Medicare insurance coverage to fit their personal needs, answer common questions.

Q: Let's touch on some basics. People who are approaching their 65th birthday should sign up for Medicare, correct? (I heard that in some cases, folks are automatically signed up.)

A: You may enroll in Medicare within 90 days prior to your birthday month, your birthday month, or three months after your birthday month. This is your Initial Enrollment Period. If you are drawing SSA Retirement benefits when you turn 65, you are automatically enrolled. If you and/or your spouse are still working at age 65, and you are covered, you need only to enroll in Part A of Medicare. This can be done at ssa.gov, or by calling the Social Security Administration at 800-633-4227.

Q: Does this apply for those who choose to continue working and have insurance from their employers?

A: If you and/or spouse are still working at 65, you need only to enroll in Part A. You may also want to compare what you are paying through your employer to help you decide. In some cases, Medicare coverage can be less expensive, and with better coverage. Check with your Medicare Broker for pricing and coverage.

Q: After all these years of paying Medicare taxes on every paycheck, I thought my healthcare coverage during retirement would essentially be free. Haven't I already paid enough into the system to cover my costs?

A: Excellent point. Yes, you have likely paid into the Medicare Trust Fund via payroll tax deductions your entire working life. Currently, the tax stands at 1.45%. This is your money the federal government has "saved" for your lifetime medical costs after age 65.

But, original Medicare was never intended to cover 100% of costs. The rule of thumb has been 80% of costs are covered by original Medicare. Original Medicare is the red, white and blue card with Part A (Hospital) and Part B (Medical Services). That stated, there are many additional coverage options available in Southern California with no additional cost.

Many people confuse this with "free" coverage. Most of the available Medicare Advantage Coverage options have $0 monthly premium and low additional costs.

Q: Should I stay on my employer's coverage, or will Medicare be better for me?

A: You should always review the costs and coverage of your and/or your spouse's employer coverage before deciding to enroll in Medicare. There are cases where Medicare can provide better coverage at lower costs while you or your spouse are still employed.

Q: Let's do a quick review of Medicare parts. There's Part A (insurance for inpatient care in hospitals and some healthcare facilities), Part B (medical insurance to pay healthcare providers and for some equipment costs), Part C better known as Medicare Advantage (combined A, B and D coverage in an HMO-style plan) and Part D (drug coverage plans). It all sounds pretty complicated. Am I missing anything?

A: Yes, it can be complicated and arduous to get to the best possible coverage route for your individual needs. This is where a competent Medicare Broker can help you tremendously. The best way to break it down is to understand there are two primary ways to conduct your Medicare coverage:

1. Original Medicare (Part A and B) plus a supplement (Medigap plan), plus Part D drug plan. This will likely cost more, but allow you to go to any provider, anywhere in the U.S. without a referral.

2. Medicare Advantage. This is the one-stop-shopping method that covers most costs, including deductibles, and includes Part D drug coverage. In Southern California, most are HMO plans. They all require a primary doctor and referrals except in the event of an emergency.

Q: I've seen news reports about Medicare drug coverage, and drug prices in general - that Americans pay more than citizens in other developed countries. Some members of Congress want the government to negotiate with drug companies on Medicare and Medicaid drug prices. What should I know? If there is movement on this, is that likely to impact my drug costs in the coming year?

A: There is no question that drug costs and co-pays have risen dramatically in the last 10 years. The first thing to do is to always check the costs of your regular medications on an annual basis through your plan's drug list, or formulary.

Your plan and costs can change year to year. In addition, Congress last year passed the Part D Senior Savings Model which has additional savings for certain costly medications like insulin. It caps the monthly co-pay at $35.

Check with your broker for what plans participate, and what insulins are available. That said, Congress is working on several new programs for additional drug cost savings.

Q: Any advice for selecting Medicare Part D, drug coverage?

A: Check the formulary (drug list), premium, annual deductible, and Medicare Star Rating for your plan each year. Part D drug plans and Part D drug coverage via Medicare Advantage can change year to year. This can be a difference maker between Medicare Advantage plans with similar co-pays for other services.

Q: Will I know what my drugs will cost with Part D coverage? What if I can't afford them?

A: Yes, before enrolling in a Part D or Medicare Advantage plan with Part D drug coverage, the broker should check your drug list for costs and co-pays. Each plan has a unique formulary, or drug list, with drug co-pays broken down by Tier (1, 2, 3, 4, 5) to determine your co-pay.

Q: Have you encountered anyone who is just on the wrong plan or grossly overpaying for coverage?

A: If the co-pays are not affordable, you may ask your doctor if a more affordable substitution is available, like a generic version of the medication. Also, if you are suffering from financial hardship, there is a federal program called LIS (Low Income Subsidy) also known as Extra Help that can dramatically reduce co-pays. You may inquire and apply for the program at SSA.gov, or by calling Medicare at 800-633-4227.

Q: Can I be denied supplemental coverage based on pre-existing conditions? What happens if I apply for a plan and am denied? Do I have to wait for open enrollment to seek different coverage?

A: Yes, you can be denied supplemental coverage if you apply more than six months after enrolling in Medicare, or adding Part B to your coverage. There is a specific list of serious medical issues that may preclude you from enrolling in a private supplement (Medigap) plan.

Issues such as pending surgeries like organ transplant, joint replacement, open heart surgery and cancer are on the list. Medicare Advantage plans do not consider any pre-existing condition for enrollment. And, yes, you must also have a valid enrollment period to enroll in any Medicare plan.

Q: I've heard that Medicare plans aren't the same in all states - that there's something called Select. What is that? Is it available here? Does California have any notable differences from Medicare coverage across the U.S.?

A: Medicare Select is a type of policy that may require you to use doctors and hospitals within its network to be eligible for full benefits. It is not available in California at this time.

It is notable that California, compared with other states, has some of the more competitive Medicare Advantage plans in the U.S. The scale and amount of available medical providers and population base are conducive to the Medicare Advantage model. Also notable is that most of the Medicare Advantage plans have no monthly premium, therefore, making it a popular choice, particularly in heavily populated areas like Southern California.

Q: I'm concerned when I hear there's a lot that Medicare doesn't cover - eye, dental and hearing care are notable examples. I also am concerned about coverage for long-term custodial care. Are there policies or plans to deal with these issues?

A: Yes, while it is true that original Medicare does not cover vision, dental and hearing, most of the Medicare Advantage plans available in Southern California include all three, plus many include free gym memberships, chiropractic, acupuncture, transportation and even access to stipends for over-the-counter items.

No Medicare plans include coverage for long-term, or custodial care like at an assisted living facility. There are a few plans that include very limited help at home based on specific diagnoses and qualifying criteria. Yes, long-term policies do exist, but they are very expensive if purchased later in life, and have stringent qualifying guidelines.

Sarah and Scott Welsh are respected and experienced Medicare plan advisors/brokers based in Redlands. They conduct no-cost, no-obligation consultations to help clients understand health-care options. Visit www.welshadvantage.com or call 909-307-5900.