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Are you overpaying for retiree health insurance?

Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil.

Greg – N.J.: I’m 57 and will be eligible for Medicare in May 2016 (I’ve been disabled for nearly two years). As is the case with most corporate retiree medical plans, I’m required to enroll in Medicare Part B when eligible. What seems unfair here is that my company plan will now become secondary to Medicare, yet there is no reduction in premiums commensurate with the reduced exposure to the carrier, and my costs will actually increase due to the $105 monthly deduction from Social Security benefits to pay Part B premiums. This would be understandable if there were some appreciable benefit to the insured (e.g., lower deductibles and/or copays), but that doesn’t seem to be the case.  It seems I’m being required to buy coverage that I already have, which benefits only the carrier.

Phil Moeller: In all situations that I’ve come across, premiums to a retiree health have been designed to reflect the fact that it is now your secondary insurer. In other words, these premiums should be a lot lower than what you would pay for these health benefits if you were not retired and the plan was your primary insurer. If, as you suggest, your retiree premiums have not been adjusted down once you switched to Medicare as a primary insurer, one of two things has happened. Either you’ve been getting a relative bargain during your pre-Medicare retirement years, or your employer’s retirement insurer is making out like a bandit. I’d suggest you speak with someone in your employee benefits department to find out which is the case. If your suspicions are correct, there is nothing forcing you to keep your employer retiree plan. You always can leave it and get Medicare coverage the same way millions of other seniors do who do not have retiree plans.

Teresa – Texas: My mother-in-law has been dealing with dementia for a few years, and it is getting progressively worse. At the current time, she needs assistance with remembering to take her medication, bathe, eat and keep up with her household straightening. She also needs help dealing with her paranoia of strangers. I am currently employed, but am willing to take on the position of a provider. Does Medicare compensate me for providing these services?

Phil Moeller: First off, kudos to you for wanting to take care of your mother-in-law. Unfortunately, Medicare does not cover this kind of care, which it considers “custodial” care. It only covers medically necessary care for people who are homebound. Such care must be prescribed by a doctor, and Medicare only covers it if it is performed by a home health care agency that is among those registered with the agency and approved by it to provide such care.

Melody – Colo.: I’m turning 65 this June. I’ve been retired and collecting Social Security for a year. I wanted to decline Plan B and go with an AARP plan. I found out I still have to pay a Plan B premium with Original Medicare. I don’t understand why. I would already be paying a premium monthly with the AARP plan.

Phil Moeller: I’m assuming you’re referring to AARP’s Medicare Advantage plans (it also sells Medigap insurance). In nearly all cases, you need to have Parts A and B — and pay any required premiums — before you can get another Medicare insurance product. This may sound like a raw deal but it’s not. I’m not suggesting that private insurers are not making good money from Medicare. Unlike some of their financially strapped Obamacare plans, private Medicare insurers are making a very, very nice living. Your AARP plan, and other private Medicare insurance, is designed with the knowledge that people need to first obtain Part A and Part B coverage. Now, it is true that the plans receive subsidies from Medicare to provide coverage. But without Original Medicare premiums, the government would not be able to afford these subsidies and the private plans would have to charge you even higher premiums.

Charles – Ala.: My wife will turn 65 in May 2016 and will be retiring. I am four years older than her and plan on working five to six more years. She is presently on my health insurance at my work. I talked with HR, and they said she could stay on my insurance when she signs up for Medicare. How does that work? Which insurance will be her primary? If she stays on my insurance will she need Part B?

Phil Moeller: The rules here are pretty clear. If your employer has 20 or more employees and offers group coverage, it must continue to offer such coverage to your wife even after she turns 65. In this case, she does not have to sign up for Medicare and can stay on your plan. If she has enough work history of her own to qualify for Social Security benefits, she is entitled to free Part A (hospital) coverage from Medicare, even if she has not yet begun claiming Social Security benefits. Unless you’re in a high deductible health plan with a health savings account, she should get Part A (she is ineligible for an HSA if she signs up for Part A). It will act as secondary insurance to your employer health plan and can come in handy if she requires hospitalization. She does not need Part B at this time, even though she has turned 65. If Social Security sends her a Medicare card that says she is enrolled in Parts A and B, she should send it back and indicate she is rejecting Part B at this time.

Ruben – Pa.: Does a Medigap plan allow you to use it outside of your area, such as in other states while on vacation, but not as an emergency? My Medicare Advantage plan doesn’t allow this. I have to have blood drawn on a monthly basis, and that is not an emergency, according to my Health Maintenance Organization plan.

Phil Moeller: Medigap plans do work in other states, but they don’t work with Medicare Advantage plans. To get a Medigap policy, you’d need to leave your Medicare Advantage plan and get Original Medicare (Parts A and B) and a stand-alone Part D drug plan. Because Original Medicare works anywhere in the country, your blood work would be covered anywhere, and if you had a Medigap plan that covered some or all of the unpaid amounts covered by Original Medicare, it also would do so anywhere in the country.

Jane – Mich.: Why do we have to have our Social Security number for our account number?  Most would agree that the elderly are among the most vulnerable to fraud, but I have to give my Social Security number to every clerk at the pharmacy, the lab techs, the entire staff of a very large primary care clinic, all my other doctors and the entire hospital system. There’s no reason for this stupidity. Every time I see the admonishment “Don’t give your out Social Security number,” I cringe. Is there any movement to change this?

Phil Moeller: For once, people did listen. Social Security numbers are no longer printed on newly issued Medicare cards. You can order a replacement Medicare card online, and it should arrive in about 30 days.

Jeanne – Ill.: I am being charged for Medicare even though I already have insurance from my husband through his company. How can I get that stopped and get a refund? I turned 65 three months ago.

Phil Moeller: Social Security handles withdrawals from the program. You need to call to schedule a face-to-face interview at your local Social Security office. Yes, I know this is a hassle, especially since it sounds like you were automatically enrolled in the program, most likely without your knowledge or permission. Maybe you can find a sympathetic soul who will do this over the phone. But the agency’s rules call for an in-person session to make sure people don’t unintentionally lose their health coverage.

David – Ind.: How much does the government (taxpayers) pay to insurance companies for providing Medicare Advantage plans? I was told that these companies get over $10,000 a year for each senior citizen who signs up for a Medicare Advantage Plan.

Phil Moeller: It’s actually slightly more than this. Before screaming about corporate socialism, you should know that the annual public support for regular Medicare (Parts A and B) is a similar amount. All told, Medicare costs several hundred billion more dollars each year than the revenue it receives from beneficiaries in the form of payroll taxes and insurance premiums.