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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.
Note from Phil Moeller: If you know anyone who works for Medicare, please share this story with them and ask them to do whatever it takes to help this courageous woman.
Mary – Fla.: I am a quadriplegic and have been since I had an injury on June 11, 2012. During the time of my injury, I was under my employer’s large health plan and stayed on this plan until March 1 of this year. I had to go on COBRA [COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which allows workers to continue their group health coverage for 18 or 36 months following a qualifying event], since my employer switched to a different insurance company then. I was given 10 days’ notice to decide if I wanted to elect COBRA coverage and also was never informed about COBRA rules, specifically with Medicare, and the coordination of benefits. At 46, I never thought that I needed to even think about Medicare.
During the time I was on my employer’s health plan, Medicare automatically enrolled me, since I was disabled and collecting Social Security Disability Insurance. When I received my Medicare packet in the mail, I called the company who brokers the health plan to my company and asked them if I had to sign up for Medicare. They told me no, as my company has well over 100 employers. They said that I might as well keep Medicare Plan A since it was free and decline Part B since I had to pay for it. I followed their advice, because at the time, I had a high deductible health plan that paid for everything, including lots of physical therapy and the numerous medical expenses that I incur with my condition.
When I received the email from the benefits person in February of this year regarding the new insurance plan, I elected a COBRA policy with the new insurer. Just a few weeks ago, many providers started calling me stating that the new insurer was asking for its money back because I was entitled to Medicare and Medicare should be paying first. Well, I did not elect Medicare Part B, so this is leading me into the jam.
The benefits person that I spoke to is working with the new insurer to get this cleared up, but it appears I do have to go on Part B. I was highly misinformed and now will probably have to pay a penalty for late election of Part B. I’m not sure whether I should keep the new COBRA plan, still pay the $509 for it each month and also elect Part B, or if I should sign up for a Medicare Advantage plan. I’m very confused about this and have no idea what the differences are between all of these plans. I want to make sure that whatever plan I go with is the best possible plan that helps pay for all the physical therapy and catheters that I need. The new insurer told me that if I keep them as a secondary that they will cover the difference between what Medicare Part B will not pay.
My previous employer, whom I have very good relationship with, is trying to find a solution for me. This entire experience is tragic, and they know it. I’m hoping that they can do something, because basically, aside from Part A and my COBRA, I’m uninsured until July 2016.
I can’t even buy a private policy, because I’m enrolled in Social Security Disability Insurance and Medicare Part A.
Phil Moeller: Mary, I am so sorry to hear about your injury and your subsequent insurance problems. Medicare should have a red-carpet service for folks like you, instead of forcing you to run such a daunting gauntlet of coverage hassles.
First, your Medicare issues do not really involve the open enrollment period. Open enrollment is for people who already have Medicare to decide if they want to change their coverage. So, you don’t have to worry about the Dec. 7 deadline that just passed. Unfortunately, this is the only piece of good news I have for you.
I don’t understand the details of why you had to go on COBRA, but I assume you’re OK with that shift, or at least you’re not suggesting it was inappropriate. I assume you’re not still actively employed, because if you were, you would not have to go onto COBRA.
As I understand your note, you have run into the problem that many people with COBRA encounter. And this is that COBRA coverage is not considered participation in an active employer group health insurance plan under Medicare rules. Accordingly, this policy can no longer be the primary payer of your health insurance claims, and Medicare must now be your primary payer. You don’t mention this, but even at 46, you are entitled to Medicare 25 months after beginning Social Security Disability Insurance payments, and it appears you’ve met this entitlement.
So you will need to get at least Part B Medicare coverage and probably a Part D drug plan as well. But your Medicare enrollment window actually began when you began getting COBRA. Now, more than eight months later, the soonest you can sign up for Medicare may be next January, and the coverage might not be effective until July. This is an awful consequence for people like you who thought they were doing the right thing. I hope your benefits person can do better than this for you, but these are the sign-up rules as I understand them for a person in your situation. While there may be some late enrollment penalties, they will not be large. Your real concern is not having primary insurance at all for an extended period.
If your COBRA insurer is saying it will only be the secondary insurer here, you will have to weigh how much this is worth and compare it to the monthly premium for a Medigap policy. Part B of Medicare generally pays only 80 percent of covered expenses, and you’re on the hook for the other 20 percent. If you got a Medigap plan along with Part B, it might pay this 20 percent for you. You can go online, see who sells these policies where you live and get a general idea of their cost. The monthly premiums ordinarily would be much less than your COBRA premium, but that’s assuming you were signing up for Medigap during your initial enrollment period. Consumers have guaranteed issue rights to Medigap during this period, but you may no longer have such rights, and insurers may be perfectly within their rights to charge you higher premiums.
You also could, as your note suggests, get a Medicare Advantage plan. These plans usually combine Parts A and B of Medicare with a Part D drug plan. They also have annual caps on out-of-pocket spending for covered expenses, which means you wouldn’t need a Medigap policy. I can’t really advise you which way to go. There is a Medicare Advantage online tool that will show you what’s available where you live, but you will need to do homework to figure out the best policy for you.
Your main job, however, as I’ve emphasized, is to get primary coverage as soon as you can. For this reason, I’d sign up for Part B and a drug plan as fast as possible. I’d keep the new insurer plan as a secondary payer and replace it with a Medigap policy if you can find one that is a better deal for you. Then, during next fall’s open enrollment, I’d take the time to research Medicare Advantage plans and figure out if you wanted to switch to one of them in 2017.
I’d recommend that you call the State Health Insurance Assistance Program (SHIP) and ask to speak with a counselor. The service is free, and I hope they can lead you to good and timely decisions here.
All the best. You are a brave soul for navigating these challenges.
Jim – N.Y.: I just turned 65, have hospital and medical coverage from an employer that includes prescriptions. I presume my employer program will be the primary insurance. I will sign up for Medicare Part A. Do I need to sign up for Part B to avoid a penalty later, and will Part B cost me? I hate having to pay premiums for my employer’s coverage and Medicare Part B coverage. Would either Part A or B cover out-of-pocket costs of my employer’s program (copays and deductible)?
Phil Moeller: You do not have to sign up or pay for Part B coverage if you continue participating in an employer group plan, and your employer has more than 20 employees. There will be no late-enrollment penalty when your group coverage ends and you do sign up for Medicare, assuming you do so within what’s called a special enrollment period, which is eight months long and begins when your employer coverage ends. Your Part A may cover some hospital costs not covered by your employer plan, but it will not help with Part B expenses.
Cary – Neb.: I’ll be turning 65 in two months, and I am active and in good health. I have good (but expensive) employer-provided health care. My employer is a very large international corporation. I’ll not be retiring for the foreseeable future (maybe at 70). Is there any advantage for me to sign up for Medicare Part A and B at this time, or can I wait until retirement without penalties?
Phil Moeller: As I told Jim, you can get some secondary coverage of hospital expenses from Part A, and it’s free for anyone who’s worked enough to qualify for Social Security benefits. (Part A will mess up participation in a high deductible health plan with a health savings account.) As for Part B, I’d wait. There will be no penalties when you do enroll later.
Janet – Wis.: My husband and I did not take Medicare when we turned 65 and could have enrolled in it. Now we have the opportunity to get a local supplement plan, which wasn’t available back then, but we have been told we would have to pay Medicare an additional 70 percent monthly add-on to our Part B premium because there is a 10 percent penalty for each year that we could have been on Medicare and weren’t. We are now 72 years old. Is there anything we can do to avoid this penalty?
Phil Moeller: The only way I know to avoid the penalty is if your incomes are low enough to quality for a Medicare special assistance program. This can help pay Medicare premiums and also may permit you to avoid these late-enrollment penalties. Call a SHIP Medicare counselor in Wisconsin and see if there are any state programs that might help you. Good luck.
Terri – Wash.: I am disabled. I have been on Medicare Part A and B with a Medigap policy. Last month my husband put me on his health insurance. I have cancelled my Medigap policy. Do I still have to keep paying my Medicare Part A and B now that I have good insurance from my husband’s work?
Phil Moeller: No, you probably don’t, assuming your husband’s employer has at least 20 employees. If his company does, you must be offered health coverage comparable to that offered to other employees. So you can contact Medicare to withdraw from Part B and stop paying those premiums. Because Part A is probably free to you, I’d keep it, as it can come in handy as a secondary payer if you need hospitalization and skilled nursing care.
Mike: I am currently 59 and on Social Security Disability Insurance. I had lottery winnings in 2014 and now find my Medicare premiums are being raised a lot in 2016. Can they do this to me? Chop away my monthly payments because I won money? Is there anything I can do? If I don’t win any money next year, will the government see this and reduce my premiums back to their regular levels? Since my Medicare Part B went up, will I be able to claim that as an expense on my itemized tax deductions?
Phil Moeller: The lottery is not good luck when it comes to Medicare premiums. Under what’s called the income-related monthly adjustment amount, or IRMAA, Social Security can raise premiums for both Part B and Part D Medicare coverage if your annual income exceeds $85,000 ($170,000 on joint returns). And as Mike found out, it uses a two-year look back period in determining IRMAA surcharges. Winning the lottery is normally not the basis for challenging an IRMAA surcharge. Your higher Part B expenses are tax deductible as a health care expense, but remember that the threshold for these deductions was raised from 7.5 percent to 10 percent of taxable income under the Affordable Care Act.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: email@example.com.
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