Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.
The Centers for Medicare & Medicaid Services has clarified a couple of important policies. The first deals with Medicare rules about people whose hospital visits are defined not as formal admissions but as observation stays. The second concerns the confusing rules about whether people covered on Affordable Care Act state insurance exchanges need to leave them and get Medicare when they turn 65 or are otherwise eligible for Medicare.
Before launching into this week’s Medicare fare, I am compelled to urge you to read everything you can about the House Republican’s Obamacare replacement bill – the American Health Care Act. I disagree with nearly everything in this measure. It would, over time, limit the scope of coverage, result in fewer people having health insurance, cut taxes on the wealthy, force older Americans to pay sharply higher rates for insurance, sharply cut Medicaid (the major provider of long-term care for the elderly), guarantee that Medicare would become fiscally unsustainable, and in these and many other ways, officially turn the back of government upon millions of the nation’s poorest and most vulnerable people.
Criticism of this proposal is intense and widespread, and emanates from all ideological points of view, although usually for different reasons. Many pundits say these proposals surely will need to be rewritten and will not be able to attract even a small majority in the U.S. Senate. But it is dangerous to assume this is the case. If you care about these issues, become informed and become involved – now. The Kaiser Family Foundation is an excellent factual source. You can see the latest PBS NewsHour coverage here.
Fly Me to the MOON
Observational stays are a particularly dark corner in the nooks and crannies of Medicare’s rules. If a Medicare enrollee is admitted to a hospital and later discharged into a skilled nursing home for related care, Medicare will cover the nursing home expenses. However, doctors and other certified caregivers at a hospital may decide the person should not be admitted to the hospital, but treated as an observational patient.
Even though such a person may receive nearly identical care to that provided to an admitted patient, Part B of Medicare would cover outpatient expenses as opposed to inpatient expenses, which are covered by Part A. Further, and here’s where insult can become injury, people treated on an observational basis will not be covered by Medicare should they require related nursing-home care.
For reasons that are disputed, the volume of observational stays has increased sharply in recent years. Some say it’s because Medicare has stepped up its scrutiny of hospital readmissions, levying financial penalties against hospitals with especially high readmission rates. Hospital critics say the hospitals are trying to avoid such penalties by not admitting some people in the first place, but treating them as observational patients. The hospitals disagree with this.
Whatever the reason, patients and their families often did not learn they were being treated on an observational basis until their bills arrived or, worse, until they found out they were not covered for nursing-home care. To address this, a law was passed requiring hospitals and other care facilities to tell patients on a timely basis when they were being defined as observational visitors and not being formally admitted. These rules recently took effect, and CMS has clarified the implementing regulations.
The agency’s penchant for bad acronyms has continued unabated with these rules. They are known as MOON, short for Medicare Outpatient Observation Notice. My equally sophomoric weakness for truly bad puns prompts me to suggest that reading these instructions may send you into orbit. But Medicare enrollees and the friends and family members who care for them should understand these rules and make sure hospitals follow them.
Medicare vs. Obamacare
People who get their coverage from a state insurance marketplace are understandably confused when they also become eligible for Medicare. People can become eligible because they turn 65, are 65 or older and retire from work, or they qualify for Medicare because they’ve become disabled. According to Timothy Jost, a health care expert who regularly contributes to the journal Health Affairs, CMS has just issued revised policies explaining how Medicare-eligible people with exchange health insurances should proceed. Unfortunately, he says, the agency didn’t do such a great job.
People who already have Medicare can’t be sold marketplace policies by insurance companies. But people who already have exchange policies and then become eligible for Medicare cannot be booted out of the exchange by their insurer and may be able to keep their policy. If they do keep it, however, they usually will not be eligible to continue receiving premium tax credits from their marketplace plans. The loss of this benefit may make marketplace coverage more costly than getting Medicare.
Last week, Medicare said it is sending out notices to households with someone who is enrolled in Medicare and the marketplace, telling them their insurers should not be enrolling them on the marketplace and that they should tell their marketplace insurers to end their coverage. People having only Part A of Medicare (which is required of anyone receiving Social Security benefits) are instructed to get Part B and end their marketplace plans.
These notices, Jost says, incorrectly leave the impression that the only correct course of action is for people to end their marketplace plans and get Medicare. However, he says, this is not what the policy really says. In fact, such people do not have to get Medicare, but can retain their marketplace plans, so long as they do not receive premium tax credits.
(Another little-known provision of the ACA rules that remains in effect says that a person who has not worked long enough to qualify for premium-free Part A of Medicare – usually fewer than 40 quarters of work — can stay on an exchange plan and also buy exchange policies when they become Medicare-eligible. The premiums for Part A can exceed $400 a month, making an exchange plan possibly cheaper than getting Medicare.)
In another shift, Jost wrote that CMS has created an “equitable relief” program and will waive late-enrollment penalties until Sept. 30 for people with marketplace plans who did not sign up for Part B when they became eligible for Medicare.
“Equitable relief will certainly be welcomed by individuals who have stuck with their marketplace coverage to avoid the Part B late-enrollment penalty,” Jost concluded. “And it offers significant relief to individuals who are already paying the penalty because they delayed enrollment without understanding the consequences. But the notice may well mislead individuals who are in fact better off in the marketplace than in Part B as to their options going forward.”
Onto the questions.
Diane – North Dakota: I have a $2,500 deductible employee group health insurance. My employer has more than 20 employees. I will be 65 next fall. Should I keep my insurance when I get Medicare? If I do, which is primary? And if my insurance is primary, would Medicare cover the high deductible?
Phil Moeller: Normally, people who can keep their employer health coverage when they turn 65 will save money and have at least comparable coverage if they forego Medicare and keep their employer plan. However, as employers continue shifting health care costs to their employees, through high-deductible plans and other means, it makes sense for people nearing their 65th birthday to consider if Medicare would be a better deal for them.
In large-employer plans, the plan remains the primary insurer, and Medicare would be the secondary payer of covered claims. But I would not advocate paying for two insurance plans. Medicare Part B covers doctor and outpatient expenses and costs $134 a month this year with a $183 annual deductible for most enrollees. This is a pretty expensive way to get what may be limited secondary coverage.
Part A, on the other hand, covers hospital expenses and charges no premiums to anyone age 65 and older who has worked long enough to earn Social Security benefits. It can come in handy as secondary insurance for your workplace coverage. Having Part A, however, makes it illegal to continue making tax-free contributions to a health savings account, so if your high-deductible plan includes an HSA, you might not want Part A.
As part of your comparison, you should review your employer plan with the benefits department at work. In particular, make sure the drug coverage in your plan is “credible” — meaning that it’s at least as good as coverage offered by a Medicare Part D drug plan. Some high-deductible plans are not considered credible, meaning that you would have to get a Part D plan. You could keep the rest of your employer plan and get Part D. You would not need Part B to qualify to do this, but you would need Part A.
When you contact the benefits department at work, find out if your employer will provide you any financial compensation if you drop your workplace plan and thus save the employer money.
Mary – Indiana: My mother has dementia, broke her hip last May and recently had a stroke. She stayed 35 days in a nursing home for the stroke, and Medicare covered this. I transferred her to an assisted living facility, but she became frightened there, and the facility said she needed more care than they could provide. What assistance can Medicare provide with home care?
Phil Moeller: I’m sorry your mom is having a hard time. Unfortunately, Medicare does not cover what’s called custodial care, but only covers care determined to be medically necessary by her doctor or other licensed health care professional. Even in this case, home-based care usually is covered only for a short period and is not full-time during the day.
There’s a helpful Medicare guide to home care services. Here’s a key requirement from the guide:
“To decide whether you’re eligible for home health care, Medicare defines part-time or ‘intermittent’ as skilled nursing care that’s needed or given on fewer than 7 days each week or less than 8 hours each day over a period of 21 days (or less) with some exceptions in special circumstances.”
Suzy – Colorado: I had Medicare Part A and COBRA as my husband was laid off. I had spinal surgery and Medicare paid my Part A benefits, but COBRA is refusing to pay any of the doctors I had in the hospital, even though they provided prior authorization for this surgery! Now I am getting all these bills from the surgeons. Am I just out of luck?
Phil Moeller: I can’t be positive what’s going on from what you’ve told me. However, COBRA does not take the place of needing to get Medicare when you turn 65 or lose access to employer health coverage.
If you were 65 when you went on COBRA or turned 65 after going on COBRA, you were still required to sign up for Medicare. Failure to do so means that your COBRA insurer may not be obligated to be the primary payer of your health care claims and that Medicare is primary. This appears to be what has happened, but if I’ve got it wrong, please let me know.
Of course, I have no idea why they authorized the surgery or whether this authorization is grounds for you to sue them for failure to pay your doctor bills. You might benefit by calling one of the non-profits that provide free Medicare counseling. Three organizations I work a lot with are:
Susan – Indiana: I am divorced after 28 years of marriage. I have been told by some that I am entitled to receive some of my ex’s Social Security in addition to my own. Is this true?
Phil Moeller: Yes, although there are qualifications you need to meet.
To collect an ex-spousal benefit, you must be single and at least 62, and your ex-husband must either have filed for his own retirement benefit or you need to have been divorced for two years.
Also, if you’ve already filed for your own retirement benefit, the amount of this ex-spousal benefit must exceed what you’re already collecting for you to be eligible for any additional payment.
Your own Social Security earnings record and age can play a large role in determining the best strategy here. If you haven’t already done so, open an online Social Security account and obtain this information. Then, if you have further questions, let me know.
Diane – Kentucky: I had to retire earlier than planned because of health issues. Could I try to file for Social Security disability if I already filed for retirement benefits?
Phil Moeller: If you are younger than Social Security’s full retirement age, you certainly can apply for disability. This might provide you two benefits. First, disability payments can in some circumstances be more generous than retirement benefits. Second, being approved for disability by Social Security also allows you to become eligible for Medicare, even if you are younger than 65. This might help you, although it usually takes 30 months from the date your disability is approved to be actively covered by Medicare.