Like it or not, we’re all in the same Medicare boat

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.

Jim – Nev.: How can Medicare penalize me for paying for my own prescriptions? I lost my job and my insurance in 2008 and have been paying for my prescriptions since then — all of which were affordable. Now, I have signed up for Part D (drug coverage), and I understand I will have “x” amount taken from my Social Security each month for the rest of my life. This is ridiculous and just another way for the government to get their hands in my pockets. I thought I was saving the taxpayers some money. I love my country, but I hate the politicians. How can regular people catch a break? I lost my job, my house and my retirement. I have nothing left to give them.

Phil Moeller: My heart goes out to Jim and to millions of other Americans whose financial futures and dreams have been hollowed out along with much of the traditional American business structure that provided their livelihoods for generations. But I understand the economic reasons why Medicare socks late enrollees with penalties for both Parts B and D of Medicare. If Medicare participation was voluntary, healthy seniors wouldn’t buy coverage until they needed it. And if they experienced unexpected medical emergencies, they’d likely wind up on Medicaid, where nearly all of their health care expenses would be paid by taxpayers. Meanwhile, back in Medicare land, only sick people would be insured. Medicare health expenses, on a per capita basis, would soar. And there would be no offsetting Medicare premiums or deductibles being paid by healthy people. These premiums help defray costs for those older Americans with lots of health care needs. This is the “pooling of interest” logic that supports making it in all seniors’ best financial interest to have Medicare.

Jim most certainly has, as he claims, been saving taxpayer dollars by paying for his own drug prescriptions. The big weakness in his argument is what would he do if he ran into a health problem and needed one of the new and extremely costly miracle drugs? Without a Part D plan, he would not be able to pay for such a drug. But if he could sign up anytime for a Part D plan with no penalty at all, he would become just another example of what’s called “adverse selection,” where only sick people get insurance.

So while I truly do sympathize with Jim’s situation, I do not want to give him a free pass to either have or not have Medicare prescription drug insurance based on his personal needs. The Medicare boat may be leaky and full of unclear and even unfair rules. But we all need to be in it to help the system survive, even with all its admitted problems. My anger over drug expenses is not directed at Medicare’s rules, but at the often outrageous prices that Jim and everyone else is forced to pay for drugs in this country. I’d focus reform efforts here, not on Part D late-enrollment penalties.

James – S.C.: I have been on Medicare disability (not Medicaid) due to combat-related disabilities. I also have had a permanent and total disability rating for more than five years with the VA. I turned 65 this December, and I wanted travel with my son or by myself overseas and find a means of have coverage for myself and my son, who is eight years old. I need to be able to do this with as much health care coverage as I can arrange. We can also have the flexibility of coming back to the United States for at least one month per year.

Phil Moeller: This may boil down to money. Original Medicare is not going to cover you outside the U.S. You can get a Medigap policy that provides emergency coverage. Some Medicare Advantage policies do the same thing. None of them will cover your son though. However, you should be able to get him covered through your VA insurance as a family member. That will work for when he is in the U.S. When he travels with you as a tourist, however, he will not be covered. So for both of you, I’d recommend getting a travel insurance policy for your foreign travels. You will need to keep your Medicare coverage in force for when you’re back in the U.S. And your son will need domestic health insurance most of the time as well, as I’m assuming his trips with you will be relatively short.

Dan – Pa.: If I have a Medicare Advantage plan, can I go to a Medicare supplement plan during the open enrollment period? Someone said that you can’t do that — even during open enrollment — if you have a Medicare Advantage plan and have health problems.

Phil Moeller: In theory, you are free to move from Medicare Advantage to Original Medicare (Parts A and B) and a Medicare supplement plan, also known as Medigap. In practice, however, you may not be able to find an insurer who would offer you a Medigap policy or would offer it to you at a price you can afford. Here’s why.

When people turn 65 or older and stop being covered by employee health insurance, they become eligible for Medicare for the first time. During this initial enrollment period for Medicare, people have what are called “guaranteed issue rights” to Medigap policies. These rights mean that insurers must sell you Medigap policies and cannot refuse to cover you or jack up your rates because of any pre-existing health conditions. However, once you’ve been enrolled in Medicare, you normally no longer have these rights. This means insurers can decline to sell you Medigap or they can impose stiff premiums tied to pre-existing conditions.

Now, there may be exceptions to this general rule, depending on whether your state insurance department has more favorable consumer safeguards. Medigap policies are regulated by the states, so you should call your state insurance department for help. You also might call the free Medicare counseling service at the State Health Insurance Assistance Program (SHIP) and find out more about your Medigap options.

Patricia – Ga.: I was told a few years back by our insurance agent that it was cheaper for me to stay with company health insurance than to go with Medicare. I also was told that my company had to advise me every year of the pros and con of staying with the company or going with Medicare. I have only received this information one time from our company. We have a $2,500 high-deductible plan and our copays for prescriptions are high. Since my employer has only sent me information about Medicare one time, is there anything I can do about this to somehow appeal and get access right away to Medicare? I fell this weekend and I have injured myself. I cannot afford to go to the hospital and pay the emergency room fees out of my deductible. What am I to do?

Phil Moeller: Patricia, I am so sorry to hear about your fall. However, Medicare probably wouldn’t provide you much better payment protection for the costs of your fall than your employer’s plan. If you needed to be hospitalized under Part A of Medicare, you’d first need to pay a $1,288 deductible before your hospital bills got paid. And if you needed to use an emergency room, which is covered under Part B of Medicare, that program has a $166 deductible in 2016.

I have never heard of a requirement that employers tell you each year about Medicare pros and cons. The only even remotely similar obligation I know of involves Medicare’s Part D prescription drug program. When people become eligible for Medicare, they usually do not have to enroll so long as they are receiving health insurance from an employer plan. However, that employer plan must include prescription drug coverage that is “creditable” — meaning that it is at least as comprehensive as a typical Part D plan. Your employer is supposed to provide you this notice every year. And if its plan is not defined as creditable, you are then required to get Medicare.