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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.” You can send your questions to Phil, but for the next few weeks he will be taking a break from answering questions to write about Medicare’s annual open enrollment period.
And a reminder: Medicare’s annual open enrollment period begins October 15. Do you need to sign up?
Janice – Pa.: I am on only a couple of prescription medications with no significant medical issues. One of my drugs costs me only $37 out-of-pocket for a 90-day supply. However, my insurance company is charged more than $500 for this generic drug, and all of this cost is applied to my donut-hole coverage. Over the course of the year, this single drug will eat up nearly my entire insurance limit. In Canada, my annual cost for this same drug would be only about $800 a year — without insurance! Why is our government allowing this price gouging, which we as citizens ultimately pay for? Not to mention, it’s compromising our health by not being able to afford medication that clearly has been exorbitantly overpriced.
Phil Moeller: Your government is allowing this, because the pharmaceutical industry convinced enough legislators in 2003 to forbid Medicare from negotiating drug prices when Congress enacted the law creating Part D drug plans. It was a bad move then, and it is costing us even more now. As new generations of effective but very expensive drugs hit the market, Medicare has little choice but to pay up. A Congress that truly represented the American public would have addressed this problem. Our Congress has not. And while high drug prices will be an issue in the 2016 presidential campaign, it’s tough to see Congress dealing with it before the election.
Also, calls for drug price cuts make for good news headlines. But the key here is to rein in U.S. drug prices while not destroying the financial incentives that I believe are appropriate to encourage companies to pursue the very costly research and development costs of new drugs. The Maven may (once again) be a lonely voice here, but the U.S. can’t do this by itself. We need to involve other nations and develop a global cost-sharing system where all countries pay some of the freight for pharmaceutical research and development. Today, U.S. consumers (and taxpayers) are shouldering nearly all of this burden. Compared with global accords on limiting greenhouse gas emissions, a trade pact on drug prices should be a snap.
Chris – Texas: I turn 65 this December. My wife is five years younger than me. Our goal is to both stay with my company’s health savings account (HSA). Unfortunately, pre-tax contributions will no longer be possible, because the United Healthcare HSA prescription drug plan is not “creditable” — essentially because the HSA is high deductible. I’ve advised my employer to no longer make contributions to my HSA. I do not plan on taking Social Security until I turn 70. Should I select a “creditable” private prescription drug plan or a Medicare Part D “creditable” prescription drug plan? It’s my understanding that the later forces me into Part A. I assume I would then notify Medicare that I’m continuing to work and now have a “creditable” drug plan. Will I incur any penalties now or in the future for following this road map?
Phil Moeller: What a ball of hot and gooey wax! First off, just because you have a high-deductible health plan doesn’t mean your drug coverage is not creditable. So ask your employer to certify whether that’s the case. If, as you say, it’s not the case, I’d explore leaving your HSA plan during your company’s open enrollment period and choosing a plan for 2016 that has creditable drug coverage. This will permit you to continue getting drug coverage from your employer plan and of course, other health coverage for you and your wife. This is likely to be a better deal than you signing up for Medicare and your wife getting coverage on the Texas state insurance exchange.
To answer your drug coverage question, you cannot pick a Part D plan without first having Parts A or B of Medicare (and you’d need both A and B if you want a Medicare Advantage plan that includes drug coverage). If it turns out that you do need to sign up for a Part D plan, I doubt your employer would continue to cover the rest of your health insurance needs. That’s a separate conversation you would need to have. But if you needed to rely on Medicare for all your health insurance, you’d have a seven-month window to sign up in order to avoid late-enrollment penalties — three months before turning 65, the month of your 65th birthday and the following three months. Lastly, even if you no longer can contribute to an HSA, you can keep any balances in the plan and use them the future. So long as they’re spent on qualifying medical expenses you will pay no taxes on these funds.
Steven – Okla.: I just turned 64. My wife will be 63 in January. I plan to work until 67, and she will likely do so until she turns 67 or later. We plan to retire abroad in France where health care costs are generally lower. I know that Medicare will not pay for any procedures performed outside the U.S., but can we suspend coverage when we leave the country? It seems pointless to pay a premium for Part B when we have no hope of receiving a benefit. And if we don’t pay, will we be subject to the 10 percent annual penalty if we then return to the U.S. in the future and wish to resume Medicare coverage?
Phil Moeller: Once your employer group health insurance ends, Medicare generally does not permit time outs, do overs or other suspensions. Sadly, you would thus be on the hook for Part B and Part D penalties if your Medicare lapses and you resume it later on. But then, Paris is so beautiful!
Tucker – Wash.: Why does Medicare only consider reimbursement for a wheelchair used in the home? Do they want us to be shut-ins?
Phil Moeller: You’re correct that Medicare’s standard for wheelchair use is your doctor’s assessment that you have a medical need for a wheelchair inside your home. But you are then free to use it wherever you wish. I don’t see this as meaning that Medicare wants you to be a shut-in. However, if you can putter around your home without needing a chair, but you can’t walk very far outside the home, I can see where you’d feel this standard is unfair. In practice, basing Medicare coverage on your mobility outside the home would create a very slippery slope. How far would you need to walk unaided before you didn’t need a wheelchair? A mile? Less? More? How would this distance be tested? The medical need requirement is consistent with other Medicare coverage determinations. And the in-home standard, while certainly murky in some circumstances, is easier to consistently interpret.
Bruce – N.Y.: I have family medical coverage through my job. When I retire at age 65, will Medicare cover my spouse?
Phil Moeller: Medicare doesn’t do family plans. It covers only individuals. If your spouse is 65 or older, she will have to get her own Medicare coverage. If she is younger and no longer covered by your employer health plan, she will have to get coverage on the New York state insurance exchange as part of the Affordable Care Act.
Linda – Wash.: I was 65 last November and have Medicare Part A in place. My private employer insurance ended October 1, and I signed up for Medicare Part B and a Medigap policy to start then. The only drug I take is a relatively inexpensive low-dose generic. Do I need Medicare Part D now?
Phil Moeller: Part D is voluntary, so you don’t have to get it. However, if you later need a Part D plan, large annual penalties will be applied to your Part D premiums. Actually, they’re applied to an average of Part D premiums, so even if you have a zero premium plan, you’d get socked with a penalty. The penalty is 1 percent a month, and it will be imposed so long as you have a Part D plan. My advice is to buy one of the many no-premium Part D plans that are available. If your drug use continues to be modest, you will wind up paying little for the policy, but doing so will allow you to avoid Part D’s late enrollment penalties.
Ann – Ore.: If my doctor does not accept Medicare, can I pay him out-of-pocket without involving Medicare? If he prescribes medications, can I use a Part D plan to pay for them?
Phil Moeller: You can certainly pay your doctor without filing a Medicare claim. If he prescribes medication, however, a new Medicare rule taking effect next year will prohibit your Part D plan’s pharmacy network from filling a prescription unless the prescribing physician participates in Medicare.
Malcolm – Cal.: I’m 79 and have Medicare Parts A and B and a Medicare supplement policy. I’ve never had a Part D drug plan. Is there a way to get Plan D without the huge penalty?
Phil Moeller: If you have a very low income, you might be able to qualify for Medicare’s Extra Help program to assist you with your drug expenses. In some cases, this assistance includes waiving Part D penalties. Otherwise, it will be difficult to avoid a big late-enrollment penalty, which could add 12 percent a year to your premium for each year you failed to enroll. I suggest you speak to a SHIP counselor at 1-800-434-0222 and see if there are any options for California residents that might help you out.
George – N.Y.: I just received my Aetna PPO (preferred provider organization) MA (Medicare Advantage) booklet for 2016. It indicates there will be a $75 monthly charge for out of network gym memberships. There is no mention of in-network coverage for such memberships. Does this mean they will stop honoring Silver & Fit current locations for members?
Phil Moeller: No. An Aetna representative says your membership will still be covered without a co-pay. The new charge applies only to non-network gyms. This should be reflected in a chart in your booklet. If you’re still unclear, please get in touch with Aetna.
Barbara – Fla.: I did not sign up for Medicare prior to turning 65, because I have a full-time job with medical benefits from a large employer. I have since been told that since I did not sign up for Medicare three months before I turned 65, I would be paying penalty fees when I do. I just turned 66 and will be retiring next August a month before my 67th birthday. I am so confused and frustrated.
Phil Moeller: It sounds to me like you got bad advice. Large employer plans (meaning plans involving 20 or more employees) cannot force you to take Medicare when you turn 65 (the employer size jumps to 100 for disabled persons). When your employer coverage ends, you will have a special enrollment period of eight months within which you can sign up for Medicare without facing any late-enrollment penalties. If you need “firepower” to stand up to whomever said you would face penalties, call the Medicare Rights Center’s helpline at 800-333-4114.
Barbara – Mass.: I am paying higher Medicare premiums based on my high income in 2014. My income will drop enough in 2015 so that I should now be paying the standard $104.90. Will this automatically take place or do I have to contact Social Security or Medicare to discuss it?
Phil Moeller: This is a Social Security matter, as it oversees the Medicare program that deals with income-based Part B and Part D surcharges. This program is called IRMAA, which stands for income-related monthly adjustment amount. There is a two-year lag between when your income changes and when this change is reflected in your Medicare premiums. For example, this year’s premiums will be based on the income reported on your 2013 tax returns, and next year’s will be based on 2014 tax returns. The adjustment should be automatic. But there has been a big projected boost in Part B premiums next year for people paying IRMAA surcharges. So a clarifying call to Social Security at 1-800-772-1213 might make sense to make sure you don’t get hammered unfairly in 2016.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: firstname.lastname@example.org.
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