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.
Moeller is a research fellow at the Center on Aging & Work at Boston College and co-
author of “How to Live to 100.” He wrote his latest book, “How to Get What’s Yours: The Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. Follow him on Twitter @PhilMoeller or email him at firstname.lastname@example.org.
Your Medicare Questions
Medicare rules and private insurance plans can affect people differently depending on where they live. To make sure the answers here are as accurate as possible, Phil is working with the State Health Insurance Assistance Program (SHIP). It is funded by the government but is otherwise independent and trains volunteers to provide consumer Medicare counseling in state and local offices around the country. The nonprofit Medicare Rights Center is also providing ongoing help.
Dolores – N.Y.: I am 70 and still working full time. I was just notified by my employer that because of the repeal of the Defense of Marriage Act (DOMA) my wife can now be covered by my health insurance first and Medicare second or drop Medicare Part B. She has been on Medicare for years. We were married August 2013. I don’t feel comfortable having her drop Medicare to save $104 per month. I spoke to a Medicare help line and they said she might want to keep Medicare. What is your opinion? Are there shortfalls we need to be aware of?
Phil Moeller: Dolores, I am with you on this one. While your wife can be covered under your employer plan, I worry about the transition off of Medicare and then, when you retire, back onto Medicare. The practical determinant here may be how much longer you will work. There can be lags getting onto an employer plan, and Medicare shouldn’t be dropped until primary coverage has been assumed by the employer plan. Your wife then would need to complete a Medicare termination form, which also can take time to become effective. Finally, she would need to re-enroll in Medicare and also complete a form so that Medicare could obtain details on your employer health plan and make sure your wife’s coverage was a qualifying alternative to Medicare. Glitches in these transitions — and of course these things do happen — could expose your wife to unintended coverage gaps and even financial penalties.
Of course, it is possible your plan would provide badly needed coverage your wife does not have now – things like vision and dental insurance. I also don’t know if your plan will allow your wife continued access to all of her doctors, hospitals and other health care providers. You didn’t say whether your wife has a stand-alone prescription drug plan or not. But it’s dangerous to assume these days that prescription drugs have similar price schedules in two different plans, or that all of your wife’s drugs even would be offered under your drug plan.
Like much else with Medicare, it’s what you and your wife don’t think about that could come back to hurt you. In this case, a major potential problem is in your wife’s guaranteed access to Medicare Supplement insurance, also known as a Medigap policy. These policies cover things that Medicare does not pay, including co-pays and deductibles, dental and vision coverage, and even coverage for medical expenses incurred while traveling outside the United States. Insurers must offer Medigap policies to people when they begin Medicare. If your wife has Medigap and then drops Part B, she will lose guaranteed access to a Medigap policy when she signs up again for Part B. If that happen, insurers could charge her much higher rates for a Medigap policy, assuming they want to offer her coverage at all.
GOT MEDICARE QUESTIONS?
Unless you plan to work a long, long time, continuing to fork over the Part B is the pragmatic call here. Even if you do work several more years, your wife’s continued Part B premiums may be the best call.
Teri – Tenn.: I work for a non-profit agency that employs six people, but my agency and four other agencies are covered under one group health insurance plan. One of those agencies (not mine) is designated the plan sponsor. That agency has well over 20 employees. If I apply for Medicare Part A (hospital insurance) when I turn 65 in November, which will be primary, Medicare or the group plan? If I take only Part A in November, and wait until I retire and lose group coverage to take Part B, will I have guaranteed issue rights for a Medigap policy for a certain period of time?
Phil Moeller: Teri, your understanding is correct and you should be just fine, including retaining your guaranteed access to Medigap when you retire. As your question suggests, the group policy is primary and Medicare normally is the secondary payer in an employer group plan involving 20 or more employees. In the kind of multiple-employer plan you describe, the private insurer is the primary payer if any participant in the plan has more than 20 employees. So, even though your own agency does not have that many employees, your plan will be the primary payer for plan participants who have reached the Medicare eligibility age of 65.
By taking only Part A, you are correct that you will preserve your guaranteed access to Medigap when you eventually retire and begin Part B and other Medicare coverages. Finally, I’m assuming here that you have at least 40 quarters of work for which you paid Social Security payroll taxes. This qualifies you to receive Part A coverage at no cost. This coverage has a per-admission deductible of $1,260 in 2015. If your private plan has a higher deductible, your Part A coverage could save you some money.
I’m assuming here that your private insurance has drug benefits that are comparable to a Medicare drug plan and thus considered “creditable” coverage. Also, if you are in a high-deductible plan with a tax-advantaged health savings account (HSA), you should know that these accounts are not allowed once you sign up for Social Security.
And, in a particularly nasty Medicare gotcha, signing up for Part A of Medicare is considered signing up for Social Security (although it does not trigger an actual claim for Social Security benefits). Are you confused? Of course you are! Welcome to Medicareland.
Christopher – Calif.: I am of Medicare age but still working and covered by an employer insurance plan. It requires my pharmacy to charge me reduced rates for my drugs. However, I have a $5,000 drug deductible and therefore I feel forced to choose a Medicare Part D plan in order to avoid this big deductible and save money. Once I choose a Part D plan, who controls the price of my drugs that I and my Part D plan must pay? My group insurer plan or my Part D plan?
Phil Moeller: The annual deductible for a stand-alone Medicare Part D plan in 2015 is $320. Because your health plan’s deductible is so much larger, its drug coverage does not seem to me to be creditable under Medicare rules (see the above answer for more details). The private insurer through which you buy the Part D plan will control the price of your drugs through the rates it has negotiated with drug companies.
You should be able to see the drug prices for all insurers who offer Part D plans where you live. If you go online to the Medicare Plan Finder and enter your ZIP code, you should be able to see all the plans. By entering all the prescription drugs you take, you should see the costs you would face in the various plans. Besides the drug prices themselves, your out-of-pocket costs also will be affected by the plans’ charges for premiums, co-pays and deductibles. It sounds like your drug costs are not large enough that a $5,000 deductible would come into play. But you probably should at least be aware that Part D plans do have a coverage gap that kicks in after spending has reached a certain level. This gap is known as the donut hole.
So, your first step is to talk with employee resources where you work and ask if the drug coverage in your private plan is creditable. Perhaps there are some qualifying aspects of its coverage despite that big deductible. But if its coverage is not creditable, then you need to find out details of the enrollment period or window within which you can purchase Part D coverage. Call the California SHIP office for details. If you miss the enrollment window, you could be slapped with lifetime Part D penalties when you do finally sign up for coverage. Good luck!