Editor’s Note: Journalist Philip Moeller is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil. Today, he weighs in on the possible Congressional deal to approve a permanent Medicare “doc fix” before taking your questions.
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, “Get What’s Yours — The Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. Follow Moeller on Twitter @PhilMoeller or email him at firstname.lastname@example.org.
I have been celebrating the recent sighting of the nearly extinct Congressional Consensus. This event involves Republicans and Democrats in the House and Senate reportedly agreeing to spend some $210 billion in the next decade so that doctors who treat Medicare patients won’t have to cut their fees by more than 20 percent.
This so-called “doc fix” was driven by a 1997 law tying Medicare physician fees to economic growth. When certain medical costs grew by more than the broader economy, the law called for rolling back physician fees. This would not stand, so Congress overrode the cuts no fewer than 17 times. Facing another round of cuts April 1, the latest proposal offers a permanent response. The deadline is only a week away, and Senate Democrats may yet block the deal, so it’s still possible that an 18th short-term fix might be the best Congress can do.
In the meantime, and at the risk of spoiling the party, I fear my giddiness may have been premature. Here’s why:
- About $140 billion of the measure’s $200 billion price tag wouldn’t be funded at all but just come straight out of the Treasury and thus add to deficits. The losers: Taxpayers.
(Some House Republicans reportedly are working on a plan to “fund” this $140 billion with future cuts to Medicaid. The losers: Our states and our poorest and often frailest seniors.)
- Another $35 billion would be paid by higher-income Medicare beneficiaries. According to a one-page summary, the proposed new rules would require 2 percent of the country’s highest-earning Medicare recipients to pay higher premiums for Parts B and Part D (doctor and prescription drug) coverage. The losers: Wealthier seniors, for sure, but means-testing is a slippery slope that eventually may make losers out of all Medicare beneficiaries.
- Other health care providers would take a similar-sized haircut on their Medicare revenues. This will include higher consumer costs for Medicare supplement (Medigap) plans. The losers: Everyone but doctors.
- Finally, there are signs that the doc fix is a tempting vehicle to become a broader Medicare fix. Given how seldom Congress comes together on meaningful proposals, it’s understandable that pet projects and ideas might seep into this bill. But passing the resulting bill too quickly and without careful review could saddle us with provisions we later regret. The losers: Everyone.
The last time I looked at the relative well-being of different sectors in our society, taxpayers, plus those receiving Medicare and Medicaid, weren’t faring so well. Doctors, by comparison, were much higher up on the economic ladder. Is giving them even more money, which the permanent fix would do over time, really the right way to go?
For the record (and my future health): I am all for having Uncle Sam pay my doctors whatever they want.
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 non-profit Medicare Rights Center is also providing on-going help.
GOT MEDICARE QUESTIONS?
Sharon – Wis: I just turned 65 in January. I began collecting Social Security survivor benefits at age 60. I have been working full-time for the past four years and therefore haven’t collected very much Social Security. I was automatically enrolled in Medicare, but I declined Part B (which is still screwed up) but that was my intention. I didn’t know I could also decline Part A. I signed up for my employer’s high deductible insurance and went to create a Health Savings Account (HSA) and I found out that I can’t use one if I am on Medicare! Now what do I do? My employer was not aware of this rule either. My question is, can I still use an HSA account if I am not collecting benefits due to my salary? Can I just stop benefits and Medicare so I can use the HSA account?
Phil Moeller: The dreaded HSA trap has snared another victim. With HSAs growing in popularity and people working longer, many people get a rude surprise when they innocently reach 65. We have been programmed for years to think that Medicare is required at age 65. It’s not if you have group health insurance at work (and your employer has more than 20 employees). But many people are uncertain and so they at least sign up for Medicare Part A. This covers in-hospital expenses and is free if you’ve worked at least 10 years at jobs where payroll taxes were deducted from your pay. The government even may encourage you to sign up for Part A because it’s free. But where an HSA is concerned, Part A is definitely not free. Having Part A will invalidate your eligibility to have an HSA. So, if you have employer health insurance with an HSA, do not sign up for any parts of Medicare when you turn 65.
The second part of the trap is that taking Social Security benefits automatically registers you for Part A of Medicare. I have never read one practical reason for this rule and think it’s silly, but of course, the good people at Social Security don’t particularly care what I think. So, the message here is that if you can afford to hold off on claiming Social Security, you can keep working at a job with employer health insurance and participate in an HSA until you turn 70. At that point, your Social Security benefits will have hit their peak, and will be worth a lot more than the tax benefits of an HSA.
People can disenroll from Medicare to preserve their HSA eligibility. But Sharon can’t do this because she has been collecting Social Security survivor benefits for five years. Her best option is to disenroll from her employer’s HSA and use another health insurance plan at work. That will cost her far less than withdrawing her Social Security payment.
Linda – N.Y.: I am about to turn 65 and would like to know if I can remain with my self-pay HMO/POS indefinitely. There are certain benefits I get with this plan that would not be available with Medicare and a Medicare supplemental plan. I checked with the insurance company and they said I could, however. I do not know if this information is accurate.
Phil Moeller: Check again. I’m concerned that your self-pay plan would not qualify as an acceptable alternative because it’s not a group plan provided by an employer. And if you bought your coverage through an exchange plan set up under the Affordable Care Act, there is still a lot of fuzziness over the transition of such plans into Medicare and what happens to any tax credits you may have received from the exchange plan. You may need to do more homework here.
If your plan did not qualify as an acceptable alternative, you would face Part B late enrollment premium penalties. Further, if you decided you later wanted a Medicare supplement plan (also called Medigap), you might have lost the window for guaranteed access to the plan under favorable underwriting assumptions. If that happened, you could face much higher premiums. Whatever plan you wind up with, make sure you understand whether it or Medicare is the primary insurer, and that you understand your exposure when it comes to paying for covered services and procedures.