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Editor’s Note: The open enrollment period for Medicare opens today. But what does that actually mean, and what are you supposed to do? Making Sen$e turns to journalist Philip Moeller, who writes widely on health and retirement, to answer your Medicare questions in a new column on this page, “Ask Phil, the Medicare Maven.” Send your questions to Phil, but first, read Wednesday’s column for an overview of what Phil calls “health care’s Groundhog Day.”
Moeller is a research fellow at the Sloan Center on Aging & Work at Boston College and co-author of “How to Live to 100.” Follow him on Twitter @PhilMoeller.
Wednesday marks the beginning of this year’s open enrollment period for more than 50 million Medicare beneficiaries. People already enrolled in Medicare will be able to change insurers and sign up for different versions of Medicare coverage from now until December 7.
Every year at this time, we are treated to a flurry of advice about how much money people might be able to save and how much their health care could improve, if only they would take the time to study the often-significant changes in the plans available to them. Then there’s the deluge of marketing materials from private insurers.
And every year, people look at all of this “information,” and like Punxsutawney Phil (no relation), they see their health care shadows and rush back into their burrows without making any changes to their coverage. This is just not right. Everyone – Medicare, private insurers and, yes, consumers – needs to do better.
With the help of the good people at Making Sen$e, “Ask Phil, the Medicare Maven” will appear here regularly to help you make sense of this critically important yet little-understood program. I will answer as many of your questions as I can, and I will get into as much detail as needed.
Check here in coming weeks to read about the major components of Medicare coverage and of your open enrollment decisions. Despite the urgings of your current plan to “Renew Today!” I have my own urging: Take your time, read what the Maven has to say, and then make an informed decision.
Along with Social Security, Medicare is an essential support for our later years. And, like Social Security, its provisions can be unbelievably complicated and opaque. Gobbledygook would be a complimentary description of many of its rules. Further, as documented in news reports, private insurers face persistent criticisms for not delivering promised services and not communicating with Medicare customers about their care.
Health plans are required by September to send plan members explanatory materials with details of next year’s annual plan changes. They are called the “Annual Notice of Change” and “Evidence of Coverage.” If you look at the foregoing links to the Medicare website, you’ll see the agency does a poor job of helping consumers understand these documents. Medicare’s main mission seems to be to help the health plans comply with the requirements of the forms.
Not surprisingly, most beneficiaries have only a general awareness of these materials. Focus groups have found that people believe the details defy understanding. So they don’t even try, and these forms often get tossed in a drawer, never to be read or seen again.
I asked a leading Medicare expert if a public campaign would make sense to help people understand and use these documents from their Medicare insurance providers. The answer? “Don’t bother. It would be a waste of time.”
Behavioral research shows that the explosion of Medicare Advantage and prescription drug plans, beginning in 2006 with implementation of the then-new Part D Medicare drug program, has been too much of a good thing. All these complicated choices are too much, not only for older Americans, but for Americans of any age to navigate. Decision-making paralysis has ensued.
As a result, according to Medicare officials, more than 81 percent of those in Medicare Advantage and 87 percent with stand-alone Medicare drug plans in 2013 stayed with their same insurance plans in 2014. These include people forced to choose new plans when their existing plans were withdrawn from the market. Even creators of gerrymandered voting districts would be impressed.
Medicare officials declined to be interviewed on this or other topics I raised with them related to open enrollment. Now, Medicare loves to talk about what a great job it does looking out for consumers. But those consumers are also voters, and there always seems to be an election just around the corner. So, when the Medicare topics are not so positive, there often seems to be no one at home at Medicare. I’m just sayin’…
Open enrollment is not very successful, to say the least. Neither are lots of the other things that the government and private insurers try to do to get Medicare recipients to spend money more wisely, get better coverage and take better care of themselves.
As for open enrollment, it’s hardly the only time you have to make important Medicare insurance decisions. Exceptions to the open enrollment window abound. If you have Medicare Advantage, you can leave your plan and switch to original Medicare (Part A for hospital coverage and part B for qualifying physician, outpatient services and equipment costs) between January 1 and February 14 of next year. If you do, you also can get a stand-alone prescription drug plan (Part D).
If there are important changes in your life – you move, change your marital or household status, lose your job or face lots of other factors – you may be able to change your Medicare coverage at any time. If you are new to Medicare, you can sign up for coverage anytime within a seven-month window before and after your 65th birthday.
And perhaps the biggest exceptions to open enrollment plan choices stem from Medicare’s recent rating system for health plans. The ratings range from one (lowest) to five (highest) stars. As a reward and inducement for plans to improve their services, plans that receive five stars are allowed to enroll new members anytime during the year except for the first week in December. Very few plans now get five stars but those numbers are likely to rise.
There are multiple ways health plans can collect money from you. Low premiums, while perhaps important, may mask relatively high deductibles (initial expenses that come out of your pocket before your insurance kicks in) and co-pays (the portion of a medical service or medication that you must pay).
Here are basic 2015 Medicare costs, courtesy of the Center for Medicare Advocacy. Private insurer Medicare rates must be approved by the government, but there is a wide range of costs among approved private Medicare plans.
The hospital deductible will be $1,260 for each benefit period (you can have more than one covered hospitalization in a year). There is zero coinsurance for the first 60 days of a hospital stay, $315 a day for days 61-90, and $630 a day for days 91-150. Nursing homes have zero coinsurance for the first 20 days and $157 a day for days 21 to 100.
The standard monthly premium is $104.90 for those with taxable incomes of $85,000 or less ($170,000 for joint filers) and rises along with income levels to a maximum of $335.70 for anyone making more than $214,000 a year ($428,000 for joint returns). The Part B deductible is $147 a year. Most people’s Part B premiums are paid out of their monthly Social Security, so it’s important to look for changes in your Social Security and make sure they’re accurate.
This is the part of Medicare that deals with Medicare Advantage plans, private insurance that contracts with Medicare to offer Part A, B and, usually, D programs. Medicare Advantage plans grew out of those 2006 changes to Medicare. They were subsidized by the government to encourage private insurers to offer and manage basic Medicare insurance plans. Because of the subsidies, these plans usually offered enhanced benefits at no extra cost to consumers and have thus become increasing popular. Even with recent cutbacks in their subsidies, the plans have gained users and now are chosen by about 16 million beneficiaries.
More than 38 million people were enrolled in Medicare drug plans at the end of last year, including about 23 million in prescription drug plans and the rest in Medicare Advantage plans.
The annual maximum deductible for drug plans in 2015 will be $320. For the next $2,640 in drug expenses, members pay a 25 percent co-pay. Once expenses hit $2,960 (more commonly known as the donut hole), you’re on the hook for the next $3,720 in drug costs. Under the Affordable Care Act, the donut hole will be phased out by 2020.
For 2015, beneficiaries inside the donut hole must pay 45 percent of the cost of brand-name drugs and 65 percent of the cost of generics. However, nearly the full cost of brand-name drugs will count toward those $3,720 in additional expenses. Once expenses hit $6,680, catastrophic coverage kicks in. It requires a co-pay of only $2.65 for a prescription of generic drugs and $6.60 for a brand-name prescription, or 5 percent of the cost, whichever is greater.
Got all that? Even just the basics of prescription drug coverages can cause aneurysms. The details are horrendously complicated. Plans also have multiple tiers of separate pricing structures for different drugs, usually forcing consumers to pay bigger bills for increasingly costly drugs.
Prescription drug plans will get extended treatment in one of several upcoming Ask Phil pieces that will appear during open enrollment season. Other topics will include how to use the helpful but consumer unfriendly Medicare Plan Finder, understanding Medicare Advantage Plans, making sure your plan still includes your preferred doctors and hospitals, and how Medigap or Medicare Supplement insurance policies work.
For now, please send your questions: things you want to know more about, questions about how Medicare works and problems you’ve encountered with your Medicare coverage.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: firstname.lastname@example.org.
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