What’s the most important cost to consider when picking a health plan?

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.

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.

Moeller is a research fellow at the Center on Aging & Work at Boston College and co-author of “How to Live to 100.” Follow him on Twitter @PhilMoeller or e-mail him at medicarephil@gmail.com.

Elizabeth – Md.: I am turning 65 soon and have signed up for and have been accepted into Medicare Parts A and B. My husband will turn 65 this spring and plans to sign up for Medicare A and B soon. Our 24-year old son is now on our plan, which is with Montgomery County. It’s an excellent plan with virtually no deductible unless you go out of network and then the deductible is maxed out at $600 for the whole family. Everything is about a $10 copay and we get to choose our own doctors. The family premium is $265 per month.

Here’s my quandary. I am working and can get insurance for myself and my family through my company. That insurance would be a little less expensive on premiums but the deductibles are quite high. The County Retiree plan requires us to be secondary and Medicare primary for me and for my husband when he becomes Medicare eligible in April. The County plan premiums are not reduced even though my husband and I are on Medicare and are Medicare eligible because we are on the family plan. Our son’s insurance is primary, through the county. Medicare has sent me several notices stating that because of my income, my monthly premiums are not $104, as they first billed me, but $272 per month because of our joint income; Medicare will likely also charge my husband $272 per month starting in April.

So, our premiums have just jumped from $265 per month (our retiree health insurance through the county) by an additional $544 per month to $809, with zero additional services provided. AAAGHHH! 🙂 Do you see any options for us?

Phil Moeller: Wow, what a great deal! Seriously, I’m sorry these costs are so much higher but you deserve to be congratulated for finding these things out when you still have time to do something about it. I’d suggest you look further into your own employee group plan.

Congratulations on planning ahead. Like almost all retiree plans, Montgomery County’s Retiree health plan requires Medicare parts A and B for the retiree and eligible spouse at age 65. That is very typical. If you stay on this plan, you will need to pay the freight, I’m afraid. Looking ahead, however, will your part B premiums always be this high? If your retirement incomes decline, perhaps your Medicare premiums also will drop. The point is not to make a decision with long-term consequences based on short-term conditions.

Alternatively, you say you’re eligible for an Employee Group Health Plan (EGHP) through your current employment. How long will you continue to be employed and potentially have that coverage? How much would it cost to cover you, your husband and your son? Also, I assume he will need to roll off your plan when he turns 26 and find his own coverage. This may affect your short-range solution. If you like the employer plan and it would pay primary to Medicare, then you and your husband could consider terminating your Medicare Part B and saving the cost of the premium. After your current employment ends, you would then have an eight-month special enrollment period (SEP) to re-enroll in Medicare without a penalty.

Of course, this advice depends on your family’s health and pattern of health care use. Can you afford to pay the co-payment out of pocket, and how would these expenses compare with your savings from terminating Medicare?

You have a lot of options, but it’s clear from your question that you are a good planner. Make a chart, compare your different insurance choices — premiums, deductibles, co-payments, and things these plans cover and don’t cover. The decision may boil down to dollars but it also could entail the “hassle factor” of dealing with a new plan and all its attendant changes.

Marcia – Colo.: I turned 65 but continued working in the National Park Service until late August. My son is now 20 and I want to continue paying for his health insurance in a federal family plan. I am considering not doing Medicare Part B because of the expense of having the additional insurance. What do you think?

Phil Moeller: It sounds like you have an Employee Group Health Plan through the federal government. That’s fortunate. People with a Federal Employee Health Benefits Plan (FEHBP) are the only exception to the rule that you must enroll in Medicare Part B if you are over 65 when you retire. Unlike all other retiree coverage, FEHBP retiree benefits will continue to pay as your primary insurer if you do not take Medicare. If you do take Medicare, FEHBP will become your secondary insurer and will wrap around Medicare as a supplementary insurance. In some cases, your FEHBP will pay for services not covered by Medicare.

You should consider the pros and cons of turning down Part B. You should first figure out whether paying for both types of coverage will be useful in offsetting your health care costs. For example, if you are enrolled in a health maintenance organization (HMO) under your federal plan, you may find that the HMO provides such comprehensive coverage that you do not need to enroll in Part B. Of course, the HMO may limit you to its provider network, but I assume you’ve already figured out how to deal with such limitations. Having Part B. though, could increase your access to providers if this is important to you.

If, on the other hand, you are enrolled in a fee-for-service plan, you may find it better to take Medicare because your plan waives most Medicare deductibles, coinsurance and copayments (except for prescription drugs) for people who have Part B. As a result, FEHBP fee-for-service plan enrollees with both Parts A and B find that they have little or no out-of-pocket expenses.

Remember, if you delay enrollment in Medicare, but eventually take Medicare Part B, you will pay a penalty on top of your premium. This penalty will increase the longer you wait to enroll in Medicare after you are first eligible. It’s a 10 percent premium surcharge for each 12-month period you were eligible to enroll but were not enrolled, and also weren’t covered by an employer plan based on your active employment. Your FEHBP benefits will not exempt you from this penalty which gets larger and larger over time.

Pam – N.H.: My husband retired at age 63 in May 2013 from a job in Massachusetts, and Blue Cross Blue Shield of Massachusetts dropped him that same day, saying he was a New Hampshire resident and needed Anthem Blue Cross Blue Shield from that state. However, they wouldn’t accept him because of a prior condition – he had prostate cancer in 2012. He has just turned 65 and has not had health insurance in nearly two years. We are pretty healthy, thank God. But I now wonder if he will be penalized for not having insurance? And now that he’s 65, will he have to get Medicare? The plans are extremely confusing. Please help!

Phil Moeller: I’m all for states’ rights, private enterprise and the Red, White and Blue. But Pam’s story is an all-too-frequent tale that illustrates how messed up health care is in the U.S. of A. Now, the good news is that her husband has dodged a major bullet by avoiding serious medical issues since May 2013. But that’s not the way things should work. And, in fact, the Affordable Care Act did provide a solution for her husband. However, the act was just taking effect around the time when he lost his coverage, and lots of folks were confused about this new health insurance option.

As it turns out, he had guaranteed access to New Hampshire’s Health Insurance Marketplace, which includes coverage plans for low-income residents as well. Unfortunately, you may owe a non-coverage fee, payable with your federal tax return. If you can afford health insurance but choose not to buy it, you must pay the fee. The fee is sometimes called the penalty, fine, individual responsibility payment, or individual mandate.

Under certain circumstances, you won’t have to make the individual responsibility payment. This is called an exemption. Contact your Health Insurance Marketplace to find out more about the fee and any exemptions for which you may be eligible.

As for Medicare, he will face no penalties but should sign up for it as soon as possible. I know the coverage options are daunting, especially for folks that have been using employer-provided health insurance. It can help to break your decision into smaller steps. The first one is easy. Call Social Security at 800-772-1213 and enroll him into Medicare Part A and Part B. Here’s a general explanation of Parts A and B, which are also often known as basic Medicare. You also will need to consider a separate Part D drug plan.

Basic Medicare does not cover all your medical expenses. Many people wind up purchasing a Medicare Advantage plan or what’s called a Medicare Supplement or “Medigap” plan. Many Medicare Advantage plans include drug coverage but Medigap plans do not. To help you better understand these plans and figure out the best choice for your needs (and pocketbook), you can get in touch with the free ServiceLink counseling program in New Hampshire.