Medicare is a Complex Beast - Prepare for Open Enrollment Now

Robert Quinlan, of Quinlan Care LLC, an independent life and health insurance agent/broker sat down with me on behalf of FOXBusiness.com to review the basics of Medicare, open enrollment and changes for 2016.  Here is what you need to know.

Boomer:  What Medicare paths should seniors choose from for health coverage and what do they cover?

Quinlan:  Seniors will choose one of two paths.  The first is the original Medicare Part A that covers many of the costs related to your hospital stays, but not all costs are covered.  Your costs are also covered for a short term stay in a nursing home (no coverage after 100 days).  Some home care and hospice care is also covered in Part A.  The original Medicare Part B will pay 80% of the costs for your doctors outside a hospital.  Many seniors today will purchase a Medicare supplement policy (also called Medigap plans and offered by private carriers) to pay the costs that Medicare will not pay under Parts A and B.  You can see any doctor in the US that accepts Medicare payments.

The second alternative path is called Medicare C (Medicare Advantage plans) offered by private insurance carriers. They are managed health care products like an HMO or PPO.  These popular plans (some also offer drug, vision and dental coverage) have low or no premiums due to subsidy payments by the federal government to the private carriers.  These plans do require that you are enrolled in both Medicare Parts A and B.  No need to purchase a Medigap policy.

Boomer:  What are the costs involved with Medicare coverage?

Quinlan:  There is no monthly cost for Part A but there are considerable out of pocket expenses in Part A if you are hospitalized.  Many people cover these costs by purchasing a Medicare supplement policy offered by private insurance carriers.  Medicare Part B has a monthly premium.  For most people who have enrolled in Part B this year or in previous years, the monthly premium is $104.90.  Those with higher earnings will pay monthly premiums up to $335.  Sharply higher premiums for Part B are being proposed. Medicare Advantage plans (Part C) have traditionally no or low premiums.  These plans do have maximum out of pocket expenses that can reach $6,000 annually.  Medicare prescription drug coverage does have a monthly premium based on your annual income.

Boomer:  What changes to my Medicare coverage can I make during the annual open enrollment period?

Quinlan:  If you have Medicare Part A and B today, you can drop that coverage and enroll in a Medicare Advantage plan.  You can also switch to a different Medicare Part D prescription drug plan.  If you have a Medicare Advantage plan with a prescription plan (also known as MA-PD plan) you can move over to another MA-PD plan.  You can also drop a Medicare Advantage plan and go back to Medicare Parts A and B, also known as Original Medicare.

Boomer:  What should you be looking for during the open enrollment period?

Quinlan:  Are your doctors and hospitals still accepting patients under the original Medicare Part A and B?  If you are in an Advantage plan, are they still in the carrier’s network of providers?  With Medicare Plan D coverage, are your medications still covered?  Or do you have to upgrade your current Plan D to cover new medications?

Boomer:  Can we expect higher premiums for new people enrolling in Medicare Part B in 2016?

Quinlan:  The monthly Part B premium for many people enrolled now will remain at $104.90 next year. However, for new people enrolling in Part B in 2016 and other groups, the monthly premium could jump up to $153.30.  Higher earning people will pay even more each month next year, up over $500 per person.  These new higher premiums have not been finalized yet.

Boomer:  If I am still working past age 65, can I stay on my employer plan instead of electing coverage under Medicare?

Quinlan:  Yes. If you like your employer’s health coverage plan keep it as your primary coverage and Medicare can be secondary.  At your retirement and if your employer offers health coverage as a retiree, the coverage will reverse making Medicare the primary coverage. I would also recommend, if you are covered by an employer health plan, that you enroll in Medicare Part A at age 65 since there is no monthly premium.

Boomer:  If someone takes a lot of costly medications, are there plans available to help absorb out of pocket costs while in the “donut hole”?

Quinlan:  First, review costs and coverage. Some drugs may no longer be covered in your current plan or they may have higher out of pocket expenses. There is, as you mention, the widely discussed Medicare drug “donut hole”.  The coverage gap (a temporary limit on what Medicare will cover for your drugs) in 2015 begins once you receive $2,960 in coverage.  In 2016 the limit goes up to $3,310.  Medicare also has a program called “Extra Help” where there is no gap or donut hole.  To be eligible your income has to be less than $17,505 if single and $23,595 if married and you have a limited amount of savings.  You will also have lower co-pays for prescriptions.  Medicare will automatically qualify people (sent on purple paper) for Extra Help when they qualify for Medicaid or programs like Medicare Savings Programs or Supplemental Security Income (SSI) benefits.

Boomer:  Where can you find more information about Medicare’s annual open enrollment?

Quinlan:  You can call or visit your state health insurance assistance programs (SHIP) for free counseling.  You can also locate an insurance agent/broker that is up to speed on Medicare insurance matters.  Medicare’s comprehensive “Medicare & You 2016” publication will be available on e-devices as well as hard copy.  You can also call Medicare at 1-800-633-4227.  TTY users should call 1-877-486-2048.

Boomer:  Does the Affordable Care Act have any impact on my Medicare plans?

Quinlan:  There are no significant changes under the ACA in 2016.  Also be aware that you cannot enroll in an ACA health plan if you are age 65 or older. For those folks, you should enroll in Medicare or maintain your employer sponsored plan.

*This conversation was edited for length and clarity.