With a Medicare Advantage plan there’s always the possibility of being dropped from your plan. These plans are subsidized by the government and the government is slowly taking away these subsidies causing them to be increasingly expensive for major insurers such as healthnet, SCAN, Blue Cross Blue Shield, United healthcare, Cigna, Aetna and many more. If a plan gets to be unprofitable, insurers have the right to drop the entire plan. This will cause thousands of individuals to receive letters by their providers stating that their major medical plans are ending and it is up to the member to find a new one.
Obviously this can be quite catastrophic requiring members to find new doctors, change their benefits and most likely restart their plan of care which can also mean having to pony up for copays all over again. Most Americans don’t know that while this letter is terrifying and a potentially crippling blow to their healthcare needs, there is one very important opportunity that the government allows with this letter.
If you or someone you know is being INVOLUNTARILY dropped from their medical plan and received a letter stating so, Medicare will allow you a new Guaranteed Issue window in order to purchase a Medicare Supplement with NO health questions! However, there is a catch.. it MUST be a supplement plan F. If you want a different supplement, you will have to medically qualify.
For someone with serious health issues that is spending a great deal with copays and co-insurance costs, this is an incredible opportunity which you might never get again.
Besides being dropped because of a plan getting discontinued, members can also be involuntarily dropped for moving out of their service areas also causing a Guaranteed Issue window. If someone is receiving Tri-Care benefits and re marries they will also be dropped. There are many ways that individuals can be forced out of their medical plans, contact your agent if you’re unsure about your rights & options.
Below is an example of what a drop letter would look like. This one is from 2014 from Aetna and to the right is from 2015 from Cigna. As you can see these are not small companies.
Cigna Drop Letter
Aetna Drop Letter
Working “under the table” is all too common these days and poses an enormous risk to the individual, tax-payers and society as a whole. While there may be some immediate gratification of not paying any taxes, the cons far outweigh the pros. If you know someone working in this manner and they have a choice, please educate them on the consequences to their future. By generating income off the books you are contributing nothing to the tax payer system and therefore are essentially getting benefits that the rest of us pay for free such as education, recreation, infrastructure, healthcare and many more. They are essentially mooching like the friend on the couch that has overspent their welcome.
As far as their future is concerned, Social Security requires 40 credits (10 years) of work in order to qualify for any financial benefits. In addition, in order to qualify for Medicare you must receive or be eligible to receive Social Security benefits or eligible to receive railroad retirement benefits. Government employees that have not payed into Social Security may also qualify for Medicare by paying into Medicare payroll taxes.
Many retirees are living solely on the Social Security benefits and unfortunate for most of us that is not enough. If you’ve worked off the books long enough to not qualify for Social Security, this means it will be up to you to create your own savings and retirement plan. In my experience, those who work under the table are not financially secure or educated enough to plan for their own retirement. These folks may have a live day to day attitude and will most likely have to either live their entire lives or depend on the rest of us to support them when they get older through hand outs.
It is important to understand that Medicare Advantage is actually not part of Original Medicare. While most plans might be attractive thanks to a $0/mo. premium, you get what you pay for. It is important to look at what your exposure is which is most commonly in the form of copays found in your Evidence of Coverage book. Medicare Advantage plans are great until you have to use them, hence why many doctors call them “dis-advantage plans”. Most doctors prefer Medicare Supplements over Medicare Advantage plans for the simple reason that they pay better and they come with less red tape and bureaucracy. Medicare Advantage plans are steadily increasing in price or flat out dropping entire plans because of government subsidies being retracted. Many doctors, facilities and hospitals simply don’t accept Medicare Advantage plans while most of them take Medicare Assignment which means they take Medicare Supplements. All Medicare Advantage plans available for your state are listed in the back of the Medicare & You guide.
Supplements are letters from A-N with some missing in between. Supplements are intended to fill the gaps that Original Medicare leaves behind. Different supplements cover different things, and one of them covers EVERYTHING. That would be plan F. If you have a Medicare Supplement F you should never pay another medical for the rest of your life. Keep in mind prescriptions are completely independent from your healthcare costs with supplements. Unlike Medicare Advantage plans, supplements are guaranteed renewable meaning as long as you pay your premiums on time they can never be taken away from you. For example, the plan F is being discontinued in 2020 however anyone already on a plan F will be grandfathered for life. Below is a list of supplements and what they cover and a comparison of Medicare Advantage plans and Medicare Supplements.
|Drug Plan Included
||Hospital (per day)
|Maximum Out of Pocket
||approx. $3,000-$10,000 per year
*Unless you are in a Guaranteed Issue period.
Original Medicare includes A & B. Both have out of pocket costs.
Part C actually takes over Parts A, B & D and creates it’s own rules.
Part D is prescriptions.
Home Health Care
Medical Services & Supplies
NO LONGER PART OF MEDICARE
|RX Prescription Drugs
||Payed with Payroll taxes all your working life*
||Monthly premium $121.80 in 2016 (was $104.90 previously)
||$0 to approx. $100/mo.
||Approx $18/mo. – $100/mo.
||10% of Part B premiums for each year you were eligible to enroll but didn’t** for the rest of your life
||1% of average Part D premiums added to your monthly premium costs for the rest of your life
*This is why working under the table can be extremely dangerous. If you don’t have enough quarters paying into Social Security & Medicare you may not qualify for benefits.
**If you do not have other creditable coverage.
While many of my clients have Long Term Care (LTC) insurance, the rising costs of Nursing and Custodial care has caused LTC policies to gradually increase in premiums. One of the most difficult conversations for me to have is when a client has had their LTC policies for 10+ years and has consistently seen their premiums increase. They are concerned that they will no longer be able to afford to keep the policy yet it seems outrageous for them to have to forfeit the policy after paying into it for so long. This dilemma has caused me to focus my attention on what I consider to be a much smarter investment Short Term Care.
Most Long Term care policies have an elimination period of 90 days before the policy will start to pay benefits. The reason for this 90 day waiting period is not only to keep the premiums down but also because Medicare covers up to 100 days of Skilled Nursing Care. Over the years however, Medicare has made it more and more difficult to qualify for these 100 days and if Medicare considers the care ‘custodial’ (meaning you’re not expected to get better) they will not pay 1 day or 1 penny of the care. Because of the increasing difficulty of qualification by Medicare standards, many people have had to pay of out pocket for the first 90 days which can cost in excess of $20,000.
When a need presents itself, so does an opportunity. Short Term care was designed to “fill the gap” between your health coverage and Long Term Care policy. Short Term Care has now grown and developed into a fully functional Long Term Care alternative. Not only can these be used to fill the gaps of LTC but they can also be designed with a large enough daily benefit and multiplier that they can provide a Nursing Care or Home Health Care benefit of well over $100,000 AND premiums NEVER increase on these policies.
Another major difficulty with LTC is its underwriting. It can be incredibly difficult to qualify for LTC because of the amount of money the policy needs to pay in the event of a claim. When going thru underwriting for LTC, the client will need to get a blood & urine test, full MIB and prescription check and even cognitive test. They are incredibly difficult to get approved. Short Term Care however is what we call “Easy Issue” meaning no blood or tests of any kind, just a list of questions.
For more information on Short Term Care, please contact us.
Having someone you can trust to help you create a proper plan is key. One isn’t better than the other it just depends what you’re looking for. I have personally heard of both being unreachable however I do tend to appreciate agents more than brokers for one simple reason: service.
Brokers represent many different companies and therefore can typically find you the lowest cost plan and offer a variety of different options. However this can also be a bad thing because they may not know the ins & outs of those plans or providers but just enough to sell you on it. They sell based on being able to provide the lowest cost plan.
Agents generally work for a single company which means they know their companies, products and plans a lot more thoroughly than most brokers would. A good agent sells based on value. They may not have the lowest price but other value that they may bring to the table can be a huge benefit to the client.
When it comes to help with Medicare related issues, the most important feature should be that they are willing to come see you every year to review the plan changes. Whether or not you like your plan or have any changes in health or prescriptions, an annual review is still necessary. Make sure that your agent is local and that they give you their direct line. A referral from someone you know if helpful but don’t be afraid to get a second opinion. Just because your friend recommends someone doesn’t mean they know what they’re doing. Find someone that you connect with face to face and that is willing to educate you instead of just giving you prices.
Medicare Part B is what most of use are familiar with and covers Doctors, Outpatient hospital, Medical Services and Supplies. Part does have an annual premium where as Part A does not. Part be increases periodically and increased in 2016 to $121.80 per month from $104.90 in 2015 for most. Those fortunate enough to be higher income will have the unfortunate higher premiums of up to $389.80.
Here is the exact income chart according to Medicare
A few things you need to consider when asking yourself if you want to take part B.
- If I delay taking my Medicare Part B, what could the Part B premium be when I finally sign up? While you are not grandfathered for life, you can still lock in a lower rate for some period of time if rates increase the following year. For example: many folks are still paying $104.90 even though the 2016 rate is now $121.80.
- Higher age = Higher premiums (in some cases) – If you are buying a Medicare Supplement, some companies will lock you in at the age you buy your supplement. This does NOT mean your costs will never increase however it does mean that it will not increase simply because your age changes. That slimy practice is called ‘Age Rating’ and believe it or not, a LOT of companies operate that way which results in guaranteed increases year to year.
- Is the monthly premium worth the benefit? It depends and not by itself. Having Original Medicare Parts A & B with nothing else is reckless and exposes you to catastrophic costs. You will want to sit down with a Medicare specialist (not a broker) which will help you understand Medicare Supplements and compare it to your current plan so that you can compare apples to apples.
- Is there a penalty for not taking Part B? There can be a penalty for not taking part B when you are eligible. The key is whether or not you have creditable coverage. If you do, you will not be penalized for postponing part B. However not having creditable coverage (the VA is NOT creditable health coverage) will cause you to be penalized. The Part B late enrollment penalty is 10% of the Part B premium for each year you did not enroll and lasts for the rest of your life!
Part B is ultimately what gives you your ‘Guaranteed Issue’ period. Which means you can get any Medicare Supplement you want with no health questions. That is key to protecting your future health costs. Once that Guaranteed Issue period runs out, you will have to medically qualify to get or change a Medicare Supplement.