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When you reach age 65, you find that traditional Medicare offers very extensive medical coverage . . . up to a point.  Medigap plans provide coverage for those times when you go beyond those points.

Medigap plans are supplements to the traditional Medicare Parts A & B.  These plans offer coverage of the medical charges that are not covered by Parts A & B.  Although the companies involved vary state by state, the coverage provided by plans themselves, listed A through N, are fixed by the federal government.  (Note: Plans E, H, I and J are no longer being sold, but they can be retained by those that already have them.)  Although different companies may charge different amounts for different plans, the coverage provided by the plans themselves is uniform throughout.  With the new changes coming in 2011, the specifics of these plans will undoubtedly by modified, but their overall thrust will likely remain unchanged.

During the past decade, Congress introduced Medicare Part C, aka Medicare Advantage, in an attempt to reduce costs.  These plans offered broader coverage but limited the choice of doctors and hospitals.  Ironically, Congress legislated higher payments for these plans in an effort to entice people to change to them.  On the flip side, the amounts paid to doctors with traditional Medicare patients were reduced.  When physicians stopped accepted new Medicare patients as a consequence, Congress relented and reversed the cuts to traditional Medicare.  Your doctor should welcome your new Medicare status.

Now, with the new health care legislation, Congress is eliminating the price advantage of Part C while adding coverage for many preventative care measures to the traditional plans.  As a consequence, you will be able to keep your own doctors, and Medigap will likely live on.

Of all the Medigap plans, Plan F has been the most popular.  But that does not mean that is the one you should choose.  The different plans are for different situations, and you have to spend the time to determine what is best for your lifestyle, health, and wallet.  For example, some plans offer coverage for medical expenses while traveling abroad.  If you are not a traveler, it makes no sense to pay for that feature.

Some sites to visit for further information are -

Guide by Medicare

AARP Medigap description of plans

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Ever since the passage of the Health Care Reform Act on April 23rd, I’ve been looking for a good summary of its components. Of course, any legislation with that many pages will be difficult to summarize, but someone had to take a swing at it. I guess no one will be surprised that it was the AARP that took up the challenge.

At the link, AARP User’s Guide to Health Care Reform, you will find a summary that doesn’t take that long to read. It does, however, have a sufficient sweep and level of detail, that you can develop a sense of the legislation.

Three things to note -

1. Medicare will finally start to cover its most foolish lack, i.e. some preventative services. Catching conditions sooner rather than later should always reduce the cost of their care.
2. The Part-D Donut Hole will be phased out over the next decade.
3. The overpayments for Medicare Advantage Plans will be phased out.

Every senior should read this summary. Thanks AARP, you did a good job!

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Although some individuals are still covered by company and union health plans once they start Turning Age 65, fewer and fewer people have that opportunity. By far, Most US citizens discover that they have come under the Medicare umbrella. Whatever other insurance they may consider, it is all influenced by Medicare. Or, if your income level provides that alternative, Medicaid. (A few qualify for both.)

What do these choices mean?

Original Medicare Part-A provides hospitalization coverage for no charge. It doesn’t cover everything, but it does cover a lot. The key words for coverage are “medically necessary” procedures, i.e. those required to keep you alive and functioning. Once you get in to “elective” or “experimental” procedures, you are no longer covered. For example, it does not cover private rooms, private nurses, or even TV and phones in the room because they are not “medically necessary”. Basically, during each year it covers hospital stays for -

• days 1 - 60 after $1,068 deductible,
• days 61 - 90 at $267/day,
• days over 90 at $534/day, which are deducted from a 60-day pool of “lifetime reserve days”, and
• days beyond the pool of “lifetime reserve days” at full coverage.
• Charges for blood as well as home, hospice, of skilled nursing facility care are determined separately.

Original Medicare Part-B provides coverage for doctors, lab work and other medical services. There is a monthly charge for this coverage which amounts to $96.40 during 2010. The coverage is limited to the Medicare-approved amount for the Medicare-approved services. For example, a colonoscopy is limited to once every ten years, or two years for high-risk patients. Basically, after an annual deductible of $135, Part-B covers -

• 80% of doctors services and medical devices,
• 100% of clinical lab and home health services, and
• other “medically necessary” services after a co-pay or co-insurance deductible.

Original Medicare Supplement policies, Medigap fill in some of the gaps left by deductibles and co-pays. The coverage offered by these policies is strictly formulated by Medicare and specified by the letters A through N. (Plans E, H, I, and J are being phased out.) Until now, F has been the most popular. Although the coverage of each lettered plan is specific, the companies and charges vary by state.

Medicare Advantage, i.e. Part C plans, are privately run HMO alternatives to Original Medicare. Your care is generally restricted to the doctors and facilities that are members of that organization. Essentially, the government pays your Medicare allocation directly to these plans. The plans then set up their own internal rules for coverage as well as any additional charges that may apply. These plans vary on a state-by-state basis, and must be reviewed in that context.

Medicare Part-D Drug Plans, which also vary state-by-state, provide coverage for prescription drugs. Unless you have other drug insurance, you must sign up for one of these plans within four months of turning 65 to avoid being charged a late penalty.

Medicaid programs offer more extensive coverage to people with limited income and resources. This program is jointly funded by both federal and state governments, so it also varies state-by-state.

Go to the government’s Medicare Web Site for more information and for links to individual state programs.

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For most people turning 65, Medicare offers welcome relief. Pre-existing conditions are no longer an issue, and the vast majority of hospitals and doctors accept it. A very brief description of this program follows. Of course, this is the view from 2009, before any changes (hopefully for the better) that are currently being discussed in Congress.

Start at Age 65:
One of the confusions surrounding the Medicare program is that it is somehow linked to Social Security. It is not. It is a different program. Specifically -

• The start date for social security benefits is variable, depending upon your birth year, the start date for Medicare is fixed at age 65.
• Although most people should wait until their full retirement age (or beyond) before they start taking Social Security benefits, there is only one reason to delay Medicare, i.e. your retirement benefits from your employer includes private health insurance that covers more than Medicare. The reality is that there are not many of those plans left.

“Parts is parts”:
That quote from an old commercial referred to chicken, but it could also apply to Medicare since it also has parts. The different parts of the Medicare program cover different aspects of coverage - hospitalization, doctors, private Advantage plans, and drugs. Specifically -

• Part A - covers stays at facilities (hospitals, clinics, skilled nursing, etc.) You do not pay any additional fee to enroll in or benefit from this program.
• Part B - provides payments to doctors and other service providers such as physical therapists. You must pay an additional monthly fee to be part of this program. In 2009, the fee is $96.40/mo.
• Part C - usually called Medicare Advantage, these are private plans (HMO’s, PPO’s, or PFFS’s) that are subsidized by Medicare and replace the Medicare Part A and Part B programs. These plans vary by state. The coverage rules of these plans are determined by the individual plan operators, not Medicare. To enroll in these plans, you must first sign-up for Medicare. Once you enroll in these plans, you are excluded from Medicare A and B, and it is quite difficult to return.
• Part D - offers coverage for prescription and generic drugs. These are also private plans which vary by state and require a separate fee. They operate separately from the other parts of Medicare.

MediGap (Medicare Supplement) Plans:
Medicare doesn’t cover all medical expenses. For example, there are deductibles for hospital stays and co-pays for doctor visits. To address these shortfalls, many private insurance companies offer MediGap policies that cover the gaps. These plans vary by state. Although Medicare does specify the coverage rules of these plans, labeled “A” through “J”, they do not administer them.

Decisions to Make:
Among these various options, the decisions a person must make include -

1. Do I enroll in Medicare Part B? Most people choose this, but it does require the monthly payment of an additional fee.
2. If enrolled in Medicare A & B, should I abandon them and enroll in one of the private Advantage programs? Because you usually cannot reverse this decision once made, your coverage is no longer controlled by Medicare, and you can no longer choose your own doctors or hospitals for the less expensive plans, only about 15% of the people make this choice.
3. Do I enroll in Medicare Part D? Since you pay a penalty for enrolling after the initial six month grace period, most people do enroll despite the infamous “donut hole” in the coverage.
4. Is there any reason to wait until the changes being discussed in Congress occur? The short answer is NO.

To learn more about Medicare, go to the Medicare web site which is well put together and offers a wealth of information.

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If you are turning 65 this year, and you haven’t yet joined the “Social Security Club”, then this is your year to enroll. The questions that you will encounter in this process are presented below with a few typical answers.

1. When do I qualify for full retirement benefits?
   People who turn 65 during 2009 will not qualify for full retirement benefits until they reach age 66. You can choose to start benefits earlier, but you will pay a hefty penalty for that choice. You can assess your retirement benefits using the BEST calculator for Social Security Benefits.
2. Why should I enroll this year if I don’t qualify for full retirement benefits until next year?
   Although those born 1944 do not qualify for full retirement benefits until they reach age 66 during 2010, Medicare benefits still begin at age 65.
3. Do I need to register for Medicare if I am still covered by my company’s health plan?
   You need to check with your company’s health plan. Their plan may revert to a Medicare supplement when you turn 65.
4. When, during this year, should I enroll with the Social Security Administration?
   Typically, you should sign up for Medicare about three months before you turn age 65. This allows time for your records to be fully activated prior to your birth date.
5. Medicare has different plans, A, B, C and D. What is the difference?
   These letters represent the different parts or plans in Medicare.
   • Part A is Hospital Insurance that the government pays.
   • Part B is Medical Insurance for visits to doctors that you must pay monthly to be enrolled.
   • Part C is the HMO/PPO type of non-government private plan, called “Medicare Advantage”, that you must pay for monthly.
   • Part D is the prescription drug insurance for which you must pay monthly.
6. What is the difference between traditional Medicare, the new Medicare Advantage Plans, and the Medigap plans?
   • The traditional Medicare plan is a government program whose benefit amounts are set by the government program. Physicians accepting Medicare patients are also agreeing to accept the Medicare benefit amounts as their payment. Seniors can choose their own doctors and hospitals with traditional Medicare.
   • Medicare Advantage works either like an HMO, where you use assigned doctors and hospitals, or a PPO, where you select from a list of pre-approved doctors and hospitals. Although subsidized by government payments, these are private plans that set their own rules.
   • Today, most seniors still select the traditional Medicare program. Some will supplement that with a private Medigap policy which provides coverage for the few things that Medicare doesn’t cover. The coverage provided by these policies is strictly formalized by Medicare, i.e. F-level coverage from two different companies must provide identical benefits.
7. What is this November 15th - December 31st enrollment period that I hear about?
   Each year, people enrolled in the Part D (Drug) program may change to another plan or provider without penalty. It is called the Free Enrollment Period.
8. If I do nothing, what happens?
   Obviously, you will receive no benefits. In addition, if you change your mind and decide to enroll later, you may be assessed some penalties. The website of the Social Security Administration offers a number of other answers about Medicare.

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Life insurance used to be fairly straightforward. It came in two flavors -

• Term Life, which provided insurance for a set period of years and was often renewable, and
• Whole Life, which worked as a combination insurance and savings account.
  

While you were young and working, you often could carry both, a larger term policy to protect the family and a smaller whole life policy as enforced savings. Upon retirement, or at age 70, most term policies lapse. The whole life policy, however, usually lasts until age 100. It is often used to pay for the burial and help a spouse whose other income may be reduced. In most cases, life insurance benefits paid to the spouse are free from probate or additional taxes.

Today, some new wrinkles have appeared that can be potentially beneficial to seniors. Like an update of the old game show, You Bet Your Life, some investors are stepping forward to do just that, i.e. bet on your life. If you are sufficiently old, e.g. 74, and sufficiently healthy to be insured, they will provide the funds and pay the premiums for you to purchase a hefty life insurance policy. After the policy is in effect for a year, they will buy the policy from you for as much as a third of its value.

Called “Spin Life”, these policies are a part of the Life Settlement sub-industry, were investors buy current policies from people that need to cash out. The difference is that the investors are paying all of the premiums.

A senior in New York adds, “the policies that investors are purchasing on seniors, which I was not for at first, actually became a dream came true. I did not believe a word until someone from the company of spin life insurance explained to me how this works, and there is no risk. I first signed up for this no cost life insurance at Spin Life Insurance.”

What to do?

1. Since insurance is regulated by state, investigate what type of policies are available where you live.
2. Be wary of any sales pressure tactics or small payments. Check for policies with at least two or three firms.
3. Don’t be afraid to ask a friend you trust for further advice.

Some other places to look for information include -
Maximizing Life Insurance Benefits, Wikipedia article, Life Settlement Association, and New York Times article on Spin Life.

BUT WAIT. BE WARY. Now, there is risk, Big Time Risk! In this current economic climate, the insurance companies have become more demanding and the investors have fled. This leaves the seniors in the middle with big time policies and loans they cannot afford. As recently noted in the Chicago Times, it is estimated that as many as 10,000 seniors are in serious trouble. So goes another “too good to be true” scheme.

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‘Tis the season, 11/15/07 - 12/31/07, to review drugs. Today, I’m changing my Medicare-Part D Plan, the one that covers drugs. Last year, I just kept the same plan and let it roll over to the new year. Now, it is time for a change.

During this time, it is worth repeating a word of caution on ID Theft, i.e. DO NOT RESPOND TO A TELEPHONE SOLICITATION OR INQUIRY REGARDING ANY MEDICARE ISSUE. You have to initiate the call to a number listed for Medicare. Never give information over the phone if you do not initiate the call.

This is the way I understand the 2008 Medicare-Part D rules.

• It is a one-year policy with a Medicare-approved insurance company that complies with or exceeds Medicare rules.

• You have to sign up for a policy during your initial “Medicare Eligibility Period” or pay a penalty if you decide to join later.

• The policies may limit the specific drugs covered, as listed in their “formulary”, as well as the participating pharmacies, as listing in their “network”.

• You can either pay the monthly fee or have Medicare deduct it from Social Security.

• You pay the first $275 of any drug costs.

• The plan pays 75% of the next $2,510 of drug costs, and you pay 25%.

• You pay all of the costs ($3,216.25) between $2,510 and $5,726.25, i.e. for the famed “Donut Hole”.

• Once the total drug costs exceed $5,726.25, you make co-payments of $2.25 for generic prescriptions and $5.60 for all other drugs.

There are slightly different rules for folks that already have some drug coverage, are institutionalized, or are on Medicaid.

To evaluate the various plans for my state, I went to Medicare.gov and clicked on “Prescription Drug Plans”, then selected “Plans in Your Area”. This gave a concise list of available plans. After reviewing the formulary, network, and premium of a few plans, I picked a new plan that seemed to suit me better. I was able to complete the enrollment right online, and the deed was done well before the year-end deadline.

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