230 S. Bemiston; Suite 900 Clayton, MO (314) FAX (314)

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1 Life & Health Insurance Advisor MRCT Benefits Plus is a comprehensive employee benefits, wellness and Human Resources consulting firm offering a variety of financial services to businesses and individuals Health Insurance November 2012 Volume 5 Number 11 Choosing Your Medicare Prescription Drug Plan Even if you don t use a lot of prescription drugs now, joining a Medicare drug plan as soon as you re eligible can help lower your prescription drug costs now and help protect against higher costs in the future. If you re currently enrolled and your costs have gone up, now s the time to evaluate your options. The Medicare open enrollment period ends on December 7. In most cases, this may be the one chance you have each year to make a change to your Medicare health and prescription drug coverage. If you want a new plan during 2013, act quickly! To get Medicare drug coverage, you must either join a Medicare Advantage (MA) plan that includes drug coverage, or join a Medicare prescription drug plan (Part D). Neither Original Medicare (Parts A and B) nor newer Medicare supplement ( Medigap ) plans cover prescription drugs. Although many Medicare Advantage plans cover prescription drugs, not all do. Check your plan 230 S. Bemiston; Suite 900 Clayton, MO (314) FAX (314) documents for details. People in most regions of the country have access to an average of 31 Medicare prescription drug plans (PDPs), also known as Medicare Part D. With this much selection, how do you choose the best one? Keep in mind that the plan with the lowest premiums isn t always the cheapest. The following factors will determine what your PDP ends up costing you over the course of a year. 1 Premiums. The Centers for Medicare & Medicaid Services (CMS) predicted the monthly fee for a basic Medicare PDP will average $30 in While premiums for basic plans will re- This Just In If you have original Medicare, you might want to look at a Medicare Advantage (MA) plan during this year s open enrollment. Since the Affordable Care Act was passed in 2010, MA premiums have fallen by 10 percent and enrollment has risen by 28 percent. The Department of Health and Human Services (HHS) predicted that enrollment will increase by 11 percent in the next year. HHS projects the average MA premium in 2013 will increase by only $1.47 from last year, to $32.59 per month. However, if beneficiaries choose lower-cost plans at the same rate in 2013 as they did in 2012, average projected premium will increase by

2 Health Insurance Life & Health Insurance Advisor November 2012 main essentially unchanged from last year, premiums for some of the more popular plans will increase more than 20 percent. If your plan costs will jump considerably, you might want to shop around. Monthly premiums can vary from plan to plan, even within the same area. 2 Deductbles. You must pay a deductible, a specific dollar amount, for covered drug expenses before the plan will begin to pay. For 2013, no Medicare PDP may have a deductible exceeding $325, up $5 from Copayments or coinsurance. These are amounts you will pay each time you fill a prescription after you meet the annual deductible (if your plan has one). If your plan requires coinsurance, you will pay a percentage of the cost (such as 25 percent) of the drug. With a copayment, you pay a set amount (for example, $10) for all drugs on a tier. Some Medicare PDP have different copayment or coinsurance tiers for different types of drugs. Many plans have lower copayments for generic drugs than brandname drugs. If you currently take any drugs on a regular basis, check the plan s copayment or coinsurance levels for them. 4 Networks. Medicare PDP and Medicare Advantage prescription drug (MA-PD) plans contract with pharmacies that are part of the plan s network. Check a plan s network before enrolling to ensure there is a network pharmacy nearby. If you go to a pharmacy that isn t in your plan s network, your plan may not cover your drugs. Along with retail pharmacies, your plan s network may include a mailorder program. 5 Formularies. Each Medicare PDP and MA- PD has a formulary, or list of prescription drugs that it covers. The formulary must include a range of drugs in the most commonly prescribed categories and classes, including both brand-name and generic drugs. The formulary might not include your specific drug, but in most cases, a similar drug should be available. This Just In only 57 cents. Access to the Medicare Advantage program will remain strong, with 99.6 percent of beneficiaries having access to a plan. Additionally, the number of plan choices will increase by 7 percent in A Medicare Advantage plan (Part C) covers all the services that original Medicare includes in hospital insurance (Part A) and medical insurance (Part B), except hospice care and some care in research studies. Private insurers offer these plans, rather than the federal government. Many plans include services not covered by original Medicare. For information, please contact us. 6 Managed care provisions. You will also want to check what kind of steps you need to take to get the medications you need. Some plans require prior authorization and/or step therapy. Under prior authorization, the patient or physician must obtain the plan s approval before filling certain prescriptions, or demonstrate that the drug is medically necessary. In step therapy, an insured must try one or more similar, lower-cost drugs before the plan will cover a higher-cost prescribed drug. Failing to follow these provisions could lead to lack of coverage for that prescription. We can help you evaluate different Medicare prescription drug plans and Medicare Advantage plans. For more information, please contact us.

3 Life & Health Insurance Advisor November 2012 Health Insurance Consumer-Driven Health Plans Growing in Popularity Enrollment in health savings account (HSA)-eligible insurance plans has increased more than 18 percent since 2011, reported America s Health Insurance Plans (AHIP). Why are these plans growing in popularity? This article will discuss some of the advantages of HSA-eligible health plans. HSA-eligible health plans are a type of so-called consumerdriven health plan (CDHP), so named because they put many healthcare decisions in the hands of insureds. CDHPs combine a high-deductible health insurance plan (HDHP) with some form of tax-advantaged health savings account. The high deductibles in these insurance plans (a minimum of $1,250 for single-only coverage in 2013) force insureds to pay for a greater share of routine healthcare expenses than other types of insurance plans. However, plans include a tax-favored savings or spending account that insureds can use to pay at least some of their out-of-pocket expenses. CDHPs rely on a simple idea: If people spend their own money, they will become more frugal consumers of healthcare. They will think twice before running to a specialist for a minor complaint and compare costs whenever possible. In theory, consumers will take their business to providers who give better care at lower cost. In this way, CDHPs will allow providers, instead of insurers, to set prices for their services and reap the benefits of innovation. And that, proponents argue, will significantly lower healthcare costs. Some types of CDHPs are available only through an employer. However, individuals can obtain a health savings account (HSA), a tax-advantaged account specifically for paying healthcare costs. Particularly if you are relatively healthy and able to budget for your routine healthcare expenses, you might find that a CDHP has several advantages over traditional health plans. These are: Y Lower health insurance premiums. The HDHP typically has lower premiums than other types of health plans, since the insurer doesn t have to pay for more frequent, lower-cost claims. Y Funds in your HSA can grow year to year. Most types of health plans have a use it or lose it structure: you forfeit any funds or benefits you don t use in the plan year. With an HSA, unused funds roll over from one year to the next, allowing you to build a nest egg for potential catastrophic health costs or to fund healthcare in retirement. Y Tax-advantaged savings for health expenses. Health savings accounts are triple tax advantaged: 1) you deduct contributions from your taxable income; 2) your money will grow

4 Life & Health Insurance Advisor November 2012 tax-free (funds can be invested); and 3) you can make withdrawals without incurring income taxes if you spend funds on a qualified medical expense whether you withdraw the money immediately after deposit or 20 years later. To qualify for an HSA, you must meet the following requirements. Y You must be covered under a high-deductible health plan (HDHP), described later, on the first day of the month. Y You have no other major medical coverage. Y You are not enrolled in Medicare. Y You cannot be claimed as a dependent on someone else s tax return. Dental Plans: Something to Smile About Dental Insurance Preventive dental care saves an estimated $4 for every $1 spent, by eliminating the need for expensive and invasive procedures. Having dental insurance encourages people to go for regular checkups and get needed preventive care. That s important, because researchers have proven a link between poor dental health and heart disease, low birth weight and other illnesses. Your HSA-qualifying high-deductible health plan must have a minimum deductible of $1,250 for single-only coverage for $2,500 for family coverage in It will have an out-of-pocket maximum of $6,250 for selfonly coverage or $12,500 for family coverage. The out-of-pocket amounts include deductibles, co-payments and coinsurance, but not premiums. Once you pay the maximum outof-pocket amount, the policy will act as a traditional major medical policy, paying all your healthcare costs, except for co-payments and coinsurance. We can help you compare consumer-driven health plans to other types of plans. For more information, please contact us. If you do not have employer-provided dental coverage, many types of plans exist on the individual market. As with medical insurance, traditional fee-forservice plans are becoming less common. In addition to a fee-for-service or indemnity plan, you can find a wide variety of managed care dental plans, through which insurers manage the cost and quality of care using different delivery systems. These include: 1 Dental preferred provider organizations (PPOs): Under a PPO plan, a network of providers agrees to treat plan members

5 Dental Care Life & Health Insurance Advisor November 2012 for an agreed-upon payment usually a percentage of the reasonable and customary charges of dentists in your geographic area. As with medical PPOs, dental PPO plans give members financial incentives to use these preferred providers. For example, your plan might pay 100 percent of your visit to a preferred provider for covered preventive services, but only 60 percent when you use a nonpreferred provider. You would have to pay the uncovered portion and possibly a higher deductible out of pocket. 2 Dental health maintenance organizations (DHMOs): DHMOs operate on a capitation basis that is, they contract with dentists who agree to provide covered dental services to members in return for a payment based on the number of members in the plan. Payments do not depend on the number or type of services rendered, and the DHMO accepts the financial risk for providing covered dental services to members. Most plans require members to use a dentist who is a member of the DHMO in order to have their services covered. Some plans provide reduced benefits when a participant uses an out-of-network provider. Dental HMOs can be less expensive than indemnity or PPO plans. If you buy an HMO plan, make sure there is a member dentist in your area. 3 Dental point-of-service (POS) plans: The POS plan combines features of a traditional fee-for-service plan and managed care plans. DHMO or PPO plans may offer a point-of-service option to allow participants to use out-of-network providers. However, POS plans usually offer lower benefits or reimbursement percentages and participants may have to do their own paperwork, including submitting bills to the insurer for payment. 4 Dental referral plans: Also known as a dental discount plan, a DRP consists of a panel of dentists who have agreed to provide services for members according to a fee schedule. The fee schedule usually reflects a discount off the usual charges for the service. Members pay a membership fee (usually monthly) and handle all payments to the provider directly. This is not insurance, but rather a membership program. For more information on dental coverage, please call us. more on next page

6 Life & Health Insurance Advisor November 2012 Good News on Medicare Deductions for the self-employed. Self-employed individuals can now deduct Medicare premiums using the self-employed health insurance deduction on their Form A memorandum from the IRS s office of chief counsel issued earlier this year reverses a long-held IRS stance by stating, All Medicare Parts are insurance that constitutes medical care under section 162(l). Section 162(l) allows an individual who is an employee within the meaning of section 401(c)(1) to deduct health insurance premiums when computing adjusted gross income. Sole proprietors, partners in a partnership, and 2 percent shareholders in an S corporation are employees for this purpose. The insurance plan must be established under your business, and if you were eligible to participate in any subsidized health plan maintained by your or your spouse s employer for any month during the tax year, you cannot use amounts you paid for health insurance coverage for that month to figure the deduction. Self-employed individuals who failed to deduct Medicare premiums for prior years may file an amended return to claim the deduction. For information, please consult your tax professional. Donut hole shrinking. As a result of the Affordable Care Act, coverage for both brand name and generic drugs in the Medicare Part D donut hole coverage gap will continue to increase until 2020, when the donut hole will be closed. This year, people with Medicare received a 50 percent discount on covered brand name drugs and 14 percent coverage of generic drugs in the donut hole. In 2013, Medicare Part D s coverage of brand name drugs will begin to increase, so people with Medicare will receive approximately 53 percent off the cost of brand name drugs, and coverage for 21 percent of the cost of generic drugs, in the donut hole. SmartsPro MARKETING The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing does not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher s permission. All rights reserved SmartsPro Marketing. Tel