Welcome to the Medicare Seminar Your presentation will begin momentarily
Jeffrey B Johnson RHU, CEBS 1977 BA in Education and Chemistry University of Washington 1981 Licensed Life & Health Agent 1984 Registered Health Underwriter (RHU) 1991 Certified Employee Benefits Specialist (CEBS) 2006 Medicare Seminars Begin
Jeffrey B Johnson RHU, CEBS JBJ Insurance Group www.jbjinsurance.com Jeff@JBJInsurance.com 253.249.7846 Medicare Education and Brokerage
Medicare MEDICARE OVERVIEW EMPLOYER COVERAGE AND MEDICARE
Why Work Past Age 65? Longer Life Span Reduced Savings Increasing Health Insurance Costs Enjoy Working
Federal Retirement timeline 59.5 Can Start Withdrawal IRA, 401(k) 62 Can Start SS Early with Reduced Benefit 65 Medicare 66 SS Normal Retirement Age - Born 1943 67 SS Normal Retirement Age - Born 1960 70 SS Maximum Benefit 70.5 Must Start Withdrawal - RMD Traditional IRA 401(k), 403(b), 457(b)
Retirement may be longer than you think About one out of every four 65-year-olds today will live past age 90 And one out of 10 will live past age 95 Not covered today but important to consider Distribution of Retirement Income Long Term Care
SS Benefits - 25% or + 32%
Medicare History
A Brief History 1945 Truman introduced a national health insurance plan 1965 Johnson signed legislation 1966 Medicare coverage begins Vote House 307-116 Senate 70-24 Truman is the first to enroll. Part B premium is $3 per month
A Brief History 1982 TEFRA Enacted. Medicare Eligible employees must be offered same benefits as under age 65 employees Employers with 20 FT or PT employees for 20 or more calendar weeks / year Employer plan is Primary for 20+ Employee group An employer cannot offer, subsidize, or be involved in the arrangement of a Medicare supplement policy where the law makes Medicare the secondary payer Employer penalty for non-compliance
A Brief History 2003 Medicare Modernization Act (MMA) Part D Rx coverage added 2010 Patient Protection and Affordable Care Act (ACA) Rx Gap reduced
A Brief History 2003 MMA, The bill passed 220-215, 5:30AM Added Part D Prescription Drugs Removed Rx from Medigap plans Added Inflation Adjustments to B Deductible Added Initial Preventive care to B B Premium based on income Added HSA Survey - Health Care for All Americans
A Brief History 2010 ACA, The Bill passed 219 212 Medicare Advantage plan ratings Part D Rx Gap eliminated by 2020 Part D Rx subsidy reduced for high-income beneficiaries 28% Retiree benefit taxable to employers
A Brief History 2010 ACA - continued Addition of Preventive screening Medicare Payroll tax increase on high-income begins in 2013 1) + 0.9% tax on income exceeding $200,000 for individuals, and $250,000 for families. 2) A new 3.8% tax on non wage income
BOOM
Boomers turn 65 Boomers birthdates 1946 1964 78 million baby boomers poised to begin aging into Medicare beginning 2011 10,000 boomers per month An AARP survey of boomers turning 65 in 2011 found 40 percent said they plan to work "until I drop."
Boomers turn 65 Employees age 65 have choices 1) Can remain on employers plan A requirement for groups with 20 or more employees 2) Enroll on Medicare and drop employer provided coverage Voluntarily drop employer coverage 3) Stay on Employers plan and enroll on Medicare Expensive Employers plan is primary for 20 + Employee group
NAIC Baby Boomer Survey 28 percent said they didn t know at what age they would become eligible for Medicare, and another 36 percent gave incorrect answers. 66 percent reporting that they were not very familiar or not at all familiar with options such as Medicare Parts B and D, Medicare Advantage and Medigap insurance
Enrollment 45 Million Medicare 58 Million Medicaid 2011 Census Bureau, 2008 data Federal Spending 2010 $695 Billion Social Security #1 $453 Billion Medicare #4 $290 Billion Medicaid #5
Enrollment 45 Million Medicare 58 Million Medicaid 2011 Census Bureau, 2008 data Federal Spending 2010 $695 Billion Social Security #1 $453 Billion Medicare #4 $290 Billion Medicaid, CHIP #5 Beginning in 2010 Total Health Care spending for Medicare and Medicaid combined is #1
2011 Medicare Taxes Part A Hospital Insurance Payroll Tax Employee and employer each pay 1.45 percent If you are self-employed, you pay 2.9 percent Medicare hospital taxes are paid on all earnings; there is no limit High Income Earners will pay increased taxes beginning 2013
2011 Medicare Taxes Part B Medical Insurance Part B Premium Support General Fund 75% Taxpayers Income Tax 25% Medicare Part B Premium ($115.40/m in 2011) High Income Earners pay increased premiums For Part B and Part D
Medicare ELIGIBILITY ENROLLMENT BENEFITS COST
Medicare Has Four Parts and Two Options Eligibility Enrollment - rules, timing, guarantees Benefit - examples Choice - two major options Cost - Sample Company No specific carrier s plan
Eligibility
Eligibility Worked 10 or more years in Medicare-covered employment, and paid (or spouse paid) Social Security payroll taxes for at least 40 quarters. Entitled = eligible and enrolled
Eligibility Age 65 Disease ESRD (enacted 1972) ALS (enacted 2001) Disability (enacted 1972) SS Elimination period of 5 months On SS Disability for 24 months
Enrollment
Enrollment Medicare benefits administered by Centers for Medicare & Medicaid Services (CMS) Enroll through Social Security Administration Phone call In person Online Railroad Retirement Board (RRB)
Enrollment Apply 3 months before age 65 Need not be retired Automatically enrolled if receiving Social Security or Railroad Retirement benefits If not receiving benefits, apply 3 months before age 65 Call SSA at 1-800-772-1213 In Person Online
Medicare Part A Part A premium is free for most people Enroll at Age 65 unless you or spouse are enrolled in Health Savings Account (HSA) and HDHP HSA contributions allowed if not enrolled in Medicare Employers plan is primary Groups with 20+ employees People with less than 10 years of Medicare-covered employment can pay a premium to get Part A For information, call SSA 1-800-772-1213
Enrolling in Medicare Part B Enrollment in Part B is your choice Initial Enrollment Period (IEP) 7 month window, beginning 3 months before age 65 3-1-3 Enrolled automatically if receiving Social Security Includes Part A and Part B To keep Part B, keep the card If you don t want Part B, follow instructions with card
July 15 th - 65 th Birthday Month enrolled Month coverage starts Delay April, May, June July 1 July August 1 1 month August October 1 2 months September December 1 3 months October January 1 3 months
Enrolling in Medicare Part B Missed IEP? General Enrollment Period (GEP) January 1 through March 31 each year Coverage effective July 1 Premium increases 10% for each 12-month period you were eligible but did not enroll Pay this penalty as long as you have Part B Limited exceptions
Enrolling in Medicare Part B Special Enrollment Period (SEP) Sign up while still employed if you have employer or union group medical plan coverage Sign during the 8 month period that begins after employment ends or group health coverage ends whichever happens first Based on active employment of employee or spouse Beware of COBRA trap No increased premium for delaying enrollment
Benefits
Happy 65th Birthday
Original Medicare A&B (choice 1) Government* Part A Hospital Benefits Part B Medical Benefits Insurance Carrier Marketplace** Part D Prescription Drug Benefits Medigap/Medicare Supplement Policy * Medicare ID Card ** Insurance Carrier ID Card
Medicare Advantage C (Choice 2) Insurance Carrier Marketplace* Part C Hospital, Medical and Prescription coverage HMO UHC/Secure Horizons, Group Health, Soundpath PPO Regence MedAdvantage, Humana PFFS Sterling MSA Typically includes Prescription Drug Benefit Medigap Policy not needed *Insurance Carrier ID Card
Part A Hospital Provider Must Accept Medicare No Network Days 1-60 $1132 Deductible (per benefit period) Inpatient mental Health-190 day lifetime limit Skilled Nursing Facility after 3 day Hospital Stay 100 day limit (per benefit period) Not long term care Home Health Hospice
Part B Medical Provider Must Accept Medicare No Network $162 Annual Deductible plus 20% coinsurance No coinsurance Limit Office visits, Outpatient, Ambulance, Emergency, Rehab, DME, Diagnostic Radiology, Lab, Preventive care(100%) Part B Drugs/Dr Office/chemotherapy
Part D Rx Insurance Carrier Marketplace Four coverage levels Deductible Initial coverage 25% coinsurance Gap phased away by 2020 Catastrophic coverage 5% coinsurance
Part C Medicare Advantage Insurance Carrier Marketplace Copays and coinsurance levels vary Typically includes Prescription Drug Benefit Medigap Policy not needed Enrollment 26% WA, 41% OR, 29% ID Statehealthfacts.org, 2011
Premiums
Premiums Part A - No cost Part B - $115.40 per month in 2011 Beginning in 2007 the premiums for Medicare B are based on income. If your income is above $85,000 (single) or $170,000 (married couple), then your Medicare Part B premium may be higher than $115.40 per month Highest premium is $369.10
Premiums Part A and Part B premiums are always paid no matter what coverage choices are made. Higher income will pay increased premium beginning 2007 Deducted from SS check Part D premiums vary by plan and insurance carrier Higher income will pay increased premium beginning 2011 Deducted from SS check Part C premiums vary by plan and insurance carrier
2011 Monthly Premiums - Choice 1 Part A $0 Part B $115.40 * Part D $ 35.10 No Deductible Medigap $147.00 Plan F Total $297.50 *Deducted from SS Check, or billed quarterly
2011 Monthly Premiums - Choice 2 Medicare Advantage - Part C With Rx Part B $115.40 * Part C $ 0.00 to $212.00 Total $115.40 to $327.40 *Deducted from SS Check, or billed quarterly
Medicare Options TWO OPTIONS: ORIGINAL MEDICARE MEDICARE ADVANTAGE
Medicare Options Once you have enrolled in Medicare Part A & B With Social Security Administration You now have two basic options Diagram Medicare and You 2011 page 15 2011 Choosing a Medigap Policy page 7
Two Options Option 1 Original Medicare Part A Part B Part D Rx Medigap/Medicare Supplement Option 2 Medicare Advantage Part C PPO HMO MSA SNP PFFS Medicare Cost Plan
Two Options Enrollment - rules, timing, guarantees Benefit - examples Cost Sample Company - No specific carrier s plan Penalties may apply Increased premiums and or taxes may apply for high income individuals and families
Option 1 ORIGINAL MEDICARE PART D MEDIGAP/SUPPLEMENT
Option 1 Enroll in Medicare A & B Pay Part B Premiums - $115.40/m (2011) High Income will pay increased premium Part D WA 16 insurance carriers offer 29 plans Premium range $14.80 $118.60/m High Income will pay increased premium Medigap/Medicare Supplement WA 19 insurance carriers offer 109 plans Premium range $50 - $295/m
Option 1 - Part D Rx
Option 1 Part D - Enrollment Enrollment To avoid late enrollment penalty must sign up when first eligible for Medicare Age 65 Or, within 63 days of losing creditable coverage Most employer plans are Creditable Employees age 65+ should save all Creditable Coverage Part D Notices Caution High Deductible or HSA plans may not be creditable
Option 1 Part D - Enrollment Did not enroll during Initial Coverage Election Period? Waited longer than two months after group coverage ends? Must wait for Annual Election Period January 1 for coverage to begin
Option 1 Part D - Enrollment Late Enrollment Penalty (LEP) Monthly penalty of 1% of national average premium times number of months (after 1.2006) without creditable Rx coverage 2009 [$30.36 x 1%] x 12 months = $3.64 2010 [$31.94 x 1%] x 12 months = $3.83 2011 [$32.34 x 1%] x 12 months = $3.88 36 months without Part D = penalty of $11.35/month
Option 1 - Part D - Benefit 1) Deductible zero to $310 in 2011 2) Initial coverage 75% Plan/25% Beneficiary most common plan four tier copayment Ends when deductible + drug costs = $2,840/y 3) Coverage Gap (Doughnut Hole) Was 100% paid by beneficiary before 4.2010 In 2011 Beneficiary pays 50% Brand and 93% Generic Ends when out of pocket costs reach $4,550/y Coverage gap ends in 2020 4) Catastrophic coverage Beneficiary pays 5%
Option 1 Part D Benefit/Cost Sample Carrier plans Basic* Preferred Enhanced Deductible $310 $0 $0 Tier 1 Generic $5 $7 $5 Tier 2 non preferred generic Preferred brand name Tier 3 non preferred brand name 20% $40 $37 35% $70 $71 Tier 4 Specialty drugs 35% 33% 33% Gap Coverage none Few Generics Many Generics Some Brands Monthly Premium $15 $43 $120 * In network benefits limited to one Pharmacy Chain
Option 1 - Medigap MEDICARE SUPPLEMENT STANDARDIZED PLANS
Option 1 Medicare Supplement - enrollment Sign up within first 6 months after enrollment in Medicare Part B guaranteed issue for MS plans A through N No late enrollment penalty, however coverage can be denied if you wait more then 6 months after enrollment in Medicare Part B Eligibility is based on medical underwriting If accepted there may be a 6 month Pre-existing condition waiting period
Option 1 Medicare Supplement - enrollment Guaranteed Renewable (after 1992) Old plans issued before 1.2006 may have Rx benefit Under age 65 disabled Not available from Insurance Carriers WA, ID Available from State - WA Available from Insurance Carriers OR No coverage Long term care, vision, dental, hearing aids, eyeglasses, privateduty nursing Insurance carriers must offer A and if any other C or F Many changes 6.2010
Option 1 Medicare Supplement - Benefit Standardized plans Identified by Letters A through N Medicare Part A is not the same as Medigap Plan A Each standardized plan must offer the same benefits, no matter which insurance company sells it Carrier ABC Plan F = Carrier XYZ Plan F Cost is usually the only difference MA, MN and WI have different standardized plans
Option 1 Medicare Supplement - Benefit Standardized 6.2010 A B C D F* G K L M N Part A: Hospital co-insurance Part B: 20% Co-insurance 50% 75% *** Part A: Hospice Care co-insurance 50% 75% Skilled Nursing Facility co-insurance 50% 75% Part A deductible 50% 75% 50% Part B deductible Part B excess charges Foreign travel emergency after $250 deductible Out of Pocket limit** $4,620 $2,310 * $2,000 High Deductible plan available. *** $20 Office Visit co-pay, $50 ER co-pay
Option 1 Medicare Supplement - cost Sample Carrier Plans Monthly premiums A B C F K L N $95.00 $140.25 $164.75 $165.75 $58.00 $89.75 $105.75 F Under 65 Disabled - WA $295.00 Provided by WA State $2000 High Deductible $63.00 Medicare Select $145.00 Network Hospitals
Option 2 MEDICARE ADVANTAGE MEDICARE PART C
Option 2 Medicare Advantage 1997 Balanced Budget Act Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the Original Medicare plan - Parts A and B These programs were known as Medicare+Choice or "Part C" plans
Option 2 Medicare Advantage Medicare Prescription Drug, Improvement and Modernization Act of 2003 Medicare+Choice plans were made more attractive by the addition of prescription drug coverage and became known as Medicare Advantage Plans (MAPD) plans Medicare pays the private insurance plan a fixed fee per enrollee per month
Option 2 Medicare Advantage MAPD Medicare Advantage and Prescription Drug MA Medicare Advantage, No Rx PDP Prescription Drug Plan, No Medical Typically combined with Medigap, PFFS or MSA plans Can NOT purchase MAPD + PDP Can NOT purchase MA + PDP (unless PFFS or MSA)
Option 2 Medicare Advantage MAPD and MA Plans HMO Health Maintenance Organization PPO Preferred Provider Organization MSA Medicare Medical Savings Account SNP Special Needs Plans PFFS Private Fee for Service Medicare Cost plans
Option 2 Medicare Advantage One health question Do you have ESRD? Enrollment IEP - Same as Original Medicare 3-1-3 GEP - Same as Original Medicare Apply Jan 1 st, begin July 1 st SEP - 8 months to enroll in Original Medicare, plus up to 2 months to enroll in MAPD or MA AEP - Annual Election Period - MAPD, MA and PDP plans only, not Medigap/Medicare Supplement October 15 December 7.2011 Benefits begin January 1 st
Option 2 Medicare Advantage WA - 9 Private Insurance carriers 30 plans 9 MA - Medical only plans 21 MAPD - Medical and Prescription Drug plans Premium range $0-212/m
Option 2 Medicare Advantage Washington Plans Not available in every County Community Health First HMO Essence Health Care HMO Group Health Cooperative HMO Humana PPO Molina HMO Soundpath Health/Puget Sound Health Partners HMO Regence PPO United HealthCare/Secure Horizons/AARP HMO Sterling Life Insurance PFFS
Option 2 Medicare Advantage Sample Carrier Plans Good Better Best Deductible $0 $0 $0 PCP visit copay $15 $5 $10 Specialist copay $35 $15 $30 Hospital copay $320/day 5 day maximum $150/day 5 day maximum $150/day 5 day maximum Diagnostic Services 0 to 20% $5 to $125 0% to 20% Prescriptions $7/44/85/34% $7/37/81/34% $6/36/76/29% Out of pocket maximum $4800 $1600 $2900 Extras V,H HC,(D,H,Rx,V,+) V,D Monthly Premium $0 $75 $200
Low Income Assistance
Health Insurance Coverage in the U.S., 2009 Total = 303.3 million
Extra Help (Low Income Subsidy LIS) Prescription assistance with premium, copays Single Income less than $16,335/y $1,361/m Resources less than $12,640 Couple Income less than $22,065/y $1,838/m Resources less than $25,260 Resources Cash, investments Does not include Home, Car, personal possessions
Medicare Medicaid - Dual Eligible 2011 Medicare Savings Program Qualified Medicare Beneficiary QMB Monthly Individual Income limit Pays For $923 Part A Premiums Part B Premiums Deductibles, coinsurance, copayments SLMB $1,103 Part B Premium Only QI $1,239 Part B Premium Only Resource limits - $6,600 Single and $9,910 married couple
Summary
Enrollment Medicare Part A Medicare Part B Medicare Automatic Retire before age 65 receiving SS/RRB On SS Disability for 24 months IEP - 3 months before, month of and three months after birth month Retire before age 65 not receiving SS/RRB Working past 65 no group coverage SEP 8 months after leaving active employment and covered by group plan Working past Age 65 with group coverage GEP if missed above than enroll between January 1 March 31 coverage begins July 1 (up to 15 month wait)
Enrollment Option 1 Medicare Part D Medigap/Supplement Option 2 Medicare Advantage Medicare Part D 63 Days after creditable coverage ends 2 months after group coverage ends Medigap/Medicare Supplement After Part B Starts a 6 Month Open enrollment begins Medicare Advantage Same as Original Medicare IEP SEP GEP AEP - Annual Election Period
Other Considerations Providers have choices Some do not accept Original Medicare Everett Clinic Highline Medical Group Small Clinics May participate in some but not all Medicare Advantage Plans
Other Considerations Health Savings Account Contributions allowed at any age Contributions must end once enrolled in Medicare Can waive enrollment in A and B COBRA If age 65+ do not remain on COBRA for full 18 months. The SEP ends 8 months after active employment ends. Retire then return to work Can request Medicare coverage suspension
Jeffrey B Johnson RHU, CEBS JBJ Insurance Group www.jbjinsurance.com Jeff@JBJInsurance.com 253.249.7846 Medicare Education and Brokerage
Resources
Resources Phone: WA SHIBA Volunteers 1-800-562-6900 OR SHIBA Volunteers 1-800-722-4134 Medicare Help line 1-800-633-4227 Social Security Office 1-800-772-1213
Resources Web : www.medicare.gov Drug Finder Medicare Advantage plan www.ssa.gov Apply for Medicare www.insurance.wa.gov www.insurance.or.gov ratings
Resources Medicare SSA Publication # 05-10043 16 pages
Publication # 05-10043 If you have insurance from an employerprovided group health plan Group health plans of employers with 20 or more employees are required by law to offer workers and their spouses who are age 65 (or older) the same health benefits that are provided to younger employees. If you are currently covered under an employerprovided group health plan, you should talk to your personnel office before you sign up for Medicare medical insurance.
Resources Choosing a Medigap Policy CMS publication # 02110 64 pages
Resources Who Pays First CMS Publication # 02179 44 pages Medicare and You 2011 CMS publication #10050-44 140 pages
Helpful Hint Back up any verbal statement from a government, insurance or referral resource with their written documentation. Keep your copy of Creditable Coverage on file. Call or Visit SSA Office several months before your 65 th Birthday if you haven t received any notices in the mail.