Which Is A Better Deal for You? Medicare Or Employer Health Insurance
Congress created a problem in the 1980s when it increased the age for full Social Security benefits. Eligibility was age 65 for both Social Security AND Medicare. Medicare eligibility is still age 65, but full Social Security benefit now is 66 and six months or 67 for those born in 1960 or later.
Many people delay retirement now until they reach the age of full Social Security benefits at 66 and six months. The issue for those who continue to work is whether they should go on Medicare at age 65 or stay on their employer plan. The quandary is, which is a better deal: Medicare or your employer-provided health insurance? People are stumped. Which way to go?
Many of my clients who come to us after retiring at 66 or older complain they should have gone on Medicare instead of staying on their employer’s health insurance plan. Medicare would have been a far better deal. Medicare typically costs less and typically provides better coverage than their employer plan, but they didn’t know any better. They didn’t understand Medicare, the rules, and the costs. Medicare was a mystery. Consequently, they made misinformed decisions.
Find out what they didn’t know.
What Is Medicare?
First of all, what is Medicare?
Medicare is a federal health insurance program that Congress created in 1965. The program was designed to provide health insurance for those who work in the U.S. and are 65 or older. At the time, there was little access to reliable, low-cost health insurance once you retired and lost employer-provided health insurance.
How Do You Qualify for Medicare?
You must have worked at least 40 quarters (10 years). To qualify for Medicare, you must have paid FICA (Federal Insurance Contribution Act) payroll taxes.
Once you turn 65 or are certified as disabled by the Social Security Administration (SSA) after 24 months, you can enroll in Medicare.
- Those with End-Stage Renal Disease (ESRD) (permanent kidney failure requiring dialysis and/or transplant) are immediately covered by Medicare.
- Those with ALS (Amyotrophic Lateral Sclerosis, also called Lou Gehrig’s Disease) will likewise qualify for Medicare immediately.
I have clients in every category, but most of my Medicare beneficiaries are 65 and older.
What Is Part A?
Medicare is divided into two parts–Part A and Part B. Medicare Part A is hospital insurance. Part A covers
- Inpatient Hospital
- Skilled Nursing Facilities
- Home Health Care
How Much Does Medicare Part A Cost Compare to Employer Health Insurance?
You would pay nothing for Part A coverage if you or your spouse paid FICA for at least ten years. Of course, the zero premium for Medicare beats the premium employees pay for their employer-provided health insurance.
If you are not eligible for free Part A, consult the article on paying for Part A.
Part A Penalty and Medicare Fake News
If you are eligible for free Medicare Part A, there is no penalty for not enrolling in Part A when first eligible.
People call me up in a panic because they are worried about “the penalty.” They fear if they do not enroll in Medicare Part A, there will be a lifetime penalty. There is no penalty for not enrolling in Part A. Medicare Part B, however, is a different story.
Why Should You Enroll in Medicare Part A?
That being said, I encourage people to enroll in Medicare Part A when they are eligible. You will establish your identity with the Social Security Administration (SSA) and CMS (Center for Medicare & Medicaid Services).
Sometimes my clients go to enroll in Medicare, and they discover they cannot. There are errors with their personal information in the government’s database that results in problems and delays.
Delayed enrollment in Medicare is especially critical when there is a strict timeline. Sometimes clients have hard retirement dates when they will lose their employer-provided health insurance, and Medicare has not approved them. Over the years–especially during COVID–I had several clients run-up to the deadline, and even a few went over it. Not a good situation to be in. That is why I recommend you enroll in Medicare as soon as you are eligible, even if it is only Part A.
Medicare Enrollment Problems
For example, I have had clients who were scheduled to lose their health insurance in a few weeks. They needed a Medicare number to enroll in a Medicare plan, Medicare drug plan, or Medicare Supplement. We cannot process any application without their Medicare number. We are dead in the water without the number.
Clients had begun the process as early as Social Security allowed–3 months–but they still did not have Medicare insurance. SSA or CMS was backed up, there was a mistake in personal data, and/or documents were lost and needed to be resent.
Starting Medicare and Medicare insurance on time is critical because essential prescriptions may need to be filled. Hard to get doctor’s appointments, and vital surgeries are sometimes on the calendar. The dates are inflexible. These plans blow up when Medicare delays someone’s enrollment past their expected start date.
While these incidents were a small percentage of my clients, I guarantee, you are stressed to the max when it happens to you. Most of the time, I coach them across the finish line. Everything starts on the desired date, but being in that time crunch is not comfortable.
At Least Enroll in Part A When You Turn 65
Enrolling in Medicare Part A even when you are on an employer health plan is the smart thing to do. There is no critical timeline because you have insurance. It gives you plenty of time and space to fix any problems that may arise without the rush and pressure.
Then the process is much easier and quicker when you go to activate your Medicare Part B later. Your identity is already established, you have a Medicare (MBI) number, and you are an active Medicare beneficiary. Activating Part B is the simple matter of submitting a couple of forms.
Medicare Beneficiary Identifiers (MBI) Is the Ticket to the Dance
The old Medicare number was the Health Insurance Claim Number (HICN). It served as your personal Medicare beneficiary identification number. The HICN was used for paying claims and for determining eligibility for services across multiple entities (e.g., Social Security Administration (SSA), Railroad Retirement Board (RRB), States, Medicare providers, health plans, etc.)
The MBI (Medicare Beneficiary Identifiers) is the new number. SSA generates the number for you when you enroll in at least Medicare Part A. The MBI is necessary when enrolling in any Medicare Advantage Plan, Part D Prescription Drug Plan, or Medicare Supplement.
Your Medicare card (a.k.a. Red, White, & Blue Card) has your MBI printed on the front. The card also shows your coverage. CMS prints Part A in the bottom right corner for hospital coverage and Part B for doctor’s visits and outpatient services if you also have Part B.
How the MBI Affects Picking A Medicare Supplement
In the past, some insurance agents would enroll people in Medicare Supplements as early as six months before their 65th birthday. They aimed to lock down the business so another insurance agent could not get in there. Then, people’s Medicare number (HICN) was their Social Security number with a letter on the end. It was easy to figure out their Medicare number. But since April 2019, the only number CMS (Center for Medicare & Medicare Services) will process is the new MBI. The MBI is a series of random numbers and letters.
Some unscrupulous insurance agents will still fill out applications with your signature six months before you turn 65. Again the purpose is to lock down the business. The agent does not date the application at the time he takes it. Eventually, when you get your Medicare (MBI) number to him, he completes the application. He dates it since you have already signed the application and submits it to the insurance company. Major violation of the rules!
What Is Part B?
Medicare Part B is for medical insurance, which means doctor visits and outpatient procedures. Part B covers medically necessary services in these areas as well as preventative care.
How Do You Pay For Part B?
Your Medicare Part B health insurance has a monthly premium. You pay your Part B premium out of your Social Security check if you receive benefits.
Suppose you are not receiving a monthly Social Security check. In that case, you can set up an ETF automatic monthly draft from your bank account. Medicare Easy Pay is the program through which you pay monthly. A detailed explanation of how to pay is on the Medicare.gov website. If you do not set up an ETF, the Social Security Administration will bill you quarterly. Those are the three options.
Who Pays For Part B?
The actual Part B cost is more than four times the monthly premium you pay. Taxpayers pay the remaining cost of Medicare through the federal budget.
The Medicare Part B premium can change as medical expenses and Medicare administrative costs increase. The current 2022 premium is $170.10. The 2021 premium was $148.50, 2020-$144.60, 2019-$135.50, 2018-$134. You can see the increasing trend. With current inflationary pressures, your Part B premium increasing cost will probably accelerate.
If you are in the top 4% of income earners, your Medicare Part B and Part D premiums will be higher depending upon your level of income. Please, consult Blog: IRMAA Tax.
Lifetime Medicare Late Enrollment Penalty
If you do not enroll in Medicare Part B when first eligible, you will pay a late enrollment penalty for the rest of your life.
You will also be required to wait until General Enrollment Period (from January 1—March 31) to enroll in Part B. When you enroll during General Enrollment, Medicare coverage will not start until July 1 of that year. (FYI: these rules will change in 2023. Please, consult Blog: 2023 Medicare Changes.)
UNLESS: If you are an active participant in an employer health insurance plan as good as Medicare, or other qualifying health plans, you may delay enrolling in Medicare Part B (or Part A and Part B) indefinitely without penalty.
You will also have an open enrollment period if you wish to enroll in Medicare Part B (or Part A and Part B) at any time after 65 when you are actively covered by employer health insurance.
Many people are completely unaware of this exception to the rule. As a matter of fact, insurance agents will take advantage of this rule and omit the exception to induce people to meet with them.
When Can I Sign Up for Medicare?
If you are eligible for Medicare when you turn 65, you can sign up
- 3 months before the month of your 65th birthday,
- The month of your 65th birthday
- The 3 months following your 65th birthday.
Enrolling when you are first eligible for Medicare is vital in case of delays. The Social Security Administration (SSA) and CMS (Center for Medicare & Medicaid Services) are very slow.
Also, there may be errors in your personal data that will require time to correct. The corrections will require supporting documentation, like a birth certificate or naturalization papers. The SSA bureaucratic process does not function with the same instantaneous efficiency to which you may be accustomed.
Making corrections, processing documents, and verifying your identity must be completed before your Medicare enrollment process begins. So begin your enrollment process as early as possible.
Over the years, many of my clients had their Medicare postponed beyond their intended start time. Errors in their personal information delayed the process. The back and forth with SSA to make corrections dragged on.
Part A Post-Dated Six Months Back
After your Initial Enrollment Period (IEP), you may enroll in Medicare Part A at any time. However, your Part A will be post-dated six months back from the date you apply for Medicare part A, but no earlier than the first month you were eligible for Medicare or turned 65. This rule applies only to Part A.
The six-month backdating is important to be aware of if you contribute to an HSA (Health Savings Account). An HSA is attached to an employer’s high deductible health insurance plan. Medicare has rules and penalties around HSAs as well.
Birthday on the First of the Month with Medicare
If your birthday is on the first day of the month, your coverage will start the first day of the prior month.
For example, Mr. O’Shea’s 65th birthday is May 1, 2022. His Medicare will start April 1 if he enrolls in January, February, or March.
Enroll in Medicare After 65 During Initial Enrollment Period
A different timeline occurs if you enroll in the month after you turn 65. CMS delays your Part B start date.
|If you enroll in this month of your Initial Enrollment Period||Your Coverage Starts|
|The month you turn 65||1 month after enrollment|
|1 month after you turn 65||2 months after enrollment|
|2 months after you turn 65||3 months after enrollment|
|3 months after you turn 65||3 months after enrollment|
Medicare Special Enrollment with Employer Health Insurance
Once your Initial Enrollment Period ends, you have another chance to sign up for Part B. This new election period is called a Special Enrollment Period. You need to meet specific requirements.
Suppose you are covered under an employer health insurance plan that is as good as Medicare. Then you have a Special Enrollment Period to sign up for Part A and/or Part B as long as you (or your spouse) are working and covered by an employer health insurance plan Medicare recognizes. Medicare will allow you to enroll at any time.
You may decide to retire, or you change jobs. The new employer’s health plan is not as good as your previous employer’s or as good as Medicare. So you decide to go completely on Medicare.
No matter the reason–retirement or job change–you will not pay a Medicare Part B late enrollment penalty or Part D late enrollment penalty because you were covered by an employer health plan.
COBRA & Retiree Employer Insurance and Medicare
COBRA and retiree health plans are not considered coverage based on current employment. You are not eligible for a Special Enrollment Period when that coverage ends.
General Enrollment Period
Suppose you don’t sign up for Part A and/or Part B when you are first eligible and do not qualify for a Special Enrollment Period. In that case, you may have to wait until the Medicare General Enrollment Period (from January 1st-March 31st) to enroll in Medicare.
Coverage will not start until the following July 1st of that year.
What Is the Medicare Late Enrollment Penalty?
In most cases, you will have to pay a late enrollment penalty for the rest of your life if you sign up during the General Enrollment. You did not have Medicare Part B and had no employer health insurance plan when you were eligible.
The penalty is 10% of the current Part B premium for each full 12-month period you did not have coverage when you should have.
Yes, if you did not have Part B for five years when you should have and had no employer health insurance either, your late enrollment penalty would result in a 50% surcharge permanently added to your Medicare Part B premium. Not good.
When Are You Automatically Enrolled in Part A and Part B?
If you are getting your Social Security (or Railroad Retirement Board) benefits, you will automatically be enrolled in Medicare Part A and Part B starting the first day of the month you turn 65. If your birthday is on the first day of the month, Part A and Part B will start on the first day of the prior month. You should receive your Medicare card three months before the month of your birthday.
If you want to keep Part B, you do not need to do anything.
If you do not want Part B, you can cancel Part B by signing the back of the card and returning it to CMS. A new Medicare card will be reissued to you with only Part A for hospital coverage. You always have the option to activate your Part B at a later date.
You have the option to purchase a Medicare Part D prescription drug plan with Part A only.
However, if you want to purchase a Medicare Supplement or enroll in a Medicare Part C (Medicare Advantage Plan), you will need both Part A and Part B active.
What if I Am Under 65 and Disabled?
Suppose you are eligible for Medicare because of a disability. You will automatically get Part A and Part B after receiving disability benefits from Social Security (or RRB) for 24 months.
If you are not currently receiving Social Security (or Railroad Retirement Board (RRB)) benefits, you will need to sign up for Medicare Part A and/or Part B to activate them. You will not receive Medicare automatically like those already receiving Social Security Benefits.
Enrolling in Medicare Online
Social Security is the gatekeeper for Medicare. Signing up for Medicare has been an evolving adventure because of the pandemic. Enrolling online is the preferred way to initiate your Medicare since the pandemic. The Medicare online enrollment iterations have been myriad. Enrolling online has grown progressively more complex and difficult over time.
I help my clients enroll in Medicare online weekly. I am relieved when the process goes smoothly, but that is not as often as I would like. There frequently seems to be some sort of glitch. I highly encourage people to enroll as soon as they are eligible. You do not know how the system may or may not work when you try to enroll. Also, it is possible the government does not have your correct personal information.
What Could Delay Medicare Enrollment?
For example, I had a client named Gregory, but the Social Security Administration had his name as Greg. That stopped his enrollment process cold. He needed to produce an original birth certificate. After several time-consuming meetings at the local Social Security Administration Office, SSA approved Greg for Medicare.
I had another client who had divorced and moved to a different residence. However, SSA still had his old address, where he had not resided for three years. SSA blocked his enrollment until he made the corrections.
Many a time, I have had a client’s enrollment delayed because a birthday was off by a single digit. One client moved one house down from their previous residence. SSA did not have the current address, which was one digit different from the old one. That person went two months past her start date because of processing delays. Fortunately, for her, she could carry her employer coverage until Medicare kicked in.
You are probably getting the idea. You need to deal with Medicare as early as possible and attentively monitor the process.
How Do You Sign Up For Medicare?
You can call the National Social Security Administration (SSA) phone number (800) 772-1213. I do not recommend that. The hold times are maddening.
Do not call Medicare. They cannot enroll you in Medicare, only SSA can enroll you in Medicare–typical government.
If you wish to enroll in Medicare over the phone, I suggest calling the local SSA office. Omaha (866-716-8299), Lincoln (866-593-2880), or Council Bluffs (866-331-9094). They will probably set up an appointment many weeks in the future to perform the actual enrollment.
You can also drop in at the local offices. They are now open. Prepare to wait.
|Old Mill Center|
604 N 109th Ct
Omaha, NE 68154
|Room 240 |
Centennial Mall N
Lincoln, NE 68508
Arena Way Suite 1
Council Bluffs, IA 51501
The fastest and easiest way to enroll in Medicare is online at the Social Security Administration website (ssa.gov). Click on Benefits, then Medicare. Follow the prompts.
You will need immediate access to email and text messages to complete the enrollment process. If you do not have a computer and/or phone with internet, email, and text access, you will not be able to enroll.
How to Enroll in Medicare When Leaving Employer-Provided Health Insurance?
Many people delay enrolling in Medicare because they have an employer health insurance plan through work or their spouse’s employer. Several years may pass before they decide to completely go on Medicare and leave their employer’s health insurance plan. At some point, however, people retire, quit, or stop working and go entirely on Medicare Part A and Part B.
Center for Medicare & Medicaid Services (CMS) Forms
To enroll in Medicare Part B in this situation, you will need to complete two CMS forms. The forms are: Request For Employer Information and Application For Enrollment in Part B. You will find these forms on the CMS.com website under forms. You can also use the search tool on the website and type “enrollment.”
If you have not enrolled in Medicare Part A by this point, you need to also enroll in Part A on the SSA website. Enrolling online for Part A is the preferred method. Calling the SSA office or visiting is usually a time-consuming process. If you already have Medicare Part A, simply complete the two required forms.
(When you enroll in Part A, Medicare will backdate Part A six months or to your sixty-fifth birthday, whichever is shorter.)
Then fax the two forms to the local Social Security Administration Office. Omaha (Fax: 833-515-0443), Lincoln (Fax: 833-641-3167), or Council Bluffs (Fax: 833-950-2936). I would not fax the forms to the National SSA fax number. Black Hole. I would also mail the forms USPS to the local office. Then call the local office to confirm the forms were received and processed. If you do all three of these steps, you significantly increase the chances of a timely and successful enrollment. No joke. We help our clients do this all the time. It works. If you eliminate any of the steps, you will have diminished levels of success.
How Does A Health Savings Accounts (HSA) Affect My Medicare?
Once you enroll in Medicare, even if you only enroll in Medicare Part A, you can no longer contribute to an employer’s Health Savings Account (HSA). If you or your employer contribute any amount to your HSA after you enroll in Medicare Part A and/or Part B, you will pay a sizeable tax penalty when you withdraw the money from your account as well as unpaid taxes.
Do not enroll in either Medicare Part A or Part B if you wish to continue contributing to an employer HSA.
You must make sure you and your employer stop contributing to your HSA at least six months before your Medicare takes effect if you enroll in Medicare after age 65. Medicare Part A is always backdated six months or to your 65th month of birth, whichever is shorter.
What Is the IRS Penalty for HSA Contributions While on Medicare?
The amount of your pre-tax contributions to your HSA during the time you are prohibited will be added back into your past taxable income. You will then be responsible for those past taxes. You will no longer have the HSA deduction for that period.
There will also be an additional 6% amount charged as an IRS penalty accessed on the amount contributed.
HSA Testing Period & Penalty
HSAs also have what is described as a testing period. Contributors may make lump sum contributions, which are averaged out over the testing period. If the person’s Medicare is active at any time during this testing period, an additional 10% IRS penalty is added along with the taxes.
How Do Veterans Benefits Effect Medicare?
Military veterans have access to veteran benefits. Veteran benefits are separate from Medicare benefits. The Veterans Administration (VA) administers the Veterans Administration. Benefits are based upon the person’s service, time and place of service, disabilities, and even income. Consult the Veteran Administration for your benefits. VA benefits do not affect your Medicare benefits, though they may work with them. They are completely two separate entities.
I Have Marketplace Health Insurance Coverage, a.k.a. ObamaCare
The Health Insurance Marketplace is generally for people who need to
buy individual or family health insurance or for people who are offered
employer coverage through the Marketplace.
Medicare is not part of the Marketplace. Once your Medicare coverage starts, health insurance companies cannot sell you a plan through the Marketplace.
Should You Stay on Your Employer Health Insurance Or Switch to Medicare?
More and more people are working past age 65 for various reasons. While working, you will still have access to your employer’s health insurance. The question is whether you should remain on your employer-provided health insurance when you have access to Medicare. Or should you go completely on Medicare?
To review your Medicare options to your employer’s health insurance plan, we need answers to four basic questions.
1.) What is your monthly premium? If you are on your spouse’s employer-provided health insurance, your premium may be significantly more because you are a non-employee. The premium is not always identical. Double-check.
2.) What is the deductible per individual? And if there is a total between a couple, what is that?
The deductible is the amount you pay upfront for medical expenses before the plan’s coinsurance kicks in. These expenses include hospital stays, outpatient surgeries, emergency room visits, diagnostics, tests, etc. Doctor visits and other services may have minimal copays that do not count toward the deductible.
3.) What is the coinsurance? Many times the coinsurance is an 80% / 20% percentage split. Sometimes, however, it is 70% / 30%. I’ve even seen 90% / 10% on a rare occasion, which is very nice.
The coinsurance is the percentage you pay of the actual cost after the deductible is met. For instance, you could have a $10,000 medical bill. The deductible is $2,000. After you pay the first $2,000, you then pay 20% on the next $8,000, which is $1,600. The coinsurance amount is then added to the deductible for a $3,600 total.
4.) The final question is the maximum out-of-pocket (MOOP). The MOOP is the total amount you pay out of your pocket, independent of the insurance company’s payment. Your MOOP could be $5,000, $7,500, $10,000, or even higher.
In the above example, if your MOOP is $3,500, you would pay $3,500. If your MOOP were $4,000, you would pay $3,600.
When you have the answers to these four questions, you can compare your employer’s health insurance plan and Medicare.
Weighing The Options As A 65-Year-Old
People will often look at the monthly premium to determine which is a better plan. The lower the premium, the better the plan; the higher the premium, the worse. Premium is undoubtedly a factor among the four, but the deductible is really the first consideration.
You are eligible for Medicare at age 65. That number is not arbitrary. Even though your health may have been excellent before age 65, health significantly declines in the remaining 18 years, which is the average life expectancy once you turn 65.
Chronic conditions, such as diabetes, arthritis, and heart disease, disproportionally affect older persons. Eighty percent have at least one chronic condition, and nearly 70% of Medicare beneficiaries have two or more.
National Poll on Health & Aging
What is the chance you have outpatient surgery?
Considering elective surgery was more common among adults aged 65–80 than adults aged 50–64 (36% vs. 25%).
The five most common elective surgeries older adults considered were joint surgery (18%), eye surgery (12%), abdominal surgery (10%), cosmetic surgery (9%), and foot or leg surgery (7%).
Among those who had considered an elective surgery in the past five years, 65% had surgery within that timeframe, 24% planned to have the surgery in the future, and 11% said they were not planning to have surgery.
Adults aged 65–80 were more likely than adults aged 50–64 to have had elective surgery (73% vs. 57%), as were adults who were retired or not working compared with those employed (71% vs. 55%).University of Michigan National Poll on Health & Aging
The Deductible Is Upfront Money
You pay the deductible portion immediately before the employer’s health insurance begins to cover the surgery. You pay the first $1,000, $2,500, or $5,000 of the $10,000 knee replacement. Then the coinsurance is 20% of the remainder.
The chance that an unforeseen health issue will occur after 65 is significantly higher. The deductible, which is your upfront expense, can instantly wipe out any momentary savings you may have had with a smaller employer premium.
MOOP Is Total Risk
The second most important number to consider is the maximum out-of-pocket (MOOP). The MOOP is the most you pay yourself personally. It is the maximum risk for which you are on the hook. After reaching that number, the health insurance covers your medical expenses 100%. MOOPs are generally large numbers. Paying the MOOP would significantly affect most families’ bottom line.
What is your employer’s health insurance MOOP compared to a Medicare Advantage Plan, Medicare Supplement, and Medicare Part D prescription drug plan? These numbers are usually figured differently, so be careful to make sure you are comparing apples to apples.
When you accurately review your Medicare options to your current employer’s health insurance plan, you have the essential information for making a decision. Will you stay on your employer’s health plan or drop the plan and go on Medicare?
Spouse & Children Are Part of the Equation
Other considerations are spouses and perhaps even children.
If your spouse, who may be younger, cannot find health insurance from an employer or marketplace at a reasonable price, and you plan to continue working anyway, remaining on your employer’s health insurance will probably be the better choice. The same is especially true when children are involved.
To make a real comparison, you need real numbers. You need the numbers from your employer’s health insurance plan, and you need the numbers from Medicare, the many Medigap policies, the Part D prescription drug plans, and the Medicare Advantage plans.
We help clients layout these many plans and numbers clearly and concisely, so you can consider your options and make thoughtful plans and good choices.
We cost you nothing. The insurance companies and Medicare cover the cost.
Call us at 402-614-3389 to speak with a licensed and experienced insurance professional.
What is Medicaid?
‘Medicare For All’ is a slogan that we have heard repeatedly in political campaigns and on the news. Medicare, and Medicaid to a lesser extent, are successful social programs that a majority of Americans embrace.
How does Medicaid work?
The biggest bones of contention have to do with the funding of Medicaid. The reality is–through the Medicaid program–we are virtually at “Medicare For All” because Medicaid is a massive program. Most people do not know how incredibly large Medicaid is. Once you understand how Medicaid works, you will see why it is so enormous.
How Big Is Medicaid?
Medicaid covers 1 in 5 Americans in various ways and at various stages. Medicare covers a huge population, but Medicaid significantly funds our medical institutions and professionals, though you hear constant complaints about Medicaid reimbursement.
Medicaid supports even a larger percentage of the American population than Medicare, which is only about 14.2 %. Medicaid provides 50% of the financing for Long Term Care Facilities, so how does Medicaid work?
Medicaid is a program designed for low-income individuals who lack the resources to provide their own health coverage. The Center for Medicare and Medicaid Services (CMS) administers Medicaid.
Medicaid works as a partnership. The states administer the Medicaid program, and the federal government establishes broad standards. The states have the flexibility to decide which populations to cover. They determine the services covered and set up the health care delivery models. The state sets reimbursements for doctors and hospitals because the cost of living is different between New York, Nebraska, and New Mexico.
The state may conduct experiments in delivering the Medicaid program to figure out more effective uses for resources. The Section 1115 waivers allow for testing different approaches after the approval of the Secretary of HHS. The federal government will match up to 50% of what a state spends, even more for poorer states.
Medicaid Has Not Always Worked the Same Way
Medicaid used to be associated with Aid to Families with Dependent Children (AFDC) and federal Supplemental Security Income (SSI). In 1972 Congress expanded Medicaid coverage to parents with children, Medicare beneficiaries, the blind, and the disabled. Medicaid started paying the Medicare Part B premiums and co-insurance for some.
This is where the rubber meets the road with a number of my clients who are lower income. They may not qualify for “full Medicaid,” but they do qualify to have their Medicare Part B premium paid, which is a tremendous help.
Medicare Spend Down
Medicaid became more complex for those who were on the borderline of income. They could “buy in.” Disabled persons whose income was too high or were working could spend down their income to qualify for Medicaid.
In 1996 Congress broke the link between Medicaid eligibility and welfare. Some children’s families did not qualify for welfare, so they could not get Medicaid. People recognized the importance to cover children whose parents could not afford to provide health coverage. The Children’s Health Insurance Program (CHIP) 1997 was created to cover low-income children that did not qualify for Medicaid. The federal government added an enhanced match to encourage states to implement the plan. The recent development of the Medicaid program is to convert it into an income-based health insurance program for everyone below certain levels.
The Affordable Care Act (ACA) in 2010 expanded health coverage to those who had not been covered before–21-64 even if they are working. Their income simply needed to be below 138% of the federal poverty guideline to qualify for Medicaid health coverage. Nebraska, through a recent referendum, approved the expansion here. Governor Rickets implemented a plan HHS recently approved.
The enormity of Medicaid is mind-boggling. I suspect most citizens are completely unaware of the number of people covered. Medicaid provides health coverage and long-term care to over 75 million low-income Americans. The breakdown is that children account for more than four in ten (43%) of Medicaid enrollees, and the disabled elderly account for one in four. Medicaid covers nearly half of all births. Children with special health needs, such as autism, traumatic brain injury, serious mental illness, etc. make up 48% of the Medicaid rolls. Nonelderly adults with disabilities cover 45%. Six in ten nursing home residents are on Medicaid. Medicaid pays the Medicare Part B premium for 1 in 5 beneficiaries. The numbers are staggering.
Medicaid Coverage Is Broad
Medicaid covers more than you may think, and each state may add extras. Many states provide prescription drugs, physical therapy, eyeglasses, and dental. The ACA had its “essential health benefits” which influenced many of the states to add to their healthcare programs, especially on the mental health side. Substance abuse services are particularly geared toward the opioid crisis.
With the partnership of private insurance companies to administer Medicaid programs, there is more of an emphasis on preventive care and addressing issues before they become issues.
Medicaid provides a program known as Periodic Screening Diagnosis and Treatment (EPSDT) services. EPSDT is especially important for children with disabilities because private insurance is often inadequate to meet their needs. Parents cannot afford the costs of some diagnoses and treatments to enable the children to develop. This Medicaid-funded program serves as the stopgap.
Many do not realize how Medicaid works and its massive funding for nursing homes, home-based care, and community-based long-term care service and support. Home base care has expanded as a less expensive alternative to institutional care. Because of its efficiency, half of all long-term care funding goes to home-based programs.
Medicaid Works By Using Risk-Based Managed Care Programs
Over two-thirds of Medicaid beneficiaries are enrolled in a managed care plan. In Nebraska, there are three.
Over the years I have gotten to know the nurses and staff that work in these programs–both on Medicare as well as on the Medicaid side. I find it invaluable when my clients who are on Medicare and Medicaid have one of the dual plans with the same health insurer. The health provider staff, which is different and separate from Medicare and Medicaid, can coordinate care more readily. No one is dropping the ball, and redundancies are avoided.
The private insurance companies are on the hook for not only the care but for the outcomes. The state devises payments so that managed care plans are responsible for ensuring certain outcomes are attained. The insurance companies’ payments hinge on successful outcomes. They are at financial risk if they do not achieve pre-determined outcomes. More and more states are designing their programs around these types of risk-based managed care arrangements.
Community health centers are used to serve the low-income population rather than overloading the emergency rooms of public hospitals. “Value-based purchasing” of services is even used with mental health services. Many of the lower-income participants suffer from mental health issues. Through the coordinated dual plans, I have seen many of my clients receive far more and better help than before.
Access to Care
With Medicaid expansion, access to care improves overall community success. Research demonstrates Medicaid beneficiaries utilize care more readily than their uninsured counterparts who postpone treatment.
The result is less infant mortality among pregnant women. Teen mortality has declined. Classroom performance and graduation levels are higher with reduced behavior resulting in disability through lower rates of hospitalization and emergency room visits in later life. There are second-order fiscal effects like increased tax rolls due to higher earnings as adults.
The challenge with Medicaid is always access to providers, especially specialists. The psychiatric professionals are the most poorly represented. They, of course, are especially important in this community.
Medicaid reimbursements are 70% of private insurance. It is understandable why doctors and clinics are less than enthusiastic to take on Medicaid patients or more Medicaid patients, but the risk-based managed care plans are required to ensure access to just these types of doctors. Within their contracts and systems, they are guaranteeing this access. Fortunately, in recent surveys, doctor participation in Medicaid is not declining.
Medicaid Has Wide Public Support
Even though Medicaid makes up a large portion of each state’s budget as well as the federal expenditure, there is wide support for Medicaid. Public opinion polling shows that seven in ten Americans say they have had a connection with Medicaid including three in ten who were covered themselves by Medicaid at some point. All political affiliations have a favorable opinion of Medicaid and support the program.
In Nebraska’s recent referendum in October 2020, voters voiced their support for expanding Medicaid to the 21-64 age group. Understanding how Medicaid works enable its advocates to strengthen its many programs.
Does Medicare Cover Hospice?
Many people are still not very familiar with Medicare and hospice. It is actually a fairly new idea. The “end of life movement” began in the ’70s. (The “end of life movement” is separate and distinct from the Euthanasia movement and organizations, like the Hemlock Society.) Medicare did not cover Hospice when Medicare started in 1965. Medicare and hospice were only put together in 1982 as part of the Tax, Equity, and Fiscal Responsibility Act under President Reagan in response to a growing awareness of end of life concerns. The legislation was an attempt to fill the gap in care. Awareness was growing in the country of the importance of what transpired at the end of life.
A Happy Death Is Not A New Idea
I remember when I was a teenager. My father was up before me in the mornings. He would take me to school on his way to work. I would see him praying when I came into the kitchen in the morning. One time I asked him what he was reading. It was a small devotional booklet. He was praying the novena to St. Joseph for a “Happy Death.” I was startled by the subject matter.
Teenagers don’t think much about death unless forced. I had a buddy, Herbert Woltz, killed in a motorcycle accident my senior year in high school. That was my abrupt intro to death.
I asked my father why pray for such a crazy thing as a “happy death”? The two subjects were oxymoronic to me. What’s happy about death? He reminded me that is how the Hail Mary ends. “Pray for us . . . now and at the hour of our death. Amen.”
After birth, he said, death is the most important event in your life. The difference, however, is you’re aware of what’s going on in the end, and you make the most important decisions of your life at “the hour of your death.” Praying for a “Happy Death” is about minimizing the pain and maximizing your moment of entrance into eternity. You’re asking for God and all the heavenly hosts to be at your side to handle the fear, pain, discouragement, and loneliness a person faces when approaching death and the moment of death.
I didn’t think much about what my father shared until many years had gone by and many friends and family members had passed away, including my dad. Medicare and hospice are something with which I have had extensive experience. Now I know why you would want to pay for a “happy death.”
End of Life Care Is Different
As a seminary student in St. Paul, Minnesota in the early 80’s, I was looking for a part-time ministry when I wasn’t at school studying. I found the Hawthorne Dominicans. The Hawthorne Dominicans is a Catholic women’s religious order devoted to the terminally ill. They had a hospice facility near my college, so I would walk down to it and help out on weekends. Most of the patients were cancer patients. My work was minor cleaning, but mainly it was visiting with the patients. Keeping up their spirits. Show them someone cared as they were coming to the end of their lives, and I would join the sisters in prayer and mass for the residents.
While I was there, I got to know the sisters. They were remarkable young ladies. The convent was inside the hospice facility. The nuns lived, prayed, and worked with their dying residents around them twenty-four hours a day. The Hawthorne Dominicans were some of the happiest people I ever met.
Their foundress, Rose Lanthrop-Hawthorne, was the youngest daughter of the famous author, Nathanial Hawthorne, and a convert to Catholicism. In her day, cancer patients were put on an island in New York harbor–Blackwell Island–because it was believed that cancer was contagious. Many people, especially the poor, died in incredible misery, isolation, and squalor.
Medicare and hospice were a century away. Rose, like Mother Teresa of our time, saw the face of Jesus in the poor, and she started a ministry to the dying among the poor immigrants of the New York slums. The Hawthorne Dominicans is a purely American woman’s religious order. Most woman’s religious orders in our country came from Europe originally.
End of Life Care Rediscovered With Hospice & Medicare
The end of life movement in our time found its origin during a 1967 lecture at Yale University by Cicely Saunders. She introduced the idea that the dying needed specialized care that served their unique situation. She later founded St. Christopher’s Hospice in London.
Dr. Elisabeth Kubler-Ross, MD research into death and dying identified five stages terminally ill patients go through. Her popular and groundbreaking book, On Death & Dying, fueled a movement to deal with issues of death and dying.
In 1972 she testified at the first national hearings on death with dignity conducted by the U.S. Senator Special Committee on Aging. Organizations, like The National Hospice and Palliative Care Organization (NHPCO), sprang up to study and promote awareness around the end of life issues. Finally, because of raised public interest and concerns, Medicare added hospice care to the list of services provides in 1982.
Medicare And Hospice Are Huge
In 2014 approximately 2.6 million people died in the US. Of those deaths, 80% were on Medicare. Medicare is the largest insurer for persons during the last year of life. A quarter of the Medicare budget is just for those who are in the last year of life. That number has been consistent for decades. The high cost of health care at the end of life is not surprising considering the number and complexity of health issues, so CMS (Center for Medicare & Medicaid Services) is acutely aware of end of life issues.
Today, hospice is an important benefit for terminally ill Medicare beneficiaries. Currently, nearly half of Medicare beneficiaries receive hospice benefits before their deaths. Medicare is the primary source of payment for hospice care in this country. Yet, hospice still remains somewhat of a mystery, and Medicare beneficiaries know very little about what Medicare does with hospice until they are forced into the situation.
How Does Medicare Cover Hospice?
Hospice is defined as a program of care and support for people who are terminally ill. Terminally ill means a life expectancy of six months or less. The primary goal of hospice in Medicare is to help terminally ill people live a comfortable life and manage their pain and discomfort. Hospice care is palliative care versus skilled nursing and home health care. That is, it is not designed to cure the patient, but rather to aid the person in the dying process. Because hospice care is so intimately involved and in such a big way with Medicare beneficiaries, understanding Medicare and hospice is essential.
Prayer to St. Joseph
O St. Joseph whose protection is so great, so strong, so prompt before the throne of God, I place in you all my interests and desires. O St. Joseph do assist me by your powerful intercession and obtain for me from your Divine Son all spiritual blessings through Jesus Christ, Our Lord; so that having engaged here below your heavenly power I may offer my thanksgiving and homage to the most loving of fathers. O St. Joseph, I never weary contemplating you and Jesus asleep in your arms. I dare not approach while He reposes near your heart. Press Him in my name and kiss His fine head for me, and ask Him to return the kiss when I draw my dying breath. St. Joseph, patron of departing souls, pray for us. Amen.
One of the biggest fears people have when they come to my office, for example, is backbreaking medical bills. A major concern is: ‘Will Medicare cover . . . . ? You can then imagine how clients react when Medicare does not cover a bill.
Fortunately, I do not get many frantic phone calls from clients who are upset because Medicare denied a claim. Medicare denials, however, do happen. Most of the time, a Medicare denial is simple to handle. At other times, there needs to be a formal Medicare appeal process.
First of all, what is a Medicare denial of coverage? A denial is when Medicare, the Medicare Advantage plan, or the Medicare Part D prescription drug plan refuses to cover and pay for a particular procedure or medication.
This denial may come in many forms. The Medicare denial letter may come before the procedure. The doctor’s office calls to get prior authorization, and the procedure is denied. The denial may come after the procedure is performed, and Medicare denies payment. The patient may be in the midst of the procedure, such as staying in a hospital, skilled nursing facility, or receiving home health care. Medicare refuses to cover additional time in the institution.
Understanding How Medicare Coverage Works
One time I had a client who had a serious shoulder problem. The doctor recommended an MRI. The Medicare Advantage plan denied the treatment. They suggested a less expensive treatment to repair the situation–physical therapy.
The client called me to complain. After a few phone calls with the insurance company, they explained physical therapy was far less expensive, and it may achieve the same result without being so intrusive as surgery.
The purpose of the MRI was a preliminary to surgery. The client later said he had no intention of having surgery at his age. He simply wanted to know what was wrong with his shoulder.
Most situations can be easily resolved without going through the Medicare appeal process.
Medicare and the insurance companies will almost always take the least expensive and intrusive route when prescribing treatments. A denial is not always a denial.
Medicare sends a quarterly statement, the Medicare Summary Notice (MSN). It lists all the procedures you have had in the past quarter, the cost, and the payment. The MSN is not a bill. It is a notice that people with Original Medicare get in the mail every three months for their Medicare Part A and Part B-covered services. The MSN shows all services and supplies billed to Medicare during a 3-month period, what Medicare paid, and the amount you owe. It will also show denials.
Another client of mine was denied access to a Skilled Nursing Facility (SNF). She had had a knee replacement. Usually, patients go directly home after a knee replacement. In her case, the rehabilitation was not going well. Her home was a small apartment with pets. She lived alone. When Medicare denied the request, we had the doctor put she was a “fall risk” in the letter to Medicare, and he laid out the reasons. The appeal was quickly granted.
Many times it is not an issue of denial of coverage; it is poor communication. In this instance, we did not even use the formal Medicare appeal process. It was just a letter of clarification from the doctor.
Medicare Appeal Process
If you disagree with the Medicare coverage determination, you can appeal the decision. An appeal is a formal way of asking Original Medicare (Part A & Part B), the Medicare Advantage Plan, or the Part D plan to review and change the coverage decision.
A Medicare appeal is different than filing a grievance or complaint with Medicare. Grievances deal with the quality of coverage, the listing of medications on formularies, or access to medical personnel and institutions.
An appeal asks Medicare to pay for a procedure it denied. For example, an appeal may ask Medicare to extend a patient’s stay in a skilled nursing facility beyond her situation’s customary period. An appeal may ask Medicare to approve a more expensive procedure than is ordinary for the situation.
As a Medicare beneficiary, you have a right to file an appeal. There are five levels to an appeal. Medicare Advantage and Part D plans mirror the same process. If you are dissatisfied with the decision at the last level, you may proceed to the next level. The denial letter includes instructions on how to apply.
Medicare Redetermination Form For Appeal Process
Once you are aware of a Medicare denial of coverage with which you disagree, you need to act. You have 120 days to respond.
Download and complete the Redetermination Request Form. The form goes to the Medicare contractor, or you can write your own letter. Remember to include all the essential information. You will receive a Medicare Redetermination Notice within 60 days after Medicare, or the contractor receives the letter. If you disagree with that decision, you have 180 days to appeal to Level 2.
A Qualified Independent Contractor (QIC) administers the 2nd Level of appeal, not Medicare or the insurance company contracted with Medicare. It is a third party that reviews the case. The appeal process is the same as the previous. There is a designated form—the Medicare Reconsideration Request Form. The decision is rendered in 60 days or less.
If you disagree with the decision from the 2nd Level, you may proceed to the 3rd Level, which is the Administrative Law Judge Hearing. You have 60 days to make this appeal.
Of course, there is a specific form for this appeal, and it is sent to the Office of Medicare Hearings and Appeals (OMHA) Central Operations. The address is on the form. If you are not satisfied with this decision, you may appeal to the 4th Level within the 60 days allotted.
The 4th Level in the Medicare appeal process is like the others. The council has 90 days to respond. If you still are not satisfied, you may take your appeal to a district court within 60 days.
The 5th and final Level is the Federal District Court Judicial Review. Cases that make it this far usually significantly impact Medicare when won. This is the “supreme court” of the Medicare world.
Please, call when you have questions about appeals. We can help steer you in the correct direction. You can also call Medicare directly. They are open 24/7. They will mail or email you the required forms as can we.
If your appeal is to an Advantage or Part D plan, you call them directly. Their appeal process mirrors the Medicare appeal process and is usually less formal. You can also call the local SHIP (State Health Insurance Assistance Program) office to assist you.
Many times speed is essential in a decision. The Medicare beneficiary may request an expedited review.
For example, you are in a hospital. The doctor thinks you need an additional three days because your body is not recovering from the treatment at the average speed. It is three days beyond what Medicare allows. Medicare will deny payment. The hospital files the Medicare Redetermination Form requesting three extra days. They also request an expedited review, which means Medicare will make a decision within 72 hours. An expedited review for medications on a Part D plan is 24 hours.
The Beneficiary and Family-Centered Care-Quality Improvement Organization (BFCC-QIO) is the department that will help with appeals.
No one likes no. My five-year-old granddaughter does not like no. My wife certainly does not like no. Most of my clients don’t like no, but we hear it, even from Medicare at times.
No, however, does not necessarily mean we are done. There is a process. I am happy to help clients navigate the hurdles and obstacles of the Medicare appeal process. Sometimes there is no need for the process. It is just a matter of talking to the right person or better communication.
Getting Medicare and your Medicare insurance to work for you is what training and years of experience enable us to do. We will walk you right through the Medicare appeal process.
Since 2013 I have worked exclusively in Medicare insurance. Many people will ask me, however, ‘What is Medicaid?’ Some of my clients are on both Medicare and Medicaid. Those situations are more complex because you are dealing with two government agencies and a different setup in terms of insurance.
To help clients, I call Nebraska Medicaid or Access Nebraska frequently. During our initial meeting, I determine if prospective clients are eligible for Medicaid and LIS (Low Income Subsidy) through the EXTRA HELP Program. Medicaid and LIS are all based upon total income and assets.
Medicare & Medicaid do not require insurance agents to elp with Medicaid and LIS nor compensate agents for the work, but for those who qualify, the extra support is tremendous. I love to help clients get Medicaid and LIS when they qualify.
On top of figuring out how Medicare works, those who qualify for Medicaid, have an additional challenge as to how to apply for Medicaid. Each state has its own unique approach. But the big questions I hear are: what is Medicaid, where did it come from, what does it cover, how do I qualify, how do I apply for Medicaid, and why doesn’t it help me at my income level? Medicaid has a story, like Medicare.
The story of Medicaid began when Congress established Medicaid as part of Medicare in the Social Security Act of 1965 Title XIX. Individual states administer the federal program. The federal and state governments jointly fund Medicaid. The federal government sets the minimum standards for Medicaid, such as eligibility and coverage benefits, but the states implement and administer the plan. The state implements plans with a certain level of its own discretion.
For example, the state may expand eligibility to a wider group. It may also add additional benefits. Of course, the state will primarily bear the funding burden for those additional members and benefits. As it stands, the federal government covers fifty percent of the cost, except for states with lower per capita costs. The federal government may pay up to eighty percent. As it stands today, Medicaid covers 1 in 5 Americans. That’s a lot!
The benefits covered include inpatient and outpatient acute care services, but what many may not be aware of is that the federal government is also involved in long-term care. As a matter of fact, the federal government is the largest provider of long-term care coverage through Medicaid.
Reform & Leverage
In 1986 constituents complained to their representatives in Congress that nursing home facilities were treating loved ones poorly and not giving them adequate care. Congress commissioned the Institute of Medicine (IOM) to study nursing home care in the nation. IOM discovered widespread abuse, neglect, and inadequate care. The study resulted in sweeping reforms that became law in the Nursing Home Reform Act in the Omnibus Budget Reconciliation Act of 1987.
Patient Bill of Rights
The legislation’s goal was to ensure nursing home residents received quality care to enable them to maintain their “highest practicable” physical, mental, and psychosocial well-being. Congress mandated essential health benefits. Part of the legislation created a “Bill of Rights” for residences. You may have seen that bill displayed in some long-term care facilities when you visited.
- The right to freedom from abuse, mistreatment, and neglect;
- The right to freedom from physical restraints;
- The right to privacy;
- The right to accommodation of medical, physical, psychological, and social needs;
- The right to be treated with dignity;
- The right to communicate freely;
- The right to participate in the review of one’s care plan, and to be fully informed in advance about any changes in care, treatment, or change of status in the facility;
- The right to voice grievances without discrimination or reprisal.
Because the federal government pays so much money to long-term care facilities, the industry quickly complied.
Monitoring Care For Medicaid Beneficiaries
There is over 1.6 million elderly and disabled receiving care in over 11,000 institutions. Nursing homes must be certified to receive Medicare and Medicaid reimbursements. The law requires states to perform inspections of facilities and surveys of residents annually and conduct investigations of complaints. They are the primary enforcer of Medicaid.
CMS Means Business
When violations are found, remedies and penalties may be imposed. Everything from the closure of the facility, monetary and criminal penalties, to the retraining of staff depending on the severity and widespread nature of the problem. You can check out the star rating for nursing homes at this link on Medicare.gov.
Medicaid Is Not Perfect
The major challenge for nursing homes is they may become dependent upon federal and state funding for their operations. For those institutions with a large Medicaid population, the reimbursement is 75—80 percent of what private insurance residents pay. Maintaining a facility at the level that Medicaid requires with inadequate funding may result in a bare-bones operation. It can also result in slipping out of compliance with the federal guidelines.
Deficit Reduction Act of 2005 (DRA) attempts to address the issues of inadequate funding. Nursing home residents who are on Medicaid can no longer be evicted without due process. Nursing home workers undergo background checks and standardized levels of training. Those convicted of abusing residents are placed on a national register of workers who have abused nursing home patients.
Another idea in DRA is a provision for states to partner with private long-term care insurance companies. The rules allow for the amount of LTC policy, such as $250,000, to be used to protect an equal amount of the person’s assets. Instead of spending down a person’s assets to nothing so he/she can then go on Medicaid, an equal amount of assets would be protected if a person purchased nursing home insurance.
Medicaid Planning Techniques
DRA legislation enacted prohibitions again “Medicaid planning” techniques. Some attorneys and financial planners were devising ways to move assets out of a person’s estate so that Medicaid and the state would not make claims against nursing care costs after the person passed. They would also transfer assets to family members to reduce the individual’s net worth and more quickly impoverish the person to make them a county ward.
Clawback provisions and penalties going back some time as far as five years to discourage persons from moving or hiding assets were enacted.
Obamacare and Medicaid
The next big change to Medicaid came with the Patient Protection and Affordability Act of 2010 (ACA), a.k.a. Obamacare. The Affordable Care Act (ACA) required states to expand Medicaid to all citizens under 65 with incomes less than 138 percent of the federal poverty guideline. The federal government guaranteed funds for the first three years.
The U.S. Supreme Court ruled that provision of the ACA was unconstitutional because of its coercive nature to the states. The Medicaid expansion, however, remained intact but was left to the states to implement.
Nebraska implemented the ACA Medicaid provision in October of 2020 after state Initiative 427 was affirmed by the voters. Nebraska partners with private insurance companies to add managed care plans.
A major challenge for Medicaid is still reimbursement. Because the Medicaid reimbursement is so low, nursing homes, doctors, and other healthcare facilities are less enthusiastic about taking on more or even any Medicaid recipients. In 2012, CMS adjusted the payment amounts for primary care physicians, so they were paid and for Medicare beneficiaries as for Medicaid recipients. Doctor surveys, however, give the same consistent feedback that lower Medicaid reimbursements diminish access to medical providers.
What Is Medicare Hospice?
Medicare pays for hospice, but what is hospice exactly?
Medicare defines hospice as a program of care and support for people who are terminally ill. Terminal illness, as Medicare definites it, is a life expectancy of six months or less. The primary goal of hospice in Medicare is to help terminally ill people live a comfortable life and manage their pain and discomfort. Hospice care is palliative care versus skilled nursing and home health care. Hospice does not cure the patient but rather aids the person in the dying process.
Death & dying is an area most people do not wish to ponder, so there are many misconceptions about Medicare-covered hospice care.
What Medicare Hospice Is Not?
Hospice is not a place. When my mother was terminally ill with ovarian cancer, I was thinking of taking her to a place.
When I was in college in the 80s, I had volunteered in a hospice facility run by the Hawthorne Dominican sisters. The hospice facility was an actual place people went to die. The nuns took care of everything: medical, personal care, food & lodging; and patients stayed there until the end.
That is what I had in mind when the doctors spoke to my family about hospice for our mother. That is not, however, how Medicare thinks of hospice.
Medicare does not pay for a hospice facility that provides room & board unless the care is tied to something like a skilled nursing facility. Medicare does, however, pay for hospice personnel and the medications they administer during hospice.
Where Do You Go For Hospice?
Hospice can be given virtually anywhere. A Medicare beneficiary can receive hospice at a hospital, hospice in a skilled nursing facility, hospice in an assisted living residence, and hospice at home. Medicare will pay for hospice care in assisted living, nursing homes, and other facilities if it is a Medicare-approved facility.
The end of life movement that started in the ’70s sees passing at home as the ideal. Most Medicare patients, when surveyed, prefer hospice in the home. That is where people feel most comfortable, but because of the level of care required, hospice care may have to move to a hospital in the last few days or another location.
What Kind of Illness Makes You Hospice Eligible?
When we think of hospice, we usually think of cancer, but there are other illnesses that result in hospice.
Grandpa Joe was 98. Grandpa had beaten cancer 4 times, lockjaw, and the Second World War. Dying didn’t seem possible. He had always been there, and we grandkids assumed he would always be there. Terminal illness and Grandpa Joe didn’t fit.
When Grandma Hilda announced to the family, Grandpa had congestive heart failure and was going into hospice, it didn’t quite register with us grandkids.
Grandpa Joe seemed the same old Grandpa Joe. When I was home from college, we chatted about the Cornhuskers, baseball, and politics. Nothing seemed to have changed, but there was a procession of nurses and therapists who came in and out of their home.
When Grandma Hilda finally called to tell us Grandpa had passed in his sleep, his death hit me like a sledgehammer.
Grandpa’s passing was hard on everyone, but Medicare providing and paying for hospice lightened the burden, especially for my parents and grandparents.
Who Can Go Into Hospice?
Hospice is also not exclusively for the old. I have a number of clients who are in their twenties and thirties. Not everyone on Medicare is sixty-five and older, though the majority are.
Accidents or illnesses permanently disabled some, and some are terminal. Hospice is for them too.
How Much Is Hospice?
Hospice care is not expensive for those on Medicare. Medicare pays for the vast majority of the hospice costs under Medicare Part A with very little out-of-pocket costs. Medications, some equipment, and nurses are covered.
Like I said earlier, hospice does not usually include custodial care or housekeeping. That can be very costly if the family cannot provide that type of care themselves.
How Do You Get Medicare To Pay For Hospice?
A Medicare beneficiary is eligible for Medicare’s hospice care benefit if she is entitled to Medicare Part A and meets the following conditions.
- The hospice doctor and the person’s regular physician certify that the person is terminally ill with a life expectancy of six months or less if the illness runs its expected course.
- The person accepts palliative care for comfort instead of care to cure her illness.
- The person must sign a statement choosing hospice care instead of other Medicare-covered treatments for her terminal illness and related conditions.
- The care is provided by a Medicare-certified hospice agency.
When these 4 critical are met, Medicare pays for hospice. At any time, a person may choose to exit hospice.
Is Hospice Euthanasia?
Hospice does not accelerate the dying process.
I have had people describe hospice to me as akin to euthanasia where someone actively terminates a life. Hospice is not euthanasia or assisted suicide. You do not intentionally cut short a person’s life. Hospice is about allowing the dying process to take its natural and inevitable course without assistance. Hospice care is about alleviating the suffering and providing comfort while the person dies.
An uncle of mine was a retired Omaha police captain. Uncle Bill had a severe stroke with many complications. He was put on a ventilator.
Uncle Bill was a strong and courageous individual. A vegetative existence was not for him not to mention impoverishing his wife with medical bills. He ordered the ventilator turned off.
Without the ventilator, he would quickly stop breathing. He knew it. The doctors made him as comfortable as possible with heavy sedation. His body fought hard against the loss of breath.
We gathered around his hospital bed. Over the course of a day, he passed peacefully from this life to next surrounded by his loving wife and children.
Hospice Is Up To You
I’ve known many individuals over the years who have gone on hospice for a time. Instead of dying, their health improved, or they resumed a normal life and quit hospice because the decline stopped. You are free to remove yourself from hospice at any time.
Hospice Is Also For The Living
Hospice is the option when all other alternatives have been exhausted. It is the option to bring the highest possible quality of life to a person’s remaining time. The hope is family members will look back on their time and know that everything was done to preserve, prolong, and then peacefully say goodbye.
While you may struggle with the challenge of terminal illness, the end of your life and hospice is as much about your loved ones as it is about you. Watching you suffer and your family’s grief afterward will be their burden. Dying is equally about them. Understanding that there is something for them as well as you in a scary time can give you all hope that the last great challenge in life will be a little less daunting.
While hospice ends with a patient’s death, family grief counseling can continue for up to a year. Medicare pays for that hospice care too.
One’s mortality is difficult to face, but the chance you will go on Medicare hospice at the end of your life is more than 50%. That is an extraordinary number, so having confidence Medicare will pay for hospice is critical.
What Does A Medicare Insurance Agent Do?
When you sign up for a Medicare plan or Medicare supplement, you use a licensed insurance agent. An agent is a person who acts on behalf of someone. That someone may be the client or he may be the insurance company. He is licensed which means that the state certifies he has passed some basic testing and has rudimentary knowledge about insurance that allows him to represent a company or person. Medicare insurance agents come in many different types. What type of Medicare insurance broker is near you?
What Is A Captive Medicare Insurance Agent?
A captive Medicare insurance agent is the opposite of an independent Medicare insurance broker. He has a contract to represent one insurance company. He is not an insurance broker. Depending on the level of captivity, he must sell a certain amount of the company’s insurance products to remain an agent and continue to receive renewal commissions. He may or may not be able to sell any other insurance company’s products.
The difficulty with dealing with a captive agent who offers Medicare insurance products is a lack of selection and objective evaluation. He will probably say his products are “the best!” However, you have no way to compare and evaluate based upon the product information he shares. He is a one-trick pony. Physician Mutual agents. Blue Cross Blue Shield of Nebraska Agents.
From what clients have reported to me, many captive agents do not honestly represent themselves as exclusively with one company. They lead prospective to believe they can represent many companies when that is not the case. Some captive agents do not disclose they are in fact captive.
What Is A Medicare Supplement Insurance Agent?
Some agents sell almost exclusively Medicare supplements or Medigap policies. For those who sell over the phone, Medicare Supplements are the only Medicare products they can sell because of very strict regulations around Medicare Advantage and Medicare Part D. Medicare rules and regulations prohibit unsolicited calls to consumers about Medicare Advantage.
Consequently, these agents sell against Medicare Advantage constantly. They point out weaknesses in the product–whether real, exaggerated or imagined. Medicare Supplements are the best, of course, because they cannot offer an alternative.
With auto-dialers, Med Sup agents dial 10 to 15 prospects simultaneously. Call centers in Florida, South Carolina, and California carpet bomb the U.S. with millions of phone calls each day. During Annual Election Period (Oct. 15th–Dec 7th), the Med Sup call centers recruit a bunch of agents for the season. You will probably never talk with the agent again after he signs you up.
Other agents who sell Medicare Supplements exclusively face-to-face are controlled by agencies, managers, or marketing groups. If they sell a lot of one or two companies, their commission is higher. They can win sales trips abroad and bonuses. That is the motive behind their exclusivity. They are not truly Medicare insurance brokers.
What Is A Medicare Advantage Insurance Agent?
Some agents sell just Medicare Advantage plans. They are likewise semi-captive to an insurance company that feeds them leads. The insurance company may have a large market presence. Lots of consumers call in because they are familiar with the brand name and trust it. They enroll in the Medicare Advantage plan over the phone or online with an insurance agent at the company.
Some people, however, want to talk with a live person. The insurance company will send an agent out to the person’s home to explain the product in greater depth and enroll them in person. The agent, however, is obliged to just offer that company’s products in the most favorable light and not the competition. That is why the insurance company supplies the leads to the agents. These are not Medicare insurance brokers.
Independent Medicare Insurance Brokers Near Me
Independent Medicare brokers represent both sides of Medicare–Medigap policies and Medicare Advantage. Independent Medicare insurance brokers represent multiple companies, not just a hand full. He should be showing quotes and brochures from many different insurance companies.
Insurance companies that offer Medicare Advantage pay the agent the same amount, so there should be no preference based upon commission. An independent agent should receive the same percentage on the supplement side as well.
Medicare insurance brokers are only paid when you are a client. To keep you a client, you need to remain a happy client. A conscientious independent insurance agent should keep in touch and make sure his clients are happy with their current Medicare plans and change them when not.
Local Broker Vs. Call Center Agent
When you turn 65, that is when you first become Medicare eligible. You will be inundated with mail, phone calls, and even door knockers trying to sell you some Medicare insurance product. I hear complaints from my clients all the time about the oodles of phone calls and the blizzard of junk mail. They need to go into witness protection to avoid the solicitors.
Most solicitations will come from persons you will never meet. You do not know them. They are strangers calling from far away states. They may have been insurance licensed for only a year, a month, or just a week. The average insurance agent doesn’t last in the business even a year.
Do you want to share your personal information over the phone with a complete stranger? Someone you will never meet in person.
There is something reassuring about dealing with someone who is established in the local community. Proven. They will not disappear in a month. Connected to people and institutions you know. At least a Cornhusker!
You can use Google to find Medicare insurance brokers. Google seems to know everything. It is not a bad start.
An agent’s website gives you a feel for the agent and agency. Blogs and videos demonstrate his knowledge and expertise–or the lack.
Google reviews from clients–hopefully not family and friends–give some proof of professionalism and quality of service. Google is a 3rd party, so the reviews are not cherry-picked.
Referrals are another way. Most of my clients now come from my existing clients. So ask a friend, but check the person out. Go to the Better Business Burea and check the rating. Again, visit the website.
One new client told me she was at a work function. She’s employed in the healthcare field. Three other ladies–fellow nurses–were chatting around a table. She mentioned she was turning 65 and going on Medicare. She complained how the endless phone calls and junk mail made the whole process a headache. Immediately the three nurses volunteered “their Medicare guy” to her to help solve the dilemma. All four were surprised when they realized I was the Medicare agent for each of them.
The most important criterion I believe is experience. Being in the insurance industry, I have seen hundreds of agents come and go since I became an agent back in 2003. Like anything–stock trading, medicine, law–you need practice. While it may be very nice to help out a friend or nephew who is getting started in the business, your health insurance is a serious matter. You want a professional handling your money, your body, and your assets to have time in harness.
Let the market pick your Medicare broker. If the agent makes lots of people happy with his work, he is successful and stays in the business. Time in service with lots of clients is the first key.
While my doctor is younger than me for the first time, she didn’t just get out of medical school. I know she had a lot of practice before I showed up. I think Medicare insurance brokers near you need to have lots of years in the business and lots of clients. That way they are not practicing on you, and they will be there for you for years to come.
Again, visit their website, read their materials, list to their presentation. It is like listening to good or not so good music. After a while, you can tell whether it rings true.
Needed Changes to the Medicare Enrollment Process 2022
I have been a licensed insurance agent since 2003. I’ve seen a lot of changes to Medicare over that time. One of the problems that always baffled me was how difficult it was to enroll in Medicare. Let me put you in the front seat of the upcoming changes to Medicare for 2022 and 2023.
More than 11,000 persons turn 65 each day and become Medicare eligible. That is a lot of people enrolling in Medicare. The problem that Congress created a number of years ago was moving the full Social Security retirement age from 65 to 66 and so many months.
People are also living longer. Retirement is being pushed off because people don’t have enough saved. Consequently, many continue to work past 66 to just survive, so they remain on their employer’s group health plans. But, when they turn 65, they need to do something about Medicare enrollment.
How to Enroll with Upcoming Changes to Medicare in 2022 & 2023?
When you start your Social Security, Social Security enrolls you automatically into Medicare Part A and Part B when you turn 65. You have the option then to decline Part B. Many do if they are still working and have adequate health insurance from their employer.
Many people are not taking Social Security at 65, so Social Security does not automatically enroll them in Medicare. That number is even smaller than a few years ago.
So, people must actually choose to enroll in Part A at 65. If they are going on Medicare entirely and delaying Social Security, they must actively choose to enroll in Part A and Part B. A lot of people call Medicare complaining because of how hard it is to enroll in Medicare. Upcoming changes to Medicare in 2022 and 2023 will make the enrollment process simpler.
Enrolling in Medicare at The Social Security Administration Office
Enrolling in Medicare is a challenge, to put it kindly. I do this for a living. I like to think I have above-average intelligence and some good computer skills. However, I still find the Medicare enrollment process unnecessarily difficult and complicated.
Before the pandemic, you could go to your local Social Security office to enroll in Medicare. Depending on the office’s busyness and the staff’s competency, it was more or less complicated and very time-consuming. The primary issue was the time involved—driving to the office, waiting in line, being at the office during regular business hours when you are still working. Those were the usual challenges. As of the writing of this, the local Social Security offices are closed to visitors because of COVID. The only option now is to enroll online.
The other option for enrollment, which has become pretty much the only option now, is enrolling online. Enrolling online is not easy, even if everything goes smoothly.
In the past two years, the online process has evolved. A few months ago you took a photo of your state driver’s license. Social Security scanned your license into their system through your smartphone. The purpose was to identify you if you did not already have an active MySocialSecurity account. It was not a bad improvement over the old way, which was answering credit questions. That was an amazing bureaucratic mess in itself. I’m glad the credit questions are gone, but the technology for taking the photo of the driver’s license was faulty.
The latest method is a combination of email and text confirmation codes. This method works if there are no issues with your personal information.
The major challenge with this newest method is some of my clients do not have email or do not get emails and texts on their phones.
Challenges, however, go beyond just the mechanics of getting enrolled with Medicare. The problems are with when you can enroll, penalties when you don’t follow the rules, confusion about the rules, and penalties that are imposed as a result. Frustration has built over time as more and more baby boomers run into the wall called Medicare enrollment.
Someone must have heard that consumers were not happy because Congress made some significant changes to the Medicare enrollment process for 2022 and 2023.
What Are the Upcoming Changes to Medicare for 2022?
In December 2020, Congress passed the Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act of 2020. Parts of this legislation will be effective beginning in January 2023.
The changes are in five areas:
- GEP (General Election Period)
- Part B Enrollment Exceptions
- IEP (Initial Enrollment Period)
- Advanced education for Medicare enrollment
- Expanded Kidney transplant patient coverage
What Are Medicare General Enrollment Period Changes For 2022 & 2023?
Sometimes people miss their Initial Enrollment Period (IEP), which occurs when they turn 65. If you do not have health insurance from 65 onward, you cannot enroll in Medicare until the General Election Period (GEP), January 1st—March 31st. The delay is part of the punishment for missing your IEP. You may also incur the 10% permanent late enrollment penalty.
The problem with the rules around GEP is that Medicare Part A and/or Part B does not start until July 1st after you enrolled sometime from January 1st–March 31st. Consequently, a person cannot get a Medicare Supplement or Part D plan until then. Medicare Part C/Medicare Advantage plans are delayed even further until Annual Election Period (AEP) in October. You are without comprehensive health coverage for many months after an already delayed enrollment.
The BENES Act changes GEP (General Election Period). Congress moved GEP from the first three months of the year to the last three months of the year—October 15th—December 31st—to coincide with the Medicare Annual Election Period (AEP), which is October 15th–December 7th. The hope was to reduce confusion and enable a newly enrolled beneficiary to get maximum coverage right away. For example, if you enrolled in November during the GEP, your Medicare would start on Dec 1st.
Medicare Changes in 2022 Allow For More Exceptions
Medicare enrollment periods are very restrictive and precise. The handbook that agents must learn runs to many pages for Medicare election periods when someone can enroll in Medicare or make changes to a Medicare plan. Often I cannot enroll someone in a plan or change their plan, even when the situation is terrible, because of the restrictive enrollment election criteria.
The new law allows the Secretary of Health and Human Service to initiate a particular enrollment period for Part B when exceptional circumstances arise. Of course, we all can think of the pandemic as the perfect example.
The Last 3 Months of The Initial Enrollment Period
Many people know that your Initial Enrollment Period (IEP) is three months before the month of your birthday, the month of your birthday, and the three months afterward. What people do not realize about this rule is there are additional rules for the last three months. This provision has been the bane of my existence—as well as a few clients—for years.
Staggered Medicare Start Dates Change in 2023
Sometimes people will delay enrolling in Medicare when they turn 65 to coincide with a spouse turning 65, a retirement date, the end of a school year, etc. The problem with enrolling after you turn 65 is the start dates are staggered.
For example, you are turning 65 in July, but your spouse is turning 65 in October and needs you to remain on the employer health plan so she can have health insurance. You want to enroll in Medicare for an October 1st start date so it coincides with your spouse, but you can’t.
If you enroll in August, your Medicare will start in September. If you enroll in September, your Medicare will start two months in November under the current rules. You will need to enroll in Medicare in August, so your Medicare starts in September. Your spouse will enroll during the three months before, so it starts on October 1st. You will need to double pay for insurance for one month because of the unusual Medicare rules.
The upcoming changes to Medicare in 2022 and 2023 do away with the silliness. Joe can enroll in September for October and not have to pay double for health insurance. I can’t tell you how many times this has been an unnecessary burden for my clients going on Medicare.
This change will allow people retiring at the end of their IEP (Initial Enrollment Period) to have a smoother transition from employer coverage to Medicare without a lapse in coverage or double paying.
Medicare Part B after 65
I find that Medicare does not explain very well how Medicare works when you work past 65 or beyond and have an employer health plan. I hear the standard response from Medicare and Social Security bureaucrats. They encourage people to enroll only in Part A and stay on their employer’s health plan as long as they are working.
In the past, that standard answer may have worked, but when more and more people are working past 65 and full Social Security retirement is 66+, reality changed.
Also, employer plans have steadily declined in quality during the past fifteen years. Health plan costs have increased and coverage has decreased significantly. I find the vast majority of employer health plans are inferior to Medicare Advantage or Original Medicare and a supplement.
Medicare Enrollment Deadline & Penalty
The most common issue around Medicare is initial enrollment, which is when people turn 65. Some people claim they didn’t know about their Medicare enrollment. I’m not sure how that is possible because most people’s mailbox is jammed full of mail announcing they are turning 65 and need to get signed up for Medicare.
The real issue around 65 is should I enroll in Medicare, and how do I quickly do that? I find a lot of legitimacy around that question.
The upcoming changes to Medicare in 2022 & 2023 through the BENES Act will include notifying people of Medicare eligibility. The notifications will start at ages 60 to 64. Medicare will send information to explain rules such as Medicare eligibility, timeframes for enrollment, Medicare penalties, delaying Medicare without penalty, Part B coordination of benefits, and other online resources will be included on the notice. The purpose is to alert beneficiaries, so no one misses their opportunity.
If your mailbox was not full enough when you turned 65, it will be stuffed to overflowing now.
Medicare For Kidney Transplant Patients
End-Stage Renal Disease (ESRD) is one of the ways you qualify for Medicare before age 65.
If you are under 65 and diagnosed with ESRD, you can enroll in Medicare for a specific number of months. For example, now if you qualify for Medicare based on ESRD and have a kidney transplant, your Medicare coverage will end 36 months after the month of your transplant.
The BENES Act of 2020 change will allow kidney transplant beneficiaries to continue their Medicare Part B coverage past 36 months if they have no other health insurance source. The purpose of this is so these beneficiaries will continue to have coverage for immunosuppressive drugs.
According to the Social Security Administration (SSA), Part B’s premium under these circumstances would be less than the base premium and not subject to late penalties.
When Does the BENES Act Take Effect?
The BENES Act will take effect on January 1, 2023, but like many laws, different aspects will be implemented over time to give all the institutions and organizations time to comply.
The two changes I think most important are General Election Period (GEP) and Initial Enrollment Period (IEP). Those will be implemented on the start date–January 1, 2023. The outreach program and kidney transplant patients will take about two years to enact the changes fully.
The number of people enrolling in Medicare is monster. I think all the Baby Boomers enrolling in Medicare have forced politicians and bureaucrats to streamline the Medicare system. Upcoming changes to Medicare enrollment in 2022 and 2023 are going to make life easier. Late enrollment penalties and complaints should decline significantly with the more efficient and user-friendly rules. The most vulnerable, like kidney transplant patients, will have better options.
Medicare and Medicare insurance, however, is still complicated. When you need help understanding the new BENES rules and all the others, give us a call at 402-614-3389 and speak with a licensed and experienced insurance professional.
What Are Medicare Advantage Plans First of All?
Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are an “all in one” alternative to Original Medicare. Original Medicare is just Part A and Part B. It is Original Medicare because that is how “originally” Medicare started.
Private insurance companies approved by Medicare create and offer Medicare Advantage plans. The Medicare Advantage plan must offer as much as Original Medicare but usually offer much more. CMS (Center For Medicare & Medicaid Services) oversees the design of each plan and monitors and evaluates the plan’s service.
If you join a Medicare Advantage Plan, you still have Medicare. These “bundled” plans include Medicare Part A for hospital insurance, Medicare Part B for doctor and outpatient procedures, and usually Medicare Part D for prescription drug plans. Nebraska Medicare Advantage Plans cover the state from Omaha to Scotts Bluff.
Is Medicare Advantage plans worth it?
Medicare Advantage plans are established geographically compared with Original Medicare, which is a homogeneous, national program. The Nebraska Medicare Advantage plans are designed for a specific county, the size of the population in the county, and the average health care costs in that county. The amount of monthly payments from Medicare depends on two main factors.
What Are the Mechanics of How Medicare Advantage Plans Work?
The two factors are: what are the medical costs in certain areas of Nebraska, and what are those particular Nebraskans’ health?
CMS (Center for Medicare & Medicaid Services) constructed a bidding process for the insurance companies. The advantage plan submits bids to Medicare based on the estimated cost of Part A and Part B per person. Then Medicare compares the amount of the bid against benchmarks. Each county has its own benchmarks based upon average billing for specific procedures. If the bid is above the average, the beneficiary pays the difference. If the bid is below, the additional funds supplement the overall plan through lower co-pays and premiums.
The patient risk assessment determines the amount paid to the Nebraska Medicare Advantage plan. Each patient has a risk assessment. A person may be at average risk if they have a certain illness, greater risk, or less. Their score determines what Medicare pays for the beneficiary in the Nebraska Medicare Advantage plan.
After establishing the base rate, Medicare uses risk adjustment to change the rate to reflect the anticipated healthcare costs of a person enrolled in a plan. For example, if someone has a risk score of 1.0, it means that their expected costs are equal to those of an individual with average health. A risk score of 0.5 indicates that the expected costs are half of those of the average person, while a risk score of 2.0 indicates the expected costs are double those of the average person. Can you believe how complex Medicare has made this?
There are 24 Nebraska Medicare Advantage Plans in the Omaha metro. The Nebraska Medicare Advantage plans in rural Nebraska are much fewer. For example, Nebraska Medicare Advantage plans number only two in the Scotts Bluff area. There are four Medicare Advantage plans in North Platte, while Kearney, Nebraska Medicare Advantage plans number fourteen. The strength of the plan depends upon the size of the senior population.
The plans in the rural areas are also not as rich as the Medicare Advantage plans in Omaha and Lincoln.
The Blue Cross insurance companies are not-for-profit organizations, and they are tied to a particular state, such as Blue Cross & Blue Shield of Nebraska. Consequently, the Blues make a big effort to cover as much of a state as possible, but even with that intent and their financial where-for-all, Blue Cross cannot suspend the laws of economics. There is not enough Medicare reimbursement to create a Nebraska Medicare Advantage plan to cover every county and provide a minimum coverage.
Nebraska Medicare Advantage Plans also work with Nebraska Medicaid. Dual Medicare Advantage plans refer to someone who has both Medicare andMedicaid simultaneously. Nebraska Medicaid acts as a supplement to the Medicare plan. The state Medicaid program pays the Part B monthly premium. It covers copays when the person has “full Medicaid.” There are four levels of Medicaid. The bottom two are full Medicaid. Nebraska has three Medicare dual advantage plans among three different insurance companies.
The advantage of these Medicare Nebraska dual advantage plans is doctors who may not normally take Medicaid may be in-network for the dual plan. This could expand your access to doctors you otherwise could not see in some areas. The Nebraska Dual Medicare Advantage plans provide extra benefits that Original Medicare or Medicaid alone do not offer, such as additional dental, vision, hearing, over-the-count items, transportation, and gym membership.
The insurance companies design dual plans for the chronically ill, such as diabetics, coronary disease, and COPD. These special needs Medicare Advantage plans provide extra benefits that specifically address clients’ unique health needs. The insurance companies have special teams of health professionals who serve the chronically ill. Original Medicare and Medicaid are not structured to provide these higher levels of service for a more vulnerable population.
Tens of millions of people are currently utilizing these plans throughout the country. These Nebraska dual Medicare Advantage plans are mostly on the higher population eastern side of the state.
Where Are the Best Medicare Advantage Plans in Nebraska?
Best is always a relative term. What is best for one person may not be for another.
One of the advantages of the Medicare Advantage plans in Nebraska is access to networks. Doctor and medical facility access is one of the major criticisms of advantage plans, but access in the Omaha, Lincoln, and Council Bluffs areas is superb.
There are principally three networks in the Omaha area: CHI (Creighton Health Initiative), UNMC (University of Nebraska Medical Center), and Methodist. All three of these networks work with the insurance companies offering Medicare Advantage plans in Nebraska. Unfortunately, the access diminishes once you are west of Lincoln and Lancaster county. People in more rural areas need to be careful that their doctors and hospitals are in their plans system.
Is Medicare Advantage Worth It?
The Medicare Advantage plans in the Omaha, Lincoln, and Council Bluffs Metro are as rich as in other parts of the country. Premiums are very low or zero, co-pays and maximum out-of-pockets are low. Additional benefits, like dental, vision, and hearing, are very good and getting better. That is why the number of people enrolling in Medicare Advantage plans nationwide and locally in Omaha, Lincoln, and Council Bluffs continues to grow. The year-over-year growth in Medicare Advantage plans in the Omaha Metro area is the sign Medicare Advantage is worth it.
There are seven insurance companies that have Medicare Advantage plan contracts in Nebraska: United Healthcare, Aetna, Humana, and Blue Cross of Nebraska with very strong Medicare star ratings. These plans have been in the area for years.
Bright, Medica, and Wellcare Medicare Advantage plans just came to Nebraska in 2022. They will not have star ratings from CMS (Center For Medicare & Medicaid Services) for another two years.
As part of our presentation, we review these 22 plans–the copays, maximum out-of-pockets, and the additional benefits. There are no preference or sweetheart deals with any of the insurance companies. We objectively lay out the details of each plan for your inspection and consideration. Medicare Supplements are also, of course, part of the presentation.
Call us at 402-614-3389 to see if the Medicare Advantage plans in Nebraska are worth it for you.
What is Medicare?
Medicare is under the Social Security Administration (SSA). SSA is the bookkeeper for Medicare collecting premiums from Medicare beneficiaries and distributing funds to Medicare and insurance companies with Medicare contracts. The Centers for Medicare & Medicaid Services (CMS) is the federal agency that manages the Medicare Program. CMS is under the Department of Health and Human Services (HHS).
So who pays for the Medicare bureaucracy?
Who Pays For Medicare?
Medicare, like Social Security, is a “pay as you go” program funded each year by current taxpayers. That means the current income taxpaying workforce is who pays into Medicare.
When workers’ ratio to retirees was much higher in past decades, there was little trouble meeting revenue needs. With the vast baby boomer population going on Medicare each month, the number of workers is at a record low level compared to those on Medicare.
Other Sources of Medicare Funding
Medicare also has a trust fund. The U.S. Treasury holds two accounts for Medicare: the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. Medicare can only use these monies in the trust funds for Medicare operations.
I remember when I started working at 14. I picked up my first paycheck. Chuck Wagon Buffet on Center St. paid me $1.46 an hour for washing pots and pans in 1975. While working, I would calculate how much I was making in my head. When my first payday arrived, I was excited. I was expecting a specific amount of money. In my mind, it was already wholly spent on useless teenage stuff. When I got the check, my jaw dropped. The amount was way lower than the amount, I figured.
I told my dad they had made a mistake. He explained that the company took out the FICA (Federal Insurance Contribution Act) taxes for Social Security and Medicare. I was not a taxpayer who pays into Medicare. I told him I wanted my money back. He just laughed and told me I might see it back when I got older.
The Medicare tax is a percentage taken from your gross pay. There is no opting out of the Medicare tax. The more you make, the more you pay. The employer is required to match the same percentage amount. You pay 1.45% of your gross wages. The employer himself matches 1.45% of your wages also.
Medicare and Obamacare
However, there is a difference between the Social Security and Medicare tax. The Social Security tax is higher. It is 6.2% from the employee and 6.2% match from the employer. Medicare is 1.45% for both the employee and employer. The difference between Social Security and Medicare is that the Social Security tax ends at $145,000 in income. Any income above the $145,000 mark is Social Security tax-free. The Medicare 1.45% tax, is levied on all earned income, no matter how much. There is no limit. You keep paying the 1.45 even if you are making $500,000. Your income will also affect your Medicare Part B premium.
Further, the government adds an 0.9% Medicare tax for incomes over $200,000 for a total of 2.35%. Congress, with the Affordable Care Act (ACA), a.k.a Obamacare, in 2013 created this new tax. FICA taxes accounted for 88% of Part A revenue in 2019. The taxpaying worker is who pays for Medicare Part A.
Trust Fund Investments Do Little
A source of income for the trust fund is the trust fund investments. However, the investment interest is not actual interest like in your savings account.
When receipts from taxes exceed the HI Trust Fund’s expenditures, the Treasury takes the cash and replaces it with IOUs. The debt instruments are called Government Account Series (GAS) securities. They are nonmarketable, and the US Treasury issues them. Interagency transfers of funds are done with GASs. The interest “earned” is the current interest rate on Treasury bonds and notes. When the actual debt needs to be redeemed, the Treasury must go into the open market to sell US Treasuries to find the cash to cover the Trust fund’s GAS. At the end of the fiscal year 2019, the trust funds held $5.2 trillion in such securities. The internal debt does not count toward the national debt, which is $28,000,000,000,000 and growing.
The Trust Fund investment interest is a tiny portion of the total trust funds. The interest credited is an insignificant amount in relation to the whole budget.
Sometimes people are surprised that Medicare costs something. They assume Medicare is free, especially since they paid for Medicare all their working lives. I assure them that Medicare is “free”–the Part A for the hospital. They, of course, thought the whole thing was free.
Medicare Part A, however, is not free for everyone. For those who have worked less than 40 calendar quarters or ten years, Part A has a price. Your Part A monthly premium will depend on how many years you or your spouse worked and paid FICA taxes in the U.S. These people are those who pay for Medicare Part A with monthly premiums.
Paying the FICA is critical. I have known some individuals who worked and earned income, but all of their earnings were not reported to Uncle Sam. As a consequence, their Social Security is small. They are not eligible for Medicare or must purchase Medicare Part A if they want health insurance past 65.
Persons getting Railroad Retirement benefits and some federal, state, and local employees fall into other categories.
How Much Does Medicare Part A Cost?
For individuals or couples who worked between 30 and 39 quarters, which is 7.5 to 10 years, the premium is currently $240 per month. For individuals or couples who worked less than 30 quarters, the Part A premium is $437 per month.
If you do not meet the criteria above, you will likely pay a monthly premium for Part A. Your monthly Part A premium will depend on how many years you or your spouse worked in any job you paid Social Security taxes in the U.S.
State Medicaid will probably pick up the premium cost for Part A and Part B for low-income individuals. The Part A premiums paid to go toward the Medicare expenses.
Supplementary Medical Insurance (SMI) Trust Fund Is Not Much of a Source
The Supplemental Medical Insurance (SMI) Trust Fund supports two Medicare programs. Part B is for doctor and outpatient services as well as medical supplies. Part D started in 2008. It helps seniors with the cost of medications, especially expensive medications. Both programs are voluntary. Monthly premiums from beneficiaries and taxes from the general fund support the programs.
Those enrolled in Part B pay a monthly premium of $170.10 currently out of their Social Security check or paid directly to Social Security. The premium payment options for Part D prescription drug plans are similar. However, the Part B and Part D premiums do not cover most of the actual cost. The general fund supports most of the funding, which is financed with income taxes, corporate taxes, and excise taxes. Part B and D are not financed by FICA payroll taxes like Part A.
For example, in 2017, the federal government general fund paid $253 billion for the Part B expenses. Part B premiums Medicare beneficiaries paid amounted to only $93 billion. Part D revenue from the general fund was $68 billion. Beneficiaries only paid $16 billion for their prescription drug plan premiums. General tax revenues fund the vast majority of Medicare.
Medicare is truly a pay-as-you-go program. There is no stockpile of cash accumulated over decades to cover the expenses. As the ratio of taxpaying workers to beneficiaries declines, the program will experience significant strain.
The SMI Trust Fund itself has very little money reserves and supplies a small fraction of the Medicare budget through interest income. The purpose of the fund is to aid in cash flow. The real source of revenue for Medicare Part B and Part D is taxes. The Part B and Part D premiums paid are a small percentage of the overall revenue.
Do You Have to Pay For Medicare Benefits?
Who pays for Medicare? The answer is the tax payor. The tax payor pays over a lifetime through FICA payroll taxes out of his monthly check. He pays mostly through income tax that goes into the general fund. He finally pays in the form of premiums to Medicare directly, Medigap premiums to private insurance companies, copays, and co-insurance to doctors and medical institutions.
That being said, who pays for Medicare begs how it will be paid in the future. More and more of the burden for the cost of Medicare is falling on seniors in the form of insurance premiums and coinsurance. The working taxpayer is paying less because there are fewer actively employed in relation to those who are receiving Medicare benefits.
The projects and public policies currently in place make that clear. The curiosity that prompts someone to ask who pays for Medicare should lead to additional questions about how we will continue to pay and for what level of benefits.