HSA's and Medicare

Lately, I’ve had a lot of questions about how HSA’s work with Medicare, so I thought a blog post would be helpful.

What is an HSA?

An HSA is a Health Savings Account. You may contribute to an HSA on a pre-tax basis, but only when you have a qualified High Deductible Health Plan (HDHP.) With HDHP’s, out-of-pocket expenses such as deductibles, co-payments, and co-insurance can add up quickly, and HSA’s are designed to help with those costs. HSA’s can be set up through employers or independently, and are overseen by banks, credit unions, or other financial institutions.

What happens if I have an HSA when I turn 65?

First of all, you’re now eligible for Medicare - congratulations! With Medicare, many of your medical expenses will by covered by Medicare, but there are still out-of-pocket expenses to consider:

• With Original Medicare, you’ll have to pay a Part B premium (and possibly one for Part A), plus deductibles, etc. after you reach the limits that Medicare pays.

• Medicare Advantage plans may be “zero-premium”, but you’ll still have to pay for Part B premims, deductibles, and copayments.

• Medicare Supplements and Prescription Drug Plans are designed to cover deductibles and limit out-of-pocket expenses, but they do have premiums.

Based on all of this, it would be great to be able to keep your HSA and keep contributing to it to cover Medicare out-of-pocket expenses. Unfortunately, that’s not allowed! You must have a high-deductible health insurance plan in order to contribute pre-tax dollars to an HSA, so once you enroll in Medicare Part A or Part B, you may no longer contribute pre-tax dollars to your HSA.

What Happens to my HSA when I enroll in Medicare?

The money is still yours, and the good news is that you can use it to pay for Medicare expenses until the money is gone. However, you may NOT contribute money to the account anymore.

Should I delay enrollment in Medicare so so that I can keep contributing to my HSA?

Good question, and the answer depends on your work situation when turning 65:

• If you intend to keep working and your employer has 20 or more employees, Medicare insurance will pay after the company’s insurance. You may delay enrolling in Medicare with no penalty and continue contributing to your HSA.

• If you want to continue working and you’re working for an employer with less than 20 employees, Medicare insurance pays before the employer’s insurance. You may very well need Medicare in order to have primary insurance. Therefore, you should stop your HSA contributions when your turn 65 if you work for an employer with fewer than 20 employees.

• Finally, let’s say you delay your Medicare enrollment and keep your employer coverage, and your employer has more than 20 employees. When you enroll in Medicare, Part A is typically dated six months before Part B. That’s why conventional wisdom states that you should stop contributing six months before retiring.

I hope this helps, but Medicare is confusing. If you have questions, please contact me.

Tiering Exceptions - What Are They and How Do You Request One?

As you may know, Medicare Part D plans categorize prescription drugs in their formulary by tiers. To make sure we’re all on the same page, the “formulary” is a fancy word for the list of medicines covered by a plan. Usually, low-cost generic drugs are designated as Tier 1 and high-cost, branded rugs are placed in higher tiers that pass along greater costs to the enrollee. Often Tier 5 is the most expensive, but it varies by plan.

What If You Cannot Afford Your Copay?

If your Part D plan covers your prescription drug, but the drug is in a high tier and you feel that you cannot afford your copay, you can request a tiering exception as an avenue for lowering your cost-sharing amount.

How to Request a Tiering Exception

Follow these steps the request a tiering exception:

1. Talk to your pharmacist to find out exactly why your drug is so expensive. If your Part D provider has placed you drug on a higher tier than similar drugs that treat your condition, you can proceed with a tiering exception request. (However, please note that tiering exceptions are not provided for drugs in the specialty tier.)

2. Contact your Part D provider to find out their process for requesting a tier exception. Each insuror’s procedure will be a little different, so you will need to follow their instructions. As part of the Part D appeal process, you or your doctor must show that you need the drug prescribed and that lower tier drugs used for treatment of your condition are ineffective or dangerous for you.

Your Part D provider will approve or deny your request and notify you of their decision.

What if My Request is Denied?

If your request is denied, you should consider switching to a plan with lower cost-sharing during the next Annual Election Period, which runs from October 15th - December 7th.

Report Says Medicare Advantage Provides Better Outcomes than traditional Medicare

According to a recently released report from Havard University and and software company Inovalon, Medicare Advantage enrollees experience better quality outcomes than fee-for-service Medicare enrollees, including fewer readmissions, fewer preventable hospitalizations and lower rates of high-risk medication use.

Specifically, Advantage enrollees have over 70% fewer hospital readmissions and 25% fewer preventable inpatient admissions. Also, Advantage enrollees have lower rates of inappropriate medication use, and comparable rates of medication adherence.

The study did make adjusments for “enrollment differences across the two programs and for the pre-existing disadvantages faced by MA members in terms of baseline demographic, clinical, and social risk factors.”

Considering the fact that Medicare Advantage enrollment has grown from 17% of Medicare beneficiaries in 2000 to over 50% in 2023, the findings are encouraging.

Read the full report here.

Medicare Part B Premiums Due to Increase for 2024

The Centers for Medicare and Medicaid Services (CMS) announced that the standard monthly premium for Medicare Part B will increase in 2024, going from $164.90 this year to $174.70 next year, an increase of $9.80/month.

Additionally, the annual deductible for Part B will increase by $14, going from $226 to $240, and the standard premium for elective Part B coverage of immunosuppressive drugs will be set at $103. CMS attributes the increase primarily due to expected growth in health care spending.

Since a beneficiary's Part B monthly premium is been based on a person’s income, the income-related monthly adjustment amounts affect only about 8% of people with Medicare Part B. The 2024 Part B total premiums for high-income beneficiaries with full Part B coverage may be found at CMS.

Also, for anyone paying a Medicare Part A premium (inpatient hospitalization), the deductible will increase by $32 to $1,632. (About 99% of Medicare beneficiaries do not have a Part A premium, since they have the required minimum 40 quarters of Medicare-covered employment.)

Medicare - What to Do When You Turn 65

According to the U.S. Census Bureau, U.S. citizens aged 65 or older numbered 55.8 million in 2020, which is 16.8% of the population, or 1 out of 6 Americans. For comparison, in 1920 the proportion was less than 1 in 20.

Silver Tsunami

The rapid growth was largely attributed aging baby boomers, who were born between 1946 and 1964 and began turning 65 in 2011. We are at the peak time for boomers turning 65 now, with an American turning 65 every 8 seconds. By 2030, all baby boomers will be age 65 and over, and growth in this segment will begin to slow.

What to Do

If you’re one of the many Americans turning 65 soon, one of the perks is that you qualify for Medicare. Medicare is confusing, though, so this guide is provided to help you with the Medicare basics, so that you can hopefully know where to start and what to do.

If you have health coverage from your current active employment, do not assume that you must enroll in Medicare when you turn 65.

The Medicare Basics

The 4 parts to Medicare:

1. Part A - Inpatient care, including hospitals, skilled nursing facilities, and hospice, plus some home health care. Part A has no premium if you (or your current or former spouse) worked and paid Medicare taxes for at least 10 years.

2. Part B - Medical insurance, including outpatient and home health care from doctors and other health care providers, durable medical equipment, and some preventive services. Depending on income level, most people pay a monthly premium for Part B. In 2023, the standard monthly premium for Medicare Part B enrollees is be $164.90.

3. Part C - Medicare Advantage is run by private companies who contract with the federal government to provide Parts A and B (and usually D) and may also include coverage for vision, hearing, dental, and other benefits. You must have both Part A and Part B before enrolling in a Medicare Advantage plan.

4. Part D - Prescription Drug Coverage is also run by private companies and helps cover prescription drug costs. You must sign up for Part A or Part B before enrolling in Part D. There is a late-enrollment penalty if you don’t enroll in Part D when first eligible, unless you have other “creditable coverage.”

In addition to the above, there’s also Medicare Supplement Insurance (Medigap), which is extra insurance sold by private health insurance companies that helps pay your share of out-of-pocket costs in Original Medicare.

When to Sign Up

It's important to sign up as soon as possible to avoid penalties or gaps in coverage. (If you are age 65 or older and receive Social Security benefits, or if you’re already receiving Social Security due to a disability, you will be automatically enrolled in Part A.)

For most people, the best time to sign up for Part A and Part B is during the Initial Enrollment Period, which is the three mosnths before and after the day you turn 65. , but there are exceptions.

If you’re covered by an employer group health plan (through you or your spouse), when you turn 65, you can wait and enroll in Part B later during a Special Enrollment Period, and there will be no penalties if you sign up or add Part B during this time. The Special Enrollment Period will apply:

• If you or your spouse are working and still covered by the group health plan.

• Within 8 months of the day you or your spouse stop working, even if your group health plan continues for a time.

• Within 8 months of the group health plan ending while you or your spouse continue to work.

Your coverage begins the month after you sign up.

If you miss both the Initial Enrollment Period and the Special Enrollment Preiod, you can sign up during the General Enrollment Period, which lasts from January 1 and March 31 each year. Your coverage begins the month after you sign up. However, there is typically a life-long penalty if you sign up during this time.

Where to Sign Up

Enrollment for Parts A and B can be done through Social Security online at https://www.ssa.gov/medicare/sign-up. Be prepared to supply Social Security Number, information on where you were born, any current group health plan coverage information. You’ll be logging into your mySSA account to apply for Medicare, if you have one. If you don’t have a mySSA account, you’ll create one during the application process.

What Plan is Best for You?

This is where things get confusing for a first-timer (as if it’s all been easy so far). Once you’re enrolled in Part A and B, there are choices to be made: stick with Original Medicare, add a Part D plan or a Supplement, or go with a Medicare Advantage plan? After that there are more choices: which Part D or Supplement, or which Advantage plan?

If You Need Help

If you get confused, which is natural, consider calling an agent who offers many plans and can guide you to the best one for your needs. I’ve been helping customers for over ten years, I represent many carriers, and I don’t charge a fee for my services. You can contact me here.

State Medicare Agencies Set to Redetermine Enrollees' Eligibility Post-COVID

Back in the normal days before COVID, state Medicaid programs (including TennCare and Kentucky Medicaid) reviewed eligibity for all Medicaid recipients on an annual basis through a process called Medicaid redetermination.This is also known as Medicaid renewal or recertification.

However, during the pandemic, states were required to pause the redetermination process and maintain coverage for all individuals enrolled in the Medicaid. This means that some recipients have not had their eligibility reviewed since 2020 or earlier.

Beginning April 1, 2023, many states, including Tennessee and Kentucky, reinstated their review procedure.

How It Will Work and Why It Matters

Reviews are being done based on annual renewal date, and states are attempting to auto-renew every recipient's coverage using existing and allowable data sources. In these situations, enrollees should receive notice that they have been approved or denied coverage and the reasoning behind the decision. 

For recipients whose coverage cannot be done automatically, renewal packets will be sent to them requesting additional information. Contact may be made via postal mail, email, or other ways that are on file with the Medicaid agency. Insurance carriers who administer Medicaid programs may also attempt to contact impacted members to help them with the recertification process.

Social Security checks increased by a greater percentage than the Federal Poverty line did. This means that people who were on the qualifying borderline will probably lose their Medicaid benefits.

More Information

A guide to elegibility for TennCare can be found here.

Less Retirement Funds Needed for Medicare Advantage Compared to Medicare Supplement

I found an interesting headline regarding retirement savings needed for Medicare Advantage versus Medicare Supplement.

According to an analysis published on Feb. 9 by the Employee Benefits Research Institute, Medicare beneficiaries who enroll in a Medicare Advantage plan may need less retirement savings to cover their healthcare costs.

According to the EBRI’s analysis, for Medicare Advantage plans:

• Assuming median drug expenditures and an average usage of health care services, a man will need to have saved $56,000 and a woman will need to have saved $67,000 to have a 50% chance of meeting his health care spending requirements in retirement.

• To have a 90% chance of meeting health care spending requirements, a man will need $96,000 in savings and a woman will need $113,000.

• Couples will need $123,000 to have a 50% chance and $184,000 to have a 90% chance of covering their health care expenditures in retirement.

For a Medicare Supplements:

• A man need to have saved $96,000, and a woman will need to have saved $116,000 in order to have a 50% chance of having enough to cover premiums and median prescription drug expenditures.

• To have a 90% chance, a man will need to have $166,000 in savings, and a woman will need to have $197,000 in savings.

• Couples will need to have saved $212,000 to have a 50% chance and $318,000 to have a 90% chance.

As the article states, “there are other factors to consider when it comes to choosing a Medicare Advantage plan over traditional Medicare. Medicare Advantage plans often have limited networks or may require approval before certain medications or services are covered.”

Medicare Advantage and Prior Authorizations - Should You be Concerned?

Prior authorization is used by most Medicare Advantage plans to prevent waste and as a safeguard to prevent patients from receiving medically unnecessary treatment. In 2021, 90% of Medicare Advantage enrollees were in plans requiring authorization for procedures and lab tests. Original Medicare and Medicare Supplements do not have prior authorization requirements.

In previous blogs (here and here), we wrote about how Medicare Advantage plans have been accused of using their prior authorization provision to deny coverage for needed healthcare. A new report from the Kaiser Family Foundation (KFF) investigates the allegations.

The report was based on requests for medical care submitted to Medicare Advantage plan carriers in 2021. Out of 35 million prior authorization requests that were submitted, 2 million requests were either denied or partially denied, which equates to a 6% denial rate. Out of that group, only 212,000 (about 10%) were appealed. The result of those appeals was for 173,000 to be partially or fully approved. That means there was an 81.6% success rate on appeals.

Final tally: of the 35 million requests for prior authorization, the final rejection number for those who were denied both initially and on appeal was only 1.1%.

212,000 - 173,000 = 39,000 rejected twice
39,000 rejected twice/35,000,000 P.A. requests = 1.1%

The above numbers may be a little misleading because the sample size is small for the appeals, but the point is that it doesn’t hurt to appeal if you feel that you have a case. Delays or denials of prior authorizations can complicate and delay necessary medical procedures. The Centers for Medicare & Medicaid Services (CMS) is working to address concerns and streamline the process by (1) processing more requests electronically instead of by phone or fax, and (2) be requiring more transparency about the criteria used for making decisions.

I’ve recently heard (on two separate occassions) from my policyholders who were told that their insurance hadn’t approved their procedure. When they called their insurance company, they learned that the provider hadn’t yet submitted the claim for approval!

Bottom line: Medicare Advantage plans are popular because they provide great value, but until improvements to the system are implemented, it’s important for you and your doctor to work together to advocate for your needs. If you get denied on a prior authorization request, don’t be afraid to appeal.

Beginning April 1st, 2023, Vanderbilt Health Will No Longer Be in Network for Humana and WellCare Advantage Plans

Vanderbilt University Medical Center released an announcement this week stating that they are ending participation with Humana and Wellcare Medicare Advantage plans effective April 1.

After March 31st, patients in a Humana or WellCare Medicare Advantage plan will lose in-network access to the following Vanderbilt Health hospitals, clinics and affiliated partners (marked with an asterisk):

• Vanderbilt University Hospital

• Vanderbilt Health Clinics throughout the region

• Vanderbilt Psychiatric Hospital

• Vanderbilt Wilson County Hospital

• Vanderbilt Bedford Hospital

• Vanderbilt Tullahoma-Harton Hospital

• Vanderbilt Home Care Services

• Cool Springs Surgery Center*

• Spring Hill Surgery Center*

• Vanderbilt Imaging Services*

• Vanderbilt-Ingram Cancer Center at Tennova (Clarksville)*

• Vanderbilt-Ingram Cancer Center (radiation oncology) at Maury Regional Spring Hill*

In their statement, Vanderbilt blamed “higher costs for personnel, supplies, equipment, and medications needed to provide high quality care” as the reason for the change, stating “We rely on fair partnerships with insurance companies that help us cover these increased costs. We can't continue to partner with insurance plans that don't reimburse us adequately.”

More details here.

If the change affects you and you need to discuss or consider alternatives, please let me know.

Regarding Recent Criticism of Medicare Advantage

In May of 2022, we wrote a blog post addressing allegations that Medicare Advantage plans are bad for potential enrollees because the insurance companies administering the plans deny claims and authorizations for necessary care. Today, we address more recent claims that Medicare Advantage programs are flawed because insurance companies, many of which are for-profit, are more incentivized by profits than helping patients.

First, a short history lesson.

Medicare was first established in 1965 as a government-funded fee-for-service (FFS) program that covers - to some degree - costs for inpatient services (Part A) and outpatient services (Part B). The “some degree” part means that the patient may end up liable for various deductibles, co-insurance of 20%, and other expenses after Medicare limits are reached.

Without going into details, let’s just say that, with healthcare in America being what it is, out-of-pockets expenses under Medicare can add up quickly and be expensive. In order to address the gaps in coverage, Medicare Supplements and Prescription Drug Plans were developed by private insurance companies and allowed beneficiaries to pay a monthly premium to cover deductibles and copays and limit high out-of-pocket costs resulting from a catastrophic health event.

In 1997, Medicare Advantage plans were formalized, which is essentially Medicare contracted out to be administered by private insurance companies. In Advantage plans, the government pays the insurance company a monthly premium based on geographic area and the expected patient medical expenses, and then the insurer develops and markets various plans they hope will be attractive to consumers, many with attractive benfits such dental, hearing, and vision coverage, plus other perks such as transportation services and gym memberships, etc. The insurance companies, most of which are investor-owned and publicly-traded, make some degree of profit based on the difference between what the government pays them versus how much money they pay out in expenses and benefits for their insured clients.

In fact, newly released federal audits reveal indicate that the profits are actually very good, with Medicare Advantage plans typically earning insurance companies twice what they earn from their regular insurance products ($1,608/covered person for Advantage vs. $779).

The profit incentive of the insurance companies is the crux of recent criticism.

Some of the profits are legitimate, but in other cases the audits reveal widespread overcharges and other errors in payments to Medicare Advantage health plans for seniors. Out of 90 audits, 71 showied net overpayments, and 23 showed overpayments of over $1,000 per patient. Humana, one of the largest Medicare Advantage sponsors, had overpayments exceeding $1,000 on average in 10 of 11 audits.

The government pays the insurance companies based on formulas that use risk codes, with a higher risk code meaning the patient was sicker than average. If a patient is coded as having a condition such as diabetes or congestive heart failure, for example, the insurance company gets more money from the government. Most of the audited plans fell into what CMS calls this “high coding intensity group,” but the medical records supplied by the health plans didn’t always support the coded claims.

Does Medicare Advantage need more oversight?

Ted Doolittle, a former deputy director of CMS’ Center for Program Integrity, which oversees Medicare’s efforts to fight fraud and billing abuse, admitted that the agency has failed to hold Medicare Advantage plans accountable. “I think CMS fell down on the job on this,” he said.

In the wake of the audits, there have been calls for more oversight, with policymakers, journalists, and health industry analysts weighing in on how to rein in the overcharges the federal government. Some have even called for abolishment of Advantage plans.

The program no doubt has its flaws, and assessments are needed, but most experts agree Congress is gridlocked and has other priorities, which means no changes will come soon.

In the big picture, despite the government over-payments due to inflated risk coding, the fact remains that Advantages plans are gaining in popularity and are beneficial for many older adults. In spite of the overcharging and even the denied claims and over-use of authorizations, the alternatives to Medicare Advantage plans - original Medicare and Medicare Supplements and Prescription Drug Plan - have their own flaws.

Therefore, the best plan of action needs to be deliberate and objective. There’s no need to throw out the baby with the bathwater.

Join Carol for a Medicare Webinar on November 9, 2022, at 5:30 PM

Fall is the time for the Annual Election Period for Medicare, when those eligible can switch plans.

Feel free to join the webinar presented by Keystone Financial Resources, LLC, where Carol Ballenger, a Medicare Specialist, will discuss Medicare's Fall Open Enrollment before its deadline of December 7th.

An average 65-year-old couple retiring today will need an estimated $363,946 to cover their healthcare costs, according to one study, which could make it one of your largest retirement expenses. With the Medicare fall open enrollment period starting on October 15th, it’s time to assess your options or start thinking about your Medicare strategy for when you turn 65. Beyond this enrollment season, we could see changes to the Medicare program based on the outcome of this election.

Carol specializes in Medicare and individual plans through the Affordable Care Act. As market conditions have shifted, so has her approach. Listen in as she discusses which plan may fit best for you! 'Tis the season for Medicare options.

To register, click the link below.

The "Family Glitch" in Obamacare Has Been Fixed

This is great news! Families who didn’t previously qualify for ACA tax credits due to their spouse having family coverage available through their employer - even if it wasn’t affordable - can now get help with their premiums.

On Tuesday, October 11, the Treasury Department announced new rules for determining the premium tax credits. Until now, if a family was eligible to be on their spouse’s employer insurance, they were NOT eligible for ACA tax credits. While employers help pay for their employee’s health insurance, the help doesn’t usually extend to the rest of the family. This meant many people stayed on an expensive employer health plan or went without coverage. This new rule will result in more families qualifying for the tax breaks offered through the ACA.

"Now, the Treasury Department is finalizing that fix so that the law works the way Congress intended and the cost of coverage comes down for families all over the country. Starting next month, Americans can sign up to take advantage of this change," President Joe Biden said in a White House statement.

"About 1 million Americans will either gain coverage or see their insurance become more affordable as a result of the new rule," he added.

The open enrollment period for health insurance plans under the Affordable Care Act starts on Nov. 1, and the fix will bring down healthcare costs and expand access to affordable coverage to more Americans. Even though the number of uninsured Americans has dipped to a historic low of 8% this year, there is still an estimated 26 million people in the U.S. who don’t have health insurance.

Bright Healthcare Discontinues ACA and Medicare Advantage Plans in Tennessee for 2023

In unexpected news, Bright Healthcare announced on October 11th that they would no longer offer Individual and Family Plans after plan year 2022 and will also no longer offer Medicare Advantage products outside of California and Florida. The announcement is sure to surprise current policyholders.

Here’s the full announcement:

“After plan year 2022, Bright HealthCare will no longer offer Individual and Family Plans, and will also no longer offer Medicare Advantage products outside of California and Florida. Bright HealthCare is in ongoing discussions regarding potential continued offering of Bright Health’s Individual and Family Plans in California and its PEAK health plan in Colorado.

Written notifications have been or will be sent to all impacted Individual and Family Plan members in the near future so they can select a new plan during the open enrollment period (OEP) that runs from November 1 to December 15, 2022 to ensure a January 1, 2023 effective date.

Written notifications dated October 2, 2022 were sent to impacted Medicare Advantage members so they can select a new plan during the annual enrollment period (AEP) that runs from October 15 to December 7, 2022.”

Additional information on the announcement can be found here.

Although Bright did not have a significant presence in Tennessee, there are still policyholders affected. If you were a Bright policyholder and need help with an alternate plan, please reach out to us. As agents, we represent most major carriers and can help you make a decision that is best for your needs.

Medicare Supplement vs. Medicare Advantage - What's the Difference?

Making the choice between a Medicare Supplement or Medicare Advantage is tough and confusing. The considerations are different depending on the person, and the pressure to make the correct decision can be daunting.

I’ve explained the differences before in this post, but I ran across a chart and quiz created by UnitedHealthcare that do a great job of explaining key differences.

Here’s the Chart:

Medicare Supplements are sold and administered by private insurance companies and used in addition to Original Medicare in order to fill in coverage gaps - such as limits on copayments, coinsurance, and deductibles. Supplements can also cover things that Original Medicare does not, such as stays at skilled nursing facilities and foreign travel medical care.

Medicare Advantage is essentially Medicare offered by private companies that may also include more benefits and a lower cost than Original Medicare. The extra benefits could include things like like fitness and wellness programs, vision, hearing, and dental services.

Here’s a Short Quiz to Test Your Knowledge

1. Medicare Part A covers costs when you’re hospitalized and Part B covers doctor visits and tests.
   True or false? (answers are at bottom of page)

2. Original Medicare (Parts A and B) is premium free. Medicare Advantage (Part C) and Part D prescription drug plans are optional—you need to buy them.
   True or false?

3. Medicare Advantage (Part C) includes the coverage of Original Medicare (Parts A and B) and may include extras like vision care or dental. Most Medicare Advantage plans come with drug coverage, too.
   True or false?

4. Medicare supplement insurance (Medigap) pays for some of the things Medicare Advantage (Part C) plans don’t cover.
   True or false?

Answers:

Question 1: True - Medicare Part A covers you when you need to go to the hospital. It also covers things like skilled nursing care after you’ve been hospitalized and other types of skilled care, including hospice care. Part B helps pay for doctor visits, laboratory tests and some diagnostic screenings.

Question 2: False - In most cases, you don’t pay a Medicare Part A premium. However, there is a Medicare Part B premium. The Medicare Part B premium is deducted from your Social Security check, if you receive one. If you want to enroll in a Medicare Advantage (Part C) plan or Medicare Part D prescription drug plan you must purchase them separately.

Question 3: True - Medicare Advantage plans include the same benefits you would get in Original Medicare along with extra benefits and, usually, prescription drug coverage. But since they’re issued through private insurance companies, each plan will be different. Be sure to compare plans carefully.

Question 4: False - Medicare supplement insurance is designed to help pay for some of the things Original Medicare (Parts A and B) does not pay. In fact, if you have Medicare Advantage, an insurer cannot sell you a Medicare supplement insurance plan unless you are dropping Medicare Advantage to use Original Medicare and wish to add Medicare supplement insurance.

I hope that you had fun and learned something! If you have questions or need help, please let me know.

How Does the Inflation Reduction Act Affect Medicare Drug Costs?

The Inflation Reduction Act of 2022 that was into law on August 16 by President Joe Biden was wide-ranging in scope, encompassing changes in everything from climate change, to IRS tax enforcement, to the corporate minimum tax rate. Of particular interest to Medicare beneficiares are the the Prescription Drug Provisions, which address prescription drug pricing.

How will the Inflation Reduction Act affect Medicare Beneficiaries?

In truth, the Prescription Drug Provisions portion of the Inflation Reduction Act only brings a few changes, but their ramifications should prove significant. Changes under the Act will impact prescription drug prices, out-of-pocket costs for prescription drugs, a monthly cap of $35 on insulin costs under Part D, and certain free vaccines. It’s easiest to look at the provisions as part of a timeline based on when the changes will be implemented:

2023

• Drugs rebates. Drug companies will be required to pay rebates, if prices for any Medicare-covered prescription drugs rise faster than the rate of inflation.

• Cap on insulin prices. A monthly cap of $35 will be implemented for insulin costs covered under Part D. According to the Kaiser Family Foundation, 3.3 million Medicare Part D enrollees used an insulin product in 2020, including 1.7 million enrollees without low-income subsidies. The latter group spent $54 on average per insulin prescription that year. Please note that many expensive prescriptions used for type 2 diabetes are not actually insulin.

• Cost-sharing for certain vaccines will be eliminated. For Medicare Part D beneficiaries, Part D plans will be required to cover all adult vaccines recommended by the Advisory Committee on Immunization Practices, without cost-sharing or the application of a deductible (other than vaccines covered under Part B).

2024

• Part D co-insurance costs eliminated after reaching out-of-pocket maximum. Once a Medicare beneficiary’s annual out-of-pocket expenses for covered drugs reach the out-of-pocket maximum, co-insurance costs go from 5% to zero. Currently, Part D beneficiaries have an out-of-pocket threshold of $7,050, and after that they must pay 5% of subsequent drug costs without limitation.

• Increase in eligibility for Part D subsidy. Beneficiaries earning up to 150% of the Federal Poverty Level will be eligible for full benefits under the Part D subsidy.

2025

• Out-of-pocket threshold lowered. The out-of-pocket threshold for Part D beneficiaries will be lowered from $7,050 to $2,000.

2026

• Drug price negotiation. Medicare will be allowed to negotiate the prices of 10 high-cost Part D prescription drugs. Drugs open to negotiation will be high-cost drugs with long-time FDA approval that have no generic alternative. Currently, the 2003 Medicare Modernization Act that established Part D prohibits price negotiations for drugs offered under Medicare.

2027

• Drug price negotiation - cont’d. Medicare can negotiate the prices of an additional 15 Part D high-cost prescription drugs.

2028

• Drug price negotiation - cont’d. Medicare can negotiate the prices of an additional 15 Part B and Part D prescription drugs.

2029

• Drug price negotiation - cont’d. Medicare can negotiate the prices of an additional 15 Part B and Part D prescription drugs.

Overall, the changes implemented by the the Prescription Drug Provisions portion of the Inflation Reduction Act will be welcome news to most Medicare beneficiaries. Additionally, the Congressional Budget Office projects that the changes will reduce the federal budget deficit by $288 billion over a next decade, many due to the cost savings brought by the drug price negotiation provision.

Dedicated Senior Medical Center Coming to Nashville

Nashville is about to get a new clinic to serve the under-served Medicare population: Dedicated Senior Medicare Centers is opening a facility in the Bordeaux area this fall.

It may sound like just another clever marketing strategy to say that Dedicated Senior Medical Centers puts patients first, but they have the track record to substantiate their claims.

Some stats regarding their primary and preventive health care for seniors:

• Dedicated patients spend 38% fewer days in the hospital as well as fewer hospital, ER, and urgent care visits

• Physicians at Dedicated only see from 350 to 450 patients per year versus a U.S. average of 2,300 patients being seen annually by a physician

• In 2015, when patients were asked how likely they were to recommend the company to a friend or colleague, ChenMed’s (Dedicated’s parent company) score was 90%, which compares to an average score of 12% among health insurance companies and was a higher score than such well-regarded companies as Apple and Southwest Airlines

• ChenMed was named To Newsweek's list of The Most Loved Workplaces for 2021 and placed first in the Healthcare category

• Fortune magazine named ChenMed as one of their 2020 Change the World companies

The formula is fairly simple: Dedicated offers personalized primary care, smaller patient panels, and frequent physician team discussions. Physicians will see patients as often as necessary, and specialists are on site to provide coordinated team care.

Dedicated’s centers are located in urban areas with a high density of low-to-moderate-income seniors, and the new Nashville location will be in the Bordeaux neighborhood.

A full range of Primary and Preventive Care services will be offered, plus:

• Onsite diagnostic testing, including, X-rays, labs, and testing

• Medications supplied at site

• Cardiology

• Acupuncture

• Nursing

• Podiatry

• Nursing services

• Social workers, and door-to-doctor transportation.

Follow the progress on the new Nashville location here.

A New Marketplace Special Enrollment Period (SEP) Announced for Low-Income Consumers

The Centers for Medicare & Medicaid Services (CMS) made the announcement as part of the Biden Administration’s recent American Rescue Plan (ARP). This new SEP will allow more opportunities for lower-income consumers to enroll in Marketplace health care coverage during the year and benefit from the increased financial help to pay it. To be eligible, consumers must have an estimated annual household income at or below 150% Federal Poverty Level in their state and not be eligible for Medicaid/CHIP.

Eligibility requirements by state and household size for 2022 Marketplace applications can be found here.

Consumers will be able to access the low-income SEP now, and it is available to those who have applied for Marketplace coverage since Open Enrollment ended and who didn’t have access to another SEP from a recent life event, such as a loss of coverage or a move.

Medicare Advantage Plans - Are They Denying Necessary Care?

In recent days, a report has been released that found that Medicare Advantage plans sometimes deny or delay claims that should be paid and deny care that is medically necessary. We thought the news was pretty important and deserves attention. Please make sure to read to the end of this post to get my entire response. I don’t want you to think that I believe choosing Medicare Advantage is a bad idea.

The Claim

The startling report was compiled by the U.S. Health and Human Services Office of Inspector General and states that private, for-profit Medicare Advantage plans denied 18% of claims allowed under Medicare coverage rules and denied 13% of authorizations for medical services that Medicare would have allowed.

In order to estimate how often insurers denied requests that should have been covered, coding experts and physician reviewers analyzed a sample of about 250 care preauthorization denials by 15 of the largest Medicare Advantage plans over one week in June, 2019.

These private Medicare plans cover more than 28 million older and disabled Americans and are an increasingly popular option. By 2030, it is expected that over half of Medicare recipients will be enrolled in an Advantage plan, which means that it is crucial that Medicare beneficiaries enrolled in Advantage plans have access to medically necessary covered services.

Traditional Medicare has no maximum out-of-pocket limit, but Medicare Advantage plans do offer out-of-pocket maximums while also offering perks such as vision, dental, and hearing benefits, telemedicine, and gym memberships - all at a price comparable to original Medicare. Their popularity has resulted in Advantage plan enrollments more than doubling in the past decade.

How do Medicare Advantage plans offer more while not charging much more?

To keep costs down, private Advantage plans employ various insurance industry tactics such as restricting networks of doctors and other medical providers people can use, requiring prior authorization for some services, requiring referrals for specialists, and promoting a healthy lifestyle (such as the gym memberships).

However, the report claims the private insurers were keeping costs down by denying coverage or forcing the insured to pay for services their plans should cover. Often, denials were made because the insurance companies required more preauthorization from patients than Medicare required, such as requiring an X-ray before authorizing an MRI, or requiring more documents than were required by Medicare.

HHS recommendations for getting Medicare Advantage plans to approve more requests for coverage

In order to address the discrepancies, the Health and Human Services Inspector General recommended that the Centers for Medicare & Medicaid Services (CMS):

• issue new guidance on the appropriate use of clinical criteria in medical necessity reviews;

• update its audit protocols to address the issues identified in this report, such as use of clinical criteria and/or examining particular service types; and

• direct Advantage plans to take additional steps to identify and address vulnerabilities that can lead to manual review errors and system errors.

The Rebuttal

America’s Health Insurance Plans (AHIP) is a Washington-based group for health insurers that includes to 15 private Medicare Advantage plan insurers cited in the report. They took issue with the report:

• AHIP claimed that the report’s stated denial rate of 13% was misleading and limited in scope by noting that the overwhelming majority (95%) of prior authorization requests in 2018 were approved.

• they placed some of the blame on CMS by saying that more guidance was needed, stating that “The main concern about many of those cases was not that they were improper, but rather that more guidance from the government was needed on criteria that plans can use to make coverage determinations.”

• finally, AHIP defended their preauthorization requirements by arguing that the extra measures can keep patients from getting dangerous, unnecessarily expensive or unnecessary care.

Our Conclusion

When public and private sectors intersect, there’s bound to be some conflict of objectives. Public entities such as CMS have the capacity to provide great services without the need for profitablity or efficiency, while private insurers make money by maximizing efficiences.

Advantage plans may be more strict on approving coverage, but they shouldn’t be denying necessary coverage. If you have ever had an employer PPO insurance plan, it undoubtedly required prior authorization for many procedures on a routine basis - that’s the nature of the industry.

An Observation

One of my policyholders recently called me about a denial from his Advantage plan. The good news is that we were able to work through the issue, and he received the care his doctor had recommended. The downside was the delayed response and the repeated phone calls he had to make on his own behalf. I’ve said it many times and will repeat here: you must be your own best advocate!

Another perspective is that Advantage plans, due to the fact that they are managed care, are incentivized to produce good health outcomes. Wouldn’t you rather have more professionals reviewing a complex case and trying to collaborate and solve it together, rather than trusting a fee-for-service system to deliver results?

Ultimately, I always defer to my policyholder on what they believe is best for their situation. I never try to convince someone that I know what’s best better than they do!

In summary, Medicare has been popular since it was introduced back in the 1960’s, and Advantage plans are gaining in popularity because they do bring excellent value to Medicare recipients. The report found some problems, but we believe improvements to the system will be made and Medicare Advantage plans will continue to be an attractive option for millions of Americans.

What to Know about Health Insurance when Moving to Another State

Let’s say you move from California to Tennessee, does your insurance move with you, or do you need new insurance?

Most individual health insurance is not transferable from one US state to another. Therefore, if you move to a new state, a part of the moving process needs to be obtaining health insurance in your new state of residence. This holds true whether you have individual/family coverage or Medicare (including Supplements, Advantage plans, and Prescription Drug plans).

Let’s explore both types of insurance.

It You’re Under 65 and Moving from One State to Another - Health Insurance for Individuals and Families

Employer-sponsored Plans

If your employer transfers you to another state and you’re covered by their health plan, you probably don’t need to worry because you can most likely stay on the same plan as long as the employer-sponsored plan has an adequate network in the new state. If the plan doesn’t have an adequate network, the employer will likely find you a new, accommodating plan in the new state.

However, if you have coverage through a non-Marketplace individual or family plan, you will need to check with your insurance plan to see if they have a good network in your new state and change plans if necessary.

Marketplace Plans

If you have a plan through the Marketplace, your move will require some action because Marketplace plans don’t transfer from one state to another.

First, report your move to the Marketplace as soon as possible in order to avoid a gap in coverage. For most states (including Tennessee), this can be done by going to https://www.healthcare.gov/login and entering your new state or residence. If your new state appears on this list, it means they have their own website where you’ll apply.

Normally, enrolling through the Marketplace can only be done during the annual Open Enrollment Period at the end of the year, but a move to a new state is known as a “qualifying life event,” which makes you eligible for a Special Enrollment Period (SEP). The special enrollment period allows you 60 days from the time of your move to enroll in a qualified health insurance plan through the federal marketplace, your new state’s exchange, or elsewhere. It is important to note that the SEP onlys exists if you had credible coverage in the state you left (defined as having minimum essential coverage for at least one of the 60 days preceding the move).

Medicare Coverage when Moving from One State to Another

Necessary actions for Medicare coverage when moving to a new state vary depending on the type of coverage.

Original Medicare

If you only have Original Medicare (Parts A and B), your benefits and coverage won’t be affected since Original Medicare is a federal healthcare program. Still, you need to contact the Social Security Administration about your change of address in order to continue getting important information from them.

Medicare Advantage

Since Medicare Advantage plans are managed by private companies, any move to a new state will trigger a Special Enrollment Period, during which time you can:

• Switch to a new Medicare Advantage Plan or Medicare drug plan.

• Return to Original Medicare (if you’re in a Medicare Advantage Plan and you move outside of that plan’s service area).

It is important to note that if you don’t enroll in a new Medicare Advantage Plan during the SEP, you’ll automatically be enrolled in Original Medicare once you’re disenrolled from your old Medicare Advantage Plan.

There are certain windows during which you can report your move. If you tell your plan before you move, the SEP begins the month before the month you move and continues for 60 days after you move. If you tell your plan after you move, the SEP begins the month you tell your plan and lasts for 60 days more.

Prescription Drug Plans

Much like an Advantage plan, Medicare Part D drug plans are sold by private insurers and are specific to each state, so your move will mean you will need to enroll in a new plan.

If you tell your plan before you move, your chance to switch plans begins the month before the month you move and continues for 2 full months after you move. If you tell your plan after you move, your chance to switch plans begins the month you tell your plan, plus 2 more full months.

Medicare Supplements

Since Medicare Supplements (also known as Medigap plans) are supplemental to Original Medicare and have the same carriers nationwide, in most cases you can keep your current coverage in your new state. Any provider who accepts original Medicare in your new state will accept your Medigap insurance, but make sure to inform your carrier 30 days before your move.

There are 2 exceptions:

1. If you are moving into or out of Massachusetts, Minnesota, or Wisconsin. With Medigap, there are ten standard Supplement plans available in every state, designated by letters (A, B, C, D, F, G, K, L, M, and N), but the above states offer some different options.

2. If you have a Medicare SELECT plan that limits your providers to certain hospitals; however, you would have guaranteed issue rights in this instance.

Moving will allow you the opportunity to shop for coverage from a different Medigap plan in your new state, but as always, don’t terminate your current supplement until the new one has been issued.

Health Plans Must Cover At-Home COVID-19 Tests

Beginning January 15, 2022, both health insurance companies and self-funded group health plans must cover over-the-counter (OTC) COVID-19 tests for members at no charge. The news was announced by the the Departments of Labor, Treasury and Health and Human Services on January 10 as part of the CARES Act.

Important details:

• The free tests will continue through the end of the public health emergency.

• The requirement currently applies to individual plans, both Marketplace and non-Marketplace, but does not apply to Medicare and Medicaid.

• Self-funded group plans are required to cover the free tests.

• Only FDA-approved tests with “OTC” listed in the attributes column are eligible for reimbursement. Click here for the full list. No doctors prescription is needed.

• The limit for free tests varies depending on the insurance comany and could be as high as 8 per month for each family member. Check with your insurance company for details.

• Reimbursement applies to OTC tests only. Tests that must be mailed to a lab for results aren’t covered, and tests must be for personal use only. Tests used for return-to-work testing or work-related testing required by an employer are not covered.

Some insurance companies may only require that a member present their ID card at a preferred pharmacy to receive a free test. Others will require that a member download a COVID-19 OTC At-Home Testing Reimbursement Form from their insurer, fill it out, and send it back with the original receipt and the UPC code from their test box.

For more information, check with your insurance company.