Maximizing Your Medicare Costs and Health Benefits

By Edwin Quinabo

Just thinking about growing old typically triggers anxiety. There is the inescapable reality that no amount of exercise or healthy eating can stop mental and physical decline. Old age is commonly associated with illness, loss of mobility, change in appearance. “Will I be able to take care of myself?” “Would I become a burden onto my children?” – two typical questions we hear of aging.

If diminished health alone isn’t frightening enough, money woes is yet another major concern. At some point, a senior is unable to work. Some will experience poverty. The non-profit group American Progress estimates about 3.4 million seniors age 65 and older live below the poverty line. The vast majority will have at the least, a limited and fixed income. 

To address the double-pronged challenge of maintaining health and wealth (making healthcare more affordable), Medicare was created in 1966. Today over 60 million people living in the U.S. are enrolled in Medicare.

But seniors are not in consensus about the value of Medicare. Some say it doesn’t cover enough and is unaffordable. Others say it meets all their needs. Experts say what everyone should know is that Medicare isn’t entirely free, unlike what younger people mistaken it for. It’s very complex; and ultimately designed to meet the diverse needs of its enrollees based on their health and income. Medicare is one program; but has many options.

Before reaching eligibility for Medicare at 65 (disabled can enroll under 65), healthcare experts say it’s crucial to know what these options are. Being informed gives beneficiaries the know-how to maximize their benefits.

When, how and what to sign up for 
Open enrollment to change an existing Medicare plan is just around the corner. Typically it falls between Oct. 15 to Dec. 7 each year, with the adjusted plan to take effect on Jan. 1 the following year. 

Due to the coronavirus, enrollment is only being done online at www.SocialSecurity.gov. It’s possible that the normal application process—done in-person at your local Social Security office or by calling SS at 1-800-772-1213—could be resumed by the end of the year. If you have questions on your coverage, the Medicare hotline (800-MEDICARE) is still open 24 hours a day, seven days a week.

If you are already collecting Social Security retirement benefits since turning 65, enrollment is automatic for Medicare Part A (hospital insurance) and Medicare Part B (medical insurance), collectively called Original Medicare.

You don’t have to do anything more unless you decide to switch to Medicare Part C (private company insurance approved by Medicare) called Medicare Advantage Plans that are far more comprehensive in coverage beyond what’s covered in Original Medicare.

Enrollees who want to keep Original Medicare but also want additional coverage often will buy extra private insurance called Medigap.

Medicare Part D (Medicare Prescription Drug Plan) is an additional option but not required.

If you are not collecting Social Security benefits at 65 (some delay it to 67 or 70 for full benefits), you can still get Medicare at age 65, but you must enroll (not done automatically) during what’s called the Initial Enrollment Period (IEP), the seven-month period that begins three months before you turn 65 and three months after (the month of your birthday counts as one month).

Enrollees should be reminded that it’s always possible to change a current plan to meet your current health needs.

Options
Keali’i Lopez, state director AARP Hawai’i, said “For someone not yet enrolled in Medicare, they should be aware that there are two different ways to get your Medicare coverage: either traditional (or original) Medicare, or Medicare Advantage (Medicare-approved plans offered by private insurance companies). If you choose traditional Medicare, consider whether you have or will need supplemental coverage to cover out-of-pocket costs, either through a retiree plan from a former employer, or by purchasing a separate Medigap plan. If you decide to purchase a Medigap plan, usually the best time to do so is when you first sign up for Medicare.”

He adds, “When comparing plans, assess whether your personal health needs have changed over the past year. For example, have you started a new medication, or began to see a new specialist? It’s a good idea to compare plans to see whether your drugs are covered or all your health care providers are covered, and to compare those costs.”

Original Medicare generally covers 80 percent of a person’s Part A and Part B expenses, which include services such as doctor visits, hospital stays and lab tests. The individual is responsible for the other 20 percent, with no annual limit on out-of-pocket costs.

Kailua residents and retired couple Tessie (Ed.D) and Cicerio (Bernie) Bernales belong to United Healthcare, Group Medicare Advantage Plan (PPO). Their plan covers all the benefits of Original Medicare plus more. Usually enrollees of Medicare Advantage do not need to purchase Medigap because coverage is comprehensive enough.

Tessie says their plan pays for everything except for co-pay on prescription drugs.

An example of what Medicare Advantage provides beyond Original Medicare that the Bernales’ receive include: Routine physical, Chiropractic care, Foot care-routine, Hearing- routine exam, Hearing aids up to $500 every 3 years, Vision-routine eye exams 1 every 12 months, Private duty nursing ($10,000 limit per plan year) Fitness program through Silver Sneakers, Virtual Behavioral Visits, Virtual Doctor Visits, Yearly in-person house calls.

Covered drugs are placed in tiers (1. preferred generic, 2.preferred brand, 3.Non-preferred drug, 4. specialty tier). Each has a different copay or coinsurance amount.

For the Catastrophic coverage stage, after a maximum total out-of-pocket cost of $6,350 is reached, the enrollee will pay the greater of $3.60 copay for generic brands, $8.95 copay for all other drugs, or 5% coinsurance. 

Also, Tess mentions that there is $0. Copay for In-Network or Out-of-Network providers.

Experts say it is important for beneficiaries to check their In-network and Out-of-network coverage if they are frequent retired travelers. In some basic plans, Medicare will not cover or cover only limited medical costs Out-of-net- work. What does this mean? If the enrollee receives medical treatment at a place that does not belong to their plan’s network of healthcare providers (for example in a different state or country like the Philippines), the enrollee could be responsible for all the costs or limited amount for that medical visit.

The Bernales pay $289.20 each month ($144.60 each). “That’s $3,470.40 a year and that’s a lot since we are retired and on a fixed income,” said Tess.

“I’m content with Medicare right now since the Original Medicare plan is supplemented by additional program benefits. I don’t know what we will need down the road, perhaps more as we advance in age,” said Tess.

Dr. Belinda Aquino, Professor Emeritus at the University of Hawaii at Manoa, receives Medicare without additional private insurance.

“Right now, what I have is sufficient for my needs and I have not been charged yet for emergency visits to Queen’s Hospital for a number of emergency treatments that I’ve had,” said Aquino.

She adds that she is content with her Medicare Drug Plan.

But Aquino, as well as the Bernales, would want to see Medicare provide better coverage for dental procedures.

“My dental plan was part of the plan negotiated by the UH Professional Assembly, the faculty union, when I was still working as a faculty member of UH in a collective bargaining negotiation with the State of Hawaii. I only have a ‘deductible’ amount of $1,000 every year, which is not enough to pay all the dental charges for my visits to the dentist, such as treatment of cavities and other defects that have to be corrected.

“Also, if the dental procedure is complex, like surgery for implants on any part of the mouth, the entire cost falls mostly on the patient, meaning me. When I had implant surgery a few years ago, I paid almost $12,000 to the specialist, and another amount when I went back to my regular dentist after my implant procedure,” said Aquino.

She adds, “Overall, except for the dental and vision charges which are relatively higher in cost, my entire Medical plan seems reasonable. But I think the dental and vision treatment should be lower, especially for retirees who get only about less than 50% of what they used to make when they were still working. The reduced annual pension of retirees significantly reduces their purchasing power in their retirement years, which means the costs could be higher then.”

Tips on Choosing a Plan 
Experts say Medicare is not a one size fit all program. New and current enrollees should be considering services, cost, and health needs as personal health and finances change.

A few tips experts say will help in selecting the best Medicare program include:

Understanding healthcare lingo. It’s important to know essential terminology and how they apply to your plan. A few major ones are as follows. Premium is a monthly fee paid for coverage. Deductible is the amount of money that the enrollee must pay before an insurance company will pay a claim. Coinsurance is what the enrollee or patient must pay as his share in a claim (expressed in percentage) and what the insurance company must pay. It’s like splitting the cost. Out-of-pocket maximum is a predetermined, limited amount of money the enrollee must pay before an insurance company pays 100 percent of an individual’s health care expenses for the remainder of the year. Basic plans do not have an out-of-pocket maximum.

Know what specialty benefits are. Original Medicare doesn’t cover prescription drugs and most dental, vision and hearing services. Critical illness and long-term care (nursing homes and in-house aides) are also not covered or limited in basic plans. To get these specialty benefits, enrollees can consider Medicare Advantage plans and Medigap.

Lower monthly payment doesn’t necessarily save you money in long-term. Experts say too often people will choose a plan based on how low their monthly premiums are and not consider long-term needs. They say the best approach to choosing a plan is to look at overall value both short and long-term.

Anticipate major health expenses. If you expect a major surgical procedure a year or two years in advance, compare the differences in plan designs and how much will and will not be covered. Make adjustments as necessary well ahead of planned procedure.

Reviewing your Medicare plan and benefits can usually be found on your insurer’s website or in the plan documents your insurer sent in the mail.

Saving on Prescription Drugs. Choosing home delivery pharmacy benefits is one way to save money. Some home delivery pharmacies offer a three-month supply on medication for a lower cost than what you’d pay for the same supply at a local drug store. With some plans, if you buy your drugs at a retail preferred pharmacy network, this can lower your copay.

On Costs
Lopez said most people do not have to pay a monthly premium for Medicare Part A. But most will have to pay the Medicare Part B monthly premium, which changes from year to year. He said in 2020, it is about $144.60 per month ($1,735.20 per year) for most people.

In addition to that, Lopez said enrollees will be responsible for “cost-sharing, such as deductibles and coinsurance, which will vary based on use. For example, you’ll also have to pay a $198 deductible for medical services before Medicare Part B kicks in. After that, you’ll pay 20% of the cost for doctor visits and other out-patient items and services. If you need hospitalization, the Medicare Part A deductible is $1,408/benefit period in 2020.

“If you have Medicare Advantage instead of traditional Medicare, you may also pay an additional Medicare Advantage monthly premium (average is $23/month in 2020), and cost-sharing will vary by plan,” said Lopez.

He adds Original Medicare enrollees who purchase a separate Medicare Part D (Prescription Plan), premiums and cost sharing varies but the average premium is about $30 per month. For those that have Medicare Advantage plans, Part D coverage is included.

“For someone not yet enrolled in Medicare, they should be aware that there are two different ways to get your Medicare coverage: either traditional (or original) Medicare, or Medicare Advantage (Medicare-approved plans offered by private insurance companies). If you choose traditional Medicare, consider whether you have or will need supplemental coverage to cover out-of-pocket costs, either through a retiree plan from a former employer, or by purchasing a separate Medigap plan. If you decide to purchase a Medigap plan, usually the best time to do so is when you first sign up for Medicare.” 

—Keali’i Lopez, State Director AARP Hawai’i 

Affordability
To a healthy senior Medicare could be affordable. But for seniors with chronic conditions like diabetes and high blood pressure or major conditions like cardiovascular disease, Medicare doesn’t adequately cover costs or the plan’s monthly bill becomes too expensive, or both.

The NY Times reported that the average cardiovascular patient who is a Medicare recipient pays $37,996 in out of pocket costs in the last five years of their lives.

According to a CMS Medicare Current Beneficiary Survey, Medicare Part D spending per user on insulin products is $3,949 per year (2016 average). If a senior has multiple health problems, drugs alone (separate from medical treatment) could be unaffordable.

Critics say Medicare gives people a false sense of security because it’s really affordable as long as you’re healthy.

As for Medicare’s side, their cost per beneficiary/enrollee, the program pays $14,141 (average in 2019), according to Medicare Trustees report.

Statistics shows both Medicare recipients and the Medicare program itself are paying prices neither can afford, suggesting the problem is a systemic one.

Lopez said, “If we want to reduce the cost of Medicare and make health care more affordable, we have to attack the root cause of rising health care costs, especially the high cost of prescription drugs. The simple reason why prescription drugs are so expensive is that pharmaceutical companies are free to price gouge taxpayers. Unlike many other countries, the United States allows drug makers to set their own prices with virtually no accountability or transparency.

“AARP believes Medicare should be allowed to negotiate prescription drug prices. Drug prices should not rise faster than inflation. Medicare Part D prescription drug plans should include a cap on out-of-pocket drug costs. Prescription drug price transparency should be increased, and lower-priced generic drugs should get to market more quickly.”

On Medicare for All and possibly other popular proposals floating around, Lopez said, “AARP supports efforts to ensure adequate affordable health insurance, and we welcome the debate to improve coverage and lower costs. For example, we have fought hard to protect those with pre-existing conditions and prevent an age tax.

“We want to ensure that we protect Medicare beneficiaries – Medicare remains very popular and we would oppose proposals that increase seniors’ costs or threaten their guaranteed coverage. ‘Medicare For All’ and ‘Medicare Buy-in’ are terms that have been used by many, but they mean different things to different people. We look forward to more detailed and careful analyses of the different proposals and how they would work.

There are key questions to answer, such as: who would the proposal effect; what are the costs; how would coverage compare to what we have today; and how would it impact current health care programs? We cannot prudently make decisions without knowing the answers to these questions.”

Tess said, “Accessing some services has income requirements, it should be available to all seniors regardless of income. A single-payer system like in other countries appear to be alright with their situation, but we need to really look at the fine prints of what they cover before we can say that we should adopt that system.”

COVID-19 and Medicare
Medicare has responded quickly to help beneficiaries during COVID-19.

Lopez said Medicare and Medicaid beneficiaries are given free access to COVID-19 diagnostic testing and treatment. When a vaccine is made available, that will also be free for beneficiaries. Medicare Advantage Plans also can’t charge copayments, deductibles, or co-insurance for COVID-19 tests.

“Medicare will pay for COVID-19 testing without a physician’s written order. Medicare will only cover a patient’s first COVID-19 test. Any subsequent tests must be ordered by a physician or other qualified health care provider. You can also get tests if you cannot leave your home, and Medicare and Medicaid have expanded testing in nursing homes.

“In addition, Medicare has expanded telehealth options. Physicians and occupational therapists as well as speech language pathologists can provide telehealth visits, under new orders from CMS. The agency is also allowing patients and medical professionals to hold telehealth sessions over the telephone so those who do not have Internet can still use telehealth,” said Lopez.

Medicare’s website says for virtual check-ins, you need to consent verbally to using virtual check-ins and your doctor must document that consent in your medical record before you use this service. You pay your usual Medicare coinsurance and deductible for these services.

On services during COVID, Tess said “I would like more coverage that I thought we should have while in quarantine: examples—free home health care services (cleaning, meal prep, etc. ), free meal/grocery delivery, and other services related to senior needs while in lockdown.”

Forecasting Medicare and the 2020 Elections
Lopez said, “Within six years, Medicare’s Part A (hospital) trust fund is projected to run short of funds needed to pay full hospital benefits, primarily due to rising health care costs, rapidly increasing prescription drug prices, new technology, and increased enrollment. Lowering costs and improving the efficiency and value of health care spending are especially crucial for Medicare, as the number of enrollees is expected to grow to 80 million by 2030. In addition, the COVID-19 pandemic and economic slowdown may have further increased the need to additional funding for Medicare’s Part A (hospital) trust fund.”

Medicare experts say while Medicare is strong, politicians need to look at the root causes of rising program costs and get costs manageable so that it can continue to be robust and available for generations.

Tricia Neuman, senior vice president of the Kaiser Family Foundation, said “Voters need to think about who they want to be making decisions about the future of Medicare.”

Lopez reminds voters that the 2020 election could determine whether there will be changes to the nation’s health care system, including Medicare.

“Before you vote, you should find out where the candidates stand on strengthening Medicare,” said Lopez.