The Puzzle of Medicare
Many people look forward to qualifying for Medicare as a benefit of growing older and they reach that threshold not really understanding what it’s all about. There are many parts to Medicare so let’s break them down and learn “Medicare 101”.
Medicare Part A is the most basic portion of the plan, and simply put it covers hospital care. For most people it is premium free as this is what we pay for during our working years. We are automatically enrolled in Part A as we approach our 65 birthday (this may change to 67 due to the Debt-Ceiling Agreement). Part A covers home health care, hospice care, hospital stays (after a deductible of $1,132, in 2011, for the 1st 60 days, $283 for days 61 through 90 and $566 for days 91 through 150) and 100 days of skilled nursing facility (covered at 100% for the first 20 days and after $141.50 deductible per day for days 21 through 100 thereafter you are responsible for all costs).
Unlike Part A, Part B is elective and is not free, we pay a premium and generally speaking it increases each January 1st. The monthly premium for 2011 is $110.50 if your annual income is less than $85,000 for individuals or $170,000 for married couples. There is a financial penalty if you don’t sign up for Part B when you first become eligible at your 65th birthday. You can sign up for Part B penalty free beginning 3 months prior to your 65th birthday and up to 4 months after.
Medicare, Part B, helps pay for Doctor’s services(for 2011 a deductible of $162 applies and then we are responsible for 20% of expenses); outpatient medical and surgical services and supplies; diagnostic tests; ambulatory surgery center facility fees for approved procedures; durable medical equipment such as wheelchairs, hospital beds, oxygen, and walkers; and some other medical services that Part A does not cover, such as the services of physical and occupational therapists, and some home health care, when these services are medically necessary. Medicare, Part B, does not pay for prescription drugs, cosmetic surgery, and routine physical exams.
Part C is/are Medicare Advantage Plans (like an HMO, EPO or PPO) that are sold by private insurance companies and are approved by Medicare. These Plans combine Part A and Part B coverage. In most cases, Part C plans are a lower cost alternative and usually provides extra benefits and includes prescription drug coverage. Benefits are provided with co-pays and generally there are network providers (higher co-pays for out of network providers if one has a PPO).
Part D is the prescription drug coverage that is provided by private companies approved by Medicare. It is elective coverage however if not purchased at time of eligibility a penalty of 1% per month is added to the premium (that adds up to 12% per year). Part D can be purchased as either a stand- alone plan or be part of an approved Advantage Plan. If purchased as a stand-alone it will have a separate premium. Part D is slightly complicated in its design, the maximum 2011 deductible is $310 (some plans don’t require it) we then pay a co-pay until the portion paid by coverage hits $2840. Once reached you now are in the infamous “donut hole” while in the gap, as of 2011 you receive a 50% discount on covered brand name drugs (it is expected that by 2020 the gap will be closed). When our out of pocket costs have reached (including deductible and co-pays) $4550 your Part D plan will cover most of the costs of your medications for the balance of the year. Then it begins all over again.
There are many decisions to make when our eligibility period is obtained and all options should be explored with a qualified agent so that at 65 we are ready to make our choices.
Keep It Local
Most of those reading this article live in the area, the Hudson Valley. The area is beautiful, it has changes of seasons unlike any other area. Kingston our county seat was the state’s first capital, the area is steeped in history. It is peppered with incredible businesses, little nuggets waiting to be discovered and patronized.
One of methods these businesses utilize to market themselves is to join the local Chamber of Commerce. Through the Chamber they can network with other local businesses, get listed in the business to business directory, have the opportunity to sponsor events for publicity and maybe even be interviewed on a radio show. In short it is a very reasonable way to promote a business. Our local Chamber has even added the phrase “keep it local” to their logo and their publicity campaign, a great idea.
Thus the topic of this article – our Chamber whose main purpose is to promote local commerce has in many instances decided to do business outside the area even outside the region.
One of the benefits the Chamber has offered is health insurance, which has been competition to the many local insurance companies for many years, it was administered by them. This year a decision was made to move the administration of the health insurance benefits to a brokerage firm. The most unfortunate part of this decision is that the firm chosen is based in Rochester, NY, not in the county and not even in the region. The business whose business is to promote local businesses has placed their business outside the region.
One would believe that perhaps this brokerage firm offered something different than any of our local firms could, however that is not the case, in fact every single benefit plan that is offered by the Chamber can be purchased through any of our local insurance agencies who sell health plans. Furthermore, the benefits could be purchased directly from a local brokerage and save the administration charges that are billed by the Chamber.
It also occurs to me that the money made by this outside brokerage firm is not going to be spent locally causing a trickling away of money from our area.
Local agencies were asked to provide proposals to the Chamber however when inquiries were made for details in order to provide a specific proposal those details were not provided. After the fact we were told that we couldn’t match the outside firm. Without details providing a proposal that could match or even surpass the competing firm was an impossibility.
It has recently come to my attention that my name has been used stating that I am “OK” with this decision – just for the record I am not “OK” with it.
DianaLou Wolff, FLMI/RHU, Registered Employee Benefits Consultant is the owner of Benefit Counseling Associates in Kingston and has been in the insurance industry for 30 years. WWW.benefitcounselingassociates.com
Let’s talk about Healthy New York
Living in New York is a double edged sword when it comes to health insurance. We have the advantage of many mandated benefits – chiropractic care, maternity coverage, mental health coverage, portability of coverage, no medical underwriting etc. All these marvelous things come with a hefty price tag.
Along comes Healthy New York, a plan subsidized by the state meant to cover people who fall into the abyss of no health insurance. Individuals and Sole Proprietors with limited income who either don’t have or have lost coverage and businesses who haven’t provided (or contributed less than $50 per month) coverage for their employees can be eligible.
The coverage is a Health Maintenance Organization (HMO) plan design however, because it is a government plan many of the mandates don’t apply to these plans. Because it is an HMO the insured must chose a primary care physician and use providers only within the network of the company they have chosen to use. The plan design is identical from one company to the next and the purchaser can chose from any company which is marketing in the county of residence or business domicile.
Premiums for Healthy NY products are about 3/5 the cost of a non-subsidized equivalent plan. The plan has physician co-payments of $20 and hospital co-payments of $500 depending on the company used referrals may be required for specialist care. Prescriptions are covered however there is a $100 deductible per calendar year a $10 co-payment for generic drugs and brand-name drugs have a $20 co-payment plus the difference in cost between the brand-name drug and generic equivalent (if a generic exists).
The plan does have limitations however because Healthy NY has a streamlined benefits package, certain services are not covered such as; mental health services and prescriptions to treat such, alcohol and substance abuse treatment, chiropractic care, hospice care, home health care (unless post surgery), physical therapy (unless post surgery), and last but not least ambulance transportation.
Locally the last limitation, lack of ambulance transportation, has caused some serious difficulties. As most readers are aware our two local hospitals have merged, what some people are not aware of or have forgotten in the stress of the situation is that we now only have one emergency room and it is at the Kingston Hospital. If you are one of the unfortunate to have an emergent situation and go to the Benedictine Hospital they will send you by ambulance to the other location. They are bound by regulations to do this. That very short trip has a very large bill attached to it of around $1000. Although the emergency room would be covered for the Healthy NY patient with the very slight co-pay of $50 the ambulance trip would be declined by the insuring company.
Healthy New York is a wonderful program for those who qualify and like all plans the insured should be aware of its limitations as well as its benefits. For this and all employee benefit you can contact
Things Are Not Always As They Appear
Many people have formed opinions about insurance companies and many are negative due to their past experience. However some of those opinions have no basis. I’d like to take this time to help the reader know a little more about this mysterious entity.
Many people believe that health insurance companies exist simply to keep their executives rolling in money. First I’m not sure I understand why it is ok for every other company executive to make millions but not for insurance company executives. It takes just as much, maybe more, effort to run a health insurance company as any other company(i.e. Walmart, Google, Facebook ,Trump Enterprises) it is far more regulated. Since I work and am licensed in New York State I know those regulations and in New York we have had minimum loss ratios of 75% since the 90’s (meaning that 75 cents of every dollar that comes in must be spent on claims). Now PPACA (Patient Protection and Affordable Care Act)states that insurance on employer groups of less than 25 employees must have an 80% loss ratio and that on groups larger than 25 an 85% loss ratio. That means that all administration of those insurance companies must be done in that 15 to 20% – all salaries, equipment, benefits etc of those insurance companies must be done in that 15 to 20 percent. I’m not aware of many companies that can operate on that very small margin – for instance the “rag trade” alone has mark ups of more that 100%.
Another misconception that many people have is that when they receive a claim denial it is the final word. Believing that, the insured thinks that he/she must pay large out of pocket expenses. Here’s where having a good broker comes in handy. One should never accept a denial at first blush, when that explanation of benefits comes in and states the patient responsibility there are codes explaining why. If it is not clear call and question why. If that answer is not clear don’t drop it. There are many reasons why the claim determination may be an error – coding may be incorrect (either by the providers input or the insurance claims department). Very recently a carrier’s master computer had serious errors causing the cancellation of many insured’s prescription coverage, although this was not true some people just accepted this and paid for their prescription and then became very angry. Even those who questioned where told they had no coverage again this is the perfect time to ask for help from a competent broker.
When an insured has a major illness most insurance companies assign that individual an advocate or an advisor (depending on what that particular insurance company calls it). An instance occurred where a client who had been receiving counseling was told by the insurance company outsourced doctor that he didn’t have a mental illness but dementia and that he didn’t need counseling but a babysitter and his counseling sessions were being declined. Wow did this cause outrage and rightfully so this physician had never met or even read this insured’s records. Fortunately the insured recalled that he had an advocate and called her – the denial was immediately reversed.
I hope this clears some of the mystery. Things are not always as they appear on the surface for everything including health insurance companies.
Hinchey Speaks at All Service Club Luncheon
The Wednesday before Thanksgiving I attended the local annual “All Service Club Luncheon” and I was surprised to learn that New York Congressional Representative Maurice Hinchey was to be the speaker. My instant thought was to leave as I had heard his talks before and they all tended to be a big blame game. I decided to stay when I found he was going to speak on the new Health Care Law as he called it. He, of course, was referring to the Patient Protection and Affordable Care Act (PPACA).
He began his talk by stating that he studied the law for the past week in preparation for this talk. I wondered why he only studied it the past week when he voted “Yes” for it back in March of this year.
The service clubs he was speaking to were Rotary Club of Kingston, Kingston Lions Club, Sunrise Rotary and Kingston Kiwanis Club all his constituents – the people he represents.
During his talk he explained how the new law would guarantee coverage for dependent children to age 26 and how this age category was one that had difficulty obtaining coverage. He discussed how the law would prevent people from losing their coverage due to costly ailments as so many people do. He explained that the law would prevent inequities in the premium charges between men and women and how coverage for women was so much more expensive then for that of men and how the new regulations would level those charges out. He told us how so many pregnant women are being denied coverage because it was a pre-existing condition, and, in fact, that maternity wasn’t a covered expense. He further told us of people with pre-existing conditions being denied coverage.
At this point it bears repeating that he was speaking to the New Yorkers that he represents. He never once explained that in New York State insured individuals cannot lose their coverage because of illnesses they have but only if their premiums remains unpaid. He never referred to the fact that New York State has community rating, meaning that all people within a certain geographical area are charged the same premium for the same plan – regardless of age, gender or medical condition. He didn’t tell his audience that New York State insurance laws prohibit medical underwriting, meaning that individuals cannot be denied coverage because of an existing medical condition. And he never said that in New York State maternity has been a mandated coverage for more than the past 20 years.
At the end of his talk he was going to walk off without answering questions but that was not to happen. He was asked about the cost of the new law to which he explained that no one really knows what it will cost. He was asked about Medicare and Medicaid and he said that it was a very complicated issue. Finally, as he was ready to walk off, I could hold my tongue no longer. I spoke up saying I didn’t have a question but a statement that he should study New York State insurance as his talks would be to his constituents, the people he represents, New Yorkers who already have many of the mandates that are included in PPACA. His response- he already knows those laws and that they would be made weaker by the national bill. Fortunately the reality is that in the instances where the state regulation is stronger than that imposed by PPACA the state law will supersede it.
Context is important, especially with an issue as important as healthcare. We need to know what is happening and how it affects us, as New Yorkers.
Class Act
November 1, 2010
The day before election day. Please think carefully about your choices, your vote is still very important.
The Patient Protection and Affordable Care Act is just a bundle of surprises at every turn. Next up is the portion of the Act that was enacted because and in memory of the late Ted Kennedy as it was an issue that was dear to his heart, the CLASS Act. The letters stand for “Community Living Assistance Services & Support” ( http://www.foxnews.com/…/little-known-long-termhealth-care-provision-budget-buster-say-critics/) -and its purpose is to provide Long Term Care Coverage to every employed American. A noble thought.
The coverage is guaranteed issue for all working Americans to be administered by HHS (Health and Human Services (http://www.hhs.gov). The benefit will be about (not defined yet) $50 per day of long term care – the first problem is that local care (the Hudson Valley) costs about $330 per day.
Every employed American – let me repeat that – EVERY EMPLOYED AMERICAN will automatically be signed up for this coverage. The coverage will not be free, next problem– there will be a monthly cost of from $100 to $240 (again, not defined yet) to be paid by EVERY EMPLOYED AMERICAN.
Next problem, in order to be eligible to receive the benefit the covered employee must have paid into the system for 5 years and have been employed 36 months of that time (hence no one near retirement). That means that no less than $6000 will have to have been paid in before meager benefit of $50 per day will be payable.
Another problem, as stated earlier HHS will administer this coverage AND premiums will be adjusted whenever necessary to cover benefits.
Ok, so now you know all the problems.
Employers and employees must be made aware of the CLASS Act as they can decline participation and waive coverage. If not, they will be looking at a deduction from their weekly paychecks of no less than $25 per pay. We can offer expert help http://www.benefitcounselingassociates.com
Punching Bags
Insurance agents have made for popular punching bags in recent weeks. TIME magazine posted that agents may be the first victims of health reform. But the extinction of the insurance agent has been greatly exaggerated.
Millions of small businesses depend on agents to help them find policies that suit their needs and budget. And with the new health reform law ready to make the insurance market even more complicated, consumers will need the expert advice of agents and brokers more than ever.
Professional agents and brokers are trained to help individuals and businesses select plans that are right for them. They must complete courses and pass state licensing exams in order to become licensed. New York State also requires agents and brokers to take continuing education courses to maintain their licenses.
Agents do more than just sell policies. Many, like Benefit Counseling Associates, function as virtual human resources departments for small businesses.
As the Congressional Budget Office put it, agents and brokers often “handle the responsibilities that larger firms generally delegate to their human resources departments — such as shopping for plans and negotiating premiums, providing information about the selected plans, and processing enrollees.” Small employers rely on agents to help their employees with claims problems, too.
Without the assistance of an insurance agent or broker, many small businesses would spend time and money on coverage for their employees than necessary while they could be running their own business. Individuals and businesses appreciate the high level of service that brokers provide.
Critics of agents claim that they force insurers to spend money on administration that should instead be spent on medical care. However, according to the Centers for Medicare and Medicaid Services, 86 percent of premium dollars are already spent on medical expenses.
Much of the spending classified as “administrative” actually helps fund fraud-prevention and wellness programs. Such initiatives help keep premium costs down for individuals and businesses.
The new health reform law aims to lower health costs for consumers. Agents have decades of experience doing exactly that for their customers. It’s no wonder that the National Association of Insurance Commissioners has explicitly stated that health reform must “protect the indispensable role that licensed insurance professionals play in serving consumers.”
Did you know: Eating habits directly relate to the rising cost of health care?
Increasing numbers of patients who are challenged by obesity, smoking, drug abuse, poor nutrition and physical inactivity contribute to an increase in the use of, and therefore the cost of, health care services, according to PriceWaterhouseCoopers in its publication, The Factors Fueling Rising Health Care Costs 2008. These preventable risk factors also contribute to chronic diseases, which account for 75% of the money spent on health care in the United States each year, reports Thorpe, et al, in Health Affairs.
According to the U.S. Centers for Disease Control and Prevention, 34 percent of adults aged 20 and older are obese and 34 percent are overweight. Among children, 18 percent of teens aged 12 to 19 are obese, 20 percent of children aged 6 to 11 are obese, as are 10 percent of kids aged 2 to 5.
The biggest health problem facing America is not AIDS, or even cancer it’s obesity and a sedentary lifestyle.
Health Care Reform
If you are feeling confused about health care reform, you are not alone. There are at least 1000 places within The Patient Protection and Affordable Care Act (PPACA or “The Act”) that the statement “to be defined by the HHS (Health and Human Services Secretary)” appears. Hence the rules are still being written. However, some regulations take effect in 2010.
First if you are a small business that offers coverage to employees, and the average wages of your employees are less than $50,000 per year, you may be eligible for a tax credit to help with the cost of coverage, even if you don’t owe income taxes. The credit will start at 35% of health insurance premiums in the first year and will vary depending on your (the business owner’s) circumstances. Your agent/broker should be able to help you through how it works or go to the IRS website for more information.
You may also have heard that your benefits may be improving. A number of these benefits will be required on plans that renew or begin September 23, 2010. One of those benefits is that caps or maximum benefit limits will be lifted. (i.e. if your plan has a maximum benefit limitation of $1 million it would now change to unlimited maximums.).
Another new benefit is that if your plan covers dependents they can be covered to age 26, even if they are not full time students and even if they are married. Keep in mind that this applies to plans that renew after the September 23rd date.
The Act also provides for enhanced preventative care services. Meaning that benefits for preventative care will be covered at 100% no co-pay or deductible. The benefit applies to most plans and exact services that must be covered have yet to be “defined”, but are expected soon.
Keep in mind that although these benefits are wonderful they come with a price tag. Unfortunately, there will be no choice in their implementation as they are required to be included in all health coverage now.
Welcome to my blog
I’m DianaLou Wolff and have been an Employee Benefit Specialist for 24 years. I am the principal of Benefit Counseling Associates, we help people through the “alphabet soup of employee benefits”.
My goal, with this blog, is to bring helpful information to it’s readers regarding health care reform, national and state, wellness, exciting news on the health care front as well as depressing news in that same area. Further, to become the small business persons’ source for all things “employee benefits” freeing them up to work at their own business.