AEP, ObamaCare & Medicare Supplements

One of the most common questions we're being asked lately is, “Will my Medicare Supplement change this year?”  Generally people have one of two reasons for asking this question.  There are those concerned about the Annual Enrollment Period (AEP) affects them, and there are those concerned about the Affordable Care Act (ObamaCare) affects them.  The answer to the question, regardless of your concern, is “No.”

The Annual Enrollment Period is an enrollment period that applies to Prescription Drug Plans (PDPs) and Medicare Advantage Plans (MAs), but it does not pertain to Medicare Supplements whatsoever.  Both Prescription Drug Plans and Medicare Advantage Plans are set up on one-year contracts with the government to offer Medicare services.  Thus, during the Annual Enrollment Period, these plans announce their changes for the upcoming year and give you a chance to change your plan if you like.  However, a Medicare Supplement does not hold an annual contract with the government, and thus it does not have to renew anything at the end of the year.  Your coverage simply continues on without requiring you to take any action.  This is one of the reasons a Medicare Supplement remains one of the most stable, dependable, and comprehensive coverages available.

ObamaCare, similarly, does not affect your Medicare Supplement either.  In fact, ObamaCare really doesn’t even effect Medicare that much.  There were a few changes that went into effect back in 2010, but there is nothing new that will roll out in 2014.  The ObamaCare deadlines you keep hearing about are only applicable to individuals who do not receive Medicare benefits.

So there you have it.  If you have a Medicare Supplement, sit back, relax, and enjoy your holidays! 

* If, on the other hand, you have a Medicare Advantage Plan and/or a Prescription Drug Plan and you are dissatisfied with the changes your plan is making next year, please give us a call or drop us an email and we’ll help you sort through your options.  We have access to nearly every Medicare and prescription plan available in Idaho and we’d love to help take the complexity out of your search.

ObamaCare: Non-Medicare

Two months ago we posted an article detailing how ObamaCare will affect Medicare recipients.  That article can be found by clicking here.  In this article we are going to take just a minute to look at how the law affects non-Medicare folks.  Since this group of people are the target of the bill, the effects are numerous.  Therefore, we are going to briefly summarize the high points, and spend a minute talking about what your options are.

Right off the bat this legislation makes a distinction between people covered under group coverage and those not.  If you are covered under group coverage, and your employer is choosing to continue coverage under ObamaCare, then you really don’t have anything to worry about.  You can keep your group coverage and life goes right along.

Of the group of people who do not have employer coverage, the law divides the population between people with individual insurance and those with no insurance.  If you have existing individual insurance, there is a small chance (~10%) that your plan may meet grandfathering criteria in which case nothing would change for you either.*  However, for most people who are currently purchasing insurance, your plan will be discontinued on January 1st, 2014.  Now before your heart jumps a few beats, let us be clear that just because your plan is being discontinued on January 1st, 2014 , does not mean that you lose your coverage on that date.  Your coverage will remain inforce until your annual policy anniversary date (the date your policy renews each year).  At that point it will terminate and you will lose your coverage.  Thus, you can either choose to keep your current plan until your renewal date and look at options then, or you can take advantage of the Open Enrollment Period (Oct 1, 2013 – Mar 31, 2014) to change your coverage before your renewal date.

Now we come to the uninsured.  The bottom line is that everyone, with a few exceptions, will be required to purchase health insurance.  And so here come all the questions.  How much is the coverage?  What if I can’t afford it?  What happens if I don’t purchase insurance?  etc.  It is at this point that this article can become a novel if we’re not careful.  For the sake of brevity, therefore, let us just say the following.  If you can’t afford to purchase insurance, the government will help you pay your premium.  If you don’t purchase insurance, you will pay an extra tax.

So whether you have insurance, or whether you don’t, what are your options?  If you’re currently insured by a grandfathered plan, you can stay put and be fine.  If you’re currently insured by a non-grandfathered plan, you can move to another plan during Open Enrollment, move to another plan at your policy renewal date, or drop your coverage on your annual renewal date and pay the annual tax.  If you’re currently uninsured you can do nothing and pay the annual tax (provided you are not one of the few exceptions), or purchase insurance coverage.

Before concluding, there is probably one major question still remaining, “What about these health insurance exchanges I keep hearing about?”  The exchanges are a vehicle by which to purchase insurance.  You do not have to use the exchange, but it is an option.

We know that while this has answered some of your questions, it has no doubt given birth to many more.  That is fine; that’s why we are here.   For answers to your specific questions about the annual tax, government subsidies, the exchange, and coverage options, please call or email us anytime.  If you’re currently on Medicare, simply smile, close your web browser and thank God that you don’t have to worry about any of this!  :)

* Note: since insurance rates are largely based on the number of people in a particular insurance pool, small pools often become very expensive.  Old plans (such as grandfathered plans) often become very expensive because there is no incoming new business to help grow the pool.  Additionally, people often leave old plans in favor of new ones.  These factors can cause the size of the pool of old plan to shrink, thus increasing cost.  Therefore, even on a grandfathered plan, you may find you can obtain more affordable coverage elsewhere.

ObamaCare: Medicare

One question that we’ve been getting asked a lot lately is, “How is ObamaCare going to affect me?”  Well, there are many ways in which Obama will affect you (e.g. national economy, taxes, etc), but we know that you are referring to your health insurance coverage.  The answer to that question depends largely on how you obtain your health insurance; whether through Medicare, a private individual policy, or through group coverage.  We will deal with the last two situations in another article, but here we want to answer the question as it pertains to people on Medicare.

The short answer is, ObamaCare’s full implementation in 2014 will not affect you at all.  Here’s the longer answer.

When the Patient Protection and Affordable Care Act, known as the Affordable Care Act or ObamaCare, was passed in 2010, there were three major items that affected Medicare.  First, there was a provision to reduce the donut hole coverage gap on Prescription Drug Plans.  Second, there was an increase in the number of preventative services that Medicare offers.  Third, there was a reduction in payments to Medicare Advantage Plans. 

• Donut Hole.  Prescription Drug Plans provide coverage to help pay the costs of prescription drugs.  Under the old plan design, these plans assisted with prescription costs until your annual medication expenses reached a certain level ($2,830 in 2010).  At that point, you would begin to pay 100% of the cost of your medications.  The Affordable Care Act implemented a gradual phase-out of the donut hole that will be complete by 2020.  For a chart detailing this phase-out, click here.
• Preventative Services.  Medicare has always offered preventative services.  Under the Affordable Care Act, these services were expanded to include new services, as well as providing many of these services at no cost.  For a full list of the preventative services that Medicare now offers, click here.
• Medicare Advantage Plans.  The easiest way to describe a Medicare Advantage Plan is to think of it as a farming out of the administration of health benefits by Medicare to a third-party-administrator.  Private insurance companies are paid a fee by Medicare for each member they enroll to provide their health benefits.  Under the Affordable Care Act, these fees were reduced.  The effect of this has been increased premiums and reduced benefits to members of Medicare Advantage Plans.  Additionally, some plans were unable to adjust to the reduced fee schedule and canceled their contracts with Medicare thus terminating their members health benefits.

As you can see, these changes to Medicare are not insignificant.  However, they have all been in effect since 2010.  In the Medicare world, we’ve been living under the effects of ObamaCare since 2010.  Therefore if you are a Medicare recipient, there will  be no noticeable change in January 2014.  If you have further questions about this, please feel free to call or email us anytime.

Medicare and the Fiscal Cliff

As we ended 2012, the congressional budget talks dominated the political discussion.  The impending "Fiscal Cliff" that we were set to topple off on January 1st, 2013 was on the minds of everyone and even threatened to overshadow New Year's celebrations (say it ain't so!).  But alas, just before the stroke of midnight on December 31st, congress passed the American Tax Relief Act of 2012 and saved the day.  In an instant all our cares were over... right?  But as we awoke to the promise of a new year, the buzz was gone, and people began to wonder, what had actually been done.  Had, in fact, anything really been fixed?  And for those of us interested in all things Medicare, the bigger question was, how does this piece of legislation effect Medicare?

The short answer to the questions above is, not much.  That is, not much is fixed, and Medicare is not affected much by the law.  Not much is fixed because most of the major issues were simply pushed off until March or December of this year.  Medicare is not affected much because most of the law does not even address Medicare-related issues.  There are, however, two items that do effect Medicare recipients.

• Physician Pay Cuts.  The long-anticipated, and often delayed, 26.5% physician pay cut was delayed once again.  Congress will have to deal with this issue again before December 31st of this year, but for now doctors will not see this major drop in reimbursement. 
• Hospital Pay Cuts.  Hospitals, however, were not so lucky.  While the percentages are not nearly as high as the proposed doctor cuts, hospitals will still feel a sting.  While it remains to be seen exactly how this will effect your ability to receive care or be admitted to a hospital, it does hint that some services, like kidney dialysis, may be handed over to outpatient facilities.

On a related side note, the Social Security/Medicare tax break expired at the end of the year was not renewed.  Two years ago, active workers saw a 2% reduction in the amount of tax they paid for Social Security and Medicare.  Beginning the first of this year, that tax break will disappear.  So if you are actively employed, this may explain why your check took a little dip this month.

What The Supreme Court Ruling Means For Medicare

On June 28th, the Supreme Court ruled that the Patient Protection and Affordable Care Act (PPACA) does not violate the US Constitution.  Since then, we've been asked numerous times, "What does this mean for people on Medicare?"  Well, the answer is - surprisingly little.

When the act was passed in 2010, most of the changes that effected Medicare went into effect immediately.  The major components were:

• Many of the copays for preventative care were eliminated,
• A annual wellness visit was added, and
• The phasing out of the prescription drug "Donut Hole" began (this should be completed by 2020).

Because the Supreme Court only upheld the law, as opposed to changing it, the result was that these changes remained in place.  The bulk of what the PPACA addressed was related to insurance for those not yet on Medicare. 

Under PPACA individuals not covered by Medicare, Medicaid, or employer insurance will be required to purchase health care insurance or face a hefty "tax".  Additionally, many employers will now be required to offer health insurance to their employees.  There are exceptions, of course, to these two general statements, but they are the main thrust of the law.

CLASS Act Eliminated

On Friday the CLASS (Community Living Assistance Services and Supports) Act, a part of the Health Care and Education Reconciliation Act of 2010 that created a voluntary long term care and disability insurance for working aged Americans, was scrapped by the Obama Administration.  Designed to be supported by member premiums collected via payroll deductions, the plan has come under significant scrutiny as its sustainability has been questioned.  The program was terminated indefinitely just before the weekend as it became increasingly clear that plan could not be self-supportive.  Removing this program from the law saves as estimated $86 billion over a decade.

See a full write-up of this story from The Hill by clicking here.

See a summary of the CLASS Act by clicking here.