Healthcare Coverage: “We Regret to Inform You”

We have many open enrollment windows to manage for clients from October through February so you haven’t heard from us of late.  Some reminders we report on may (unfortunately) have a “same old; same old” feel to it.   However, we are seeing some recent problems that either surprise us, or the extent or frequency of the problem surprises us.   We are sharing this information to raise awareness.

Paying for Income-Indexed Medicare Premiums

Those who are on Medicare and who reported modified adjusted gross income on tax returns of $85,000 and above for an individual or $170,000 for a couple filing a joint return pay income-indexed premiums on Medicare Part B and D (if applicable).  Income-index premiums are based on returns filed two years prior to the current year.   Clients are sharing errors with us.  First, you should always read the IRMAA (Income-Related Monthly Adjustment Amount) letter you receive from Social Security to check whether the income information the IRS provided Social Security is accurate.  Second, whether you are paying Medicare directly or having payments withheld from Social Security payments, you should make sure Social Security has put you in to the correct category and you are paying the correct amount.  Even if the government has made a mistake and inappropriately refunded or reduced income-indexed premiums to you, it can come back and bite you if you don’t respond in writing in a timely way.

Go to the following link on medicare.gov (not mymedicare.gov) to see current income-indexed premiums for Medicare Parts B and D:

www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html#collapse-4809

That there are more errors this year than are typical is not that surprising.  Remember, because there was no cost of living adjustment for those on Social Security, how to handle the increases for Part B premiums for those not on Social Security and those paying income-indexed amounts was made later in 2015 than usual and/or ideal.

Retirees and Private Exchanges

Some employers have eliminated retiree medical benefits for retirees.  Many retirees are then referred to a subset of the options that are available to individuals in the private market called a private exchange.   Retirees typically choose between staying on original Medicare with a Medicare supplement and Part D or enrolling in a Medicare Advantage Plan, an alternative to original Medicare.   Too many are being directed to Advantage Plans without understanding  the benefits/or restrictions.  This can have significant financial repercussions if you are admitted to a hospital not in-network with an HMO Advantage Plan, for example.  The promise of a rich PPO Plan can seem like just a promise if the doctors one sees won’t submit claims or abide by Medicare payment rules.  In sum, we are seeing a great deal of buyer’s remorse.  Once you’ve made a decision on healthcare coverage, you are almost always locked in until the next enrollment period to change.  We are beyond that season now for most people.But the lesson is the same – put the effort in to making a sound decision about healthcare coverage before you sign up for one product or another.

Individual Insurance Marketplace

Obamacare has transformed the country’s individual insurance marketplace.  Individual insurance prior to Obamacare was our only true self-pay market (unless you count COBRA).  Now this market is a largely subsidized market through Advanced Premium Tax Credits through the Affordable Care Act.  This transformation has played out (thus far) very differently in various geographic areas.  Insurance companies are assessing how to remain profitable in this new subsidized marketplace, whether to stay out or vacate selective markets.  As a result of all these changes, the more affluent American is often not able to purchase an attractive product depending on the geographic area.   It is more important than ever to know what your Plan’s network is.  You cannot count on every hospital in an area being in your Plan’s network in today’s environment.   Being out-of-network or private pay at a hospital is downright scary (or should be) even for those of substantial means.

Drugs

Dealing with drug coverage issues has always been a hassle but there are more hassles today.  Some Plans are denying coverage for somewhat inexpensive generics they have been covering for years.  The good news is that inexpensive generics are generally inexpensive but with all of us contributing toward our coverage, we want to see value in return.   We have also received this feedback about Medicare Part D Plans for which 2016 reviews showed coverage and now drugs shown as covered are denied.  One can always appeal these denials but the Plans have latitude to remove drugs they feel may be harmful and so many have published side effects.   You have to decide whether it’s worth battling your Plan over something that will cost several hundred dollars a year or, if you have Part D, waiting until the fall to try to optimize your chances of changing to a Plan that MAY cover the prescription drug in question.

In Summary

These are extremely turbulent times.   Some who have the ability to select coverage are being forced to choose among suboptimal alternatives.  In New York City there is no Plan offering a broad network which includes all major medical centers in the individual market.   This year in the Chicago area, Blue Cross Blue Shield of Illinois, the dominant carrier in the individual market, vastly reduced its hospital network in the individual market. It is impossible to know if these trends will expand to other markets in 2017.  After all, the trend might even reverse itself.  Plan networks result from insurance companies and providers negotiating acceptable terms.  We just can’t predict those outcomes in today’s environment.

If you remain in relatively good health and unexpected out-of-pocket expenses are a mere annoyance, be practical and pick your battles wisely.  If you choose to fight one, do so timely and with beautiful documentation.  If you are a client of ours, we are doing are best to take good care of you in this ever-changing healthcare environment.