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  1. Welcome Damon Bennett MSFS CLU ChFC

  2. Medicare 101

  3. What is Medicare? • National social insurance program • Created in 1965, and administered by the Federal Government in 1966 • Currently using 30 private insurance companies in the US • Provides Healthcare to 48 million Americans. 40 million 65 and above. 8 million younger people with disabilities. • Primary payer for inpatient hospital care (15.3 million people), representing 47.2 percent ($182.7 billion) of total aggregate inpatient hospital costs in the United States. • Medicare covers about half (48 percent) of the health care charges for those enrolled in Medicare • Enrollees must then cover the remaining approved charges either with supplemental insurance or with another form of out-of-pocket coverage.

  4. What is Medicare? • In 2014, 15.6% of Americans were covered by Medicare. The enrollment was expected to increase to 95.8 million by 2050. • Before Medicare's creation, approximately 65% of those over 65 had health insurance, with coverage often unavailable or unaffordable to the rest, because older adults paid more than three times as much for health insurance as younger people • The Centers for Medicare and Medicaid Services (CMS), a component of the Department of Health and Human Services(HHS), administers Medicare, Medicaid, the State Children's Health Insurance Program (SCHIP), and the Clinical Laboratory Improvement Amendments(CLIA). • The Social Security Administration is responsible for determining Medicare eligibility, eligibility for and payment of Extra Help/Low Income Subsidy payments related to Part D Medicare, and collecting some premium payments for the Medicare program.

  5. What is Medicare? • Since the beginning of the Medicare program, CMS has contracted with private insurance companies to operate as intermediaries between the government and medical providers. Contracted processes include claims and payment processing, call center services, clinician enrollment, and fraud investigation. • Part A is largely funded by revenue from a 2.9% payroll taxlevied on employers and workers (each pay 1.45%). • Beginning in 2013, the rate of Part A tax on earned income exceeding US$200,000 for individuals (US$250,000 for married couples filing jointly) rose to 3.8%, in order to pay part of the cost • Parts B and D are partially funded by premiums paid by Medicare enrollees and general fund revenue • In 2011, Medicare spending accounted for about 15% of the Federal budget. This share is projected to exceed 17% by 2020.

  6. Eligibility • In general, all persons 65 years of age or older who have been legal residents of the United States for at least 5 years are eligible for Medicare • People with disabilities under 65 may also be eligible if they receive Social Security Disability Insurance (SSDI) benefits (2 years). Specific medical conditions may also help people become eligible to enroll in Medicare. • People qualify for Medicare coverage, and Medicare Part A premiums are entirely waived, if the following circumstances apply:

  7. Eligibility • They are 65 years or older and U.S. citizens or have been permanent legal residents for 5 continuous years, and they or their spouse (or qualifying ex-spouse) has paid Medicare taxes for at least 10 years…or • They are under 65, disabled, and have been receiving either Social Security SSDI benefits or Railroad Retirement Board disability benefits; they must receive one of these benefits for at least 24 months from date of entitlement (eligibility for first disability payment) before becoming eligible to enroll in Medicare…or • They get continuing dialysis for end stage renal disease or need a kidney transplant…or • They are eligible for Social Security Disability Insurance and have amyotrophic lateral sclerosis(known as ALS or Lou Gehrig's disease).

  8. Eligibility • Those who are 65 and older who choose to enroll in Part A Medicare must pay a monthly premium (Up to $407 per month) to remain enrolled in Medicare Part A if they or their spouse have not paid the qualifying Medicare payroll taxes. • People with disabilities who receive SSDI are eligible for Medicare while they continue to receive SSDI payments; they lose eligibility for Medicare based on disability if they stop receiving SSDI. • Some beneficiaries are dual-eligible. This means they qualify for both Medicare and Medicaid. In some states for those making below a certain income, Medicaid will pay some or all of the beneficiaries' Part B premium for them (most beneficiaries have worked long enough and have no Part A premium), as well as some of their out of pocket medical and hospital expenses.

  9. Benefits • Four parts of Medicare • Part A (Hospitalization and Skilled nursing care) • Part B (Doctors and Medical) • Part C (Medicare Advantage) • Part D (PDP)

  10. Benefits • Part A (Hospitalization and Skilled Nursing Care) • Premium Free Part A (For those that qualify) • Covers 90 days of Inpatient Hospital Stay • Covers days 1-60 in a hospital at 100% AFTER $1,288 Deductible • Covers days 61-90 in a hospital AFTER you pay $322 each day. $9,660 • After a 90 day hospital stay, you have a pool of 60 lifetime reserve days. Once used, your hospital coverage ends • 60 lifetime reserve days, you owe $644 per day. $38,640 • You pay all hospital charges AFTER your 60 lifetime reserve days are used, with NO MAXIMUM “Out of Pocket, and NO CAP

  11. Benefits • Part A (Hospitalization and Skilled Nursing Care) • Pays for skilled nursing care at 100% for the first 20 days (2%) • Must be in a hospital for 3 consecutive days • Rehabilitation…Getting better • Days 21-100 require a copay of $161 per day • Medicare does not pay for Custodial and Intermediate care. (98%)

  12. Benefits • Part B (Doctors and Medical) • Monthly premium is $121.80 for most • Usually deducted for SSI • Only those with a Modified Adjusted Gross Income of $85K (Individual) or $170,000 (Joint) pay more. The top rate for Part B is $389.80 per month • If turning 65 in 2016, your Part B premium will be determined from your 2014 Tax return • For those not enrolled in SS, they will receive a quarterly invoice for Part B • Payments are due in advance , with the first payment due on the 25th day of the month before your Medicare starts

  13. Benefits • Part B (Doctors and Medical) • Part B medical insurance helps pay for some services and products not covered by Part A, generally on an outpatient basis • Part B is optional and may be deferred if the beneficiary or his/her spouse is still working and has group health coverage through that employer • There is a lifetime penalty (10% per year) imposed for not enrolling in Part B unless actively working and receiving group health coverage from that employer. • Part B coverage begins once a patient meets his or her deductible ($166 in 2016), then typically Medicare covers 80% of approved services, while the remaining 20% is paid by the patient • Part B has NO out-of-pocket limit. YOU are responsible for the remaining 20% regardless of the cost of treatment • If your doctor does not take assignment, the doctor COULD charge you UP TO 15% more. • No Cap

  14. Benefits • Part B (Doctors and Medical) • Part B coverage includes physician and nursing services, x-rays, laboratory and diagnostic tests, influenza and pneumonia vaccinations, blood transfusions, renal dialysis, outpatient hospital procedures, limited ambulance transportation, immunosuppressive drugs for organ transplantrecipients, chemotherapy, hormonal treatments such as Lupron, and other outpatient medical treatments administered in a doctor's office. Medication administration is covered under Part B if it is administered by the physician during an office visit. • Part B also helps with durable medical equipment (DME), including canes, walkers, wheelchairs, and mobility scooters for those with mobility impairments. Prosthetic devices such as artificial limbs and breast prosthesis following mastectomy, as well as one pair of eyeglasses following cataract surgery, and oxygen for home use is also covered

  15. Benefits • Part C (Medicare Advantage) MA • These Part C plans were initially known as "Medicare+Choice". As of the Medicare Modernization Act of 2003, most "Medicare+Choice" plans were rebranded as "Medicare Advantage" (MA) plans. • Original Medicare beneficiaries who choose to enroll in a Part C Medicare Advantage health plan instead, give up none of their rights as an Original Medicare beneficiary • Receive the same standard benefits—as a minimum—as provided in Original Medicare • Annual out of pocket (OOP) limit not included in Original Medicare ($6700) • Part C Medicare Advantage health plan members typically also pay a monthly premium in addition to the Medicare Part B premium to cover items not covered by traditional Medicare (Parts A & B)

  16. Benefits • Part C (Medicare Advantage) MA • Part C Medicare Advantage and other are required to offer coverage that meets or exceeds the standards set by Original Medicare, but they do not have to cover every benefit in the same way • Must typically use only a select network of providers except in emergencies, typically restricted to the area surrounding their legal residence • Most Part C plans are traditional health maintenance organizations (HMOs) although a few are preferred provider organizations (which typically means the provider restrictions are not as confining as with an HMO) • For almost all Part C plans, the beneficiary is required to have a primary care physician; that is not a requirement of Original Medicare

  17. Benefits • Part C (Medicare Advantage) MA • Enrollment Medicare Advantage plans, grew from 5.4 million in 2005 to over 16.8 million in 2015 • This represents 31% of Medicare beneficiaries. Almost all Medicare beneficiaries have access to at least two Medicare Advantage plans; most have access to three or more. • Most MA plans include a PDP plan • May offer additional benefits such as vision, dental, and gym membership

  18. Benefits • Part D (PDP) • Medicare Part D went into effect on January 1, 2006 • In order to receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD). • These plans are approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies and pharmacy benefit managers • Unlike Original Medicare (Part A and B), Part D coverage is not standardized (although it is highly regulated by the Centers for Medicare and Medicaid Services • Plans choose which drugs (or even classes of drugs) they wish to cover, at what level (or tier) they wish to cover it, and are free to choose not to cover some drugs at all.

  19. Eligibility • Part D (PDP) • Individuals on Medicare are eligible for prescription drug coverage under a Part D plan if they are signed up for benefits under Medicare Part A and/or Part B • Beneficiaries obtain the Part D drug benefit through two types of plans administered by private insurance companies • Can join a standalone Prescription Drug Plan (PDP) for drug coverage only • Join a MA plan that includes a PDP plan • Medicare beneficiaries need to be signed up for both Parts A and B to select a MA or MA-PD plan

  20. Eligibility • Part D (PDP) • About 67% of all Medicare beneficiaries are enrolled directly in Part D or get Part-D-like benefits through a MA health plan • Another large group of Medicare beneficiaries get prescription drug coverage under plans offered by former employers • VA offers drug benefits • Medicare beneficiaries who were eligible for but did not enroll in a Part D when they were first eligible and later want to enroll, pay a late-enrollment penalty, basically a premium surtax, if they did not have creditable coverage through another source such as an employer or the U.S. Veterans Administration • This penalty is equal to 1% of the national premium index times the number of full calendar months that they were eligible for but not enrolled in Part D and did not have creditable coverage through another source. The penalty raises the premium of Part D for beneficiaries, when and if they elect coverage

  21. Eligibility • Part D (PDP) • In 2016, there were 888 stand-alone Part D plans available in • Most states have 28 full stand-alone Part D Plans • Usually you pay a monthly premium directly to the Insurance company • In 2016, the average is around $41.34 a month

  22. Eligibility • Part D (PDP) • Potential higher costs • The Part D monthly premium varies by plan (higher-income consumers may pay more). • The charts below show the estimated prescription drug plan monthly premium based on your income as reported on your IRS tax return from 2 years ago and last year. If your income is above a certain limit, you'll pay an income-related monthly adjustment amount in addition to your plan premium.

  23. Eligibility

  24. Eligibility • Part D (PDP) • Usually each Plan's formulary is organized into tiers, and each tier is associated with a set co-pay amount. Most formularies have between 3 and 5 tiers. The lower the tier, the lower the co-pay. • For example, Tier 1 might include all of the Plan's preferred generic drugs, and each drug within this tier might have a co-pay of $5 to $10 per prescription. • Tier 2 might include the Plan's preferred brand drugs with a co-pay of $40 to $50. • Tier 3 may be reserved for non-preferred brand drugs which are covered by the plan at a higher co-pay, perhaps $70 to $100. • Tiers 4 and higher typically contain specialty drugs, which have the highest co-pays because they are generally expensive.

  25. Eligibility • Part D (PDP) • Usually each Plan's formulary is organized into tiers, and each tier is associated with a set co-pay amount. Most formularies have between 3 and 5 tiers. The lower the tier, the lower the co-pay. • For example, Tier 1 might include all of the Plan's preferred generic drugs, and each drug within this tier might have a co-pay of $5 to $10 per prescription. • Tier 2 might include the Plan's preferred brand drugs with a co-pay of $40 to $50. • Tier 3 may be reserved for non-preferred brand drugs which are covered by the plan at a higher co-pay, perhaps $70 to $100. • Tiers 4 and higher typically contain specialty drugs, which have the highest co-pays because they are generally expensive.

  26. Coverage Gap • Part D (PDP) • Most Medicare Prescription Drug Plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. • Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. In 2015, once you and your plan have spent $2,960 on covered drugs (the combined amount plus your deductible), you're in the coverage gap • Once you reach the coverage gap in 2015, you'll pay 45% of the plan's cost for covered brand-name prescription drugs. You get these savings if you buy your prescriptions at a pharmacy or order them through the mail. The discount will come off of the price that your plans has set with the pharmacy for that specific drug.  • Although you'll only pay 45% of the price for the brand-name drug in 2015, 95% of the price—what you pay plus the 50% manufacturer discount payment—will count as out-of-pocket costs which will help you get out of the coverage gap. What the drug plan pays toward the drug cost (5% of the price) and what the drug plan pays toward the dispensing fee (55% of the fee) aren't counted toward your out-of-pocket spending.

  27. Medicare Supplements

  28. Medigap Plans • Medigap(Medicare Supplement) plans pay after Medicare has paid its share for Medicare-approved treatment, while MA plans pay instead of Medicare • There are 11 standard plans…A-N • All plans of the same letter are the same for every insurance company • When you turn 65, there is no medical qualifications for acceptance. It’s guaranteed for any plan. • All plans allow you to go to any Doctor who participates in Medicare, and all 11 plans cover the same services. • There are no physician or hospital networks • No referrals required for a specialists care in any Medigap plan • Only two differences between any Medigap plan: • The monthly premium you pay to the insurance company • Your cost sharing

  29. Medigap Plans • The lower the premium, the higher the cost sharing • Most popular plan is F, no cost sharing • Most expensive • Not always the best value • Highest rate increases • G, High Deductible plan F • Excellent, good, average health.

  30. Medigap plans • Offers no Part D drug coverage • If you choose a Medigap plan, you will need to enroll in a stand alone Part D drug plan • Medicare imposes penalties for not having a drug plan when first eligible

  31. Medicare Advantage Understanding

  32. What is a MA plan? • A Health plan option • Approved by Medicare • Run by private companies • Part of the Medicare program • Referred to as Part C • Available nationally, by private companies, annual contract with CMS, CMS pays these companies • Provide Medicare-covered benefits • May cover extra benefits

  33. How MA plans work • Receive services through the plan • All part A (Hospitals) and part B (Doctors) covered services • Some MA plans may provide additional services • Most plans include prescription drug coverage • You may have to visit a network/hospital (HMO) • Benefits and cost-sharing (co-pays) may differ from original Medicare. Cap $6700 MOOP

  34. How MA plans work…cont. • You are still in the Medicare plan program • Medicare pays the health plan monthly for your care, even if you do not use the plan • You still have Medicare rights and protection • If the plan leaves Medicare, you can • Join another Medicare plan • Return to original Medicare

  35. MA costs • You still pay the Part B premium ($104.90 for existing, $121.80 new, or higher) • A few plans may pay all or part for you • Some may be eligible for state assistance, based on income • You may pay a plan a monthly premium • You pay deductibles, coinsurance, and co-pays • May be different than Medicare • Vary from plan to plan • Could be higher outside of Network • Cap $6700 MOOP

  36. Who can join a MA plan • Eligibility requirements • 65 years old • Must be entitled to Medicare Part A (Hospital) • Enrolled in Medicare part B (Medical/Doctors) • Live in plan service area • Usually no End Stage Renal Disease (ESRD) • To join you must also • Provide necessary information to the plan • Follow the plan rules • Belong to only 1 MA plan at a time

  37. When can you join? • IEP-Initial Election Period • AEP/OEP- Annual Election Period/Open Enrollment Period • SEP-Special Election Period

  38. When can you join? • IEP-Initial Election Period • When you become first eligible for Medicare • 7 month period • 3 months BEFORE you turn 65 • The month you turn 65 • End 3 months after you turn 65

  39. When can you join? • AEP/OEP- Annual Election Period/Open Enrollment Period • Join or switch MA plans • October 15 through December 7 • Coverage begins January 1 • Plan covers calendar year • Plan must be allowing new members

  40. When can you join? • SEP-Special Election Period • Move out of plan service area • Plan leaves Medicare program or reduces it’s service area • You leave or losing employer or union coverage • You enter, live at, or leave a LTC facility • You have a continuous SEP if you qualify for extra help (Medicare/Medicaid. Switch anytime • Losing your extra help or eligibility • You join or switch to a plan that has a 5 star rating (none in Texas) • More options in AHIP

  41. Plan Ratings • 5 Star is the highest rating • Very few plans nationally have a 5 star rating • CMS uses surveys from member satisfaction, plans, and healthcare providers to give overall star ratings (Shown on • 1-5 rating. Plans that have low ratings for consecutive years could be removed by CMS • Plans are given the rating by CMS on Jan 1st • Assigned Oct 1st

  42. When can I leave a MA plan? • January 1 to February 14 • You can leave a MA plan • Switch to Original Medicare • Coverage begins first day of the month after switch • May join a PDP (Part D) plan • Coverage begins first day of the month after switch • May not join another MA plan during this period • Once you enroll in a NEW MA plan or PDP plan, it will auto disenroll you from your previous plan

  43. SEP Guarantee Issue rights • People who join a MA plan for the first time • When first eligible at 65 or • Eave Original Medicare or and drop Medigap policy • You can disenroll during the first 12 months • Return to original Medicare • Have guarantee issue rights to purchase a Medicare Supplement policy

  44. Types of MA plans • Health Maintenance Organization (HMO) • In plan network of Doctors/Hospitals. You select your PCP • Except for emergency care, urgent care, out of area dialysis • HMO-Point of Service (POS) • May go out of network, usually a higher cost • Preferred Provider Organization (PPO) • Has network of Doctors/Hospitals and you can also use out of network Doctors/Hospitals for covered services, for a higher cost • Private Fee-for-Service (PFFS) • -Any Medicare approved Doctor/Hospital that accepts the plans payment terms and agrees to treat you • Special Needs Plan (SNP) • MA Plans designed to provide focused care management, tailored for Diabetes, ESRD, HIV/AIDS, Chronic Heart Failure, or Dementia

  45. Other MA points • MA plans pay instead of Medicare, not after, like Medigap plans • MA will have lower monthly cost than Medigap plans, but will have higher out-of-pocket costs • Most procedures and services will have out-of-pocket costs, and all MA plans are required to have a out-of-pocket limit ($6700 MOOP) • If you reach your co-pay max in a calendar year, you will not have any more co-pays • Required AHIP certification, SOA • Online carrier training modules • Carrier Face-to-Face training meeting

  46. Click on Find Health and Drug Plans