What the Heck is the Donut Hole?

Drugs cost moneyThere are plenty of things to be confused about when it comes to Medicare, but the “donut hole” ranks right up near the top of the list. Not only are people frustrated by the calculations but then the formulas change every year. No wonder many folks just throw up their hands in disgust.

The donut hole refers to what is more formally called the “Coverage Gap” and is found in stand-alone Part D Drug plans and in Medicare Advantage plans that include drug coverage. Many people will never encounter the Coverage Gap but it is important to understand how it works so you won’t be surprised. It will be shocking if you pay $35 copay for your prescription one month and the very next month the pharmacist tells you the same drug is now $250! Welcome to the Donut Hole!

There are 4 stages in the Part D Drug coverage:

  1. Yearly Deductible Stage
  2. Initial Coverage Stage
  3. Coverage Gap Stage (Donut Hole)
  4. Catastrophic Coverage Stage

Not all plans have Deductible Stage and some have deductibles that only apply to higher-priced drugs. In any case, if you have a deductible then you pay the entire retail price for your drugs until your costs have equaled the deductible limit.

The Initial Coverage Stage is where you will pay either a fixed dollar “copay” or a percentage “coinsurance” for each of your drugs. You might, for instance, pay $5 for Tier 1 Preferred Generics and 35% for Tier 3 Preferred Brand Name Drugs. You can find what Tier each of your drugs belongs to by looking at your insurance plan’s “Formulary”. Once the total amount of your deductible (if any), your copays and coinsurance plus the amount your insurance company has paid equals $3,750 (for 2018), you have entered the Donut Hole or Coverage Gap.

For 2018, while in the Coverage Gap you will pay 35% of the retail price for brand-name drugs. The drug manufacturer must absorb a 50% discount and your insurance plan pays the remaining 15%. A Tier 3 drug with a retail price of $500, for which you may have been paying a $35 copay, will suddenly be $175 (35% of retail). For generic drugs you will pay 44% of the retail cost while in the Donut Hole.

Calculating how long you stay in the Donut Hole is where the math gets weird. You move from the Donut Hole Stage to the Catastrophic Coverage Stage when your True Out Of Pocket (TrOOP) costs equal $5,000. TrOOP is the total of the money you have paid for deductibles, copays and coinsurance plus the amount of the manufacturers’ discounts while in the Donut Hole. It does not include the amount your insurance plan paid.

Once into the Catastrophic Coverage Stage, you only have to pay the greater of 5% or $3.35 for generic drugs and the greater of 5% or $8.35 for all other drugs for the remainder of the calendar year.

Your insurance plan will keep track of these stages for you and send an Explanation of Benefits on your drug plan each month so that you will know exactly when you are approaching the Donut Hole. Pay attention to those notices so you won’t be surprised the month it happens.

3 Reasons Not to Ignore Medicare AEP

AEP (Annual Election Period) for Medicare Advantage and Part D Drug Plans starts on October 15 and ends on December 7. Even if you have no complaints about your current plan, there are three reasons why it is still a smart move to review your options.

  • Your Plan Benefits or Premium May Be Changing: Every year companies review the plans and often change the premium and the actual benefits. Prior to AEP, they will send you notification of changes but many people ignore the notice. For instance, your plan may add a Drug Deductible of $300 to upper tier drugs and you will suddenly find that out in January when you refill your prescription. Or, they may have changed the “per day” hospital copay from $250 to $400. With an average hospital stay of just over 2 days, that means your next inpatient visit will jump from $500 to $800. And, of course, all companies adjust their premiums so the plan that was the best value for you last year may not be this year.
  • Your Particular Needs May Have Changed: During the past year, your doctor may have added a new prescription. You may find that your plan has a higher copay on that drug than another plan might. The copay for Outpatient Surgery or Primary Care Office Visits may have increased. You may now have a need for hearing aids or glasses for which many plans have benefits included. Some plans have Dental Care either included or available as extra-cost options. Many plans also include gym memberships at no additional charge.
  • Networks May Have Changed: Often the choice of a plan revolves around whether your doctor or specialists are considered “in-network” or not. Companies are always trying to expand their networks. A plan that did not include your doctor last year may include him this year, which now makes that plan a viable choice for you.

There is absolutely nothing wrong with being happy with you plan and continuing with it for years to come. If you decide to do that, you don’t need to do anything as the plan will be automatically renewed (as long as it is still being offered in your area) and your premium will be adjusted to the new year prices. On the other hand, It just makes good sense to take a few minutes during AEP to review the options to make sure your plan is still the best choice for your particular needs. Agents usually have all the details about the new plans by October 1. If you don’t have a local agent, and you live in the North Idaho area, feel free to contact me for an appointment at your convenience.

The Death of Plan F Medicare Supplements

Plan F is about to be killed by the Feds and you need to know that. For many years a Medicare Supplement Plan F has been considered the “gold standard” for supplements. There are two main reasons for this.

First, while most supplements pay the Medicare Part A (Hospitalization) Deductible, not all pay the Part B (Outpatient) Deductible. Plan F does this. Second, depending on the state you live in, doctors are allowed to charge up to 15% above the Medicare Allowable Charge for services. That means that Medicare pays 80% of the Allowable Charge, some supplements will then pay 20% of the Allowable Charge, but if the doctor charged 115% of the Allowable Charge then you are still on the hook for what is called the Excess Billing. Plan F covers that Excess Billing so you end with nothing out of pocket. Naturally, Plan F has carried a higher premium than other supplements but many people felt that the additional monthly cost was well worth the confidence of knowing that their doctor bills would be covered 100%.

Unfortunately, in 2015 Congress passed the Medicare Access and Chip Reauthorization Act (MACRA) which takes aim at Plan F as well as the less popular Plan C. In their “wisdom”, Congress decided that people who faced no out of pocket cost when visiting the doctor would simply be running to the doctor for every little sneeze or splinter and running up the costs to Medicare. Now, I don’t know about you, but going to the doctor’s office is not high on my list of social options regardless of the cost. Nevertheless, from the protective bubble that exists around Washington, DC, that’s how our elected representatives see it. So, within MACRA is a new rule that forbids the sale of any Medicare Supplement plan from paying the Part B Deductible after January 1, 2020.

No need to panic if you happen to have a Plan F because the new law allows anyone who has such a plan prior to the cutoff date to keep their plan. However, that option may have its own problems as well. In the insurance business, history has shown us that any time a health insurance plan stops accepting new (healthy!) enrollees, then the claims tend to rise above normal expectations as the remaining enrollees get older and sicker. When that happens, premiums tend to rise more than would be typical based simply upon the increasing cost of medical care overall. While no company representatives I have talked to expect the increases to be immediate, within four to five years they all anticipate Plan F renewal premiums to increase faster than other plans.

For new Medicare enrollees, and for those already on Medicare looking to switch plans, there is a very good alternative. Plan G pays those Excess Charges just like Plan F, but it does not pay the Plan B Deductible so it is not affected by the MACRA rule. As a bonus, some of my clients are finding that the premium savings for Plan G versus Plan F are more than enough to cover the Part B Deductible. Let’s look at the numbers.

The Part B Deductible for 2017 is $183, so the math is pretty simple. If, for instance, a Plan G will save you $20 per month over a Plan F ($240 per year) then you are saving more than the deductible and are money ahead. The only caveat is that the Part B Deductible usually increases each year. In 2016 it was $166, so it increased about 10% for the current year. It is conceivable that the deductible could reach $240 in another three years if that increase is stable. Personally, I would want to see no less than $100 per year in savings to give me at least a few years’ cushion if that was my sole reason for selecting a Plan G today. However, as noted above, the premium savings today might not be the sole reason if you also consider what will probably happen to Plan F premiums after 2020.

The death of Plan F is certainly not the end of the world with regard to Medicare Supplements, but it is important to be aware of the upcoming change so that you won’t be taken by surprise. You can find more information about Medicare Supplements for Idaho Seniors by clicking here to visit our page devoted to that topic.

 

Some Seniors Refusing Needed Care at Home

According to a recent article from Kaiser Health News, some seniors are refusing important medical care at home. Sometimes this is because of pride in independent living but sometimes it is because they are confused about what “home health care” is and whether or not insurance covers it.

Home Health Care is not the same as Home Care but, unfortunately, the terms are often used interchangeably and that is confusing. Home Health Care means your doctor has prescribed home health care involving intermittent skilled nursing care, physical therapy, speech-language pathology or continued occupational therapy. These services are paid by Medicare although you may be responsible for a portion of the bill for some equipment like wheelchairs, walkers, and oxygen equipment.

Home Care, on the other hand, generally refers to 24-hour a day care at home, meals delivered to your home and homemaker services like laundry, shopping, and cleaning. Home Care also includes help with Activities of Daily Living (ADL) such as bathing, dressing and using the bathroom when this is the only care you need. These Home Care services are normally not covered by Medicare, and unfortunately, this is where confusion can occur.

To understand what Home Health Care is and how Medicare defines it, be sure to download this free publication from the Center for Medicare/Medicaid Services (CMS).

When Home Health Care is advised after a hospital stay, some seniors refuse the care mistakenly thinking that it is not covered by Medicare and they are concerned that they cannot afford to pay out of pocket. In these cases, important follow-up treatment is not received and medical complications can result.

If you get your medical services through a Medicare Health Plan (such as a Medicare Advantage Plan), be sure to check your Summary of Benefits to see how Home Health Care is covered under that plan as it may be different than how Traditional Medicare covers it.

If you or someone you know is offered Home Health Care, be sure to discuss the options in detail with your doctor. Make sure you understand what is covered by Medicare and what is not. It is important that critical follow-up care is received to make sure that complete recovery occurs.

 

Seniors and Mental Illness

Older man in cafeThe month of May is Mental Health Month so it is very appropriate that we talk about mental illness as it relates to seniors. The National Council on Aging (NCOA) reports that one in four older Americans will experience some form of mental illness so this is not some rare occurrence we are talking about. Contrary to some negative stereotypes, it is not a normal part of aging to feel lonelier or more unhappy as people get older.

In an article published on May 4, the NCOA discussed the two major areas of concern: anxiety and depression. No one should have to suffer under the assumption that nothing can be done or that help is not available. If you or someone you know exhibits symptoms of anxiety or depression, it is important to seek help immediately.

There are many symptoms and diagnoses for anxiety. It is important not to “self-diagnose” any illness, but some symptoms to be on the alert for are panic attacks, nightmares, phobias or chronic worry about everyday activities. The nonprofit organization Mental Health America (MHA) has developed a free, anonymous online screening tool for anxiety. To be clear, this is not the same as a medical diagnosis, but some may find it helpful to use the screening results to start a conversation with their own physician.

Depression can also take many forms. You may notice in yourself or others symptoms such as poor sleep, extended periods of sadness, loss of enjoyment in everyday activities or loss of energy. Many articles have been written about depression creating a greater risk for suicide, but depression can also lead to an overall lower quality of life and even to physical health problems. Here again, MHA has developed an online screening tool for depression that people may find helpful in determining to seek professional help.

For people over 65, Medicare helps cover a wide range of mental health services including tests and visits with a physician, psychiatrist or social worker. Part D coverage can also help cover the costs of many medications prescribed to treat mental illness.

Although the month of May is designated as a time for heightened awareness of mental illness in our country, we should always be on the alert for symptoms in ourselves and in those we love. The stigma of the words “mental illness” have often caused people to avoid even discussing the issue. Just as with any other health issue, you should never hesitate to discuss your concerns with your family or you personal physician.

 

$10 Seniors National Parks Pass Ending Soon

Currently, there is a great deal on a pass that will get senior citizens into a bunch of recreational areas across this nation. The pass is only $10, but that deal is going away soon. Before the end of 2017, the price of the pass will jump to $80, so you’d better act soon.

Right now, any US citizen over the age of 62 can get a lifetime pass to our National Parks for just $10. In fact, the pass is good at over 2000 Federal recreation sites including National Parks, National Wildlife Refuges, and many National Forest Lands. In areas where the entry charge is per vehicle, the pass lets in the pass-holder and any passengers traveling with him or her. In those areas that charge a per person fee, the pass will still let in the pass-holder and three additional people. At some locations, you may also get a discount on some amenity fees such as camping.

The best deal is to purchase the pass in person, but you have to do that at specific locations listed here. (Hint: The Panhandle National Forest District offices in Priest River, Sandpoint, Bonners Ferry and Coeur d’Alene are all listed) You can also obtain the pass by mailing in this form or by applying online, but then you have to pay a $10 processing fee so the total is $20. Still, when the pass will soon be $80, either way is a great deal.

The increase in price was authorized in December 2016, when Congress approved the National Park Service Centennial Act which raises fees and sets up an endowment for future projects and visitor services. There is no specific date in 2017 set for the increase, although the Park Service says it will be a few months yet. Nevertheless, I would suggest you not wait a moment longer. If you have any plans to visit our National Parks and other Federal areas in the future, this is a great deal!

Older Drivers Getting Safer?

According to a study by the National Highway Safety Administration,  the number of fatal crashes involving drivers over 65 has decreased in recent years. Over the period from 2005 to 2014, the number of people over age 65 in the US increased by 26%. Yet, over the same period, the number of driver fatalities in crashes involving older drivers declined by 10%. Does that mean older drivers are getting safer?

It turns out there’s a bit more to the story. An article posted by The National Institute of Health attributes some of the change to several factors:

  • Better health for older people
  • Safer cars
  • Safer roads
  • Older drivers “policing” themselves, for instance by not driving at night

The same article points out that driving is a complex task and that as we age driving becomes more difficult. Some of the most common errors older drivers make are:

  • Failing to yield the right of way
  • Failing to stay in the proper lane
  • Misjudging the time or distance needed to turn in front of others
  • Failing to stop completely at a stop sign
  • Speeding or driving too slowly

There are things older drivers can do to improve their skills and decrease the chance of causing an accident. AARP has a Driver Safety Course it sponsors that not only improves your driving skills but may even earn you a discount from your auto insurance company. According to the American Automobile Association (AAA), older drivers can stack the odds in their favor by purchasing cars with certain safety features.

Finally, there comes a time when it is simply prudent to stop driving. AARP discusses “the talk” relatives may need to have with older drivers about this. While this loss of mobility can have some psychological impact on an older person, it is important to understand that a serious accident can have catastrophic consequences.

 

Beware of “Observational Care” in Medicare

Many people on Medicare are getting surprised by big bills after what they thought was an in-patient hospital stay. What they are discovering is a situation known as Observational Care. This is a weird occurrence that is happening due to certain Medicare rules.

Under Medicare, in order for your doctor to admit you to the hospital, he or she must verify that your condition requires at least two days (known as the “two midnights” rule) in the hospital. If the doctor is not certain but feels you are too sick to go home, then you may still stay at the hospital under “observational care”. In this case you are considered too sick to go home but not sick enough to be admitted to the hospital. Yes, it sounds odd and it is.

In this circumstance, you may not only be observed, buy may also receive short-term treatment and tests. The key, with regard to Medicare, is that since you are not an inpatient, the costs are considered outpatient care which is paid at a different rate under Part B of Medicare instead of Part A. Depending on your Supplement or Medicare Advantage plan, you may be looking at significantly higher copays and coinsurance than you would if it were actually a hospital stay.

In addition, any days spent in Observational Care do not count toward the three days (three-midnight rule) hospitalization necessary to make a stay in a Skilled Nursing Facility eligible for Medicare coverage. That can be a huge surprise if you end up having to pay out of pocket for a few days recuperating in such a facility.

Because many people were unaware of the difference between being an in-patient and observational status, the US Congress did take some action. Now a person must be notified within 36 hours of being under observational care that this is their status and what the ramifications of that status might be.

As always, you are your own best advocate. If you find yourself headed to the hospital under your doctor’s direction, make sure you know whether it is as an in-patient or for observational purposes. The difference can be expensive!

 

Seniors and Traveling Abroad

Now that you’ve ditched that 9-5 job, you’ve pulled out the Bucket List and found foreign destinations on the agenda. Excellent! In addition to checking Expedia and those cruise line brochures. the US Department of State’s Bureau of Consular Affairs has a few tips for you. On their website they have an article appropriately titled “Considerations for Older Travelers“.

While I recommend taking the time to read the entire publication, here are some highlights to remember.

  • Travel Documents: Make sure they are all correct and up to date. Make sure your passport will be valid for 6 months beyond the end of your trip or some countries may not let you enter.
  • Sign up for the State Departments “Smart Traveler Enrollment Program” where your itinerary and contact information is stored securely. This allows the embassy or consulate to contact you in case of an emergency or a security situation.
  • The State Department reminds you that Medicare does not cover you out of the US and recommends that you obtain travel insurance. You can start on that project by visiting our Travel Insurance page right here on this website.
  • Medications: Be sure to take an adequate supply of your prescriptions and leave them in the original, labeled container to avoid problems at customs. Also, know the generic name for your drugs as the generic may be more likely known in a foreign country.
  • Financial: Be sure to know the currency of the countries you are visiting and whether you should convert prior to entering the country. Also, make sure your credit cards will be accepted where you are traveling. Finally, check the State Department’s “Country Information” page to learn about any ATM scams or other financial scams that might target US visitors.

You’ve probably spent years saving and planning for these trips so it only makes sense to be prepared. Do a little homework and plan on having the time of your life!

What’s a Final Expense Plan?

Final expense plans are, quite simply, small life insurance policies. They are designed for people who no longer need to have large policies to cover their mortgage, or the education of children still at home or the loss of income for a family breadwinner. For folks on Social Security and Medicare, those situations don’t usually exist anymore.

However, there typically is still a need for a small amount of coverage to help out with final legal and funeral expenses so that a surviving spouse or adult children won’t have to suddenly come up with a substantial lump sum, often $20,000 to $30,000. For this specific situation, Final Expense Plans were created.

They are offered in three varieties depending on a person’s health. For those in excellent health there is the Level plan and you must medically qualify for this one. Next, for those with health challenges like diabetes, high blood pressure or weight issues, there is the Graded plan which has a slightly higher premium and offers a limited payout in the first two years of the policy. And, finally, for people with more serious medical problems, there is the Guaranteed Issue plan that has no medical qualifications at all. This plan has a higher premium and, like the Graded plan, has a limited pay out during the first two years of the policy.

If you would like additional information on a Final Expense Plan for yourself or a loved one, please give me a call at 263-2194 or use the Contact Form on our website.