Does government law dictate your Medicare coverage? Yes

Unlike private health insurance, Medicare is a government owned and managed health insurance system. What that means is laws dictate what coverage a doctor or supplier is able to provide. This sounds onerous and sometimes it is. If healthcare professionals break the law the government can prosecute them. Some examples will demonstrate how laws impact your medicare coverage.

Suppose you need to be on an oxygen support system. Choose wisely because once you pick an equipment supplier you have to keep that same supplier for 5 years. That's because there is a law that was passed in 2006 to lower Medicare costs. It is structured to have Medicare provide the supplier with monthly payments for 3 years for the equipment. After 3 years the supplier is only paid for maintaining the equipment. At the end of 5 years you can get a new oxygen support system from a different supplier. If you want more modern equipment or to switch suppliers any time during the 5 years you have to pay for it totally out of pocket.

There are a myiad of rules and regulations. Doctors are not allowed to bill you for services over and above 5-15% (percentage depends on the state) of what Medicare says is the approved amount. If they do that is Medicare fraud. If you need to be in a skilled nursing facility to recouperate from an illness - you have to go to the facility from the hospital and need to have been in the hospital for at least 3 days. Otherwise Medicare will not cover it. It is the law. Nor will your IBM medical insurance cover it - because it will have been denied by Medicare. Just as with any law - ignorance of the law does not absolve you from suffering the consequences. These laws are constantly changing or being amended. Each time you face a given situation you have to do research to determine what rules currently apply.

How can you possibly know all the rules surrounding Medicare healthcare? You can't. Even healthcare professionals regularly give out wrong information. Unless you see it in writing don't believe it. Sadly, even the hotline 1-800-MEDICARE is not foolproof. The burden is on the patient and the family to do research for a given situation. It can take a great deal of time but the payback for knowing the rules can save you a great deal of money.

There are a number of agencies - both government and non-profit - that will help you find answers. Make sure the agency is legitimate as there are also a lot of scams around. What follows is a list of some resources:

1. 1-800-Medicare and/or http://www.medicare.gov/
   This is the official hotline and website for medicare. The hotline people are good - but overwhelmed (and with the boomers coming along will likely be more overwhelmed) so their answers are as brief as possible. The website is really excellent but complex. Take the time to learn the site.
   
   
2. CMS centers for Medicare and Medicaid - http://www.cms.hhs.gov/
   This is the private agency that ADMINISTERS Medicare and Medicaid. Yep, it is a private agency that the government hires to do the paper work. You get your quarterly Medicare statements from CMS. There is a huge amount of information on the website. Many "white papers" detail specific situations such as "Who Pays First" which is about when Medicare is seconday insurance. They are available on the site.
   
   
3. State Health Insurance Assistance Program - http://www.shiptalk.org/
   This is a national program to help seniors navigate the Medicare world. Some states have great agencies and others ... well ... This site will give you information about how to contact the agency within your state. For example, in New York the program is administered by the office of the aging (http://www.aging.ny.gov/).
   
   
4. State Pharmaceutical Assistance Program -
   About 40 states have programs to help low income seniors cover their drug costs. You can find the program in your state by going to Medicare.gov. It is unlikely IBM retirees will meet the income eligibility requirements but there is some useful Medicare D information on the site.
   
   
5. State health insurance information for consumers -
   Most states have complaint information about health insurance companies and particularly about HMOs. Before selecting a Medicare Advantage or medigap program look at how they rate on your state insurance website ( in NY it is http://www.ins.state.ny.us/)
   
   
6. Medicare Rights Center - http://www.medicarerights.org/ and http://www.medicareinteractive.org/
   This is a non-profit organization that provides hotline support for Medicare questions, help finding Medicare D, medigap, medicare advantage plans and case advocates that will help navigate the appeals process if you feel you have been unjustly denied coverage. The hotline is staffed by volunteers so the answer quality ranges (Walter is great ... some others, well...). The fulltime staff reviews all the calls to try to remedy any bad answers. The regular staff also does the case work. The website (medicareinteractive) aggregates medicare information and links to other support sites. It is excellent.

Is there an IBM "best plan" choice? No

There is no "best plan". There are pros and cons to any option. Maybe if you start with your overall strategy and objectives. Uh, oh, that sounds so IBM. Another way of saying it in plain words - what is most important to you. For example - decide whether it is lowest monthly insurance premiums, maximum doctor and prescription flexibility cost be damned or maximum coverage for minimum cost. Then pick. What follows is some analysis for coverage for one person and does not include dental or vision coverage:

• The cheapest monthly premium plan with the most flexibility is the IBM Medical Plan without drugs for zero premium, the medicare part B monthly premium ($110.50) and a separate Medicare D private insurance plan (national average premium is $33.20/month). You are betting $1,724.40 in 2010 that you will not get sick and not need much by way of drugs. If you do, the maximum out of pocket additional cost can be as much as $5,500 for medical and about $4,350 for drugs (at which point drugs are typically covered at about a 95% rate). The total downside of that bet is approximately $11,500 for the year.
  
  
• The most flexible and most expensive montly premium plan is the IBM Prescription Drug plan ($166.00), the medicare part B monthly premium ($110.50), a top line private insurance insurance medigap policy such as plan J (estimate $250/month). You are spending $6,318 in 2010 (which is about a $4600 bet you will get sick as compared with the total premium cost above) to be covered. The maximum out of pocket you might face if you do get sick is the coinsurance on drugs.
  
  
• The maximum coverage with the least flexibility comes with the Medicare Advantage plans. Medicare Advantage plans are provided by private insurers as an alternative to original medicare and have been around since 1997 because private insurers wanted a "piece of the senior insurance market". The government is subsidizing those plans over and above original medicare costs which is why they are able to offer more services. The current health care reform debate is circling around stopping those extra subsidies. Of those plans, Aetna PFFS is the most flexible and the cheapest but a doctor can drop out of the PFFS plan whenever they want which means you have to hunt to find another doctor that will accept the PFFS plan. Medicare Advantage plans can offer a great deal but you have to be willing to stay within their rules. For example, if you need a hip replacement your prosthesis choices may be limited. If you want a more advanced prosthesis (say ceramic) it is unlikely you can get it. You are also unlikely have an expert physician who has done hundreds if not thousands of operations for your particular hip replacement operation. On the other side, the medical cost containment of these plans is excellent.

Why are the Aetna Integration plans so cheap?

When you compare the coverage and monthly premiums for the Aetna Integration plans versus official medigap plans such as A, C or F, the Aetna plans seem to provide same coverage except they are really cheap. When you compare them to the IBM Medical plan although it costs more it seems a lot better. As Bernie Madoff clients might say ... when it seems too good to be true maybe it is too good to be true. Here are some things to consider:

• You will not be able to get prescription drug coverage through IBM if you pick an Aetna Integration plan. Whether that is important depends on your prescriptions. Remember that donut hole. The most restrictive IBM drug plan caps at $3500. That's about $5000 worth of prescription drugs available to you. The Medicare D plans go into the donut hole at $2830. There is a potential exposure of about $2000 worth of drug costs you might have to pay. Plus the D premiums at about $30/month adds another $360 of cost.
  
• Since this is not a traditional medigap plan if you appeal a denial decision the appeal is between you and Aetna. There is no government agency that will mediate nor will IBM get involved.
  
• The Aetna plan is as a result of an HR consortium called Retiree Health Access (SM) that IBM joined with other companies to try to lower health insurance costs. Maybe that translates to more difficulties getting reimbursements or more denials. That is just a guess and it might be wrong.
  
• The maximum out of pocket you will have with the IBM medical plan is $4000. That sounds terrible. However, there are some things that IBM Medical covers like Home Health aide assistance that is better covered than the Aetna plan. If you need that coverage the IBM plan starts to look really good. Again, depending on your needs it may be that the IBM Medical plan turns out to be a better deal. You have to go through each line item to figure out what is best for you.

Do IBM’s drug plans have a donut hole? No

It's more like a cement block wall for the medical/drug supplement plan. That plan pays $3500 maximum for the year. You get the negotiated price for your drugs but no other benefit once you hit the max. The other two drug plans have unlimited drug coverage but are significantly more expensive. The drugs only plan (no medical) also has lower copays. But it is the most expensive and you have no secondary medical insurance unless you buy a separate medigap policy.

None of the IBM drug plans are structued like a Medicare D drug plan. But they are creditable. That means they payout a comparable amount of money to recipients compared to a Medicare D plan. Creditable is really imprtant. If you don't have creditable drug insurance or no insurance at all then when you do try to buy a D policy the insurance company will charge you a lifetime penalty that is 1% of the national average premium ($33.32 in 2010) for every month you did not have it. You have to buy drug insurance within 3 months of becoming medicare eligible.

Why the penalty? The government doesn't want people to skimp or skip buying drug insurance while they are well and then jump into a policy when sick. The insurance pools need premiums from the combination of well and sick people to at least break even much less make a profit. Incidently, there is no penalty to jump in and out of IBM drug insurance from year to year. However, if IBM decides to stop providing drug insurance (what an evil thought) then you'd face a penalty.

Medicare D insurance policies do have the donut hole. These plans STOP paying out when your total drug cost (including your co-payments) is $2830 (in 2010). When you pay out a total of $4550 (they do include your co-payments in that amount) the insurance starts paying again - usually at a 95% rate. Most people never make it through the donut hole in a given year. Incidently, drugs admininstered in the hospital are covered by Medicare A and in the doctor's office by Medicare B so they do not count in this computation.

Is the IBM medical plan a medigap plan? NO

IBM medical plans are NOT medigap plans. They do not conform to the federal government definition of a medigap plan. In fact, you can buy a medigap plan and also have IBM medical plan coverage. Why do that? Not for the medical coverage but to get the prescription drug coverage - which may be a better option for some people than the standard Medicare D drug plans. It just happens the medical coverage is part of the IBM package if you want the cheaper IBM drug plan.

It is unlikely you will ever get any benefit from the medical portion of the IBM plan if you have gap insurance too because you make the gap plan secondary and coordinate the gap insurance with Medicare. You'll never hit the IBM out of pocket maximum. Maybe if you have something done like acuputure which is not covered by Medicare and not covered by your medigap then the IBM medical will be useful. If so, file a claim for the service directly with United Healthcare. The form is on their website.

The Aetna Integration plans are not gap insurance plans either. They covers a lot of the same things that a medigap will cover but do not conform to the federal definition. It would make no sense to take an Aetna Integration option and then buy a separate medigap plan and a Medicare D drug plan.

The IBM hotline people often don't know this and will tell you that it is a conflict and you cannot have both IBM Medical coverage and medigap coverage. Medigap insurers don't know it either because they don't know the details of the IBM plan.

Time to choose IBM 2010 health plan

The annual IBM medical choices for medicare eligible retirees are harder to follow than machine language instructions in an IBM/360 Principles of Operation manual. I created a comparison of some of the options for myself and my friends. One suggested I start a blog - so here it is.

Rather than starting by posting even more charts, tables, words, words and more words - I'll keep it simple. If you have questions I will try to answer them. Or maybe someone else has an answer. If I find something I think is important but buried in the detail - I'll describe it. Ditto, please, for anyone reading this blog.

Together maybe we can sort through the options and pick wisely. I know, I am an optimist.