Sunday, April 3, 2016

IBM Medicare & Obamacare (Affordable Care Act aka ACA)

There is still a lot of confusion about insurance options for people turning 65.  I believe this because of the questions I hear during Medicare counseling as a volunteer and for friends.

  1. Over 65 employed:
    People who are over 65 and employed are able to continue to use their employer health insurance plans (if the company offers it and is larger than 20 employees). You CANNOT use ACA insurance - you can only use employer insurance.  Generally, it is recommended those people should enroll in Medicare part A (hospitalization coverage) because there is no premium for that part of Medicare.  Then, part A would act as secondary insurance.  In most cases it doesn't provide more than employer insurance but there may be instances where it is useful such as when Medicare will cover a procedure as inpatient whereas the employer insurance will require it to be outpatient. For IBM insurance it is fine to enroll in part A. Sometimes employer insurance won't allow part A enrollment so be sure to check on it.  If the employer offers prescription drug insurance that is creditable then it is fine to also use the employer drug insurance plan. IBM drug insurance is creditable.  If your drug insurance is not creditable (which is determined by Medicare) then you will face a drug insurance penalty of 1% per month of the national average drug insurance premium for every month you use an inadequate drug plan when you try to enroll in a part D plan.  That penalty almost never goes away.
  2.  Over 65 retired with working spouse:
    People over 65 who are retired are able to obtain insurance coverage through a working spouse (working for a company larger than 20 employees). Once again, you CANNOT use ACA insurance.  It has to be employer insurance.  If the spouse's company is less than 20 employees then you must register for Medicare part A and part B to have adequate health insurance.  If you do not  - no matter the reason - and continue, for example, to use spousal insurance coverage, that insurance coverage automatically changes to being SECONDARY insurance to Medicare when you turn 65.  That means the insurance will only cover co-pays and deductibles. If the spousal prescription drug insurance is creditable you can continue to use it but make sure you keep proof of having that coverage for when your spouse stops working.
  3. Turning 65 retired & using ACA marketplace insurance:
    Sometimes retired IBMers decide to use ACA marketplace insurance rather than IBM retiree insurance prior to turning 65.  If you are not collecting Social Security you will not automatically be notified that you must sign up for Medicare.  Worse still, sometimes the private insurance company that is providing the ACA insurance policy doesn't pay attention to your birthday. They cannot cover you when you turn 65 (by law). The moment you turn 65, that insurance policy (once again) becomes secondary insurance. There is legislation in process to notify people not collecting Social Security about this but it is not yet implemented.  
  4. ACA impact to Medicare:

    There is a great deal of mis-information about ACA legislation as regards Medicare.  The implication typically is that ACA insurance is financed off the back of Medicare and therefore Medicare coverage is being severely cut back.  In fact, not one medical procedure covered by Medicare insurance has been affected.  No doctor fees have been reduced because of ACA. Sequestration lowered doctor fees. That was done by the legislative body because of the budget fights.  
  5. Here's what has changed in Medicare because of ACA:
    The prescription drug insurance doughnut hole is being closed (Hooray!).

    Medicare Advantage plans were paid 15% more than the part B premium collected from people using those plans (which meant taxpayers were financing the 15%).  It is being phased out.  It is rather outrageous private plans were being subsidized by the government.
    There is a big effort to eliminate Medicare fraud cost and eliminate prescription drug insurance coverage for off label use of drugs when the condition is not cancer related. The off label problem occurs because pharmaceutical companies don't prove to the FDA the efficacy of a drug for conditions where it might be useful. Many drugs are only modestly useful for off label conditions and wouldn't be approved.  People don't realize Medicare is subsidizing the cost of prescription drugs by providing payments to part D plans.  As such, Medicare wants to be sure the drug is effective. Such efforts are substantially reducing the cost of Medicare - far more for fraud than off label use.


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