Medicare open enrollment begins on October 15,2013 and runs through December 7, 2013. October 15, 2013 you will be able to see all the plans available in your zip code for Medicare Advantage, medigap and part D prescription drug insurance on www.medicare.gov. These plans will have 2014 prices. Medicare will also publish the part B premium for 2014. All of this is important information for you to have so that you can make the best choices based on your subsidy.
Medicare.gov is the only authoritative source for those prices. Don't rely on any other site for insurance company premium prices. I have seen several chat room postings that include premium prices. I doubt they are 2014 prices since insurance companies don't have to release those prices until Medicare open enrollment. There is also a lot of misinformation floating around about medigap plans so I wrote a lot more about medigaps in this post.
The rules for medigap plans are different from state to state so you must find out the rules for your state. Call your state health insurance assistance agency to find out the rules and the prices (go to www.shiptalk.org to get the phone number). Specific company medigap policy prices are not on www.medicare.gov - the site only gives you a price range. Also, on medicare.gov to find medigap information you have to go to the top of the site's homepage. Medigaps are not included in the "planfinder" link in the middle of the site's homepage because you cannot directly enroll in medigaps off of medicare.gov. You must contact the insurance company to enroll. It has also been my experience in helping people that insurance companies do not like to sell low premium medigap plans and make it difficult to buy one. They will try to upsell you. In that regard, Extend Health will be great as they do the enrollment for you if you buy through them.
As I said, the rules for medigap widely range from state to state. New York is fabulous when it comes to medigap plans. First, there is no "enrollment period". You can enroll in a medigap plan any time you want and you can change from one type of plan to another whenever you want. How this will work with Extend Health enrollment is not clear. I did ask EH but the agent didn't even know NY had continuous enrollment. You do not have to previously had a medigap plan to get a medigap plan so there is no "guaranteed issue" problem. NY has what is called continuous enrollment. As I said, there is no requirement to have had a prior medigap plan - however if you have a preexisting condition an insurance company is allowed to delay covering that condition for up to 6 months. Most don't but it is important to ask. The Affordable Care Act does not have any affect on secondary insurance regarding pre-existing conditions so the medigap plans are allowed to do it.
New York also requires insurance companies to do community rating for prices. That means no matter how old you are your premium is the same as everyone else in the plan - it is based on where you live. I don't know how they decide to set community prices but will guess it is based on demographics, physician prices (doctors are allowed in NY to charge up to 5% more than the Medicare fee for most procedures and 15% more for a small subset of procedures) and hospital pricing. It is well known that hospitals charges range widely from one to another.
Saturday, September 14, 2013
Thursday, September 12, 2013
IBM Medicare Extend Health EAP is ending on 12/31/13
I just called the IBM Employee Services Center and asked them about the Employee Assistance Program. That's a benefit we got were we had access to psychologists for up to six sessions and it was included automatically in our benefits package at no extra cost. Sorry to say - it is gone. I never used it so I don't know if it was valuable but am a little annoyed that it is just disappearing. Dr. Rhee failed to mention that one!
IBM Medicare Extend Health Where to get more information
IBM insurance was great insurance but it was so convenient it stopped IBM retirees from really understanding the structure of Medicare. We are now faced with having to deal with the structure. Medicare was created by committee and has been tweaked and poked by our legislators since its inception in 1965 so it really is hard to understand. It requires a bit of a history lesson to even understand it. I am not an authoritative source on the history but will try to give you enough so that you can understand what people mean when they talk about the Medicare.
I suggest you read a book Medicare sends you every year called "Medicare and You". There are other resources to help you understand Medicare. The Medicare Rights Center at 1-800-333-4114; a state agency called the State Health Insurance Assistance Program - www.shiptalk.org lists the phone numbers for each state; Medicare itself at 1-800-MEDICARE
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1965 - Medicare was created as a government, single payer insurance for people over 65. Sometime after that people with disabilities were added to the pool. It consisted of two parts. Medicare A for hospitalization and Medicare B for doctor services. You have to work 10 years or 40 quarters to be eligible. You pay a premium for part B which is set by the government. Part A is "free". Medicare was not designed to pay 100% of medical costs, had medical procedure exclusions and did not include drug insurance. Because it didn't provide 100% cost coverage, secondary private insurance companies were allowed to offer "medigap" plans but the medigap plan structures were defined by Medicare. There are 10 different kinds of medigap plans and each one is associated with a letter such as K, J, L, F. Medicare changes the plans from time to time and some are no longer allowed to be sold but if you had the plan you can keep it.
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1997 - Private insurance companies lobbied the government to be able to offer alternative insurance to the government Medicare A&B plan. In 1997 they were allowed to offer insurance (then called Medicare Choice). The government requires the insurance companies to cover the same procedures and apply the same fee structure for a procedure but how the fee is split between the insuree and the provider is up to the plan. The government gave the insurance companies the client's part B payment plus some to cover part A. The companies tried to make money by limiting access to providers via hospital and doctor networks such as HMOs and PPOs
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2003 - Private insurance companies lobbied the government to provide a better subsidy because they weren't making any money. The government increase their payment by 15% per enrollee. The Affordable Care Act is trying to eliminate the increase. The name of these policies change to be called Medicare Advantage plans.
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2006 - The government created part D prescription drug insurance plans. However, these plans are only offered by private insurance companies. There is no government insurance pool. The government pays the private insurance companies a subsidy to sell these plans and defines the structure of the plans. Some Medicare Advantages plans added drug insurance to their plans.
I suggest you read a book Medicare sends you every year called "Medicare and You". There are other resources to help you understand Medicare. The Medicare Rights Center at 1-800-333-4114; a state agency called the State Health Insurance Assistance Program - www.shiptalk.org lists the phone numbers for each state; Medicare itself at 1-800-MEDICARE
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1965 - Medicare was created as a government, single payer insurance for people over 65. Sometime after that people with disabilities were added to the pool. It consisted of two parts. Medicare A for hospitalization and Medicare B for doctor services. You have to work 10 years or 40 quarters to be eligible. You pay a premium for part B which is set by the government. Part A is "free". Medicare was not designed to pay 100% of medical costs, had medical procedure exclusions and did not include drug insurance. Because it didn't provide 100% cost coverage, secondary private insurance companies were allowed to offer "medigap" plans but the medigap plan structures were defined by Medicare. There are 10 different kinds of medigap plans and each one is associated with a letter such as K, J, L, F. Medicare changes the plans from time to time and some are no longer allowed to be sold but if you had the plan you can keep it.
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1997 - Private insurance companies lobbied the government to be able to offer alternative insurance to the government Medicare A&B plan. In 1997 they were allowed to offer insurance (then called Medicare Choice). The government requires the insurance companies to cover the same procedures and apply the same fee structure for a procedure but how the fee is split between the insuree and the provider is up to the plan. The government gave the insurance companies the client's part B payment plus some to cover part A. The companies tried to make money by limiting access to providers via hospital and doctor networks such as HMOs and PPOs
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2003 - Private insurance companies lobbied the government to provide a better subsidy because they weren't making any money. The government increase their payment by 15% per enrollee. The Affordable Care Act is trying to eliminate the increase. The name of these policies change to be called Medicare Advantage plans.
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2006 - The government created part D prescription drug insurance plans. However, these plans are only offered by private insurance companies. There is no government insurance pool. The government pays the private insurance companies a subsidy to sell these plans and defines the structure of the plans. Some Medicare Advantages plans added drug insurance to their plans.
Wednesday, September 11, 2013
IBM Extend Health Questions and Answers
Many people have come to this post so I am adding an update here about the HRA subsidy that is really important. Make sure you receive and read a letter mailed from IBM about survivor designation. The "do nothing" default is that your HRA subsidy will be reduced even if you do not have a spouse or eligible dependents. I can't even guess as to why that is true. The letter was sent on 10/14/13. You must take action by 12/16/13 if you want to keep your entire subsidy.
I finally reached an excellent Extend Health agent who seemed to know a lot. Here are the questions and answers he gave me. I cannot say for sure that he was correct so you should ask again when you talk to Extend Health.
4. Does Medigap ‘guaranteed issue right’ apply even if someone only used the IBM’s prescription drug plan and had no secondary insurance or used a Medicare Advantage plan in 2013? If someone buys a Medicare Advantage plan in 2014 do they lose their ‘guaranteed right’ to buy a medigap plan in 2015?
9. My spouse receives a Medicare part B premium subsidy and gets reimbursed through SHAP reimbursement. Your brochure implies (page 9) that the process will be the same and it is not part of the HRA process and subsidized coverage. Is that correct?
I finally reached an excellent Extend Health agent who seemed to know a lot. Here are the questions and answers he gave me. I cannot say for sure that he was correct so you should ask again when you talk to Extend Health.
September 11,2013
1.
Are all the Extend Health plans traditional CMS Medicare
plans that are currently in the marketplace? Will there be any unique offerings
like the IBM secondary medical plan that only kicks in after $4000+
deductable? That was not a CMS approved
plan.
Answer: There will not be any unique
offerings at all. Anything Extend Health
offers is only what is available in the market place. The offerings we had were specialized
corporate offerings. So there will be no
Aetna Integration or specialized part D plans.
2. There are no CMS approved plans for dental or vision insurance as separate plans. Will these still be offered as separate insurance plans or is the only way to get this coverage through a Medicare Advantage plan?
2. There are no CMS approved plans for dental or vision insurance as separate plans. Will these still be offered as separate insurance plans or is the only way to get this coverage through a Medicare Advantage plan?
Answer: There will likely be dental
plans offered but they will be ones that are available in the market
place. Plans like Humana Dental and
Delta Dental will be offered. Met life
Dental is only sold as a corporate plan and not and individual plan so Met Life
will not be available. Make sure your
dentist takes the specific plan that is offered. Since there is no price advantage to buying
the plan through Extend Health you might just want to buy it in the open
market. If you have bought at least ONE
medical or part D insurance policy from Extend Health you will be able to use HRA subsidy money
to pay for out of pocket expenses and premiums for dental and medical insurance
even if it is not a plan available through Extend Health
3. If the offerings are all traditional CMS plans are Medigap plans then subject to the same state rules as CMS Medigap plans? Like not being able to switch Medigap plan types once you make a selection unless that plan type goes away. Will Medigap plans be subject to state rules such as age rated premiums, zip code rated premiums or delayed coverage for preexisting conditions? Does Extend Health negotiate private plan premiums so they are lower than what is available to the general market place?
Answer: Extend Health does not
negotiate any premiums. There is no
price advantage to buying a policy through Extend Health and state rules apply
regarding pricing by zip code or age rating.
Because the IBM group insurance plan is terminating people in any state
will have a “guaranteed issue right” to buy whatever plan they want even if they did
not have a medigap plan. 3. If the offerings are all traditional CMS plans are Medigap plans then subject to the same state rules as CMS Medigap plans? Like not being able to switch Medigap plan types once you make a selection unless that plan type goes away. Will Medigap plans be subject to state rules such as age rated premiums, zip code rated premiums or delayed coverage for preexisting conditions? Does Extend Health negotiate private plan premiums so they are lower than what is available to the general market place?
4. Does Medigap ‘guaranteed issue right’ apply even if someone only used the IBM’s prescription drug plan and had no secondary insurance or used a Medicare Advantage plan in 2013? If someone buys a Medicare Advantage plan in 2014 do they lose their ‘guaranteed right’ to buy a medigap plan in 2015?
Answer: Yes, “guaranteed issue right” will
apply in 2014. If you buy a Medicare
Advantage plan in 2014 then state rules will apply in 2015 which will mean in
some states you have no guaranteed issue
right to buy a medigap unless your Medicare Advantage plan terminates.
UPDATE - I think this is not accurate - I now believe guaranteed issue right only applies for medigap purchases if you had an IBM medical plan in 2013. If you only bought a prescription drug plan you might not have a guarantee issue right … it depends on the state you live in.
5.
Will
there be any non-CMS structured offerings like IBM’s prescription drug offering
that had no donut hole and capped at $3500 of pay out – e.g, it was a CMS
qualified plan because it was creditable coverage but not at all structured
like a CMS part D plan. If there are any such plans will they still be subject
to the higher premium rule for higher income individuals?right to buy a medigap unless your Medicare Advantage plan terminates.
UPDATE - I think this is not accurate - I now believe guaranteed issue right only applies for medigap purchases if you had an IBM medical plan in 2013. If you only bought a prescription drug plan you might not have a guarantee issue right … it depends on the state you live in.
Answer: No, there will be no unique
plans offered. All CMS rules apply for
any part D plan you decide to use.
6.
Your brochure (page 6) implies you will only be
offering Medicare Advantage plans that include prescription drug
insurance. Is that true?
Answer: The offerings that will be
available have not been published yet
7.
Both my spouse and I are IBM retirees. Do we have to enroll separately versus as
husband and wife to get our subsidies?
Answer: Each of you will have your
own subsidy but you can enroll together and can pick the plans that suit each
of your needs. You do not need to enroll
in the same plans.
8. If I don’t buy insurance through Extend Health in 2014 am I precluded from buying through the exchange in future years?
Answer: It appears you can – but ask this question
again during your enrollment session.8. If I don’t buy insurance through Extend Health in 2014 am I precluded from buying through the exchange in future years?
9. My spouse receives a Medicare part B premium subsidy and gets reimbursed through SHAP reimbursement. Your brochure implies (page 9) that the process will be the same and it is not part of the HRA process and subsidized coverage. Is that correct?
Answer: Yes, that is correct
10. You say your current insurance pool covers about 500K users for the companies you serviced before IBM contracted with you. What is the current typical wait time for them to get answers to their questions? When IBM retirees join the pool how big will the pool become and what is your anticipated typical wait time to accommodate that big an influx of people?
10. You say your current insurance pool covers about 500K users for the companies you serviced before IBM contracted with you. What is the current typical wait time for them to get answers to their questions? When IBM retirees join the pool how big will the pool become and what is your anticipated typical wait time to accommodate that big an influx of people?
Answer: I didn’t ask this question.
11.
How does the process work if a retiree is
covered under a spousal plan but cannot continue spousal coverage after the
spouse dies – and the spouse dies in the middle of the year? Are there life changing events where the
retiree then can use the Extend Health exchange or must they wait for the next
enrollment period?
Answer: Extend Health will be setting up a special
group to handle those situations.
However, since the policy is terminating for the living spouse, Medicare
gives the living spouse a Special Enrollment Period to switch to a new plan. That can be done through Extend Health or
directly by calling Medicare.
12. How are advisors compensated? Do they get a commission when the retiree decides to use an Extend Health offering and – if so – is it based on the premium of the offering?
12. How are advisors compensated? Do they get a commission when the retiree decides to use an Extend Health offering and – if so – is it based on the premium of the offering?
Answer: Advisors are salary based and do not receive
commission for the products we buy (he said nothing about bonuses).
13. Can you put claims in for medical expenses against the HRA that are not covered by the insurance plans you have through Extend Health? Like dental expenses or dental insurance premiums?
13. Can you put claims in for medical expenses against the HRA that are not covered by the insurance plans you have through Extend Health? Like dental expenses or dental insurance premiums?
Answer: YES! As long as you have purchased a
medical or part D insurance product through Extend Health you can put in claims for plans you did
not get through Extend Health. However, I suggest you ask this question again (and again and again) to be sure.
UPDATE - if you are only buying a part D plan - it must be a different plan that what you bought in 2013 in order to get the subsidy.
14. Will Extend Health allow us to enroll in any Medigap, Medicare advantage and drug insurance plans available in our zip code? If not, why not?
UPDATE - if you are only buying a part D plan - it must be a different plan that what you bought in 2013 in order to get the subsidy.
14. Will Extend Health allow us to enroll in any Medigap, Medicare advantage and drug insurance plans available in our zip code? If not, why not?
Answer: NO. They are only authorized to sell some of the
products. Some insurance companies will
not let them sell their products.
15. Can you change your mind after an enrollment call and call again to switch to a different plan and do it through 12/31/13?
15. Can you change your mind after an enrollment call and call again to switch to a different plan and do it through 12/31/13?
Answer: Only if you do your enrollment AFTER October
14, 2013. If you do it before October
15, 2013 you will be only allowed a onetime change because you will be in a
Medicare Special Enrollment Period because your company group plan is ending (I think this answer is not correct).
16. What happens to unspent HRA subsidy money? Who gets to keep it?
16. What happens to unspent HRA subsidy money? Who gets to keep it?
Answer: It goes back to IBM.
Questions added on October 8, 2013:
1.
Can I submit bills to my HRA for reimbursement
of medical procedures that are not covered by Medicare such as an annual
physical by a doctor and associated blood tests (assuming I have money left to
do so)?
Answer: Yes, the IRS ruling for HRA accounts only require that it be a medically related procedure or drug cost. Paying out reimbursement money from HRA accounts has nothing to do with Medicare.
Answer: Yes, the IRS ruling for HRA accounts only require that it be a medically related procedure or drug cost. Paying out reimbursement money from HRA accounts has nothing to do with Medicare.
2.
Can I submit bills to my HRA for reimbursement
of doctor bills if the doctor does not accept Medicare insurance?
Answer: Yes – same rules apply as for answer #1. HRA reimbursement has nothing to do with Medicare.
Answer: Yes – same rules apply as for answer #1. HRA reimbursement has nothing to do with Medicare.
3.
Can
I submit bills to my HRA for reimbursement of dental bills if I do not have
dental insurance?
Answer: Yes – same rules as #1 - dental qualifies as a medically related procedure.
Answer: Yes – same rules as #1 - dental qualifies as a medically related procedure.
4.
Both
my husband and I retired from IBM.
Can we submit bills for reimbursement to each other’s HRA accounts if
there is money left in one account and not the other?
Answer: Yes!!!!
Answer: Yes!!!!
5.
If
my medigap plan is no longer offered by EH in 2015 do I have to switch to a new
EH plan at the end of 2014 to keep my subsidy?
Answer: You have to have at least one plan purchased through EH. You would have to then buy a part D plan through EH if you didn’t want to switch medigap plans. (I did not like this answer because not all part D plans are offered by EH and your drugs might not be covered by plans they offer. My bet is you could lobby for an exception in that case)
Answer: You have to have at least one plan purchased through EH. You would have to then buy a part D plan through EH if you didn’t want to switch medigap plans. (I did not like this answer because not all part D plans are offered by EH and your drugs might not be covered by plans they offer. My bet is you could lobby for an exception in that case)
6.
If
I want to switch to a 5 star Medicare advantage or part D plan during 2014 –
which Medicare allows – will I lost my subsidy if it is not a plan sold through
EH?
Answer: You will not lose the subsidy for a part D switch if you still have an EH medigap plan. You would lose the subsidy for a Medicare Advantage switch. (Again, I do not like this answer and will bet you could lobby for an exception)
Answer: You will not lose the subsidy for a part D switch if you still have an EH medigap plan. You would lose the subsidy for a Medicare Advantage switch. (Again, I do not like this answer and will bet you could lobby for an exception)
IBM Extend Health DO NOT ENROLL BEFORE OCTOBER 15,2013
If you want the flexibility to change your mind about the insurance products you select from Extend Health after your enrollment call then DO NOT ENROLL BEFORE OCTOBER 15,2013. It is a quirky Medicare thing. If you do you will be using a one time Medicare "Special Enrollment Period" aka an SEP that is provided because IBM's group insurance is going away. You are not allowed to make changes after that one time.
If you enroll on or after October 15, 2013 you will be enrolling during Medicare Open Enrollment which runs through December 7, 2013. Then you can make as many changes as you want.
If you enroll on or after October 15, 2013 you will be enrolling during Medicare Open Enrollment which runs through December 7, 2013. Then you can make as many changes as you want.
IBM Medicare Extend Health Does NOT Negotiate Insurance Premiums
It has been confirmed a couple of times that the Extend Health Medicare insurance products we will be offered are a subset of the SAME products in the general marketplace and will be the SAME price. One would think Extend Health would have more leverage with insurance companies. Here's an even bigger irritant. EH will probably not offer the cheapest Medicare insurance products in your zip code. They offer insurance products where they are paid a commission from the insurance company to sell those products.
I continue to urge you to decide what kind of products you want to get BEFORE you talk to an Extend Health advisor. By way of example, I will tell you what I am doing.
I looked on Extend Health's website to see what was offered to employees of other companies. I did that by looking at www.extendhealth.com/dupont and www.extendhealth.com/gm (isn't it interesting that anyone can go to www.extendhealth.com/ibm which is the site we are using to enter our profile information) and I saw the products offered by EH in my zip code in 2013. I am reasonably sure it will be the same stuff offered to us. I am specifically interested in a medigap plan called F high deductible (F+). Unfortunately, the F+ plan offered by Extend Health is not the cheapest plan in my zip code. That's really irritating as there is no difference in the content of a medigap plan from one company to another. By law, all F+ plans must offer the same coverage. However, I have to use the one offered by EH to get the HRA subsidy.
Here's my decision on what kind of products I want to buy:
Original Medicare is the only way I can satisfy #1. A Medigap plan is the only way I can satisfy #2 and as I said I decided I want Medigap plan F high deductible (F+). I will explain how I made that choice. I will pick the cheapest F+ plan EH offers.For #3 I provided Extend Health with the name of the drug I take and will look on the medicare.gov website to see what plans are available in my zip code that cover my drug during Medicare open enrollment. Hopefully, those plans are offered by EH. If not, I will NOT use Extend Health to buy a part D plan.For #4 there is no research I can do. I have to wait to see if EH offers a dental plan I can use.
I decided on an F+ Medigap plan because an F plans in general provide the most robust copay coverage and we are able to get reimbursed for our out of pocket expense from the HRA account. Without a deductible ($2100/year) an F plan is really expensive and will likely use up all of the HRA subsidy and then sum. It isn't worth it. Compare F monthly premium to F+ monthly premium + 175 (2100/12).If F+ has a lower combined premium buy it whether or not you are healthy. If you get sick you'll hit the deductible but you'll submit the copay bills up to the deductible cap to EH for reimbursement. If the plans have equal premiums and you are sick you may as well choose F (no deductible). If F+ premium is more expensive and you are healthy then decide if you want to take a gamble that your copays will be significantly less that $2100 for the year so you'll never pay out that much in copays.
Don't rely on the EH agent to do this work for you. Get busy!
I continue to urge you to decide what kind of products you want to get BEFORE you talk to an Extend Health advisor. By way of example, I will tell you what I am doing.
I looked on Extend Health's website to see what was offered to employees of other companies. I did that by looking at www.extendhealth.com/dupont and www.extendhealth.com/gm (isn't it interesting that anyone can go to www.extendhealth.com/ibm which is the site we are using to enter our profile information) and I saw the products offered by EH in my zip code in 2013. I am reasonably sure it will be the same stuff offered to us. I am specifically interested in a medigap plan called F high deductible (F+). Unfortunately, the F+ plan offered by Extend Health is not the cheapest plan in my zip code. That's really irritating as there is no difference in the content of a medigap plan from one company to another. By law, all F+ plans must offer the same coverage. However, I have to use the one offered by EH to get the HRA subsidy.
Here's my decision on what kind of products I want to buy:
- I want maximum flexibility to be able to go to any Medicare accepting doctor or specialty clinic (ala Mayo Clinic) anywhere in the USA irrespective of where I live.
- I want copay coverage (aka medigap secondary coverage).
- I want the cheapest prescription drug coverage available that covers the one drug I use.
- I want dental insurance only if it will include my existing dentist.
Original Medicare is the only way I can satisfy #1. A Medigap plan is the only way I can satisfy #2 and as I said I decided I want Medigap plan F high deductible (F+). I will explain how I made that choice. I will pick the cheapest F+ plan EH offers.For #3 I provided Extend Health with the name of the drug I take and will look on the medicare.gov website to see what plans are available in my zip code that cover my drug during Medicare open enrollment. Hopefully, those plans are offered by EH. If not, I will NOT use Extend Health to buy a part D plan.For #4 there is no research I can do. I have to wait to see if EH offers a dental plan I can use.
I decided on an F+ Medigap plan because an F plans in general provide the most robust copay coverage and we are able to get reimbursed for our out of pocket expense from the HRA account. Without a deductible ($2100/year) an F plan is really expensive and will likely use up all of the HRA subsidy and then sum. It isn't worth it. Compare F monthly premium to F+ monthly premium + 175 (2100/12).If F+ has a lower combined premium buy it whether or not you are healthy. If you get sick you'll hit the deductible but you'll submit the copay bills up to the deductible cap to EH for reimbursement. If the plans have equal premiums and you are sick you may as well choose F (no deductible). If F+ premium is more expensive and you are healthy then decide if you want to take a gamble that your copays will be significantly less that $2100 for the year so you'll never pay out that much in copays.
Don't rely on the EH agent to do this work for you. Get busy!
Tuesday, September 10, 2013
IBM Extend Health - How IBM saves BIG BUCKS
IBM spokes people are running around the country telling retirees that IBM is making this change because of the run away cost in health care and this change is meant to help retirees contain their health premium costs. Really? Really?
I've been trying to think of all the ways IBM will save money by this move to "help retirees" as they will no longer be providing services directly to 110,000 medicare eligible retirees. As boomers become Medicare eligible they can throw even more people over the transom.
IBM will likely be saving MILLIONS OF DOLLARS by reducing or eliminating:
The notion that we will be getting a better price deal with Extend Health is just ridiculous. Extend Health is negotiating nothing with insurance companies. As I said, they are nothing more than an insurance agent.
Updated on 2/9/14 - I wrote this posting before we knew about the beneficiary change that required the retiree to take a benefit cut to provide survivor benefits. My guess is retirees and survivors were lasting longer than first predicted by the actuaries so the trust fund for the benefit was running low. There'd be no way IBM would do the right thing and pump more funds into the trust to compensate so, instead, they trimmed the benefit.
I've been trying to think of all the ways IBM will save money by this move to "help retirees" as they will no longer be providing services directly to 110,000 medicare eligible retirees. As boomers become Medicare eligible they can throw even more people over the transom.
IBM will likely be saving MILLIONS OF DOLLARS by reducing or eliminating:
- The team that negotiated with private insurance companies or were working with other companies to provide unique IBM offerings such as Aetna Integration plans, IBM medical plans or CVS/Caremark prescription drug plans. Wonder how many people they will be able to lay off.
- People who answer the IBM Employee Service Center helpline. The bulk of the questions that came into that helpline from older retirees had to be about the medical plans coverage and/or claim complaints. Eliminating that workload means IBM won't need as many people to answer questions. That service was probably outsourced - so less money goes to the outsource company.
- Cost overruns from the negotiated premium prices. Retirees paid fixed premiums every month and the rest of the cost of the policies came from our subsidy pool. The premium prices were established before we picked our choices. There was likely a best case scenario where the subsidy pool would under run and a worst case scenario where the subsidy pool would overrun. Predicting that probably gets more difficult as more and more people became Medicare eligible.
- Pension deduction processing. Our premiums were paid out of our pensions. There was a workload associated with adjustments and life changing events such as when spouses die.
- The cost of sending us materials every fall during open enrollment and handling the bump in helpline workload.
- There are probably other costs that IBM will be able to eliminate but the biggest payback to IBM is there is a HIGH probability we will not spend the subsidy money. It is well known in the retail industry that people are very sloppy about claiming rebate money (http://www.investopedia.com/financial-edge/0810/how-mail-in-rebates-rip-you-off.aspx). About 40% of the rebate money goes unclaimed. Let's presume IBM retirees are better than the general population so if 30,000 retirees screw up the HRA claim process IBM will get back 30,000 x 3,000 or $90 MILLION DOLLARS. Old people are particularly vulnerable about handling rebates and the HRA claim process couldn't be more confusing. Even if it is half that amount it is a lot of money!!!!
The notion that we will be getting a better price deal with Extend Health is just ridiculous. Extend Health is negotiating nothing with insurance companies. As I said, they are nothing more than an insurance agent.
Updated on 2/9/14 - I wrote this posting before we knew about the beneficiary change that required the retiree to take a benefit cut to provide survivor benefits. My guess is retirees and survivors were lasting longer than first predicted by the actuaries so the trust fund for the benefit was running low. There'd be no way IBM would do the right thing and pump more funds into the trust to compensate so, instead, they trimmed the benefit.
Monday, September 9, 2013
IBM Extend Health Press Release
Looks like the media are finally reporting on this transistion. Here is a blurb I found this morning. IBM is now doing media management and the media is just parroting what the company tells them. Whatever happened to investigative journalism?
IBM plans to move many retired workers off its health plan and give them money to buy coverage on a health-insurance exchange. The move is part of a corporate trend away from providing traditional retiree health benefits as costs rise.
The company said it acted after projections showed that costs under its present plan for Medicare-eligible retirees will triple by 2020 and that the increases would be paid by retirees through premiums and out-of-pocket costs.
An IBM spokesman said Saturday that the change will affect about 110,000 retirees who are eligible for Medicare.
Under the change, IBM will make annual contributions to health-retirement accounts. Retirees would use the money to buy Medicare Advantage or supplemental Medigap policies through a private Medicare exchange.
The change affects medical, prescription drug, dental and vision coverage.
The company is meeting with retirees around the country to explain the change. About 1,300 retirees attended the first one last week in San Jose, Calif. The next is planned for Monday in Austin, Texas.
IBM acknowledged that “some retirees may be skeptical” about the changes. But it said the health exchange, Extend Health, will offer benefits not now available under IBM’s group plans and possibly at lower cost to retirees.
Spokesman Douglas Shelton said IBM capped health subsidies to retirees in the 1990s, and so higher costs would mostly lead to higher premiums and out-of-pocket costs for retirees.
Other large employers are also moving away from retiree health benefits. American Airlines parent AMR Corp., for example, is seeking approval for the change from a federal bankruptcy court judge.
A Kaiser Family Foundation report issued last month found that among companies with at least 200 workers, 28 percent that provide health benefits also offer retiree coverage.
The study’s authors said few large employers have turned over benefits for workers or retirees to private exchanges like Extend Health. But they said 29 percent of companies with at least 5,000 workers are considering it.
The authors said there could be “a significant change in the way that employers approach health benefits and the way employees get coverage, with employers playing a less active role.”
IBM to move some retirees off its health plan
The Associated Press | Posted: Sunday, September 8, 2013 2:00 amIBM plans to move many retired workers off its health plan and give them money to buy coverage on a health-insurance exchange. The move is part of a corporate trend away from providing traditional retiree health benefits as costs rise.
The company said it acted after projections showed that costs under its present plan for Medicare-eligible retirees will triple by 2020 and that the increases would be paid by retirees through premiums and out-of-pocket costs.
An IBM spokesman said Saturday that the change will affect about 110,000 retirees who are eligible for Medicare.
Under the change, IBM will make annual contributions to health-retirement accounts. Retirees would use the money to buy Medicare Advantage or supplemental Medigap policies through a private Medicare exchange.
The change affects medical, prescription drug, dental and vision coverage.
The company is meeting with retirees around the country to explain the change. About 1,300 retirees attended the first one last week in San Jose, Calif. The next is planned for Monday in Austin, Texas.
IBM acknowledged that “some retirees may be skeptical” about the changes. But it said the health exchange, Extend Health, will offer benefits not now available under IBM’s group plans and possibly at lower cost to retirees.
Spokesman Douglas Shelton said IBM capped health subsidies to retirees in the 1990s, and so higher costs would mostly lead to higher premiums and out-of-pocket costs for retirees.
Other large employers are also moving away from retiree health benefits. American Airlines parent AMR Corp., for example, is seeking approval for the change from a federal bankruptcy court judge.
A Kaiser Family Foundation report issued last month found that among companies with at least 200 workers, 28 percent that provide health benefits also offer retiree coverage.
The study’s authors said few large employers have turned over benefits for workers or retirees to private exchanges like Extend Health. But they said 29 percent of companies with at least 5,000 workers are considering it.
The authors said there could be “a significant change in the way that employers approach health benefits and the way employees get coverage, with employers playing a less active role.”
Sunday, September 8, 2013
IBM Extend Health Insurance Offerings
I was able to get in touch with a friend of mine who worked at Dupont and asked him about his Extend Health (EH) selection of insurance plans. I am really frustrated and disappointed with what he said. It appears Extend Health will not be negotiating premium prices with insurance companies. He said there was no premium price break in EH offerings. That means a medigap plan monthly premium will be exactly the same in the open market as via EH. I believe this premium pricing will be true for IBM employees as well. Otherwise, Dupont would not be very happy that EH gives IBM retirees a better deal than Dupont employees! After all - isn't EH supposed to have the leverage of over 500,000 retirees to do insurance plan price negotiations. To put it succently - WTF.
So, the truth EH is nothing more than an insurance agent and an administrator of the IBM HRA accounts.
Surely, IBM is paying EH to "support" us. Seems to me we'd be better off by having IBM just give us the HRA money. The reason they won't do that is I bet they are counting on a number of people not understanding the whole thing and leaving that money on the table.
I really have tried to not use this blog to blow off steam about IBM and will try to get back some of my composure for future postings. But I have to say that this is truly a low blow by IBM. Whatever happened to the company that had a conscious, that acknowledged that employees were the underpinning of its success. Had it not been for hundreds of thousands of dedicated employees in the 1960s, 1970s, 1980s and particularly in the1990s- when we really held it together - there would be no IBM.
OK - back to business. YOU MUST find out what Medicare insurance plans cost in your zip code. You do that by first going to www.medicare.gov to find out who will sell plans in your zip code. Then you contact your state's health insurance assistance department aka your state SHIP and ask them for policy prices in your state. To find out how to contact your ship go to: https://shiptalk.org/public/home.aspx?ReturnUrl=%2f.
DECIDE WHAT INSURANCE YOU WANT BEFORE YOU CALL EXTEND HEALTH IN OCTOBER.
I also think you should write to Dr. Rhee and tell him what you think of this switch to Extend Health: kyurhee@us.ibm.com
So, the truth EH is nothing more than an insurance agent and an administrator of the IBM HRA accounts.
Surely, IBM is paying EH to "support" us. Seems to me we'd be better off by having IBM just give us the HRA money. The reason they won't do that is I bet they are counting on a number of people not understanding the whole thing and leaving that money on the table.
I really have tried to not use this blog to blow off steam about IBM and will try to get back some of my composure for future postings. But I have to say that this is truly a low blow by IBM. Whatever happened to the company that had a conscious, that acknowledged that employees were the underpinning of its success. Had it not been for hundreds of thousands of dedicated employees in the 1960s, 1970s, 1980s and particularly in the1990s- when we really held it together - there would be no IBM.
OK - back to business. YOU MUST find out what Medicare insurance plans cost in your zip code. You do that by first going to www.medicare.gov to find out who will sell plans in your zip code. Then you contact your state's health insurance assistance department aka your state SHIP and ask them for policy prices in your state. To find out how to contact your ship go to: https://shiptalk.org/public/home.aspx?ReturnUrl=%2f.
DECIDE WHAT INSURANCE YOU WANT BEFORE YOU CALL EXTEND HEALTH IN OCTOBER.
I also think you should write to Dr. Rhee and tell him what you think of this switch to Extend Health: kyurhee@us.ibm.com
Friday, September 6, 2013
IBM Extend Health HRA accounts
I have been looking at various IBM chat boards to see what others are saying about the IBM shift to Extend Health. I think I understand more about HRA accounts. However, I have also seen A LOT of information posted that is not correct. Anyone who is saying they know what specific products Extend Health will provide for us and/or the price of those products is either clairvoyant or they were able to hack into EH. There are no products nor prices available yet and they will not be officially available until the beginning of October.
I do think the information floating around about HRA accounts is accurate. I also dug back into my memory of health care changes. Shame on me for not remembering it better as I was a manager and used to hold meetings on this stuff but I have tried to piece it together based on what I did recall and what I read. Here is my perspective.
In the late 1980s and early 1990s you might recall that there were many retirement incentive packages offered (and many jokes about being hit with a 2 by 4 to take a package). Anyway, there was usually a component that included health care coverage that would come with the package. Prior to those incentives when someone retired and became Medicare eligible, IBM covered both the part B premium costs and secondary insurance costs. Successive retirement incentive packages would include warnings that if one did not take the package they would lose this or that guarantee of health care premium coverage. In the beginning of 1997 health care premium assistance was eliminated. Premium assistance is provided to retirees who retired prior to 1997 as a reimbursement. The retiree files a claim with a third party company to get the reimbursement. I suspect there is a cap on the reimbursement for all employees. I know this because my spouse, who retired in 1996, gets part B premium reimbursement but it caps at $900. That process is not being changed and is not part of EH.
Separate from that program, IBM subsidized retiree insurance. What that means is they worked with insurance companies to create insurance offerings and paid part of the cost of a premium for us. In the late 1990s IBM told employees who were retirement eligible they would freeze this subsidy at a fixed amount per employee. The amount was either $3000 or $3500. I don't recall and I have seen both numbers being tossed around. Let's assume it is $3000. So, as insurance premiums increased from year to year, IBM passed along increases not covered by the $3000 cap to the retiree. We never saw that money and I will guess they had a pool of money so it wasn't literally $3,000/employee because some retirees did not use IBM insurance or used policies that cost less per year and some used policies that were more per year.
In the early 2000s IBM declared to employees who were not retirement eligible the subsidy was changing again. For those employees, IBM would contribute a fixed amount of money to an account that would max out at $25,000. So, if the employee got lucky and was not laid off prior to hitting the max, when they retired they would have a retiree subsidy assistance for as long as the $25,000 lasted.
Several years ago IBM totally removed the benefit --- ergo, there are some retirees that are "Access Only".
I am sorry I don't know the exact dates of all of those changes. But you get the gist.
So, here's how that plays out with this move to EH. Each of us will now get an HRA account that contains the subsidy we are eligible to receive. The people who cap at $25,000 face the same process. They can spend that money out of the HRA account until it runs out. It rolls from year to year.
For people who get the $3000 subsidy - every year IBM will fund your HRA account with that money. You then have to file paperwork to get that money as a refund for premiums and copays. If you don't use it all or file paperwork to get it back by year end you will "lose it". You can only access that money if you buy an EH product. In October you will be told exactly what will be in your HRA account in 2014.
An interesting aspect to this change is that IBM will likely now spend less than $3000/retiree because some will forget to file the paperwork and some might pick plans that don't use it all up. So, it is another way for IBM to claw money back. Sigh.
I do think the information floating around about HRA accounts is accurate. I also dug back into my memory of health care changes. Shame on me for not remembering it better as I was a manager and used to hold meetings on this stuff but I have tried to piece it together based on what I did recall and what I read. Here is my perspective.
In the late 1980s and early 1990s you might recall that there were many retirement incentive packages offered (and many jokes about being hit with a 2 by 4 to take a package). Anyway, there was usually a component that included health care coverage that would come with the package. Prior to those incentives when someone retired and became Medicare eligible, IBM covered both the part B premium costs and secondary insurance costs. Successive retirement incentive packages would include warnings that if one did not take the package they would lose this or that guarantee of health care premium coverage. In the beginning of 1997 health care premium assistance was eliminated. Premium assistance is provided to retirees who retired prior to 1997 as a reimbursement. The retiree files a claim with a third party company to get the reimbursement. I suspect there is a cap on the reimbursement for all employees. I know this because my spouse, who retired in 1996, gets part B premium reimbursement but it caps at $900. That process is not being changed and is not part of EH.
Separate from that program, IBM subsidized retiree insurance. What that means is they worked with insurance companies to create insurance offerings and paid part of the cost of a premium for us. In the late 1990s IBM told employees who were retirement eligible they would freeze this subsidy at a fixed amount per employee. The amount was either $3000 or $3500. I don't recall and I have seen both numbers being tossed around. Let's assume it is $3000. So, as insurance premiums increased from year to year, IBM passed along increases not covered by the $3000 cap to the retiree. We never saw that money and I will guess they had a pool of money so it wasn't literally $3,000/employee because some retirees did not use IBM insurance or used policies that cost less per year and some used policies that were more per year.
In the early 2000s IBM declared to employees who were not retirement eligible the subsidy was changing again. For those employees, IBM would contribute a fixed amount of money to an account that would max out at $25,000. So, if the employee got lucky and was not laid off prior to hitting the max, when they retired they would have a retiree subsidy assistance for as long as the $25,000 lasted.
Several years ago IBM totally removed the benefit --- ergo, there are some retirees that are "Access Only".
I am sorry I don't know the exact dates of all of those changes. But you get the gist.
So, here's how that plays out with this move to EH. Each of us will now get an HRA account that contains the subsidy we are eligible to receive. The people who cap at $25,000 face the same process. They can spend that money out of the HRA account until it runs out. It rolls from year to year.
For people who get the $3000 subsidy - every year IBM will fund your HRA account with that money. You then have to file paperwork to get that money as a refund for premiums and copays. If you don't use it all or file paperwork to get it back by year end you will "lose it". You can only access that money if you buy an EH product. In October you will be told exactly what will be in your HRA account in 2014.
An interesting aspect to this change is that IBM will likely now spend less than $3000/retiree because some will forget to file the paperwork and some might pick plans that don't use it all up. So, it is another way for IBM to claw money back. Sigh.
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