Taking the Mystery out of MedicarePosted: November 14, 2011
Have you noticed lots and lots of commercials on TV lately about Medicare plans? If you’ve seen any daytime TV lately you may have screamed at monitor because you can’t take another one of those commercials. Rest assured, those commercials won’t last much longer because the annual election period ends December 7th.
But since I brought up the subject, I thought you might want a little education on how Medicare works. Medicare is a big big subject so this might be a multi part education process.
THE PARTS OF MEDICARE
Part A: This is what you pay for out of your paycheck during your working years. In order to qualify for this part you must work a minimum of 40 quarters during your lifetime (of course there are some exceptions for people who become disabled).
Part B: This is an “optional” benefit. But if you don’t have part B, you can’t purchase any of the other plans necessary to have a comprehensive plan when you retire. You have to pay a premium for part B and for those lucky enough to still have income, the premium is higher based on income ( I know that’s a stretch, luck shouldn’t cost you more). For most beneficiaries in 2012, the monthly premium will be $99.90. Just as a reference, when Part B started back in 1966 the monthly premium was $3.00!
Part C: Medicare Advantage plans are government designed plans that must be as good or better than original medicare (parts A & B). Private insurance companies administer the plans and members who enroll pay a community rate (the same rate for everyone) without pre-existing conditions with the exception of end stage renal disease. Medicare Advantage plans are NOT MEDICARE SUPPLEMENT plans, but more on that next time. Some Medicare Advantage plans include Part D prescription drug plans. And speaking of that….
Part D: Back in 2003, the Medicare Modernization act came up with a prescription drug discount program which bought time for the roll-out in 2006 of the current Part D plan. The government came up with prescription drug plan design that helps with the cost of medications. Prior to that, most plans did not include prescription drugs which left people on their own for this expense. Private Insurance companies sell Part D plans that have to be at least equal to the government design, but they can have a better plan design as well. For those late to enroll in Part D, a penalty will apply.
So why do you need to know all this? Employers are subject to TEFFRA (yes another law and we will talk about that one more in the future) which, depending on the size of your employer group, medicare will either be primary or secondary in coverage and this can affect your rates. And, as an employer, you have to be very careful how you approach this issue when an employee ages in (that’s medicare speak for turns 65).
This year, the Annual Election Period started October 15th and ends December 7th. Medicare is very important to our seniors and for those who qualify due to a disability. Many people who qualify for Medicare will benefit from a Medicare Advantage plan.
Let me know if I can help!