Medicare: What you need to know about Nursing Care coverage

One of the listed benefits of Medicare Part A is nursing care.  However, there have been many examples of people being surprised by a bill for nursing care that Medicare said it would not cover.  These situations can cur when someone is initially hospitalized, then moves to a nursing home for follow up care.  It all has to do with how you are being coded, or covered, during your time at the hospital.

This really comes down to whether the hospital considers you an inpatient or outpatient case. 

Inpatient means you are admitted into the hospital per doctor's order.  Staying in a hospital overnight does not necessarily signify this.  If you aren't formally admitted, and are considered to be under observation, you could be considered "outpatient" even if you stay in the hospital overnight.

When you are inpatient, Part A covers your hospital services for 60 days after you pay a deductible.

When you were outpatient, Part A does not cover any services.  These would be covered under Part B (and a supplemental plan) and you would be responsible for any copayment after a small deductible is met.

Medicare will not cover follow up care in a nursing home for outpatients.  You must spend 3 consecutive nights as an inpatient in order to be eligible for nursing home coverage.

So, what does this mean for you?  It means that even when you are dealing with a major medical issue that requires hospitalization & nursing home care, you need to be aware of what type of patient the hospital considers you (or have someone with you that can be making sure they know).  The question to ask the hospital is whether you are considered inpatient or outpatient.  Either way you will need 3 consecutive nights as inpatient to have nursing home covered.

Medicare: Part B & D Premiums & Other Costs

We continue our Medicare Planning series of blogs with additional information on the costs of Part B & D plans. 

Below is the breakdown of costs for Part B coverage in 2014 (and the additional cost for Part D) based upon your Modified Adjusted Gross Income each year.  We recommend looking at your tax return (and current year income assumptions) to see how close you may be to the higher or lower end of one of these bands to determine if there is any year end tax planning that could be done to help you remain in a lower premium bracket.  We are not suggesting you let the tax tail wag the dog, however, if you are right on the cusp it could be worth some minor tax planning to save hundreds of dollars a year in premiums. 

*Currently, there is a proposal on the table that will lower the income brackets (beginning in 2016) that the premium increases kick in at, and also increase the additional premiums to be paid.  This could have a dramatic impact on future Medicare costs for those in the higher tax brackets.

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Because your premium is based upon income, often times we see people who are retiring right at age 65 have their Medicare premium for year one be based on a higher bracket than their actual income will be going forward.  This is because they were working in the previous year, and their income was much higher.  If this is the case, you should let the social security office know and they can base your premium on your "projected" income for that first year, saving you the increased costs.

An issue we see quite a bit is a one-year jump in income for clients affecting their Medicare premiums.  This could occur due to any number of circumstances such as:  the sale of assets generating capital gains (possibly the sale of a house), or additional income earned through consulting during retirement.

As Medicare gets this information directly from the IRS (via your tax returns) there is often a 1-2 year delay in the implementation of the increased premium.  During that time, your income may have normalized, putting you back into one of the lower brackets.  If this is the case it is important to be proactive and reach out to the social security office to let them know that this increased premium should only apply for one year.  If you get ahead of it, you won't need to wait the 1-2 years for them to catch up to you and avoid paying the higher premiums immediately.

Medicare Part D, the prescription drug coverage, comes with a "donut hole," which is a gap in coverage. After clients satisfy their deductibles, they then pay a percentage of their prescription drug costs up to $2,850 a year. After that point, they must cover all these costs until they hit $4,550, after which point the insurance kicks in again. While in the "donut hole," clients receive full credit for the cost of the medication but the actual cost is reduced by 28% for generics and 52.5% for name brands. Under the Affordable Care Act, however, that donut hole is shrinking. By 2020, it is expected to be closed.

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For MA residents there is some great information on Part D plans at http://www.massresources.org/medicare-drug-plans.html

Also, medicare.gov has a fantastic resource where you can enter in all of your prescription drugs and it will analyze your expected all in costs for the various Part D plans available in your area.  We strongly recommend taking advantage of this each year during open enrollment (especially if your prescriptions have changed during the past year).

Medicare: When & How to Enroll:

Medicare:  When & How to Enroll:

In our ongoing series of posts on planning for Medicare, we move onto when and how to enroll. 
Please click this link to view our previous post on Planning For Medicare, which provides an overview of the Medicare system.

http://singlepointpartners.blogspot.com/2014/11/planning-for-medicare.html

It is important to enroll in at least Part A of Medicare during the window that starts 3 months prior to your 65th birthday, and ends 3 months after.  If not, penalties may apply.

It is even more important to apply for Part B  during the prescribed enrollment period.  For each 12 months when you were eligible and not covered by a group plan, your Medicare Part B premium is going up 10%, and will remain up 10% for the rest of your life.  We have seen this period missed most often by those who have been laid off prior to 65 and are on COBRA.  They assume they are covered and don't need to sign up until COBRA ends.  Having coverage through an active employer allows you to defer this, however, COBRA coverage does not.

If you are collecting social security you should automatically be enrolled in Medicare Part A at age 65.  Coverage will begin on the 1st month of your 65th birthday, unless you were born on the first of the month then the coverage begins the previous month.  You will need to be proactive about signing up for Part B, D, & Medigap plans at this time by contacting your social security office.

Most of our clients are employing strategies to defer social security (to at least full retirement age of 66, or even as far as age 70).  If you fall into the boat that is not collecting social security at age 65 you will need to contact the social security office to sign up for Medicare.  You should do this about 3 months prior to your 65th birthday to avoid any delays. 

If you are covered under an employee medical plan at age 65 (still working) you should still contact social security 3 months prior to your 65th birthday and sign up for Medicare Part A.  You can delay signing up for Part B, D & Supplemental plans for as long as you have your group insurance coverage from an employer for whom you or your spouse are actively working.    When you stop working you will be entitled to a special enrollment period to sign up for B, D & Supplemental Plan.

Even if you have a retiree health insurance plan that includes prescription drugs, you will need to sign up for Medicare Part A.  Often times, your plan will also require you to sign up for Part B, which will act as the primary insurance with your retiree plan acting as supplemental coverage.

Additional Resources:

Beyond working with your financial planner to design the right coverage for you, there are a number of resources available:

Centers for Medicare & Medicare Services (CMS):  800-MEDICARE (800-633-4227) or www.Medicare.org

Social Security Office:  National # 800-772-1213.  Or call your local office to set up an appointment.  www.ssa.gov

Local Senior Center:  Senior centers often have resources or people to talk to who are well versed in Medicare related issues. 

State Specific Resources:  Many states have additional resources and programs you can take advantage of. 
In Massachusetts we have:

• SHINE:  Serving the Health Information Needs of Everyone.  800-AGE-INFO (800-243-4636).  www.800ageinfo.com
• Mass Med Line:  Pharmacy Outreach, help with affording prescriptions, information about medications and side effects.  Free to MA residents.  866-633-1617.
• Prescription Advantage Program:  State plan that supplements Part D.  800-243-4636

Planning for Medicare

October 15th - December 7th is open enrollment time for Medicare.  For many, Medicare planning is a confusing & daunting task.  We wanted to share some information for those approaching 65 years old who are trying to understand their options for healthcare (there is also relevant information for those already 65 whether on Medicare or not).

As there is so much to cover, we plan on writing a series of blog posts on the topic. We'll start with an overview of the Medicare system.

Alphabet Soup:

Let's begin with a breakdown of the terminology you'll hear when discussing, or reading about, Medicare:


Original Medicare:
Part A:  Think of this as your hospital coverage.  This provides coverage for in patient care, medically-necessary skilled nursing facility stays (see future blog post with more detail on this), and hospices.  There is no premium for most people.

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Part B:  Think of this as your primary coverage for doctors visits and other health care providers.  It covers outpatient care, home health care, durable medical equipment, and certain preventative services.  Premiums for this are income dependent and range from $104.90 - $335.70 per month (for 2014).

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Part D:  Prescription Drug Plans.  The premiums for these plans vary with some providing better coverage for brand name drugs vs. generic.  It is very important to research the plans available to find the right plan for you.  Not investigating the plans available can cost you hundreds or thousands of dollars a year in out of pocket costs.

There are a number of great resources for helping find the right plan for you, including Medicare.org.  You can provide them with a list of your prescription drugs and which pharmacy you typically use to determine which plan is most appropriate for you.  This is something you should certainly review each year during open enrollment, especially if you are taking any new drugs.

The average costs for these plans range from $40-$110 per month (with additional premium charges for those in higher tax brackets).

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Medigap Policies:  These are also known as Medicare Supplemental plans (if you are fortunate enough to have a retiree medical plan through your employer it can essentially act as your Medigap policy).  They supplement your Original Medicare and will pay:

• Medicare's deductible
• Coinsurance costs

The average cost for these plans range from $60-$200 per month.


Part C:  Medicare Advantage Plans
Medicare Advantage plans are offered by private insurers and are localized plans (Medicare A & B are standardized plans at the Federal level).  Advantage plans often require you to utilize certain networks of doctor visits & hospitals (Original Medicare allows you to see any medical provider that accepts Medicare).   These plans can vary greatly in quality not only between states, but, within states.

Choosing the Right Plan For You

Essentially, you can get Medicare health care coverage in one of two ways.  Through Original Medicare by enrolling in Part A, B, D & a Medigap policy, or, by choosing a Medicare Advantage Plan that combines your coverage into one plan. 

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Making a choice between Original Medicare and Medicare Advantage Plans depends on each individuals health needs and budgets.  Because of the potential of out-of-network providers resulting in higher out-of-pocket costs, we tend to recommend Original Medicare for our clients.  The risk of needing to use out-of-network providers is especially high for those who spend winters down south, or enjoy traveling and therefore may need to access healthcare providers outside of their network.

Additional Resources:

Beyond working with your financial planner to design the right coverage for you, there are a number of resources available:

Centers for Medicare & Medicare Services (CMS):  800-MEDICARE (800-633-4227) or www.Medicare.org

Social Security Office:  National # 800-772-1213.  Or call your local office to set up an appointment.  www.ssa.gov

Local Senior Center:  Senior centers often have resources or people to talk to who are well versed in Medicare related issues. 

State Specific Resources:  Many states have additional resources and programs you can take advantage of. 

In Massachusetts we have:

• SHINE:  Serving the Health Information Needs of Everyone.  800-AGE-INFO (800-243-4636).  www.800ageinfo.com
• Mass Med Line:  Pharmacy Outreach, help with affording prescriptions, information about medications and side effects.  Free to MA residents.  866-633-1617.
• Prescription Advantage Program:  State plan that supplements Part D.  800-243-4636

Upcoming Medicare Post Topics:

Medicare: When & How to Enroll
Medicare: Part B & D Premiums & Other Costs
Medicare:  What you need to know about Nursing Care coverage