Review and Compare Medicare Plans

(ARA) – This is an important time of the year for seniors. Once a year, they have the opportunity to review, change and add to their Medicare plans including Part D, Medicare’s prescription drug benefit. Now through Dec. 31, 2008 is Medicare’s annual open enrollment period. It is also the chance for those not enrolled in the prescription drug plan Part D to enroll.

During these challenging economic times, it is important seniors ensure their drug benefit plan meets their health and pocketbook needs. The federal Medicare Part D prescription drug program is designed to provide greater access to prescription drugs for Medicare beneficiaries — regardless of income, health status, or prescription drug usage.

The good news is that this program works, delivering on its promise to save money for seniors on their prescription drugs with affordable premiums and low copaymevnts. With Medicare’s prescription drug benefit Part D, seniors save $1,200 a year on average on prescription drugs. In fact, a recent national survey of seniors for “Medicare Today” shows that nearly 71 percent say they have reduced their spending on prescription drugs. The survey also shows that seniors give their prescription drug program very high marks: 90 percent say they are satisfied with their plan — an increase of 12 points since the prescription drug program started in 2006.

Current and potential beneficiaries can speak with a Medicare counselor for information about the benefit by calling (800) MEDICARE or (800) 633-4227. Beneficiaries should have on hand a list of the prescription drugs they take, including the dosage and frequency, and a preferred pharmacy. Seniors have until Dec. 31 to make any changes or to enroll. For many the next opportunity will be in November of 2009, so the time to do it is now.

During the open enrollment period seniors should:

Review their drug benefit plans annually.
Premiums and benefits do change every year, as do the prescription drug needs of seniors. To ensure the prescription drug benefit is meeting the beneficiary’s current need, plans must be reviewed annually.

Compare with other available plans.
If a beneficiary feels they are paying too much for their prescription drug benefit or that certain drugs are not covered under their current plan, they should compare it with other available plans in the state. There is a wide variety of choices in coverage plans to fit every senior’s budget. Affordable Medicare drug benefit plans are available in all 50 states, and plan options vary in costs and the drugs that are covered. To compare a current plan with others visit www.medicare.gov to use the Medicare Options Compare tool.

Enroll now.
If an eligible senior is not enrolled in Medicare Part D, now is the time to enroll. The best time to sign up is when the beneficiary is first eligible for Medicare. Late enrollees may incur a penalty fee. To enroll and find a plan that meets the senior’s needs visit www.medicare.gov to use the Medicare Prescription Drug Plan Finder.

Consider the low income subsidy.
More than 3 million people eligible for financial assistance to help cover the cost of their prescription drugs are not enrolled in Part D. Those who qualify for the low-income subsidy can receive the benefit at little to no cost. To determine if you are eligible, contact the Social Security Administration (SSA) at (800) 772-1213 or visit www.socialsecurity.gov.

Article courtesy of ARA Content

Answers About the Medicare Drug Plan

The new Medicare drug program, known as Part D, has resulted in much confusion about rules, benefits and costs. Here are answers to frequently asked questions from a leading health-care advocate.

DECIDING WHETHER TO SIGN UP

My mother is in her 80s, in good health and does not take any medications. Does she need Part D? Your mother may not need coverage now, but she might consider a low monthly fee plan in case she does need coverage in the future and is concerned about the penalty. For every month she puts off enrolling after May 15, 2006 (when Part D went into effect), she will pay a penalty of 1% of the monthly premium.

For example, delaying for 15 months would mean a 15% penalty every month for the rest of her life. The typical plan charges $32 a month,* but in many states, plans may cost much less.

Note: If you enroll in Part D more than three months after your 65th birthday, when you become eligible for Medicare, you will be charged an extra 1% of the current monthly premium for every month you wait to enroll.

CUTTING COSTS

I prefer to fill my prescriptions on a 90 day basis. Do any Part D plans offer this option? Certain plans do allow prescriptions for 90 days at a time, reducing copayments. Go to www.medicare.gov. Under “Search Tools,” click on “Compare Medicare Prescription Drug Plans,” then on “Find & Compare Plans.”

Next, click on “Begin General Search.” Once you get to Step 3, click on “Continue,” then on “Continue to Plan List.” Here, go to “Select Criteria to Reduce Number of Plans Shown,” and click on “Plans that allow me to use mail-order pharmacies.” Call to confirm.

SWITCHING PLANS

I have heard that an insurer can increase premiums for the following year or drop a drug from its “formulary” (fist of available medications). Is this correct? Yes. If a plan no longer seems like a good deal, you might want to switch.
Each year, between November 15 and December 31, you can do so for the next year without penalty.

If your Part D provider drops a drug that you need, you can ask for an exception … appeal to the independent review board if your request is turned down … or ask for judicial review under certain circumstances.

HELP FOR LOW-INCOME PEOPLE

My father would like to sign up for the Medicare Part D plan, but he can’t afford it. Is financial assistance available? If his income in 2007 is below $15,315 per year ($20,535 for couples) and his assets are worth less than $11,710 ($23,410 for couples), excluding both his home and vehicle but including $1,500 per person for burial and funeral expenses, he can get Part D coverage through the government’s Extra Help program (new income limits will apply in 2008).

If he qualifies for the full subsidy, he will have to pay $2.10 for generic drugs and $5.35 for brand-name drugs, with no premiums or deductibles. Check the Social Security Administration (800-772-1213 or uwwssa.gov) for additional information.

I work with low-income people. Pharmaceutical companies do offer programs to get these people the drugs they need, but anyone who has insurance doesn’t qualify. If they sign up for Medicare Part D, their free meds will stop. What should they do? If your clients’ income and assets are low enough that they can qualify for the Extra Help program (see previous question), they should sign up for Medicare Part D. The drugs they need should be available, but check first to make sure.

Unfortunately, some people do have incomes low enough to qualify for drug companies’ patient-assistance programs but not low enough to qualify for the full Extra Help subsidy. These individuals may be better off skipping Part D in order to continue to get free prescription medications through the drug makers.

DONUT HOLE TRAP

Can you explain the “donut hole”? When Part D was originally being discussed, using a “standard plan” model, the plan in 2007 would pick up a portion of expenses up to $2,400 in total drug costs, then the individual would pay 100% of expenses up to $5,451 (the so-called “donut hole”). The plan would resume picking up 95% of costs over this amount for the remainder of the year.

In the end, there was no standard plan, so when the donut hole begins, what you pay depends on the plan you select. Read the various plans’ rules to find out what they provide.

No matter when your coverage gap begins, once you have $3,850 in out-of-pocket drug expenses in any calendar year, not including premiums, drugs that aren’t included on the plan and drugs purchased at out-of-network pharmacies “catastrophic coverage” kicks in and 95% of costs (not including the items that are listed above) are covered.

NURSING HOME CARE

My uncle is 84 and living in a nursing home. Should he sign up for Part D? If your uncle qualifies for Medicaid assistance for his nursing home bills, then he automatically qualifies for Medicare Part D’s Extra Help program.

Make sure that the plan you select includes a pharmacy that works with his nursing home. If your uncle is not getting Medicaid, he still can select a Medicare private drug plan that works with his nursing home.

CREDITABLE COVERAGE

I have prescription drug coverage via my wife’s insurance plan at her job. I also have Original Medicare.* To obtain Part D without a penalty, do I have to sign up now or can I wait until my wife’s coverage is no longer in effect? You can wait and not pay a penalty if and when you do sign up for a Part D plan as long as your wife’s coverage is “credit-able” – that means it is at least as good as Medicare Part D. (Coverage purchased privately, not through an employer, also can be creditable, although Medigap drug coverage is not.)

Your wife’s employer should have sent her a notice stating whether the coverage is creditable. Keep a copy for your records to avoid penalties when you do sign up for Part D.

I go to the VA hospital for medical care and prescriptions. Is this considered creditable coverage? Yes. (It probably isn’t necessary to get a letter from the VA stating that you have coverage, but it couldn’t hurt.)

MEDICARE HMOs

I belong to a Medicare HMO in Massachusetts. Officials there told me that they would cancel my coverage if I joined another insurer’s Part D plan. There are other Part D plans more suitable for me. Can they actually cancel me if I avail myself of one of these? Yes. If you’re in a Medicare private health plan, such as an HMO or PPO, you’ll lose coverage if you sign up for a stand-alone Part D plan.

Before you settle for your current provider’s Part D plan, consider whether you would be better off switching to Original Medicare, which covers hospitalization and outpatient services, and a Medigap supplemental policy to help with the deductibles and copayments that Medicare doesn’t cover, plus the stand-alone Part D plan of your choice.

Important: Several insurers are promoting zero or low-cost prescription drug plans that really are HMOs in disguise. Make sure you are signing up for a prescription drug plan only if that’s all you want.

My father-in-law has Medicare and Tricare, the US Military’s retiree health plan. Since the Tricare drug plan is comparable (actually better), do we need to sign him up for Medicare Part D? No, you don’t, and since Tricare is creditable coverage, you won’t face a penalty if he someday decides he does want to sign up for Part D.

HIGH-PRICED MEDICATION

I pay $20 per month for my rheumatoid arthritis medication (Enbrel) through my employer’s plan, which ends when I retire soon. My pharmacist claims the drug will cost more than $1,200 per month without insurance. I’ve checked the companies providing Part D coverage and cannot find any that adequately cover my drug. Any suggestions? Like many brand-name drugs, yours is in the more expensive, high-tier of the private drug plans. That probably means you’ll have to pay more than you’re paying now. Exactly how much more will depend on your state and the plan you choose.

Also, there may be drug plan restrictions on more expensive drugs, so you may need your doctor’s assistance to obtain coverage. DISABILITY AND MEDICARE

I’m 64 years old and on disability, Medicare and Social Security. Can I apply for Part D now, or do I have to wait until I’m 65? If your Medicare benefits have already begun, you can sign up right away.

If you’re still waiting for your Medicare benefits (for people under age 65, they don’t start until two years after disability payments begin), then you can’t sign up until three months before your Medicare coverage begins or in the month of your 65th birthday. The coverage begins the month you become eligible for Medicare.

BUYING DRUGS ABROAD

I live in Wisconsin and spend my winters in Arizona. I am on several medications which I get in Canada for a fraction of the cost I would have to pay in the US. Should I sign up for Part D or continue buying my medications in Canada? Many people have found that it’s cheaper and less of a hassle to buy their prescription drugs across the border. But there’s always a chance that you might one day reside in a state where cross-border trips are not as convenient … that you could require additional medications quickly … or that a medication you need might not be easily obtained in Canada.

Even if you continue buying your drugs Canada, to play it safe, also consider signing up for a Part D plan with a very low premium.

CHOOSING A PLAN

You are under no obligation to sign up for Medicare Part D, but if you do, make sure that the plan you choose offers the drugs you need at a fair price through a pharmacy you like. Figure in premiums, deductibles and copayments.

You can compare Medicare prescription drug plans that are available in your state at the Medicare Web site or by calling 800-MEDICARE.

Article by Carson Danfield

Will they Raise the Social Security Retirement Age?

There are many points to argue about what is right and wrong when it comes to Social Security and other age based entitled programs. But one point I think we can all agree on without beating the point to death is that Social Security is in serious trouble as we currently use it.

I am not interested in placing blame or running through all the statistical data why it won’t last. Simply put, we borrow from the future to pay for the present but sooner or later the future shows up. Anyone that borrowed against their homes in the last few years knows all to well how that statement rings true.

But what will Obama or other politicians do about it? How about get real!

According to the American Academy of Actuaries, raising the retirement age to 70 will cut the projected Social Security deficit in half. The statistics back up this age as a base age to use to start benefits with incremental increases built in. The current system increases the social security age one month at a time to age 67 but that is not enough.

The fact of the matter is that people are living longer. In 1935 the retirement age was 65 and you could expect to collect for 12 years. Now that number is closer to 19 years. That’s the type of inflation we can live with, “age inflation”. But that puts pressure on the social programs geared to help seniors with their expenses including Medicare.

According to the National Bureau of Economics the retirement age that is more realistic is closer to 73-74. That might be pushing it a bit and probably impossible to get through politically. The American Academy of Actuaries concludes that long after all the baby boomers are gone the demographics tell us that social security will only cover 75% of its costs. Women will be affected even more since they live longer than men.

But will this be a blow to current generations regarding their expectations for retirement? The answer is no, at least not for those that have given it any thought. Many baby boomers have simply not saved enough for retirement and a large percentage of them do expect to earn some type of  income through work during their retirement years.

Financial advisors are also not optimistic about their client’s chances of retiring at the current young age of 65 and having their money last. Inflation and modest investment returns over the last decade have pushed an even greater number of workers into that work longer, save more demographic that will come to dominate those tapping age based social programs.

Raise the retirement age and acknowledge the simple fact that were living longer and we need to make some adjustments to age based entitlement programs.

Article by H Craig Rappaport

Little Known Social Security Benefits

Postponing Social Security until age 70 makes a great deal of sense for most healthy, married Americans that can do without the income. Of course, there are numerous exceptions and before postponing your benefits you should seek professional guidance. Obviously most haven’t because about two-thirds of current Social Security recipients started taking benefits before their normal retirement age? For the vast majority, this was a mistake and will cost them dearly in retirement as the result will be lower lifetime benefits. Is there a way to reverse this mistake and start again?

Yes! The Social Security Administration allows you to pay back the money you’ve received in Social Security benefits – without interest and without adjustment for inflation – and reapply for higher benefits. All you need to do is complete form 521, “Request for Withdrawal of Application”. You’ll be asked the reason for your action but don’t worry because any answer is acceptable. Let say you started at age 62 and have been drawing $1,000 a month for eights months but now want to reapply. Along with form 521 you’d write a check for $8,000 and then you can reapply when ready. If you filed a tax return during the period, you’ll probably want to file an amended return because chances are you overpaid your taxes and are due to refund. If you wait until age 70 to reapply, your benefits will grow about 8% annually, plus the cost-of-living-adjustments, which means your benefits will more than double from those at age 62. As you’ll learn from reading my Guide to Social Security there are several other good reasons to postpone Social Security if you can possibly afford to do so. In fact, the typical family may be able to add as much as $200,000 to their lifetime retirement income if the primary breadwinner postpones Social Security until age 70.

Let’s look at Fred and Sue, both aged 65. Both worked outside the home and are entitled to $1,500 each in Social Security benefits for the reminder of their lifetime. A quick glance at a Mortality Table shows that Sue is expected to outlive Fred by several years. The Social Security regulations says that one spouse is entitled to what they qualify for based on their own lifetime earnings record or 50% of what the higher earning spouse will receive, whichever is greater. Since Sue is expected to outlive Fred, wouldn’t it be nice if Fred postponed benefits until age 70 so that Sue would get a big raise in Social Security benefits if Fred dies first? Is there a way for Fred to get benefits based on Sue’s lifetime earnings record and then apply at age 70 for higher benefits based on his lifetime earnings record?

Due to a little-known glitch in the Social Security regulations, there is a way. Fred would apply for spousal benefits and receive 50%, or $750, based on Sue’s earnings. He would draw this amount, increased annually for cost of living adjustments, and at age 70 reapply based on his earnings. Presto, he will get substantially higher benefits for postponing and these, too, will be adjusted annually for inflation. At Fred’s death, Sue will be entitled to the greater of the two and her benefits will ratchet up to what Fred was receiving.

The foregoing shows two easy ways to maximize your Social Security benefits by taking advantage of little known glitches in the rules. More and more married couples are realizing that postponing Social Security is the wise move because there is an increasing probability that at least one of them will live well beyond age 90. Since Social Security is a lifetime annuity promised by the U.S. Government with benefits annually adjusted upward for inflation and tax-favored when taken, making them a relative larger part of your retirement income is smart. This is done by postponing until age 70 if possible and taking advantage of the two “loopholes” we’ve discussed. Of course, by using these loopholes you’re adding to the financial woes of the Social Security System. If you find these glitches attractive, act soon before Congress wakes up and closes the gate.

May 2008

Article  by Dr. Shelby Smith