There is at least one perk to getting older: free health care. But how free is it? Five years ago, I gave an overview of Medicare in these pages. (See www.bitly.com/Medicare01). But since the rollout of the Affordable Care Act (otherwise known as the ACA, or “Obamacare”), some parts of Medicare have changed and some have stayed the same. In this story, I’d like to give an update on Medicare, how it works, and what’s changed.
If you are collecting Social Security, your red, white and blue Medicare card will come automatically to you three months before your 65th birthday. If you are not collecting Social Security, you should contact Social Security at (800) 772-1213 or www.SocialSecurity.gov/retirement three months before you turn 65, to apply for Medicare.
Your enrollment period is seven months, beginning three months before your 65th birthday. If you miss your enrollment period, you can enroll each year from Jan 1 to March 31, but your premiums could be as much as 10 percent higher for twice the number of years that you were not signed up after being eligible. For example, if you could have signed up in 2010 and waited until 2012 you would have to pay the higher premium for four years. If you meet certain criteria – the most important being having other coverage like Local 802 Health Plan – you are exempt from the higher premium penalty.
The Medicare card’s arrival means you are enrolled in Medicare Parts A and B, otherwise known as traditional Medicare.
Medicare Part A covers hospital costs. How much does it cost you? For most people, the monthly premiums are free, because they paid Medicare payroll taxes all of their working lives.
However, there is an important thing to mention. As a musician, if you worked as an independent contractor your whole career, you were supposed to be paying your own Social Security and Medicare taxes all along out of your own pocket. (If you worked mostly for Broadway or another actual employer, you were treated as a regular employee and these taxes were covered.) If you never paid into the Medicare system for any reason, then you do have to pay for Medicare Part A (hospitalization). The premiums in 2012 were as much as $451 a month for Medicare Part A. If you can’t afford Medicare premiums, you can opt out but you’ll have to figure out another way to get health insurance. (One option is Medicaid; see the previous story I wrote for Allegro at www.bitly.com/MedicaidStory).
Medicare Part B covers major medical expenses such as doctors’ visits, surgeries, lab tests, physical therapy and medical equipment like wheelchairs. Part B has a premium which is determined by your income.
|HOW MUCH MEDICARE PART B COSTS YOU EACH MONTH, BASED ON YOUR INCOME|
|If your yearly individual tax return income in 2011 was||If your yearly joint tax return income in 2011 was||You pay in 2013 per person monthly|
|$85,000 or less||$170,000 or less||$104.90|
|$85,001 to $107,000||$170,001 to $214,000||$146.90|
|$107,001 to $160,000||$214,001 to $320,000||$209.80|
|$160,001 to $214,000||$320,001 to $428,000||$272.70|
|$214,001 and up||$428,001 and up||$335.70|
Since there is a premium for Part B, some people are better off delaying enrollment until their Local 802 or other employer coverage ends. When that coverage ends, you have eight months to enroll in Medicare Part B without any premium penalty. Crunch the numbers carefully to make sure your are getting the best bang for your buck.
Besides monthly premiums, costs to you include co-insurance and co-pays. For most Part B coverage there is a 20 percent co-insurance once the deductible is paid. This means Medicare will pay 80 percent of the charges. If you are in the hospital for a stay of more than 60 days, there is a co-pay for each additional day.
Many people buy supplemental insurance called “Medigap” policies. This is private insurance designed specifically to wrap around traditional Medicare, covering some of the co-pays and co-insurance. The fine print in the description will say “Medicare supplemental insurance.” The enrollment period is the same as Medicare. If you do not sign up for a Medigap plan at the same time, you may be charged a higher premium later.
Because of the ACA (“Obamacare”), Medicare Part B now covers most preventive care free of any co-pays or co-insurance. Before the reform you had a “Welcome to Medicare” physical just once, and after that most coverage was only for treatment of diseases or conditions. Now you can get screenings for depression, alcohol misuse, obesity, diabetes, cardiovascular disease and more. When you are enrolled you will get a handbook called “Medicare and You.” You can also find the PDF of the handbook by searching at www.Medicare.gov.
Part B does not cover prescription drugs. For that you need a Medicare Part D policy. (I wrote a separate story on Medicare prescription coverage: see www.bitly.com/Medicare03). Part D policies are sold privately. There is a Medicare plan finder at www.Medicare.gov to help you find the best plan for yourself. That will depend on what kinds of prescriptions you are taking and how expensive they are. There is a limited enrollment period during which you can change plans if you are unhappy with the plan you chose. The period is Oct. 15 to Dec. 7.
The average premium for a Part D plan was $38 a month per person in 2012. The standard deductible is $325 a year. Once that is met the plan will begin to pay most of your prescription costs. You might have to pay co-insurance (25 percentage of the drug costs is standard) or a co-pay (a flat fee). When you and your plan have paid a combined sum of $2,790 in a year (not including your premium), the coverage halts until the total costs reach $4,750 in the same year. Then Medicare picks up about 95 percent of the cost. This is the infamous “doughnut hole.” The ACA is gradually closing that gap. In 2010, any senior who reached the gap got a tax-free rebate of $250. In 2011, seniors received a 50 percent discount from the manufacturer on all brand-name drugs covered while they were in the gap. The percentage seniors paid on generic drugs was much higher – over 80 percent – but generics are cheaper, and the out-of-pocket expense helps move you out of the gap. The discounts on brand-names and generics increase each year until 2020, when you will pay the standard 25 percent cost for everything, essentially erasing the doughnut hole.
The Medicare Advantage program gives you the option of buying a private health insurance plan rather than being covered by traditional Medicare. These plans are required to cover everything traditional Medicare covers but they may do it as an HMO or PPO. They have premiums and their own rules about co-pays and co-insurance and most cover prescriptions. They may also cover vision and dental services. The yearly enrollment period is the same as for Part D. For more on Medicare Advantage, see a separate story I wrote, at www.bitly.com/Medicare02.
How does Medicare work if you’re already on the Local 802 health plan? Let’s say that you turn 65 and you qualify for Medicare, but you keep your Broadway chair or your orchestra seat. If you are on the Local 802 Health Plan, that plan will remain your primary health insurance and Medicare will pick up where the Local 802 coverage leaves off. This means if you hit the yearly cap or need hospitalization (which is not covered under most of the Local 802 plans) or run into other limits on coverage, Medicare will then kick in. This does not mean that Medicare will pay your participant premiums or your co-pays or co-insurance while covered by Local 802’s plan.
Also, it is possible to sign up for Medicare Part D prescription coverage while on the Local 802 plan, but the prescription insurance you buy will almost certainly refuse to pay benefits until your Local 802 coverage is exhausted. This means it may not make sense to have both. (The exception to this advice is if you’re on the union’s Plan B, which doesn’t include prescription coverage. In this case, it may indeed make sense to buy Medicare prescription coverage while on the union’s health plan.)
Finally, one thing to also keep in mind is that your dependents can be on the Local 802 plan; the same is not true for Medicare.
There was a lot of rhetoric during the presidential campaign about Medicare Advantage plans and whether they would survive the ACA. Since Medicare Advantage was created in 2003, private insurers have been paid on average 14 percent more per person by Medicare than Medicare would have spent on that person in traditional Medicare. Between now and 2017 that will be reduced to 2 percent and Medicare will begin rewarding plans that meet certain quality benchmarks like fewer readmissions to the hospital and better management of chronic diseases. Providers who accept traditional Medicare will be held to the same standards. The goal is to lower the cost of health care by improving patient outcomes and encouraging better preventive care and less overuse of technology. The fear is that some private plans will fold because they cannot keep their costs down and maintain an acceptable profit margin, which means there might be fewer choices of private plans in the Medicare Advantage market. My prediction is that insurance companies will conglomerate, enabling themselves to hold down payments to providers. We will see how it unfolds.
As usual, I am happy to talk to fellow musicians about any of this. E-mail me at Earmar4@verizon.net.
Also, here are some useful links:
Martha Hyde is a multi-woodwind player who performs on Broadway. A member of Local 802, she is also a trustee on the Local 802 Health Benefits Fund.