Sunday, November 15, 2015

Premium Shock: Shopping Season for Medicare

About a third of people on Medicare got a nasty surprise last month. For a while, it seemed that their Medicare Part B premiums might jump by 52 percent.

Last week brought good news, sort of. The budget deal just passed by Congress will ease that hike to about 17 percent.

The news comes as the annual “open enrollment” period for Medicare is underway. (It lasts until Dec. 7.) That’s the period in which people can shop among Medicare Advantage, prescription drug plans and Medigap. Those are ways to cover the things that Medicare doesn’t.

The premium hike may prompt people to take a closer look at their choices. So, let’s look first at the nasty surprise. Then let’s examine the choice between Medicare Advantage and Medigap with Part D pharmacy coverage.

Everybody who pays their Medicare premiums through their Social Security payments can relax. The premium hike doesn’t affect them. Rather, it affects Medicare Part B recipients who don’t yet get Social Security payments, and people new to Medicare.

The increase reflects a 6 percent rise in the cost of caring for old people, and the fact that the law protects Social Security recipients from actual reductions in their payments due to rising Part B premiums. Social Security payments will be flat next year, due to absent inflation, and raising Medicare premiums would mean smaller checks. So, the rising cost gets passed on to Medicare recipients who don’t get Social Security.

Until last week, it looked like their Part B premiums would rise from the current $104.90 per month to $159.30 for those sorry recipients. The proposed fix would raise them to $120 per month in 2016, plus a $3-per-month surcharge.

High-income recipients, meaning $85,000 in income for singles and $170,000 for marrieds, already pay higher charges, and the fix will raise them further.

Smart Medicare recipients protect themselves from the big coverage gaps in Medicare. The problem:
  • Recipients must pay 20 percent of medical charges under Part B, which covers doctors, outpatient services and equipment.
  • Part A, the hospital coverage, has a $1,260 deductible for each hospitalization separated by 60 days.
  • There are co-pays for hospital stays over 60 days.
  • Parts A and B don’t cover drugs.
Those gaps can drain your savings fast in a major illness, especially since there is no out-of-pocket maximum on what you can owe. So it’s best to buy protection.

There are two methods — Medicare Advantage and Medigap insurance coupled with Part D pharmacy coverage.

Which to choose?

Think of it this way, says Sandy Leith, who knows this stuff. With a Medigap policy and Part D, you pay more now, but less when you’re really sick. With Medicare Advantage, it’s the other way around, says Leith, who heads Illinois’ advice program for Medicare recipients, called SHIP.

So, if you think you’ll stay healthy, Medicare Advantage can save you money. If you’re already seeing doctors a lot, Medigap may be better. (...)

Now for the details.

by Jim Gallagher, St. Louis Post-Dispatch | Read more:
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