3 Reasons why Medicaid is surging in RI

More jobs are added to the RI economy and yet the number of individuals on Medicaid is expanding. Here are 3 observations we're seeing as we work with individuals on a day-to-day basis as to why.

1. The obvious reason is Medicaid expansion

In RI, Medicaid expansion has increased the Medicaid threshold for more Rhode Islanders. More people qualify = more people enrolled. 

  • Adults with incomes up to 133% of poverty 
  • Pregnant women with household incomes up to 253% of poverty 
  • Children with household incomes up to 261% of poverty 
  • Women with household incomes up to 250% of poverty 

Source: https://www.healthinsurance.org/rhode-island-medicaid/ 

2. Lack of high paying jobs

There may be more jobs but there is still a lack of high paying jobs. If you're employed at $11/hour, you're still going to qualify for Medicaid. Many low paying employers (especially small businesses) are not offering health insurance because it's cheaper for them to have everyone go on Medicaid. 

3. Retirees are using Medicaid as an estate planning tool

The high cost of nursing homes and the astronomical hikes in long term care costs have forced many retirees to use advance estate planning tools to circumvent high nursing home costs. The trick? Put your assets in a trust, spend down whatever else you have, and on paper you look broke. You'll qualify for Medicaid with the state picking up your nursing home costs. With 10,000 baby boomers turning 65 each day, the growing Medicare population is definitely looking at Medicaid to cover those high nursing home expenses. 

The rising enrollment in Medicaid comes at no surprise to us as we continue to see a low wage recovery here in RI. 

What is the Donut Hole?

As the popular Oscar Wilde adage goes, “The optimist sees the donut, the pessimist sees the hole” (1). When it comes to Medicare and your drug plan, there’s nothing good about the donut hole so, maybe, just this time, you’re entitled to your pessimism.

The hole references a gap in drug coverage. There are several layers to the donut. Let’s use the year 2017 to illustrate how this works:

First, you have to reach your deductible. In 2017, the deductible is $400 so, before your drug plan starts covering any of your medication costs, you have to spend $400 paying for your medications yourself. (Not all plans have deductibles though, it’s just that the deductible can’t be greater than $400).

Second, you’ve reached your $400 deductible - now what? Well, if the metaphorical donut were a flotation device, you would be floating safely along the water. Once you hit your deductible (if you have one), your drug plan steps in and you’ll pay your designated co-pays (each plan has different co-pays for different drugs. Drugs are tiered with generics being typically tier 1-2 and brand name drugs being tiers 3-5)… until you reach $3,700. Yup, that means after you’ve spent $400, your drug plan will cover an average of 3/4ths of your drug costs until the combined total (what you’ve paid and what your drug plan covers) reaches the new threshold of $3,700.

Third, you and your drug plan have now spent the $3,700. Now what? This is where you fall into the donut hole or, in the case of the floatation device, this is the part where you get wet. At this point, your drug plan pulls back its coverage and leaves you, well, hanging out to dry. This is how it works in the donut hole:

  • If you’re getting generic medications → you pay 51%, your drug plan pays 49%
  • If you’re getting brand-name medications → you pay 40%, your drug plan pays 10%, the drug manufacturer pays 50%

Once you have spent a total of $4,950 of your own money, you’re back on the other side of the donut, safe and dry. At this point, Medicare steps back in to cover 80% of your drug costs, your drug plan covers 15%, and you cover the remaining 5%. Phew!  

I don’t mean to sound like an infomercial but there’s more - just a little more information to help you get through the donut hole. There are a few costs that you may be paying that won’t get you to the other side of the donut any faster. Here are the main payments you may be making that don’t get you past the hole:

  • The co-pays your pharmacy charges to dispense your medications
  • The premium you pay to have your drug plan
  • The cost of any medications that aren’t covered by your drug plan

Does it ever end?

Believe it or not, the donut hole is in the process of closing. Slowly, but it is closing and, thanks to the Affordable Care Act, the donut hole will cease to exist in 2020. As of 2020, you will pay 25% of the costs for both generic and brand name drugs.

(1) http://www.goodreads.com/quotes/363192-the-optimist-sees-the-donut-the-pessimist-sees-the-hole   

(2) https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf

 

Penalties!!

Those exclamation points aren’t indicative of my excitement, they’re a representation of my petrification! Penalties... they’re everywhere. Here are some you might encounter with Medicare and, if you know what they are, you know how to avoid them (you’re welcome).

If you don’t sign up for Part B in time, you have to pay an additional 10% of the Part B premium for every 12 months you don’t have Part B. So, if you’ve missed 3 whole years, that’s an additional 30% that you have to pay. The penalty continues for as long as you have Part B.

If you don’t sign up for Part D in time, you have to pay an additional 1% of the Part D premium for every month you don’t have Part D. So, if you’ve missed 2 months, that’s an additional 2% that you have to pay. The penalty continues for as long as you have Part D.

Exception: The one exception in which the penalties actually end is if you are already signed up for Medicare because of a disability and are turning 65. Once you turn 65, the system resets. 

A, B, D, C and the One Big Decision

A, B, D, C. They may not be in alphabetical order but, when it comes to Medicare, it’s easier to understand when they’re in this order.

Medicare, also referred to as “Original Medicare,” is made up of Parts A and B and is run by the US Federal Government. On the other hand, Parts D and C are run by private insurance companies that have been approved by Medicare. Given this fact, you might be tempted to mentally section off the four letters into two parts, A and B in one and D and C in another. However, there’s a reason D is before C and a reason why you’re probably going to want to section the alphabet this way: A, B, and D in one, C in another.

But before I go on, let’s take a quick look into what Medicare is offering with Parts A and B.

      Part A, also known as Hospital Insurance: this covers hospital stays

      Part B, also known as Medical Insurance: this covers outpatient care

If you have A and B, you’re missing prescription drug coverage. Part D covers your prescription drugs.

So, with A, B, and D, you’ve got decent coverage. What’s Part C then? Part C, also known as the Advantage plan, covers the same things as A, B, and D.

What’s the Difference?

For most cases, people either sign up for A, B, a Supplemental Plan, and D or sign up for A, B, and C (which oftentimes includes D). Generally speaking, Advantage plans (Part C) are typically less expensive but may have more out-of-pocket costs and network limitations whereas Supplemental plans (Medigap) are typically more expensive but may have fewer out-of-pocket costs and the freedom to go to any provider that takes Medicare without referrals. The plan that’s right for you depends on both your health needs and financial resources.  

Initial Election Period, ANNUAL ELECTION PERIOD, and Special Election Period

Initial Election

I think of the Initial Election Period as a time similar to when high school students begin visiting college campuses, checking out the scenery, getting a feel for the schools’ vibes, and deciding on which school they want to spend the next chapter of their lives in. It’s an exciting yet simultaneously scary time where you’re faced with an important decision with only a few months to make up your mind.

So, you’ve recently qualified for Medicare (or are close to qualifying); you’re turning 65 soon (happy birthday!), or maybe your 65th is a way to go but you’re just passing your 2-year mark of having a disability. In either case, it’s time to sign up for Medicare. [For this blog, I’ll be focusing on the process for people who age into Medicare, just to keep it a little less bulky - there’s a lot of information!]. Here’s where the Initial Election Period comes in. Every year, about 4 million people turn 65 in the U.S. For all the newcomers, Initial Election Period is the time to sign up for Medicare for the first time. 

How much time do you have to sign up? You have a total of 7 months to sign up: the month of your birthday, 3 months before your birthday month, and 3 months after. 

When does my coverage start? If you were born on the 1st of the month, your coverage begins on the 1st of the month before. If you were born on any other day, your coverage begins on the 1st of your birthday month. ExampleCharlie and Ryan are both turning 65 this year; Charlie’s birthday is on July 1st and Ryan’s is on April 19th. In this case, Charlie’s coverage will begin on June 1st and Ryan’s will begin on April 1st.    

 

Annual Election   

What if you already have Medicare but want to make a change to your plan? In this case, the Annual Election Period (also known as the Open Enrollment Period) is particularly relevant to you. Every year, between October 15th and December 7th, people already signed up for Medicare (regardless of how recently they have signed up) are able to switch plans. 

 

Special Election

You've been through the Initial Election Period and every year you go through the Annual Election Period but now there are circumstances in your life that have changed your healthcare needs. In this case, you fall into the Special Election Period. Three of the most common reasons people require a Special Election Period are: 

  • You’re retiring or have already retired and your employer-sponsored health insurance is ending soon.

  • You’re moving.

  • You’re dual eligible for Medicare and Medicaid.

The amount of time you have to change your Medicare coverage during a Special Election Period depends on the circumstances that have qualified you for a Special Election Period. For example, someone retiring may have an 8-month window to sign up for Medicare Part B while a dual-eligible person may be able to change their Medicare plan during any month. 

 

Why You Should Care

For the newcomers, it’s important to have proper health insurance coverage both to ensure that you’re financially able to care for your health and to avoid fees.

For those who already have Medicare, it’s important to keep in mind that the plan you have for this year may be changing or may not fit your health needs for the upcoming year. Whether for better or worse, Medicare plans change every year and you want to make sure that you’re well covered.

Doctor's Choice was Recently Spotlighted in Providence Business News

"Despite a range of online sites, many consumers say they lack the depth of information they need to compare health care services or feel confident they are making the right choice in picking a clinician. Several Rhode Island businesses have started to fill these gaps, with online and in-person services that offer more detailed information in formats, including video, that allow them to make more informed choices Warwick-based Doctor's Choice, offers both online and in-person consultation, and group seminars, designed to educate consumers about Medicare."

For more information about Doctor's Choice, we encourage you to read the article in full courtesy of PBN.

 http://pbn.com/Local-websites-working-to-improve-grasp-of-care-options,116734

Why You May Want to Hold off on Signing up for Part A Medicare

 

1 in 5 baby boomers over 65 are still working.  Health insurance rates are going up and more employers are saving money by moving to a high deductible plan with a Health Savings Account (HSA).

HSAs allow individuals to contribute pre-tax into an account that rolls over each year (you save what you don’t spend instead of the typical use it or lose it Flexible Savings Account).

Individuals can use money in their HSA after retirement to pay for certain qualified medical expenses.  The pre-tax contribution makes HSAs an attractive choice for individuals looking to pay for their medical expenses with pre-tax dollars.

However, once you sign up for your Medicare Part A, you ability to contribute to an HSA stops.  For individuals working past 65 with a HSA plan from work, do not sign up for Part A when you turn 65. Doing so will prevent you from contributing further to your HSA.  

Once you sign up for Part A, there no way to disenroll.

When you do decide to retire and go on Medicare without an employer plan, you must stop contributing to your HSA 6 months before your Part A starts.  There’s a look back period so if you do contribute within 6 months of signing up for Medicare, you may be hit with tax penalties.

 

Why Your Part D Medicare Does Not Come Directly From The Federal Government

Why Your Part D Does Not Come Directly From The Federal Government

Every once in awhile, we have someone walking into our office frantic about losing their prescription coverage. The story typically goes something like this:

“I got my Medicare, and I had prescription coverage from the federal government, then my pharmacy said my plan ended and I would not have coverage until open enrollment.”

The first couple of times, this really confused me.  Just like the boogie man, sightings of Steve Jobs in remote Africa, and to some folks - the moon landing, Part D directly from the federal government is not real.  Part D is administered by private insurance companies. In any given state, there are over 20 different options to choose from.  Sometimes, Part D is rolled into a Medicare Advantage plan, or Part C as part of an all in one package.

Stand alone Part D plans always have a monthly premium (unless you have Medicaid) and they always come from a private insurance company. Individuals can typically choose to pay for a Part D plan through a direct social security deduction, check, EFT, or sometimes credit card.

If you think your Part D coverage comes directly from the Federal Government, it’s either you’re unaware of what company you purchased your coverage from (it’s a good time to make sure your premiums are paid so you do not have any mid year surprises) or you simply do not have coverage - in which case you’ll rack up a 1% a month penalty tagged on for the rest of your life when you do sign up for Part D.

For some reason you’re unaware that you signed up for a Part D, double check your bills to make sure premiums are paid.  We unfortunately see too often folks who do not pay their bills due to the misconception that “everything is covered by the government and I shouldn’t have to pay anything” and having a mid year surprise where they’re dropped from the plan.

If you’re dropped for non-payment, you won’t be able to enroll until October for a January 1st effective dates. Ignore the moon landings and make sure you know what company you’re getting your Part D from.

 

How Much do you Need to Save for Retirement Health Care?

 

With healthcare being a top 3 concern for retirees, it's nice to be able to put a number on overall costs in order to have enough saved for retirement. Unfortunately, Medicare isn’t free and medical expenses can certainly add up.

While it certainly true that Almost everyone's exact number is going to be different, there are three key factors affecting your costs:

1. Your Prescriptions: If you’re unhealthy, have multiple chronic conditions and are on several brand name prescriptions, be prepared for higher healthcare expenses. The most uncertain cost for individuals on Medicare is prescriptions. Since there is no “supplement” to a prescription plan, almost all prescription plans will have a coverage gap (or a donut hole). What this means is if you have a few expensive brand name medications, you’ll end up paying more for your prescriptions. In 2016, you’ll pay 45% of the negotiated retail costs for your prescriptions once your total prescription costs reach $3,310. This means that a $1,000 a month prescription will cost you $450 to refill. In our experience, most individuals have prescription co­pays that are less than $100 month and less than 10% of individuals are affected by the donut hole. However, we have seen cases where prescription co­pays can skyrocket to over $10,000 a year, especially when it comes to oral chemotherapy prescriptions.

2. Your income and assets: If your income is higher than $85,000 filing single or $170,000 filing joint, you’ll be subject to higher Part B and Part D expenses known as surcharges. For a table of how much you’ll pay, please visit click here. If your income is low and you have very little or no assets, you may qualify for state assistance through Medicaid. With Medicaid, almost everything is paid for. Medicaid will pick up your Part B premiums, your Part D premiums, and most of your co­pays. You will have to pay a small co­pay for generic and brand name prescriptions.

3. Risk tolerance: If you’re in good health and do not live in multiple parts of the country for months at a time, a Medicare Advantage plaay be a good choice for you. Advantage plans typically offer a lower monthly premium in exchanges for higher out of pocket (co­pays) costs for services. If you continue to stay healthy and do not need many services, then you’ll be able to put some money away for a rainy day. In general, if you do not take numerous brand name medications and would like to be prepared for medical bills in retirement, we typically recommend budgeting $500 a month per person (or $6,000 a year) for retirement health care expenses. For most individuals, this will pay for not only the monthly premiums, average co­pays, but also give a little extra cushion just in case.

How best to scale up to compete in a national market, that is the question

For Dr. Johnny Luo, the president of the startup Rhode Island firm, Doctors Choice, the potential target audience for his products and services is huge: anyone who is turning 65 and is attempting to figure out what Medicare plan will be the right fit.

With some 10,000 Baby Boomers turning 65 every day, the aging demographics offer a promising opportunity for the firm to scale up to a regional and national market.

To read Dr. Luo's interview in its' entirety, please visit: http://newsletter.convergenceri.com/stories/How-best-to-scale-up-to-compete-in-a-national-market-that-is-the-question,2445.