In a comment to my recent post about planning for the pending layoff/retirement/whatever-we’re-calling-it, Abigail asks about the costs of Medicare, which I estimate will be around $300. I’ll be eligible for Medicare in May of 2010. So, between the December 31 canning date and May I’ll have to take COBRA, which will cost about $480 a month.
Medicare alone doesn’t cover all your costs: it’s an 80-20 plan. The older you get, the shorter the odds that you’ll suffer a catastrophically expensive illness. Heart bypass surgery, for example, can cost $170,000; 20 percent of that would be $34,000, which you have to pay out of pocket. Cancer treatment can quickly mount into the hundreds of thousands of dollars. Clearly, if you have to pay 20 percent of costs like that, a major illness—almost inevitable in old age—will pauperize you.
To protect yourself, you have to buy a supplemental policy called “Medigap” insurance. You also are required—it’s not an option—to take and pay for prescription drug coverage under Medicare Part D. By law, Medicare Part B and Medigap insurance provide no prescription coverage. If you decline to sign up for Part D when you start Medicare and then later change your mind, you are gouged royally for the privilege of signing up later.
To be fully covered, you have to cobble together coverage with the standard Medicare Part A (which is free), Medicare Part B (which costs about $100 a month), Medicare Part D (which evidently runs about $30 to $65 a month but which, if you suffer an illness that requires expensive drug therapy, will leave you holding the bag for upwards of $4,350), and Medigap insurance (provided by private insurers, apparently ranging in cost from an average of about $100 to about $285 a month—it’s next to impossible to find out what the actual costs are). By the time you’ve added up Part B, Part D, and Medigap, you end up with a monthly cost of about $300 a month. That amount will never go down, and you can be sure that like every other cost else in life, it will continue to rise.
At this time, the combined cost of full Medicare coverage is about 12 times what I pay for my employer’s EPO plan, which covers my doctor of 30 years. Since 1987, he has practiced at the Mayo. The Mayo Clinic, because of Medicare’s low reimbursement rates, now refuses to accept new patients who are covered by Medicare. They will keep you if you’re already an active patient, but if you walk in off the street and you’re covered by Medicare, they won’t take you.
You can opt out of the public system and instead buy private insurance through Medicare Part C. These plans are basically HMOs, and they are dangerous. They’re extremely restrictive—you have little or no choice as to which doctors you see, and like all HMOs they’re not in business to take care of you; they’re in business to make a profit. Consequently, it’s in their interest to limit the amount and quality of healthcare you get and to direct you to the cheapest providers.
Now, the problem is that hospitals in Arizona are about as good as schools in Arizona, which is to say “not very.” It was at one of our major regional health centers where I waited over four hours with acute appendicitis and never saw so much as a triage nurse. When I finally got to the Mayo’s ER, they slapped me into surgery instantly. In another major hospital, my mother-in-sin underwent successful aortic surgery but almost died because, while recuperating in a hospital room, she had a heart attack that went unnoticed by anyone but a CLEANING LADY! Her life was saved because a maid happened to wander into the room and figured something was wrong.
Only one hospital in Arizona consistently gets top national ratings, and it’s the Mayo. That’s why you need to retain your choice of doctors and medical facilities, no matter how much that privilege costs you.
As you search for a Medicare Part D Plan, you can get great advice from your pharmacist, especially if he or she specializes in geriatrics (as I do). If you take medications, speak with your pharmacist to find out if there is a comparable generic version available; this will help you save a lot of money, and help keep you out of the coverage gap. You can find a senior care pharmacist here: http://www.seniorcarepharmacist.com/ Your local pharmacist is also a great resource.
Some plans have chosen to cover an enrollee during the coverage gap period in various forms. There is often a higher premium, but most generic medications are covered. The challenge lies in finding a plan that covers the medications you currently take, but does not charge you substantially more than you would pay on your own, if you decided to go without a Medicare D plan (as you mentioned, there is a penalty for not enrolling immediately).
If you are someone in good health who takes very few medications, choosing a plan with a less expensive monthly premium tends to be the best choice. During the open enrollment period each year in late fall, you can change to a different plan if your current one is not serving your needs.
It can be a daunting task to choose a Medicare D plan. There are 49 different Part D plans offered in Arizona.
Best of luck as you try to navigate Medicare. It can be a challenge.
Nicole
Why do I keep thinking single payer is the only solution that makes long-term sense? As in, wonder how much it costs for doctors & hospitals to comply with billing requirements for 49 different Part D coverage providers?
Okay. Now I understand a little better where you’re getting your numbers.
I can’t believe you’re only paying about $25 a month for your insurance! Wow. (I found this number by dividing $300/12.)
Okay well here are a couple of points I can give you, though it sounds like you’re pretty well-versed on your Medicare info:
1. Do remember that it’s 20% of MEDICARE’s cost. Not the doctor bill. Might seem like a small distinction but it’s not. Medicare generally pays under 50% of the charge, so your 20% is much smaller than it might initially seem. For something huge, obviously, you’re still SOL.
2. To help save money, consider a prescription drug plan through an HMO. It’s only for prescriptions (you can, in the Medicare search engine, enter which drugs you’re taking to help make sure you choose the right plan) and some have a $0 monthly premium.
3. There are PPO Medicare health plans. So check it out. Easiest way is to go to http://www.medicare.gov/MPPF/Include/DataSection/Questions/GeneralQuestions.asp Answer the questions and hit continue. Then you can either enter your exact drugs (to get suggestions about which health plans to consider) or just click continue. When you get to the next page, choose to sort table by “Doctor Choice” and some will be listed as PPO and Fee-for-Service. Personally, I prefer PPO. Then you can find someone who takes your doctor and find out what kinds of premiums you’d be looking at.
That’s something I’m going to have to remember: AZ’s Medicaid limits are lower than WA. So if/when we move down there, I’ll stop getting help with my Medicare premiums. Bah.
@ Nicole and Abigail: These are all very interesting suggestions. I’m going to print them out and put them in the Retirement file folder, for future reference. Thanks for sharing your ideas and leads!!
@ Abigail: Watch out for Arizona’s version of Medicaid. Tellingly, it’s called the Arizona Health Cost Containment System (AHCSS), which gives you a clue about where its priorities lie. From what I understand, you have to be truly penniless to qualify. A friend who’s a psychiatric nurse practitioner working for an agency that contracts for AHCSS says that even disability benefits will disqualify you.
Yes! The EPO I’m using now raised its rates to about $13/paycheck. The State of Arizona self-insures; all its plans are administered through Harrington. The only plan that covers the Mayo is the EPO, which coincidentally is incredibly cheap. Surprisingly, most doctors around here accept the EPO. I just hope it keeps covering the Mayo open enrollment; the plans shift their providers around, so there’s no guarantee any one plan will continue to cover the doctor of your choice.
When I read this I started getting a panic attack! I can only hope that things will be simplified by the time my 65th birthday rolls around.
Kaiser Permanente is a non-profit HMO. Their doctors work for Kaiser. There are pros & cons as with anything but we’ve been with them for over 30 years. My niece was disappointed they weren’t in Arizona when she moved there. We plan on switching to Kaiser’s Senior Advantage when we turn 65. Right now it is free in SD.
It’s horrifically complex, and the opportunities for shooting yourself in the foot abound.
IMHO, people like Nicole, who have experience in pharmacies or in doctors’ and hospitals’ back offices, probably could start businesses helping individuals navigate the tangle of private and public bureaucracies that it is Medicare, and no doubt could make a good living at it. I would cheerfully hire someone to figure out how this mess works and get me safely ensconced at 65, and then to review my circumstances once every year or two to be sure I have the ideal set-up to cope with whatever changes the government makes.
Herein lies my concern about the so-called “single payer system.” Medicare is infested with private insurance companies, and that is one reason it’s such a complicated, booby-trapped mess. We will never be free of big insurance companies: they own enough lobbyists and elected representatives to guarantee their survival now and evermore. So whatever health care reform we get is likely not to be not a single-payer anything but a thicket of public and private programs.
I agree that we’ll probably never be free of insurance companies. On the other hand, it’s my impression (and I could be wrong — I got on Medicare after it was semi-privatized) that at least we have coverage options. Normal Medicare doesn’t cover vision or dental. But some programs do. Obviously, depending on your use and needs, it might be cheaper to simply go out of pocket. You’d have to compare costs. But it’s nice to have some options. It’s just that we have about a zillion, give or take a few hundred.
And, yes, AZ Medicaid is a terrifying thing indeed. For Tim to get any kind of health insurance, we’d have to make under $1215 a month (!!!). Then he’d get it for free. And AZ doesn’t have a state health insurance pool like Washington does. And, of course, there’s no in-between. No sliding scale for folks who say, “Hey, I am not penniless, but I would like to be responsible and get myself covered.”
Just another fun go-round on the big ole wheel of life. Maybe we should consider North Las Vegas after all… Not sure it will be any better out there, though.
Frankly, I don’t know what the real answer is. I think (as I said in my recent rant) that single payer is the best option we can get right now. Well, a Medicare-like single payer system. But too many people who either a) don’t know what they’re talking about or b) have great insurance for practically nothing have gone around spreading BS about what things will be like. I’ve had people tell ME what being on Medicare will be like. For example, Well with no competition, prices will skyrocket. Um… you mean compared to what they’ve done in recent years?
I think we need to take a good, hard look at Canada/England/France/Sweden and model ourselves after them. But we won’t. Because there’s a good percentage of people in this country for whom the word “socialized” automatically means bad.
I would just love some of these healthy, middle-class, well-insured folks to go tell the uninsured that anything like a single-payer system will ruin things. Look a Wal-Mart employee in the eyes and tell him/her that any coverage for them wouldn’t be better than what they have now.
And, hey, if we do get a single-payer system, maybe we can hire some of the ex-insurance folks to help us all figure out which plans are best for us. Voila, increased unemployment problem dealt with!
I am strongly against a single-payer system. A quick lesson on medical/pharmacy reimbursement: we (providers) have to negotiate reimbursement with individual plans, whether the plan is Medicare, Caremark, a state Medicaid plan, etc. A plan will not just pay whatever I tell them the price of a medication is. They can set a maximum amount they will reimburse, no matter what my cost is. My option is either to take the offered reimbursement, or opt out of the contract, which means denying care to patients in need. Today, for example, I submitted a claim to Medicare Part B for a breathing treatment for a patient. My cost to purchase one box of the medication from my distributor is $187. Medicare has decided to cap the reimbursement at $168, and give me no professional service fee (which is to cover things like reviewing the patient’s medical history for interactions, appropriate dose, etc). Medicare gave me the option of selling this breathing treatment for $30 LESS than it cost me, or to provide the patient with nothing, and put money above patient care. I dispensed the medication to the patient because she absolutely needed it, but now I have to discuss a change of therapy with the doctor, or continue to dispense the product at a loss. These types of situations happen dozens of times a week for me.
In a multiple payer system, I can choose not to contract with a particular plan that providers unsustainable reimbursements. In a single payer system (like Medicare B, or state Medicaid plans), I can either accept the negative reimbursement, or lose the patients completely. Neither one is a sustainable business model. I work for a small independent long-term care pharmacy, with only 30 employees. I’m not Walmart or Target or Walgreens, who can lose money on prescriptions and make it up on front end sales.
/soapbox
@funny: would you believe that it is actually illegal for health care providers to recommend specific Medicare D plans to patients if there could possibly a financial motivation behind the suggestion? If someone would ask me whether they should go with Plan A, B, or C, I could describe the differences to help the patient decide, but if I look at your meds and all plans are essentially equal, and I recommend Plan C because it provides my pharmacy with better reimbursement for professional services, it is considered illegal by Medicare. I tell you, they did NOT make it easy to navigate Medicare…and I’m a licensed pharmacist with more than 10 years of experience in the profession. I can only imagine how hard the health care “system” is for people who don’t know all the in’s and out’s.
@ Nicole: That is even worse than I imagined!! With the presence of outfits like Target and Walmart, which would like nothing better than to see every competing pharmacy go out of business, we’re doomed: there’s no way pharmacists will organize to refuse to distribute products at a loss. What a horror show.
The entire complicated mess that is Medicare and its ancillary private schemers worries me a lot. I’m not altogether senile yet, and I can’t figure it out. What happens when I start to lose my marbles? The obvious, I expect: I’ll get taken advantage of. Whee!