Ask the Medicare Specialist
QUESTION:
From Carla: I’m a retired teacher, turning 65 soon and eligible for the Health Options Program, aka HOP. There are several choices in medical and prescription plans. I don’t understand all the differences or what plan or plans are the best options, including dental. Can you advise us retired school employees?
ANSWER:
There probably isn’t a week that goes by we don’t help someone make their choice in HOP plans. Those who have 20 or more years of service time are eligible for $100 premium assistance which is not calculated in the HOP brochure. So, when calculating your net cost, subtract $100 from the published prices.
Our advice to every single retired public-school employee we work with is choose the HOP Medical Plan. There are several reasons. The first is cost and most people aren’t aware there is a 15% discount in addition to the $100 premium assistance if a retiree enrolls within 180 days of their 65th birthday. That means the net cost of the HOP Medical Plan starts under $70/month in most Western Pennsylvania counties. That’s a great price, especially considering how good the coverage is. Be advised premiums will go up 3% every year until they level out at age 70. The discount is on the HOP Medical Plan only, not the HMO or PPO options. In addition, spouses of retirees do not get premium assistance and are often wiser to purchase a Supplement or an Advantage Plan outside of HOP.
The HOP Medical Plan has similar coverage to Medicare Supplement Plan N, which we often recommend to clients who don’t qualify for retiree benefits. The lowest price Plan N in Allegheny County, when including a 7% household discount, is $85 for a 65-year-old female and $97 for a man the same age. Based on these premiums you can see what a good value the HOP Medical Plan is. Which leads me to another reason why it’s what we recommend 100% of the time to retired public school employees who get premium assistance. It’s a Supplement and can be used nationwide, anywhere Medicare is accepted. There are no networks. HOP does offer a PPO option and two HMO choices. Like the HOP Medical plan, the HMO’s provide most medical services at $0 or very low co-pays. However, they’re actually more expensive after the discount is factored in. The number one benefit of choosing an HMO in my opinion is the opportunity to save $1,000 or more per year on premiums vs a Supplement. HOP Advantage Plans don’t provide that value. And there are network restrictions as well. You couldn’t choose to have elective surgeries, treatments, or tests done out of network like you could with the HOP Medical plan.
As far as prescription choices, retired public school employees can opt for the HOP Medical plan only and buy their own Medicare Stand Alone Part D plan. I estimate that 95% of HOP beneficiaries are best going that route. The HOP choices are very expensive, as are copays for brand name drugs. The Hop Basic Rx Plan is $67/ month while the average premium for most of our Part D clients is in the $15 range. That’s $648 per year difference. The deductible for brand name drugs is less on the HOP plan, but even after taking that into consideration, the savings is significant. And co-pays for Preferred Brand drugs are 30% of the retail cost on HOP. For example, a brand name medication with a retail of $500 for a 30-day supply, about average in today’s market, would have a $150 co-pay! Medicare Part D plan co-pays for the same “tier” medications average around $40. Generic co-pays in general are also lower on plans you can purchase on the open market. The Health Insurance Store can analyze what Part D plan is best for those going on Medicare/HOP for the first time, as well as every year during Annual Election Period. We provide this service at no cost.
Let me make this very clear. There is no reason to take the HOP Enhanced prescription option! None. Many people choose it out of fear. “What if I get put on a really expensive drug?” I don’t have space in this column to get into all the reasons why that line of thinking will result in a waste of your money. However, I will be discussing this and other related issues in more detail in my next podcast that will be available on our website soon. For starters, it’s ridiculously overpriced at $128/month.
One more warning to retired teachers. Those who get an early retirement which includes several years of health insurance as part of the incentive package, must enroll in Medicare Part B at age 65. Failure to do so can result in expensive penalties and a delay in getting Part B when the school provided health plan ends.
As far as dental goes, I’ve been looking for a plan to offer since I opened The Health Insurance Store over 12 years ago. I’ve never found one I was comfortable with and refuse to sell products that aren’t beneficial to clients. There are a couple of things to consider. First, we buy insurance to protect our assets. Even if you need a root canal, that isn’t going to force you into bankruptcy or cause significant financial hardship. The other is math doesn’t lie. The HOP dental plan is $40/month or $480 annually. You get two free cleanings and one set of X-rays per year, less than $200 in value. Then you receive what amounts to a discount on all other services. I will almost guarantee in any three to five-year period, people who purchase dental plans will pay more out in premiums than they will ever get back in benefits.
Again, if you are a HOP beneficiary and would like help choosing a Part D prescription plan, we are more than happy to assist, go over options and benefits, and even help fill out your initial HOP application. Call to make an appointment for a no cost consultation. If you have questions free to email me personally at aaron@ getyourbestplan.com.