Ask the Medicare Specialist

QUESTION:

From John: I’m in the situation you mentioned in your last column; I’ve already turned 65, am still working, and getting health insurance from my employer. However, I have a decent amount of money deducted from my paycheck and a $3,000 deductible. If I’m offered health insurance at work, do I have to take it? Or can I opt into Part B and get a Medicare Supplement or Advantage Plan? If so, are there certain times of the year I can make that move?

ANSWER:

Yes. You can opt into Part B, and it can be done at any time during the year. You don’t have to wait for a specific Medicare enrollment period or your employer’s open enrollment. And it’s very possible, even probable, leaving your employer plan could be a much better choice and value. We’re meeting more and more people like you because employers are seeing significant rate increases. Many have no choice but to pass it on to their employees in the form of increased participation and/or higher deductibles.

Let’s talk about who I think should or shouldn’t go on Medicare Part B.

First, I want to mention I advise making an appointment with us to look over your plan’s Summary of Benefits, which is the document that discloses deductibles, co-pays, coinsurance (percentage of the cost of services one is responsible for after the deductible has been met), and the Maximum Out of Pocket (MOOP) before ever making this decision either way. Just because your plan is with Highmark or UPMC, the two leading and trusted providers of employer group health plans in our area, doesn’t ensure you have a low deductible, no coinsurance, or a reasonable MOOP. That’s not up to the insurance company. It’s up to the employer. There are many plan combinations employers can choose to offer from a $0 deductible and 100% coverage for major medical services to a $5,000 deductible and only 70% coverage for major medical, and everywhere in between. I provide my employees with a plan that has a $1,500 deductible and pays 100% after it’s been met for all major medical services such as MRI’s, CT scans, outpatient surgeries, hospitalizations, ambulance rides, etc. So, for example, if anyone who has our plan had a heart attack, were life flighted to Pittsburgh, had an emergency surgery, and a lengthy hospitalization that culminated in $175,000 or more in bills, their portion could not exceed $1,500 and would be less if they had previously met part of their deductible. Another employer might provide a plan from the same company with the same deductible, but one that has 20% coinsurance. Someone with this plan who found themselves in the same scenario I just described would be out of pocket whatever their MOOP was. And $6,500 or $7,000 are very common on employer provided plans. That’s a huge difference.

Make sure you know what you’re contributing. In other words, how much is being taken out of your paycheck for health insurance and how often? I’m always surprised how many people have no idea what their health insurance is costing them. It’s very common for an employer to pay a larger percentage of the employee’s premium than the spouses. If the total was $400 for example, it might only be $50 for the employee and $350 for the spouse. In this case, it would be best for the employee to remain on the plan at work, but for the spouse to come off.

If you’re contributing over $100 a month for just yourself or $200 if married, you should let us take a quick look at your benefits to see if you might be better off going on Part B and a Supplement or Advantage Plan. At $100, most people won’t, unless there’s a high deductible that’s anticipated to be met. At $175-$250 per month or more, it becomes much more likely Medicare B, and a Supplement or Advantage Plan would be the better value. Medicare Part B generally costs $148.50 per month. There are Advantage Plans that come with both medical and prescription coverage for $0. There are others that will only cost from $25 to $40 in 2022 and will offer excellent value in terms of no deductibles, very fair co-pays, and generous ancillary benefits such as comprehensive dental, routine eye exams and eyeglasses, no cost gym memberships, and Over the Counter (OTC) allowances. Supplement Plan N, the one we recommended most, coupled with Stand-Alone Part D prescription coverage, starts at $80 to $90 for a 65-year-old. Supplements have almost no out of pocket medical expenses as well. Who shouldn’t leave their employer plan? Obviously, those who are provided health coverage for little or nothing. The only exception would be someone who has a huge deductible, although employers who don’t make their employees pay any or just a small portion of the premium also usually provide plans with lower deductibles. Those who are forced to pay a higher Medicare Part B premium due to their income are also almost always best to stay on an employer plan. Single individuals who have a Modified Adjusted Gross Income (MAGI) of $87,000 plus, or married couples who are at $174,000 or more, pay from $59 to $356 per month over and above the standard $148.50. Lastly, those who take expensive name brand drugs are less likely to do better on Part B and a Supplement or Advantage Plan due to the Donut Hole all Medicare Part D plans have. Those who fall into the Donut Hole can pay as much as $100 to $200 for a 30-day supply of the same medication that costs $40 on average with an employer plan. Specialty drugs on Part D usually run 25% of the retail and result in co-pays over $1,000 for a 30-day supply, while those on employer plans usually have a $100 co-pay for the same medication. If you would like to set up an appointment for a no-cost consultation, have a question regarding any Medicare or health insurance related topic, give us a call or reach out to me personally via email. Aaron@getyourbestplan.com. Don’t forget you can listen to or watch the podcast and webcast versions of Ask the Medicare Specialist, which can be found on our website. You can also tune into my bimonthly radio show on WMBS590.com this Monday from 1:15 to 3.