We’re speaking with Attorney Joseph Matthews, an expert on issues relating to elder care, and the author of “Social Security, Medicare, and Government Pensions,” published by Nolo.
NOLO: Joseph, let’s say you’re a person who’s just become eligible for Medicare. If you can give them only one or two tips, what would they be?
JOSEPH MATTHEWS: If you’re becoming eligible for Medicare for the first time, there are several things to consider. The first is to find out what Medigap plans are available, private insurance plans, where you live. These are the plans that supplement Medicare, because you’ll find out as soon as you are enrolled that, in fact, Medicare covers only 50-60% of your overall medical bills. You also have to determine what Medicare-managed care plans are available in your area. It’s difficult to compare the apples and oranges of Medigap and Medicare managed-care plans, but that’s your job when you’re enrolling in Medicare, is to find out which path of coverage is best for you. So, you’ve got to sit down and find out what the coverages are for the different plans that are available where you live, how much those will cost, and, also, how much they will leave uncovered, so you can begin to calculate which ones create the higher risk for you of unpaid medical bills, versus the amount that you would have to pay to enroll in the managed-care plan, or in a Medigap private insurance policy. In order to do that, you’ve got to get firmly grounded on what Medicare does and does not cover, and what Medicare does and does not pay for within its coverage, and that, of course, is what social security Medicare and government pensions does for you; it lays out for you exactly what the coverages are, what the gaps are, and therefore what you have to consider when making your choice.
NOLO: In your book, you note that more than half of the people over 65 buy supplemental insurance. Can you share one or two tips about buying supplemental insurance?
JOSEPH MATTHEWS: One way to address the question is to investigate managed-care, coveraged by managed-care companies, HMOs, PPOS, or the like, which offer comprehensive medical care far beyond what Medicare itself offers, but which require you to go through a number of steps before you can get the care you may want, and, so, is not always attractive for a lot of people. The other alternative for many people is what are called Medigap private insurance plans, and these plans supplement Medicare coverage; they fill in the gaps, portions of your doctors bills that are not paid by Medicare, your hospital in-patient deductibles, things that can run up a considerable amount of money during the course of a year if you have many doctor visits or serious illness. These Medigap plans are controlled by the federal government, in the sense that they only can offer filling of certain kinds of gaps, and, so, there are only ten or twelve plans that you ever have to figure out the rules of. Whether or not you want to get a Medigap plan depends number one, on what your overall medical costs are, and, number two, what plans are available where you live, and how much they cost. The plans are not inexpensive, but, for many people, they provide the kind of security against high medical bills that might wipe out savings that make their cost worthwhile to people.
NOLO: In your book you say that, in return for coverage beyond basic Medicare, managed-care plans restrict the patients’ choices, and they pressure doctors to limit treatments, and the length of hospital stays. If that’s the case, then why deal with managed-care plans?
JOSEPH MATTHEWS: Managed-care, for Medicare patients, and for the population at large, is a mixed bag. Managed-care, under Medicare, presents lower-cost coverage, and coverage that, generally, is broader than what you could obtain through Medicare and Medigap supplements alone. However, there are things that you give up when you enter managed-care, and that is complete freedom of choice of doctors and treatments. The coverage by managed-care is very broad, and the premiums tend to be considerably less than if you buy Medicare or MediGap insurance. However, you are restricted in the doctors that you see, because you must see doctors only who will belong to the managed-care plan that you have enrolled in. Similarly, you cannot see specialists or receive other medical care outside of your primary care doctor, unless that primary care doctor approves of it, and sends you to those other specialists or other care, and those two must be within the “network,” as it’s called, of managed-care doctors and services that your managed-care plan sponsors. So, there are a couple of ways in which your freedom of choice for doctors and other medical care is restricted by managed-care plans. Whether that’s a good choice for you or not depends on several things. If the doctor that you normally see, and like to see, is a member of the managed-care plan that you’re considering enrolling in, then, in general, it’s not a bad choice. However, if you’re going to be forced to switch doctors in order to join the plan, then the choice of joining a managed-care plan becomes a lot riskier. Similarly, if the managed-care plan’s network of doctors and other providers is a relatively small one, and this is true usually in smaller towns, rural areas, and smaller cities, then you have to consider whether or not you are limiting yourself in your choice of doctors and other medical providers in such a way that you may not be able to get to the doctors that you want if and when you have a serious illness or injury.
NOLO: Let’s talk about what happens if your income and your assets are a little too high to qualify for Medicaid. Are there other state options that a person can consider?
JOSEPH MATTHEWS: Medicaid is a program funded by the federal government and operated by the individual states which helps people with low income to pay for the medical bills that are not covered by Medicare; I’m now talking about the Medicare-eligible population. So, if you have low income, and low assets, you may qualify for Medicaid coverage -- that’s called Medical in California -- which pays basically all of your medical bills that Medicare does not cover. However, there are an awful lot of people who cannot afford private insurance, whether Medigap or otherwise, who have no other way to fill the gaps in Medicare coverage, because they don’t quite qualify for Medicaid, or Medical. There are some programs that can help make the extra cost of medical bills go a little easier, even if you don’t quite qualify for Medicaid. There are programs that help to pay for Medicare deductibles and co-payments, very important gaps to be filled, and these programs are operated by the states; they’re called Qualified Medicare Beneficiary, Specified Low Income Medicare Beneficiary, and Qualified Individual. Each one, the qualifications are a little bit different, and what they cover is a little bit different. What’s important to know is that, if you are low-income, and have few assets other than your own home, even if you don’t qualify for Medicaid, you should consider applying with your county’s Department of Social Services, or Social Welfare Department, for these assistance programs, which can help pay for Medicare costs that are not covered by the program, but which these separate programs can help you pay for. The same thing is true for Medicare prescription drug coverage. Medicare prescription drug coverage, if you are on Medicaid, is almost free, and the co-payments are extremely low. However, there is also an in-between category of people who get low-income subsidies, even if they don’t qualify for Medicaid. Again, if you apply, if you have low income and low assets, you can apply for this low-income subsidy at your local Department of Social Services or Social Welfare Department, and it may drastically reduce the amount of money you have to pay for prescription drugs under the Medicare prescription drug program.
NOLO: The new edition of your book devotes considerable detail to the new Medicare program entitled “Medicare Part D.” This new law seems quite confusing, so, for those of us who don’t know how it works, perhaps you can start with just a basic idea of what it’s supposed to do?
JOSEPH MATTHEWS: The new Medicare Part D prescription drug coverage is a massive new program sponsored by the federal government, but run through private insurance companies, to cover some of the cost for prescription drugs for people who are enrolled in Medicare. Now, on the surface, it sounds like it’s a wonderful thing, because Medicare has never covered prescription drugs that people take home, before this new program went into effect. But the fact is, it’s a tremendously complicated system that only pays a portion of the prescription drugs, at a tremendous cost to the federal government, and to beneficiaries, in part because there are no controls on prescription drug costs, and because it’s run by insurance companies who have very high administrative costs, and profits, of course. In many ways, this is simply a massive giveaway to the insurance companies. The insurance companies have an administrative load -- that is, administrative costs that they run up in running their programs -- of around 15%, whereas Medicare itself is run under 5% administrative costs. So, it’s essentially giving away a huge amount of money, simply to permit the insurance companies to make a huge profit. Nonetheless, for anyone who is eligible for Medicare, prescription drug coverage is probably a good thing, if you take any substantial amount of prescription drugs that run up hundreds of dollars a year in costs, as they do with even a minor prescription or two for most people. What the federal government has done is made anyone who is eligible for Medicare entitled to enroll in a specific, private insurance plan that provides this Medicare prescription drug coverage, available geographically, that is, where you live determines which particular plans are available to you. Anyone is eligible; you may have to pay a monthly premium of anywhere between $20 and $35. Some plans offer low or no premiums, but, of course, they may have other costs that balance that out. There’s also, for most people, a deductible, a yearly deductible you must pay, and then there are co-payments for different drugs, depending on what the drug is, whether it’s available as a generic or not… there’s also the famous gap in coverage that people have been talking about - the donut hole - where, after you reach a certain amount of payments by the program, and out-of-pocket yourself, the plans stop paying your drug coverage for a certain amount of time, and then pick up again when you have very high drug costs. So, all in all, it’s an extremely complicated program; it will provide benefits for lots of people, but the program is not without many problems and many faults, and people have to be very careful in signing up for a plan that really fits their needs, and not simply picking a plan that has the most bells and whistles, or has the lowest premium -- something like that.
NOLO: Coverage under the new Medicare Part D prescription drug program isn’t handled by Medicare itself, but it’s managed by private companies who offer different plans in different geographic areas. This seems like it’s going to make things a lot more complicated for people who are trying to choose the right plan. In the new edition of your book, you offer a lot of helpful tips. Can you share a few of those with us?
JOSEPH MATTHEWS: The first thing that anyone who is considering enrolling in a Medicare Part D insurance plan should do is determine which specific plans are available in the geographic area where they live. They should then make a list of all the drugs they take, whether generic or brand-name, how much they pay for them now, and then determine whether or not the specific plans that are available in their area offer those drugs as covered drugs within their plan. Then, they have to determine how those drugs are covered, meaning, are they offered as generics or brand names, what are the co-payments for those drugs, and are there any other restrictions on availability of those drugs. Only by going through the several-step process of determining which plans in your area cover your drugs, and how they cover them, and at what cost, can you then start to make a very rational decision about which drug plan is best for you, if any.
NOLO: What does a person do if they’re part of a managed-care plan that doesn’t offer this Part D prescription drug plan?
JOSEPH MATTHEWS: Many people who have Medicare coverage get that coverage through a managed care plan, an HMO, or a PPO, or other kind of managed-care plan. These are available across the country, and many people use these to get their entire medical coverage, including those things that Medicare does not cover. Now that there’s a new drug coverage, often through Medicare, the question is, can you get that coverage through your managed-care plan, or do you have to go elsewhere? If your managed-care plan, that is, the plan that you’re now enrolled in, does not offer a Medicare prescription drug plan within the overall managed-care plan, you have a couple of options. One, you can buy a stand-alone prescription drug plan, just like anyone else can with or without managed-care. That is, you can investigate what insurance plans are available in your area, and enroll in them. This, of course, will add to your premiums and costs, in addition to what you’re paying now for your managed-care plan. You can also investigate whether there are other managed- care plans available in your geographic area that offer general medical coverage that’s comparable to the managed-care plan that you have now, and also offer prescription drug coverage. If so, you may want to switch to the other available managed-care plan in your area. The question of whether to switch managed-care plans is a difficult one, though, because you have to compare not only your Medicare prescription drug coverage, but also your overall coverage under the two managed-care plans.
NOLO: Joseph, thanks so much for being with us today.
JOSEPH MATTHEWS: Thanks so much for having me.
We’ve been speaking with Attorney Joseph Matthews, author of “Social Security, Medicare, and Government Pensions,” published by Nolo.