Basics of medicare advantage plans
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Basics of Medicare Advantage Plans. Background Medicare is not a welfare program and should not be confused with Medicaid. Medicare is an “entitlement” program in that recipients pay into the system via payroll taxes, and therefore are

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Basics of Medicare Advantage Plans

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Basics of medicare advantage plans

Basics of Medicare Advantage Plans

Background

Medicare is not a welfare program and should not be confused with Medicaid. Medicare is an

“entitlement” program in that recipients pay into the system via payroll taxes, and therefore are

“entitled” to take out of the program. The income and assets of a Medicare beneficiary are not a

consideration in determining eligibility or benefit payments. Medicaid is different. A Medicaid

recipient must be able to prove eligibility for benefits via limited assets or limited income.


Basics of medicare advantage plans

  • Procedures for Medicare, unlike for Medicaid, should not vary significantly from state to state.

  • Coverage under Medicare is similar to that provided by private insurance companies: it pays a portion of the cost of medical care.

  • Often, deductibles and coinsurance (partial payment of initial and subsequent costs) are required of the beneficiary, thus the need for additional insurance coverage.


Basics of medicare advantage plans

  • Part A of Medicare is financed largely through federal payroll taxes paid into Social Security by employers and employees.

  • Part B is financed by monthly premiums paid by Medicare beneficiaries and by general revenues from the federal government.

  • In addition, Medicare beneficiaries themselves share the cost of the program through copayments and deductibles that are required for many of the services covered under both Parts A and B. Thus, the beneficiary can choose how to receive care.


Basics of medicare advantage plans

  • A beneficiary can also choose to receive Medicare coverage and care through a Medicare Advantage plan by filing an enrollment form.

  • Once the choice is made, the beneficiary generally must receive all of his or her care through the plan to receive Medicare coverage.

  • Beneficiaries can also change their

  • minds, disenroll from their Medicare Advantage plans, and return to Original Medicare.


Introduction to medicare advantage

Introduction to Medicare Advantage

  • The Balanced Budget Act of 1997 (BBA), signed into law on August 5, 1997, and, effective January 1, 1999, divided the Medicare program into multiple financing and delivery systems.

  • The BBA accomplished this by creating a new Medicare Part C, also called the Medicare +Choice program.

  • Medicare +Choice expanded options for receiving Medicare coverage through a variety of managed care plans, including health maintenance organizations (HMOs) and p referred provider organizations (PPOs), and through new mechanisms such as Medicare medical savings accounts (MSAs).

  • The Medicare Modernization Act of 2003 (MMA 2003) changed the name of Medicare +Choice to Medicare Advantage.


Basics of medicare advantage plans

  • Since its inception in 1965, Medicare has provided a set of coverage and due-process protections so that all beneficiaries could expect the same basic level of health insurance.

  • As a consequence, all beneficiaries—rich or poor, well or sick—had a common interest in making the program work.

  • This system resulted in the evolution of an imperfect, but functional, basic health insurance program for all. But, as time progressed and medical expenses rose far above normal inflationary rates, the program became extremely expensive.

  • Thus, in reaction to rising costs, and in an attempt to curb them, Congress and Medicare developed Medicare Part C, the Medicare +Choice alternative, later renamed Medicare Advantage.


Basics of medicare advantage plans

  • During the late 1990s, after BBA ‘97, OBRA ‘96, and HIPAA ‘97, an increasing number of Medicare beneficiaries transferred their health needs to managed care plans.

  • The Medicare managed care benefit was different from the traditional Original Medicare fee-for-service ongoing plan, but basic coverage generally remained the same.

  • Some Medicare Advantage plans (HMOs and PPOs) permit beneficiaries to go directly to a specialized care provider, with the plan’s approval, in return for payment of an extra premium.

  • Others, such as private fee-for-service (PFFS) plans, have no requirement as to specific providers.


Basics of medicare advantage plans

  • The methods for delivering and financing health care are in flux for all Americans. Medicare Advantage plans and their preceding Medicare +Choice plans sometimes change their benefit packages due to certain circumstances, usually financial.


Basics of medicare advantage plans

  • For instance, in the late ‘90s and early 2000s, within a few years of establishing managed care plans, many HMOs nationwide dropped the grand experiment of Medicare HMO and left over 1.5 million Americans wondering where to go next for their health insurance supplements.

  • Many of these people returned to the traditional Original Medicare and Medicare supplement plans, using the guarantees of the system outlined earlier.

  • Some were able to find existing HMOs that would allow them to enroll.


Basics of medicare advantage plans

  • The HMOs abandoning their plans normally complained that Medicare did not allow them enough money (hospital and doctor’s fees) to continue operating at a profit.

  • Some said that the HMOs tried to provide too much service at too low a cost in comparison to the structure of the Original Medicare plan and Medicare supplement options.

  • On the other hand, Medicare HMOs as well as other Medicare Advantage plans with different methods of delivery continue to exist and prosper, and have remained vibrant and viable.


Options

Options

  • Under Medicare Advantage, a Medicare beneficiary can choose to remain in the traditional Medicare program or in his or her current managed care plan.

  • Or, the beneficiary may choose to receive Medicare covered services through any of the additional following types of health insurance plans.


Coordinated care plans ccps

Coordinated Care Plans (CCPs)

  • Coordinated care plans (CCPs) are managed care plans that include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and regional PPOs.

  • They provide coverage for health-care services with or without a point-of-service option (the ability to use the plan or out-of-plan health-care providers).

  • Some plans limit the enrollee’s choice of providers. Others may offer benefits, such as prescription drug coverage, in addition to those in the traditional Medicare program.

  • Other plans limit the choice of providers and supplemental benefits. It is very important for the Medicare enrollee to analyze the coverage details, advantages, and disadvantages of each plan.


Basics of medicare advantage plans

  • The enrollee should also be aware that there are basically two types of Medicare Advantage plans—network and non-network.

  • Network plans offer care to enrollees through their network of physicians and hospitals and are identified as HMOs and PPOs.

  • The non-network MA plan is a personal fee-for service (PFFS) plan that does not require the enrollee see a certain doctor or hospital.


Basics of medicare advantage plans

  • In 2006, Medicare Advantage plan choices were expanded to include regional preferred provider organization plans (PPOs).

  • Regional PPOs help ensure that beneficiaries in rural and urban areas have multiple choices of Medicare health coverage.

  • The PPO is a Medicare Advantage plan in which recipients use doctors, hospitals, and providers that belong to the network.

  • The recipient can use doctors, hospitals, and providers outside of the network for an additional cost.

  • Before 2005, HMOs accounted for 80 percent of CCP contracts and 98 percent of CCP enrollments.

  • CCPs continue to be highly utilized for delivering Medicare Advantage plans


Private fee for service pffs plans

Private Fee-for-Service (PFFS) Plans

A private fee-for-service plan is defined as a

Medicare Advantage plan that

• reimburses providers, on a fee-for-service basis, at a rate determined by the plan;

• does not put the provider at financial risk;

• does not vary rates for the providers based upon their particular utilization;

• does not restrict the selection of providers among those who are lawfully authorized to provide the covered services, and who agree to accept the terms and conditions of payment established by the plan.


Basics of medicare advantage plans

  • The Medicare program makes capitated payments (fixed amounts per enrollee) to private fee-for-service plans, just as it does to HMOs and PPOs, based upon geographical, regional, and county benchmark payment criteria.

  • These plans do not have to follow the usual Medicare fee limitations.

  • They establish their own rates, without reference to the Medicare Part B reasonable charge or limiting charge restrictions.

  • The rates set by these plans may be higher or lower than those in the traditional Medicare program.

  • Providers under contract with a private fee-for-service plan will be required to accept an amount not to exceed 115 percent of its contracted rate as payment in full for covered services (including any permitted deductibles, coinsurance, copayments, or balance billing).

  • Private fee-for-service plans provide beneficiaries with an appropriate explanation of their benefits and liabilities, and they do not coordinate care. PFFS plans are gaining in popularity.


Health maintenance organizations hmos with or without point of service pos

Health Maintenance Organizations (HMOs) with or without Point-of-Service (POS)

  • A health maintenance organization is an MA company that is composed of its own doctors and hospitals for most services.

  • The enrollee must see the network primary care doctor and get a referral to see any other health-care provider, except in an emergency.

  • If the plan has a point-of-service (POS) option, the enrollee can go out-of-network but will have to pay more for services, including the possibility of full costs.

  • If the enrollee’s doctor leaves the plan, the plan will notify the enrollee, and the enrollee can choose another plan doctor.

  • The cost of Part D is included in the premium paid for the plan.

  • Some HMOs offer extra benefits in their programs. Funding for HMOs comes directly from CMS, per enrollee, per month, based on a benchmark allotment formula developed by CMS. HMOs are highly utilized for delivering MA plans.


Cost plans 1876 cost plans

Cost Plans (1876 Cost Plans)

  • Cost plans are HMOs that are reimbursed on a cost basis rather than on a capitated (per head) amount like other private health plans.

  • Cost enrollees are allowed to receive care outside of their HMO and have those costs be reimbursed through the traditional fee-for-service system.


Preferred provider organizations ppos

Preferred Provider Organizations (PPOs)

  • The preferred provider organization is an MA company available in local or regional areas in which enrollees pays less premium than Original Medicare if they use the doctors, hospitals, and providers that belong to the network.

  • PPOs operate similarly and provide services similar to HMOs, in that the can go outside of the network to receive care, usually for a higher cost.

  • Regional PPOs were developed in MMA 2003 to enable people in rural areas to access care delivery similar to urban areas.

  • Extra benefits, including Part D, can be offered for additional premium.

  • Funding for PPOs from CMS is similar to that of HMOs.


Medicare medical savings account plans msas

Medicare Medical Savings Account Plans (MSAs)

  • Medicare medical savings account plans combine high-deductible MA policies with a medical savings account for medical expenses. Accordingly, MSAs consist of two components:

    1. a private MA insurance policy with high annual deductibles (as much as $9,500 in 2007) and

    2. a medical savings account.

  • The health policy does not pay covered costs until the deductible (which varies by plan) has been met.

  • The second component of the plan, the medical savings account, comes into play when Medicare deposits money into an account for the enrollee (deposited into the tax-free MMSA account), which can then be used for any health-care expenses, including the deductible.

  • Beneficiaries pay for medical bills out-of-pocket for the amounts under the deductible. Tax penalties are imposed for withdrawing money for any reason other than medical.


Basics of medicare advantage plans

Preferred Provider Organization Demonstration Plans (PPO Demo), Medicare Special Needs Plans (SNPs) Private Contracts, Cost Plans, and Other Demonstration Plans

  • These various plans are all technically a part of Medicare Advantage, but due to their limited singularity of purpose, they obviously are not mainstream plans.

  • They are primarily included as MA plans, because their beneficiaries have needs outside the scope of Original Medicare.

  • Because of specific purpose goals in limited geographical areas, and with limited enrollees, they may be considered.


Religious and fraternal benefit society plans

Religious and Fraternal Benefit Society Plans

  • Medicare Advantage plans may be offered by religious and fraternal organizations.

  • These organizations are able to restrict enrollment in their plans to their members.

  • The plans must meet Medicare financial solvency requirements, and Medicare may adjust payment amounts to the plans to meet the characteristics of the individuals enrolled.


Scope of coverage

Scope of Coverage

  • Medicare Advantage plans, except for MSAs and private contracts, must provide coverage for the services currently available under Medicare Parts A and B. Plans must inform their enrollees about the availability of hospice care, including whether a Medicare-participating hospice program is located within their service area, or whether it is common to refer outside the area.


Basics of medicare advantage plans

  • Plans must pass on to beneficiaries any cost-savings achieved through efficient plan administration in the form of additional benefits.

  • Medicare Advantage plans may offer supplemental benefits, for which a separate premium may or may not be charged, but the separate premium cannot vary among individuals within the plan and must not exceed certain actuarial and community rating requirements.

  • Part D Prescription Drug benefits may or may not be included in the benefits.

  • At least one plan from any MA company must include Part D, except for PFFS plans, whose enrollees can utilize Part D stand-alone products, as well as service in the plan.


Basic medicare advantage

Basic Medicare Advantage

  • Generally, a Medicare beneficiary is eligible to enroll in a Medicare Advantage plan if the following two conditions are satisfied:

    1. The beneficiary is entitled to Medicare Part A and is enrolled in Medicare Part B as of the effective date of enrollment in the Medicare Advantage plan.

    2. The beneficiary lives in the service area covered by the Medicare Advantage plan.


Basics of medicare advantage plans

  • There are some exceptions to the general rule, though, and some other eligibility rules.

  • For example, a Medicare beneficiary is not normally eligible to enroll in the Medicare Advantage plan if he or she has end-stage renal disease (ESRD)—that is, permanent kidney failure that requires regular kidney dialysis or a transplant to maintain life.

  • However, if an individual is already enrolled with the Medicare Advantage organization when he or she develops ESRD, and this individual is still enrolled with the Medicare Advantage organization at the time, he or she can stay in the existing plan or join another plan offered by the same company.


Enrollment

Enrollment

  • An eligible individual can enroll in the Medicare Advantage plan at the following times:


Initial election period iep

initial election period (IEP)

  • The IEP is also known as initial coverage enrollment period.

  • The key word is “initial.” A person can elect to enroll in a Medicare Advantage plan when he or she first becomes entitled to both Part A and Part B of Medicare.

  • The initial election period begins on the first day of the third month before the date on which he or she is entitled to both Part A and Part B and ends on the last day of the month after the date that the person became eligible for both parts of Medicare. Three months before, the month of, and three months after, creates a seven-month initial election period.

  • This the same election period as Medicare itself. Prospects within this initial period do not need to wait for November 15. For disability enrollees, there is a seven-month enrollment window


Annual election period aep

annual election period (AEP)

  • The AEP is also known as the annual enrollment period.

  • Here, the key word is “annual.” Between November 15 and December 31 of each year, all Medicare Advantage plans are required to accept enrollment elections, which will be effective the following January 1.

  • During the annual election period, a person can enroll in the plan or change his or her enrollment election from the current Medicare Advantage plan to Original Medicare or to a different Medicare Advantage plan.

  • People enrolled in Original Medicare or another Medicare Advantage plan can also change enrollment elections to any other Medicare Advantage plan.

  • The term lock-in period is important. “Lock in” means that if an enrollee to an MA plan chooses to elect a plan during this period, he or she is essentially “locked in” to that plan until the next annual election (enrollment) period.


Special election period sep

special election period (SEP)

  • SEPs are special periods during which a person is permitted to enter into or to discontinue enrollment in a Medicare Advantage plan and change his/her enrollment to another Medicare Advantage plan or return to Original Medicare.

  • The person can enroll in an MA plan if he or she is recently disabled or can begin receiving assistance from Medicaid, and he or she does not have to wait until the November 15 AEP.


In the event of the following circumstances a special election period is warranted

In the event of the following circumstances, a special election period is warranted:

* The MA plan that the member is enrolled in is terminated, which is called involuntary disenrollment.

* The enrollee moves out of the service area or continuation area of the MA plan.

* The Medicare Advantage company offering the plan violated a material provision of its contract with the enrollee.

* The enrollee meets such other material conditions as CMS may provide, such as an involuntary loss of creditable group coverage, or a delayed enrollment due to an employer’s coverage or spouse’s employer group health insurance coverage being terminated.


Open enrollment period oep

open enrollment period (OEP)—

  • The open enrollment period for 2007 was January 1 through Mar 31. This OEP is the period that allows enrollees to make a change to their MA plan.

  • Private fee-for-service (PFFS) plans without Part D coverage may be sold any time during the year.


Premiums and payments

Premiums and Payments

Enrollees of a Medicare Advantage plan have the following financial obligations:

• All copayments/coinsurance shall be paid at the time of service.

• Enrollees must continue to pay their Medicare Part B premium. If they receive a Social Security monthly check, this premium is automatically deducted from their check. Otherwise they pay their premium directly to Medicare, or someone on their behalf pays it (such as the enrollee’s state Medicaid agency). In addition, some MA plans may pay all or part of the enrollee’s Part B premium for him or her.

• Most Medicare enrollees are automatically entitled to Medicare Hospital Insurance (Part A). If enrollees are not entitled to Medicare Part A, and they have purchased Part A through Social Security, they must continue to pay their Medicare Part A premium.


Voluntary disenrollment

Voluntary Disenrollment

  • Medicare Advantage plan members can end their membership for any reason. If they want to disenroll, they should write a letter or complete a disenrollment form and send it to their plan’s Customer Service department.

  • The date of their disenrollment will depend on when the plan receives

  • the written request to disenroll. In general, written requests to disenroll must be received by the Medicare Advantage plan no later than the tenth of the month to be effective the first of the next month.

  • Written requests to disenroll that are received after the tenth of the month will be effective the second month after the request is received.

  • An exception to this general rule is that disenrollment requests received between November 1 and November 10 are usually effective December 1.

  • However, because the month of November is also the annual election period, enrollees can ask for a January 1 effective date.


Basics of medicare advantage plans

  • Even though a person has requested disenrollment, he or she must continue to receive all covered services from the contracting medical providers until the date his or her disenrollment is effective.

  • The person will be covered by Original Medicare after this unless he or she has joined another Medicare Advantage plan.


Basics of medicare advantage plans

  • In addition, other factors are involved in voluntary disenrollment. For instance, suppose a Medicare beneficiary’s first Medicare enrollment was in a Medicare Advantage program.

  • Then he or she decides to disenroll from the program and enroll in Original Medicare. Within the first 12 months of coverage, the beneficiary has a 63-day opportunity to purchase any Medicare supplement plan within the scope of the plans that the carrier offers, on a guaranteed basis.


Basics of medicare advantage plans

  • Or, suppose a person originally enrolled in Original Medicare and a Medicare supplement program, and then he or she decided to switch to Medicare Advantage.

  • Then the person decides to switch back to Original Medicare. In this case, the individual may, within 12 months after that decision, go back to Original Medicare and the same Medicare supplement offered by the same MS carrier as before, if the person had been in the Medicare Advantage plan for less than a year.


Basics of medicare advantage plans

  • A problem that may arise involves Part D coverage. If a person decides to use the one-year guarantee to switch out of Medicare Advantage, CMS rules do not permit him or her to disenroll from the Prescription Drug program. In that case, the person must complete a stand-alone Part D application and mark the “Special Election Period (SEP)” oval that is in the “Office Use Only” portion of the application.

  • CMS will then use the SEP on the Part D application to begin the process for the MA disenrollment and return the person to Original Medicare. (This SEP procedure is also available when enrolling in an MA plan when receiving Medicaid assistance or when receiving Medicare disability at any time during the year.)


Basics of medicare advantage plans

  • If individuals voluntarily disenroll during the open enrollment period, (January 1 through March 31), they may do so by writing or calling their plan, or calling 800 Medicare, but a written request for disenrollment may be required.

  • The MA company must provide a disenrollment notice within seven days of receiving the request. If the person wants to return to Original Medicare and obtain a Medicare supplement policy, the MS company will require that he or she complete the MA questions on the MS application.


The company will then send either

The company will then send either

a copy of the person’s MA plan disenrollment notice; or

a copy of the letter that the person sent to his or her MA plan requesting disenrollment; or

a signed statement verifying that the person has requested to be disenrolled from his or her MA plan.

If a person is disenrolling later the March 31, a copy of his or her MA plan disenrollment notice will be necessary.


Moves or extended absences

Moves or Extended Absences

  • If individuals are permanently moving out of the Medicare Advantage service area or plan an extended absence, it is important that they notify the provider of the move or extended absence before they leave the service area.

  • They may be eligible to continue to receive benefits if they are in the

  • plan’s continuation or network area.

  • Failure to notify the Medicare Advantage organization of a permanent move or an extended absence may result in a person’s involuntary disenrollment from the plan.

  • The plan is required to disenrolla person if he or she permanently moves outside the service area.

  • An absence from the service area of more than 12 months is considered a permanent move. If individuals remain enrolled after a move or extended absence and have not been involuntarily disenrolled as described, then they should be aware that services will not be covered unless they are received from a Medicare Advantage plan provider in the Medicare Advantage plan service area (except for emergency services, urgently needed services, out-of-area dialysis, and prior authorized referrals).


Involuntary disenrollment

Involuntary Disenrollment

The Medicare Advantage organization may disenroll an insured from a plan only under the conditions listed below:

• The insured moves permanently out of the service area and does not voluntarily disenroll.

• The insured temporarily moves out of the service area for an uninterrupted absence of more than six months.

• The insured’s continuation of coverage of Part A is terminated.

• The insured’s entitlement to Medicare Part A or enrollment in the Part B benefits ends.

• The insured supplies fraudulent information or makes misrepresentations on his or her individual election form that materially affects the person’s eligibility to enroll in a Medicare Advantage plan or Medicare Parts A, B, and D.

• The insured is disruptive, unruly, abusive, or uncooperative with regard to his or her membership in the Medicare Advantage plan, and the behavior seriously impairs the provider’s ability to arrange covered services for the person or other individuals enrolled in the plan. Involuntary disenrollment on this basis is subject to prior approval by CMS.

• The insured allows another person to use his or her membership card to obtain covered service under Parts A and B.

• The insured fails to pay the plan premiums on a timely basis.

• The insured joins a stand-alone Medicare Prescription Drug plan, unless he or she is in a PFFS plan that does not include Part D coverage, or he or she is in a MSA plan.


Basics of medicare advantage plans

  • Note that an insured will not be disenrolled due to health status. Disenrollment on the aforementioned grounds can only occur after the insured has been provided notice with an explanation of the reasons for the disenrollment and information on applicable grievance rights.

  • No insured shall be disenrolled because of his or her health status or requirements for health-care services.

  • Any insured who believes he/she was disenrolled by the Medicare Advantage organization because of the insured’s health status or requirements for health-care services should bring the matter to the attention of the local CMS regional office


Annual contract

Annual Contract

  • The contract with CMS is renewed annually. At the end of each contract year, the contract can be ended by either the Medicare Advantage organization or CMS.

  • If the Medicare Advantage organization ended the contract, insureds would receive a minimum 90-day notification before the end of the contract.

  • If CMS ended the contract, insureds would receive a minimum 30-day notification. CMS would explain what the insureds’ options are at that time.

  • For example, there may be other Medicare Advantage plans in the area for them to join if they wish. Or, they may want to return to Original Medicare and possibly obtain supplemental health insurance. Whether an insured enrolls in another Medicare Advantage plan or not, there would be no gap in Medicare coverage.

  • Until returning to Original Medicare coverage, the insured would still be a member of the Medicare Advantage plan.

  • Important provisions are in place to protect insureds in cases that relate to guaranteed issue of a Medicare supplement policy after returning to Original Medicare.


Medicare as secondary payor coordination with group health insurance

Medicare as Secondary Payor—Coordination with Group Health Insurance

  • Medicare as a secondary payor and/or in coordination with retiree group health plans was addressed in MMA 2003, not only with respect to MA plans, but particularly as to how the Part D benefits of Medicare coordinate with existing employee (retiree) group health plans.


Basics of medicare advantage plans

  • America’s companies were given large financial incentives ($28 billion in subsidies) to allow their Medicare-age retirees to stay in their group health plans, even though they may be asked to pay all or a part of the premium.

  • In addition, the objective of MMA 2003 was to allow retirees with existing prescription drug benefits of the group plans, which may have been as good or better than Part D, to stay in these plans and not switch to a stand-alone Part D Plan or a Medicare Advantage plan.

  • The companies, on the other hand, were seeking ways to cut the expenses of Medicare-age retirees in group health plans


Basics of medicare advantage plans

Some people who have Medicare have other insurance (not including Medicare supplement policies), such as employer-sponsored group health insurance for the beneficiary or a spouse, that must pay before Medicare pays its share of the bill. The other insurance pays first if the insured meets any of the following criteria:

• is 65 or older;

• is currently working (or his/her spouse is currently working) for an employer with 20 or more employees; has group health insurance based on that employment;

• is under age 65 and is disabled;

• is currently working (or any member of the person’s family is currently working) for an employer with 100 or more employees; has group health insurance based on that employment;

• has Medicare because of permanent kidney failure; or

• has an illness or injury that is covered under any of the following: workers’ compensation, the federal black lung program, no-fault insurance, or any liability insurance


Basics of medicare advantage plans

  • If the insured matches any of these descriptions and he or she has other insurance along with Medicare, the other insurance will often be the first payor on his or her health claims, and Medicare will be secondary.

  • Insuredsshould tell their doctors, hospitals, and all other providers of services about their other insurance.

  • Their claims can then be sent to the right insurer first.


Basics of medicare advantage plans

  • If an insured is 65 or older and has coverage under an employer group plan of an employer of 20 or more employees, either based on the insured’s own current employment or the current employment of a spouse, then he or she must use the benefits under that plan first.

  • Similarly, if an insured has Medicare based on disability and is covered under an employer group plan of an employer of 100 or more employees (or a multiple employer plan that includes an employer of 100 or more employees) either through the insured’s current employment or that of a family member, then he or she must use the benefits under that plan first.

  • In such cases, he or she will only receive benefits that the employer group plan does not cover but that Medicare will cover. A special rule applies if the insured has or develops end-stage renal disease (ESRD).


Basics of medicare advantage plans

  • If a person has any no-fault or liability insurance (or payment from a liable third party) available to him or her, then benefits under that plan (or from that liable third party) must be applied to the costs of health care covered by that plan.

  • Where Medicare has provided benefits and a judgment, or a settlement is made with a no-fault or liability insurer (or liable third party), the person must reimburse Medicare.

  • However, his or her reimbursement may be reduced by a share of procurement costs (e.g., attorney fees and costs). Workers’ compensation for treatment of a work-related illness or injury should also be applied to covered health-care costs by this plan.


Basics of medicare advantage plans

  • If the person has or develops ESRD and is covered under an employer group plan, he or she must use the benefits of that plan for the first 30 months after becoming eligible for Medicare. ESRD Medicare is the primary payor after this coordination period.

  • However, if the person’s employer group plan coverage was secondary to Medicare when he or she developed ESRD because it was not based on current employment as described previously, then Medicare continues to be primary payor.


How original subsidies to corporations impact sales of medicare advantage

How Original Subsidies to Corporations Impact Sales of Medicare Advantage

  • In June of 2007, Watson Wyatt Worldwide, a leading global consulting firm, conducted a survey titled “The 12th Annual National Business Group on Health Watson Wyatt Survey.” The conclusion of this survey was that the majority of large employers were not offering retiree medical benefits to new hires and were moving beyond sponsoring plans that solely supplement Medicare benefits.


Basics of medicare advantage plans

  • In fact, the trend was to go to “account-based” programs and Medicare-approved health plans run by third parties—such as Medicare Advantage plans and MA plans that include prescription drugs.

  • The incentives to corporations are obvious. The report stated that “In 2006, the average premium for Medicare Advantage plans administered by third parties was $312 per year—nearly $3,000 less than the average employer-sponsored plan for Medicare retirees. . . .” A June 2007 article in Business Week offered additional insight into why corporations were turning to account-based programs: “A Labor-Led Lift for GM? Goldman Sachs figures the UAW will likely agree to concessions on retiree benefits—and that could boost the automaker’s stock.”


Basics of medicare advantage plans

  • On the other hand, a May 2007 Government Accounting Office report entitled “Retiree Health Benefits” stated on its cover, “Majority of Sponsors Continued to Offer Prescription Drug Coverage and Chose to Retire Drug Subsidy.”

  • At least, that would be the case until the subsidy runs out, and the technique of transferring retiree health costs from the corporations to the taxpayer under Medicare Advantage catches on.

  • The strategy will become commonplace, and somewhere around 8 million Medicare-age retired employees will join the ranks of Medicare’s enrollments.


Basics of medicare advantage plans

  • A Medicare Advantage producer must remember, at all costs, not to switch retirees from their group health plan to a Medicare Advantage plan without the approval of the human resources department or the group health plan’s knowledge.

  • This action may trigger (and has triggered) a loss of the entire package of group health benefits available to the retiree and eliminates any chance of the retiree returning to his or her original group health plan.

  • As a result, the greedy incentives of some MA producers made their way into the bulging portfolio of complaints that were addressed by Congress in the spring and summer of 2007


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