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Why enrolling in COBRA can be a costly Medicare mistake

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If you (or your spouse) lose or quit your job with health insurance when you are eligible for Medicare it is unlikely COBRA (Consolidated Omnibus Budget Reconciliation Act) will be your best choice for health insurance. Medicare does not recognize COBRA as creditable coverage as they do group health insurance.  Medicare eligible individuals have 8 months to sign up for Medicare Part B once they lose their group health insurance. However, if one chooses COBRA instead and stays on it 18 months, they will be required to enroll in Part B between January 1st and March 31st. To make matters worse their Part B coverage will not begin until July 1st. Since you are not allowed to buy a Medicare Supplement or Advantage Plan without Part B, it means they will go several months with only Part A (hospital) coverage.

Also, there are penalties for not signing up for Part B when you are first eligible. Your monthly premium may go up as much as 10% for each full 12 month period you delay your enrollment in Part B.

Finally, the cost of Medicare polices is usually lower and the coverage is often better than COBRA. In North Carolina we have many low cost options for Medicare Supplements. We also have a number of zero or low premium Medicare Advantage plans.

One exception is dental or vision COBRA. Normally you can take dental or vision COBRA even if you do not take the medical. I often advise my Medicare clients to do this. Unlike Medicare plans, they can buy vision or dental plans when their dental or vision COBRA is exhausted without any penalties or restrictions.

What is the Donut Hole?

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If you’re turning 65 or becoming Medicare eligible one of your challenges is choosing a drug plan. Many are confused by the term “Donut Hole” (also called the Coverage Gap). A simple explanation is the Donut Hole is like a second deductible. A Medicare drug plan has four parts or phases, Initial Deductible, Initial Coverage, Donut Hole and Catastrophic. To understand the Donut Hole it’s important to understand each of these parts.

The drug plan you choose in 2017 might have no deductible or a deductible as high as $400. Some plans have no deductible on the inexpensive generic drugs, but have deductibles on the more expensive brand drugs. This is one way the insurance companies that market these plans control their costs and encourage their members to use generic drugs whenever possible.

After the initial deductible (if any) is met you enter the Initial Coverage Phase. During this period you only pay a copay or a percentage of your prescription drugs. If you purchase a drug with a retail value of $100, but pay $30, the entire $100 counts toward your Initial Coverage Limit. When the retail amount you are paying for all your drugs reaches $3,700 (your Initial Coverage Limit for 2017) you have entered the Donut Hole Phase. Another way to say this is when what both you and your Part D Insurance Plan are paying for your drugs reaches $3,700 you’re in the Donut Hole.

While in the Donut Hole you will pay 40% for your brand-name drugs and 51% for your generic drugs. When the total amount that you and your Part D plan reaches $4,950 you will exit the Donut Hole and enter the Catastrophic Phase.

During the Catastrophic Phase you pay the greater of 5% of retail or $3.30 for generic drugs.  For all other drugs (such as brand-name medications) you pay the greater of 5%  of retail or $8.25.

 

 

New to area and need a doctor?

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If you have recently moved to the Raleigh Durham area and need assistance finding a Duke primary care or specialist doctor, the Duke Consultation and Referral Center can help. They are opened  Monday through Friday from 8:00 AM until 6 PM. Call 1-888-ASK-Duke (275-3853) to request an appointment or visit them on-line at dukehealth.org.

 

Save on Fertility Services if you have a BlueCross BlueShield of North Carolina policy

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BlueCross BlueShield of North Carolina (BCBSNC) now offers discounts on fertility services through a partnership with WINFertility. The highlights include 10% to 40% savings on fertility services which include intrauterine insemination, in vitro fertilization treatments and medications. Participants have access to a proven physician network, financing options and free consultations.

For more details members can go to www.bcbsnc.com/blue365. If you are a BCBSNC policyholder and have not joined Blue365 it’s easy to join and offers great deals to improve your health. From the www.bcbsnc.com website click on “Go to Blue365”.

This is important to know if you’re almost 65 & on a small group health plan

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Unlike large employer group plans,  employees on small group plans (fewer than 20) are required to enroll in Medicare Part B when they turn 65. Part B helps cover the cost of doctor visits, outpatient care, some preventative services, home health care and durable medical equipment. Once you enroll in Part B you have 6 months to purchase a Medicare Supplement without going through medical underwriting (being required to answer medical questions). If you have concerns about being declined or charged a higher premium due to your health status you should purchase your own plan before the end of this six month window.

Are you paying a penalty for not having health insurance?

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If you’ve just discovered that you’re paying a penalty for not having health insurance it might not be too late to buy it. Although Open Enrollment ended on February 15th, there is a Special Enrollment Period from March 15th until April 30th for individuals who attest they will owe a fee and did not understand the implications of the penalty until after Open Enrollment ended.

Five More Fallacies of ObamaCare

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obamacare

As I pointed out in my ObamaCare video, we are constantly bombarded with misinformation about the Affordable Care Act(ACA) or ObamaCare. Here are five more examples of these fallacies:

fallacy #1:All health insurance must be purchased from the Marketplace.”

It is true that you must go through the Marketplace if you want help from Uncle Sam paying for it. However, if you don’t qualify for a subsidy it’s probably a waste of your time. If you live in the Research Triangle Park Area and qualify for a subsidy you must choose a plan from the companies that are participating in the Marketplace. These companies are BlueCross BlueShield of NC, Coventry(a.k.a. Aetna) and United Healthcare.

Applicants who don’t qualify for a subsidy can purchase from these three companies as well as Assurant, Cigna, Humana or any company which is approved to sell health insurance in North Carolina. A health insurance broker (an agent who represents multiple companies) can help you determine if you qualify for a subsidy and sort through your choices.

fallacy #2: “You will never qualify for a government subsidy if you have access to a group health insurance plan.”

Good news for people who work for companies with lousy health insurance. This is not always true. If based on your household income and size your plan at work is considered unaffordable by the Feds you may still qualify for help from Uncle Sam. Also, you might qualify if the plan you receive at work is not at the coverage level of the “Bronze” plan sold on the Marketplace.

fallacy #3: “Anyone who does not qualify for a large government subsidy is paying a lot more for health insurance because of the Affordable Care Act.”

It is true that some folks who don’t have pre-existing, are not taking any medications and do not need or want maternity coverage are paying more. However, according to a June, 2013 CBS report about 70% of Americans take prescription drugs and about 20% take 5 or more. Before the ACA even people taking common drugs to control high blood pressure or mild depression paid more for health insurance they purchased themselves. Those who were bi-polar or had sleep apnea, diabetes, seizure disorders, cardiac problems or were cancer survivors had limited choices for health insurance and paid huge premiums. Even healthy women paid an enormous amount for maternity coverage. As a result, ObamaCare has lowered the cost of health insurance for many people even when their income is too high to qualify for a subsidy.

fallacy #4: “You can purchase health insurance anytime during the year if you are not applying for a subsidy.”
Even if your income is too high to qualify for a subsidy you must purchase your health insurance during the open enrollment or when you have a Qualifying Life Event, which gives you a 60 day Special Election Period to purchase a policy. Examples of a Qualifying Life Event are moving to a new state, losing coverage due to a job loss, getting married and the birth or adoption of a child.
Uninsured individuals can purchased Short Term Medical plans outside of Open Enrollment, but these plans do not cover pre-existing conditions and are not Affordable Care Act compliant. As a result they will not prevent one from paying a penalty for being without health insurance.

fallacy #5: “An uninsured woman can purchased health insurance outside of Open Enrollment if she discovers she’s pregnant.”
Some women with unintended pregnancies have been surprised to learn this is incorrect. If the pregnant woman is unmarried she can get married and her marriage will be a Qualifying Life Event which would provide a 60 day window for her to buy a policy. Otherwise she will have to wait until Open Enrollment.

 

 

Avoiding COBRA Confusion

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COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) allows workers and their dependents to purchase group coverage for 18 months (or sometimes longer) when the worker is voluntarily or involuntarily terminated. Workers who elect this coverage can pay up to 102% of the premium that the employer pays for coverage. The employer has 44 days to notify the terminated employee of his or her COBRA rights and the employee has 60 days to respond. To avoid COBRA confusion individuals should be aware of the following key points:

  1. Although the former employee has 45 days to make the initial payment, they must pay back to the date the coverage ended. Therefore, if their coverage ends on February 28th, they receive their COBRA letter on March 5 and elect the COBRA on April 30th; they must pay for March, April and May.
  2. Even though the former employee does not have health insurance during the COBRA election period he can purchase COBRA for all or one family member if there is a medical emergency.
  3. A former worker can accept COBRA for a family member with health problems even if he does not accept it for himself.
  4. Normally the former employee can purchase dental COBRA for 18 months even if they decline the Medical.
  5. Former workers are not required to stay on COBRA for 18 months.
  6. Instead of accepting COBRA you may be eligible for a Marketplace Plan with a government subsidy to help you pay for your health insurance.
  7. Finally, since COBRA is not recognized as credible coverage by Medicare, it is unlikely that this is your best option if you or your spouse are Medicare eligible unless you expect to get a job with health benefits very soon.

Help for High COBRA Payments

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If you’re one of those folks who accepted the COBRA offer from your employer thinking you would quickly get another job that never materialized there is a new Special Election Period (SEP) to help you. Perhaps you were offered a going away package that included your former employer paying all or most of your COBRA medical plan for several months. If the payment ended before you got another job it is unlikely that COBRA is affordable to you as an unemployed person. Since your former employer is no longer helping you pay for your health insurance you might need help from another source. To eliminate this burden CMS(Centers of Medicaid and Medicare) recently announced that you have until July 1, 2014 to apply for a health insurance plan through the Marketplace with a government subsidy.

7 Tips for Finding the Best Health Insurance Deals

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As they say, “knowledge is power”. The information below will help you become a savvy health insurance shopper and find the best policy or policies for you and your family:

Explore your options with an agent who represents several health insurance companies and can help you make comparisons. There is no charge for this service and it can save you a lot of time and aggravation. Once you have educated your agent on your budget, expectations, doctors and preferred hospitals, he/she can advise you on the policies and insurance companies that would best fit your needs.  For quotes from several top insurance companies or additional information, Click Here.

Don’t wait until the last minute to apply for insurance. This is probably the best way to make sure you get the best possible deal. With that passage of the Affordable Care Act you may quality for government help paying for your health insurance policy. You must apply no later than the 15th of the month for a plan with an effective date of the first of the following month.

Understand the following 3 insurance terms and use them to evaluate your choices:
Deductible – Dollar amount of medical expenses you pay before your insurance covers you.

Coinsurance – After the deductible this is the percentage the insurance company must pay.  For example, if your plan is an 80/20 this means the insurance company must pay 80% and you must pay 20%.  It is important to purchase a plan that has a limit on the dollar amount you are required to pay.

Co-payments – Fixed dollar amount you pay for a doctor visit, emergency room visit or a prescription drug.

If you choose a policy with a prescription drug plan make sure it covers the prescription drugs you and your family take.  Also, make sure you understand the deductibles, co-pays and yearly maximums.

If you have children who are 18 or younger and your income for the past year is low, your children may qualify for reduced or free government sponsored health insurance. For additional information contact the NC Division of Medical Assistance at 800-367-2229 or www.nchealthystart.org.

North Carolina State law requires university students to have health insurance. If your children are college students contact their Student Health Services and request information on their student health insurance plans.  Compare the cost of their university plans to your cost of adding them to your policy.

Consider purchasing an IRS-Qualified High Deductible Health Plan (HDHP).

Purchasing one of these policies can reduce your monthly premium by 50% or more.  This is a perfect solution for healthy people who rarely go to the doctor.  These HDHP’s can be paired with a Health Savings Account (HSA) that offers additional savings by reducing your taxable income. Unlike the traditional health insurance plans, the policy holder pays for all medical expenses until he reaches his deductible. Like traditional plans, HDHP’s have a wide range of deductibles, coinsurance options and benefits.  .