Putnam Investments8/8/2014

2014A Guide to Medicare

Table of Content

Getting Started with Medicare……………………..………………. Page 3

Choosing the Best Plan……………………………..……………… Page 3

Medicare Increased Premiums and Penalties………………….. Page 4

Costs Associated with Hospital Insurance (Part A)................... Page 4-5

Costs Associated with Medical Insurance (Part B)…………….. Page 5

Medicare Advantage Plans………………………………………….. Page 5-6

Costs Associated with Prescription Drug Insurance Part D….. Page 6

Ways to Avoid the Donut Hole……………………………………… Page 6

Medigap the Supplemental Insurance…………………………….. Page 6-8

Additional Information……………………………………………….. Page 9

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Getting Started with Medicare

Sign up for Medicare at the appropriate time o If you are not working, you need to sign up 3 months before the month of your

65th birthday or 3 months after your 65th birthday month. If you choose the latter there will be a gap in coverage

o If you are working and over 65, you need to sign up within 8 months after the month in which your work stops or coverage stops (earlier the better to avoid a gap in coverage)

Sign up for Medigap at the appropriate time to maximize optionso Medigap enrollment period begins first day of month you are 65 or older and

have Medicare part B and runs for 6 months. If you are still working once you sign up for Medicare part B your 6 months will begin

Work for 10+ years paying the Medicare taxes for Medicare Part A to be freeo Part A will cost $234 if you or your spouse worked and paid Medicare taxes

between 7.5 and 10 years in the U.So Part A will cost $426 if you or your spouse worked and paid Medicare taxes for

fewer than 7.5 years in the U.S If receiving Social Security, you are automatically signed up for original Medicare (parts

A and B) If receiving Social Security, your Medicare expenses will be taken out of your primary

insurance amount

Choosing the Best Plan There are two options:

Original Medicare (Part A and B) Medicare Advantage Plan

Benefits to having Medicare Advantage Plans

Benefits to having Original Medicare + Medigap

1. Often charge lower copayments2. Coverage is consolidated into 1

plan3. Monthly premiums are lower4. Can include drug coverage for

no extra cost5. Additional coverage

1. Larger network of providers to choose from

2. Limits out-of-pocket expenses 3. Safer option in long run

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Medicare Penalties and Increased Premiums Every 12 month period without Medicare part B, the part B premiums increase by 10% Every month you go without Medicare part D insurance your penalty will increase. The

late enrollment penalty is calculated by multiplying 1% of the "national base beneficiary premium" ($32.42 in 2014, and $33.13 in 2015) times the number of full, uncovered months you were eligible but didn't join a Medicare Prescription Drug Plan and went without other creditable prescription drug coverage

If you have not signed up for Medicare and are eligible, you will not receive your Social Security checks

Part B and D premiums each increase as income increases as shown in the chartbelow:

File Individual Tax Return

File joint tax return

File married & separate tax return

Monthly Premium for Part B amount you pay in 2014

Monthly premium forPart D 2014

$85,000 or less $170,000 or less $85,000 or less $104.90 your plan premium

Above $85,0000 up to $107,000

above $170,000 up to $214,000

N/A $146.90 $12.10 + your plan premium

Above $107,000 up to $160,000

above $214,000 up to $320,000

N/A $209.80 $31.10 + your plan premium

Above $160,000 up tp $214,000

above $320,000 up to $428,000

above $85,000 and up to $129,000

$272.70 $50.20 + your plan premium

Above $214,000 above $428,000 above $129,000 $335.70 $69.30 + your plan premium

Costs Associated with Hospital Insurance (Part A)

Inpatient Hospital costs:o $1,216 deductible for each benefit periodo Days 1-60: $0 copayment for each benefit periodo Days 61-90: $304 copayment per day of each benefit periodo Days 91 and beyond: $608 copayment per each "lifetime reserve day" after day

90 for each benefit period (up to 60 days over your lifetime)o Beyond lifetime reserve days: all costs

Skilled Nursing Facility Costs4

o Days 1–20: $0 for each benefit periodo Days 21–100: $152 copayment per day of each benefit periodo Days 101 and beyond: all costs

Hospice and respite Care Costso $0 copayment for hospice careo May need to pay a copayment of no more than $5 for each prescription drug and

other similar products for pain relief and symptom controlo May need to pay 5% of Medicare approved amount for inpatient respite careo Room and Board

Costs Associated with Medical Insurance (Part B)

Monthly premium based on your income usually $104.90 for 2014 (see chart above with various income levels and higher premium amounts)

An annual Part B deductible of $147 You generally pay 20% of the Medicare approved amount for the doctor or other health

care provider's services Copayment for each service you get in an outpatient hospital

Late enrollment penalty may apply (see section Medicare Penalties and Increased Premiums above)

Medicare Advantage Plans (Part C)

Medicare Advantage Plans added benefits:o Coverage for routine hearing exams and vision careo Allowances toward eyewearo Routine preventive dental careo Prevention and wellness programso Worldwide coverage for emergency careo Some include Prescription Drug plans (Part D)

Health Maintenance Organization (HMO)o Least expensive and most restrictive Medicare Advantage plano Restrictive in the doctors and other health care providers available to patient,

must be part of network or you pay entire billo Has to have a primary care physician in which the patient sees first at all timeso Need a referral from patient care physician to see other doctoro Need to get prior approval from primary care physician for certain medical

services

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Preferred Provider Organization (PPO)o More attractive and more expensiveo Allows a member to see physicians and other providers not in HMO network and

allows for self-referringo If you go outside the plan or self-refer the plan pays smaller part of bill then if you

followed the ruleso Member pays a higher premium for the plan and a higher copayment each time

the option is usedo Also pay a deductible which is usually less than a traditional insurance plan

Prescription Drug Insurance Costs

You pay:o 100% of deductible ($310)o 25% of costs between $310

and $2,850o 47.5% for brand name drugs

and 72% for generic drugs while in doughnut hole (between $2,850 and $4,550)

o 5% after $4,550

Ways to avoid the Donut Hole

Check with doctors to see if prescription drugs are covered by Medicare, not all prescription drugs are

Ask doctors if there are generic drugs equivalent to the more expensive brand name drugs

Switch pharmacieso CVS Costco could save you hundreds of dollars a month

Buy drugs in bulk or online to save money

Medigap the Supplemental Insurance

Supplemental to Original Medicare, Parts A and B Designed to fill gaps in coverage such as copayments, coinsurance, and deductibles

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Sold by private companies Policy covers only one person Medigap is guaranteed renewable even if you have health problems

Medigap Plans in Massachusetts:

1. Medigap Core Policy plan:o Covers Inpatient hospitalization care copayments for days 61-150 (first 60 days

are covered by Medicare, days 61-90 $304 copayment, 91-150 $604 copayment)o Covers an additional 365 Lifetime Reserve days paid in fullo Covers Part B excess charges (usually 20%)o Monthly cost is about $100 per month, prices vary depending on insurance

company

2. Medigap Supplement 1 plan:o Pays Part A deductible ($1216)o Pays all copayments for Inpatient hospital care, days 1- 150o Covers additional 365 Lifetime Hospital days paid in fullo Covers Part B excess charges (usually 20%)o Covers Skilled Nursing Facility coinsurance for days 21-100 ($152)o Covers Part B annual deductible ($147)o Covers Foreign travel- for Medicare covered services needed while traveling

abroado Covers additional 120 days in Mental Health Hospital per benefit periodo Covers $10 per day in Skilled Nursing coinsurance for days 101-365o Monthly cost is about $175, prices vary depending on insurance company

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Regular Medigap Plans: Strategies to Maximize Medicare 60% of Medigap plans are spent on Plan F Plan F is the only plan that offers 100% coverage on Part B excess charges and the

Part B deductible Plan C is the second most popular with 21% Plans B and D are about 5% each There are different pricings for Medigap plans, based on the age when you sign up,

standard price regardless of age, and attained age pricing. Any standardized Medigap policy is guaranteed renewable even if you have health

problems. This means the insurance company can't cancel your Medigap policy as long

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• Less expensive

Shared Coverage

• Hospitalization Part A Copayments

• 365 additional lifetime hospital days- paid in full

• Part B Coinsurance

• Parts A and B blood- first 3 pints

Benefits of Medicare Supplement 1

Policy•

1.

2.

3.

4.

as you pay the premium If a private insurance company sells Medigap plans, they have to sell plan A. If they

decide they want to sell other plans they must sell either plan C or plan F Massachusetts, Minnesota, and Wisconsin have different Medigap plans All Medigap plans with the same letter have the exact same coverage, important to get

it for lowest cost because they are all the same No Medigap policy covers the Medicare part B monthly premium ($104.90) Plan F costs the most and covers everything except the part B premium Plan C provides the second most coverage and covers everything except part b excess

charges and the part B ($104.90) premium Plans C, D, F, G, M, N all provide foreign travel emergency Plans K and L work differently and charge a percentage for various costs. They also

have an out-of-pocket limit. These plans are beneficial if you are worried about long term care costs

Additional Information Be aware that your company could take you off their insurance plan at age 65 If break in skilled care lasts more than 30 days, you need a new 3-day hospital stay If break in skilled care and inpatient hospitalization lasts at least 60 days in a row this

ends your current benefit period and renews your skilled nursing facility benefits Medicare Advantage Plans, Prescription drug insurance and Medigap are all provided

by private insurance companies Medicare and Medigap policies only cover one person Long term care is not covered by Medicare

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