Thursday, October 27, 2016

Most ACA customers won't see major premium hikes

Oct 26, 2016 | By Jack Craver

Premiums are definitely going up for health plans sold through the Affordable Care Act individual marketplace.

However, most ACA customers will not see the types of double-digit hikes that have garnered headlines and served as a cri de guerre for ACA opponents in the last weeks of the 2016 election campaign.

Instead, it appears that a minority of ACA customers will be subject to high premium increases, while the majority will see only a modest rate hike.

For starters, the widely-publicized estimate from the Department of Health and Human Services that ACA plans will increase by an average of 25 percent is based specifically on what it would cost a 27-year-old to buy the second cheapest silver-level plan through the marketplace, before tax credits.

As ACA premiums rise, said Aetna CEO Mark Bertolini, young people will choose beer over health insurance.

The price for that benchmark plan will increase by an eye-popping 116 percent in Arizona, 69 percent in Oklahoma and 63 percent in Tennessee. However, in a number of other states, the premiums will go up only slightly. In a couple of states they will even decrease.

Many states that are seeing the biggest increases also had some of the lowest premiums, including Arizona, Tennessee and Minnesota, Cynthia Cox of the Kaiser Family Foundation told Modern Healthcare.

Another widely-neglected point is that it’s not always customers who will be bearing the brunt of the major premium hikes. Seventy-seven percent of marketplace customers qualify for subsidies, either in the form of tax credits that offset the cost of their plan or, in the case of those with the lowest incomes, cost-sharing subsidies that lower the price of their premium.

As a result, HHS estimates, roughly 77 percent of ACA customers can find a plan that costs them less than $100 a month and 72 percent could find one for less than $75. 

Tuesday, October 25, 2016

15 voluntary benefits trends heading into 2017

Oct 25, 2016 | By Alan Goforth

Predicting industry trends is as much a sign of the end of the year as after-Christmas sales and New Year's resolutions.

Although predicting the future is only an educated guess, one thing is certain — voluntary benefits are here to stay.

Carriers, brokers, employers and workers all give a thumbs-up to the increased flexibility and opportunities for cost control they bring to benefits packages.

Here is what may lie over the horizon in 2017. 

As a result, the quantity and quality of voluntary benefits will continue to grow. Examples of traditional voluntary benefits employers are likely to add include gap coverage, short-term disability, cancer, critical illness, prescription, dental, life insurance and hospital supplemental policies. Brokers should make sure they have these products in their portfolios. 

Most businesses understand that the size of an employee's waistline can correlate to attendance, productivity and turnover. Many also are starting to realize the link between the size of their bank account and job performance.

Smart employers are adding voluntary benefits that can help workers reduce stresses associated with finances and debt. These can include financial education, financial counseling, employee purchase programs, parental leave, retirement planning and even short-term loans under certain circumstances.


Technology is taking the guesswork out of employee wellness programs. Nearly two-thirds of carriers surveyed expect wearable technologies to have a significant impact on their industry, according to Accenture's annual Technology Vision report. Fitbits and similar devices enable employees to quantify the results of their effort, which both inspires them and provides employers valuable feedback about the effectiveness of their programs. An increasing number of businesses now subsidize the cost of wearable devices or set up payroll deductions to cover the expense.

Year-in and year-out, HR professionals cite employee engagement as one of their most vexing issues. Traditional tactics are becoming less effective with millennial employees, who often prefer voluntary benefit portals and enrollment platforms.

"Millennials get information on their own," said Aprilyn Chavez Geissler, owner of Geissler Agency Inc. in Albuquerque. "However, when it's time to purchase, they still want the personal service and an advisor to help them. As a large demographic, they are similar to the silent generation in that they think through their purchases and do research on their own."

Critical illness insurance was once a blip on the radar screen of voluntary benefits packages — but not anymore. It is becoming an increasing popular option as the workforce ages and companies reduce primary health coverage and shift the cost of primary medical onto 
“Critical illness insurance is by far the fastest-growing insurance product on the market," said Mark Randall, a researcher for GoldenCare in Minneapolis. "Even though the market share is still fairly small, it's a hot product. The bottom line is that every broker should add this product to their portfolio.”
One sure sign of growing demand for voluntary benefits is the fact that many definitions have become obsolete. In the past, voluntary benefits were limited to such bread-and-butter options as dental or vision insurance. Today, however, they are all about lifestyle benefits, such as health club memberships, legal services or pet insurance. A good working definition of a voluntary benefit is anything that can be deducted from an employee's paycheck.
A well-designed consumer-driven health plan creates a win-win scenario. Employers hold the line on costs, and employees pay only for the coverage they need and want. This can mean a transition to high-deductible health plans and health savings accounts or health reimbursement arrangements that help employees pay their out-of-pocket expenses and allow them to retain unspent contributions.
Information is a double-edged sword: Employees can be overwhelmed by the voluntary benefit options available to them, but they are also empowered to make smart choices. Benefits providers, brokers and employers are providing user-friendly tools that increase transparency. Studies show that this is especially important to younger workers.
Fifty-two percent of millennials report searching online for health or care-related information, and reliance on social media, patient portals and performance scorecards is growing. One-quarter of consumers say they have looked at a scorecard or report card to compare the performance of doctors, hospitals or health plans, compared to 19 percent two years ago. Among millennials who need medical care, scorecard use has grown from 31 percent to 49 percent.
Telemedicine is a natural byproduct of increased telecommuting. The practice is both a cost-effective option for employers and a perk for employees who are paying more out of pocket for health care. On-call services can bring virtual health care providers into the office with advice about preventive care and nonthreatening illnesses.
Anyone remotely involved in the benefits business knows that the industry is swimming in tons of data. Innovative employers are putting this information to work to design better plans that improve health care and reduce expenses. Claims data and historical use patterns demonstrate how much employees can save on new plans by making better decisions. This information also helps employers get a better handle on plan costs, employee adoption and administrative efficiency.
Employees continue to express interest in new, nontraditional voluntary benefits, and carriers are responding. According to a study by Eastbridge Consulting, 13 percent of employees have selected employee purchase programs; 8 percent have selected legal plans; 3 percent have selected identity protection; and 1 percent selected pet insurance. The relatively low numbers reflect the fact that these options are new, according to researchers.
These percentages are expected to grow. Nontraditional voluntary benefits offer workers a way to obtain products and services through convenient payroll deduction. Most nontraditional offerings provide immediate, tangible benefits that can be used any time, unlike many core benefits that employees need only when they are sick or injured.
Employees are eager to improve themselves, especially if doing so is cost-effective. Financial planning and online educational services, including college courses, certifications and career development, are becoming popular. Look for more of these, such as Graduate Management Admission Test prep and Graduate Medical Education courses, to be added.
Although the drive toward a $15 per hour minimum wage in some cities has been controversial, it may have an upside in demand for voluntary benefits.
"With the California minimum wage going to $15 an hour, those employees will have extra money to opt for more voluntary benefits," said Wayne Sakamoto, owner of Health Insurance Interactive Inc. in Naples, Florida. "This extra money will help them get into a nicer apartment, buy a home, get a car or opt to purchase more voluntary benefits. Benefits such as dental and vision insurance are a goodwill gesture by the employer."
Brokers, employers and workers all may benefit from the increasing number of carriers offering voluntary benefits.
"Brokers now have a lot more different carriers in voluntary benefits than they did several years ago," said Kathy O'Brien, vice president of voluntary benefits and national client group services for Unum in Chattanooga, Tennessee. "They have to be very knowledgeable about the carrier, what they will do to meet the needs of their clients and what types of service they offer, not just in enrollment but also in plan administration, how they will deliver the services, how they will pay and handle billing information."
A well-designed package of voluntary benefits is more efficient when integrated seamlessly with traditional benefits, and not merely tacked on. Learning how best to do this is an ongoing challenge.        
"Understanding how all of the different solutions work together is critical, especially when paired with a high-deductible health plan," said Paul Goedde, executive vice president of the Voluntary Employee Benefits Board and product management lead for Cigna in Philadelphia. "Not only does it help the employer attract and retain talent, it helps them manage their bottom line with more-productive and satisfied employees."

Monday, October 24, 2016


October 24, 2016

Contact: CMS Media Relations
(202) 690-6145 | CMS Media Inquiries


More Than 70 Percent of Consumers Can Find Marketplace Plans for Less than $75 Per Month

With Start of Window Shopping, Americans Can Now Check Out Options for 2017 Coverage

With window shopping beginning today, Health Insurance Marketplace consumers can now visit to check out their options for 2017 coverage in advance of the start of Open Enrollment on November 1. A new report released today shows that 72 percent of Marketplace consumers in states using will be able to find plans with a premium of less than $75 per month and 77 percent will be able to find plans with premiums below $100, taking into account financial assistance. The report also shows that consumers will have options, with an average of 30 health insurance plans to choose from.

“Thanks to financial assistance, most Marketplace consumers this year will find plan options with premiums between $50 and $100 per month,” said HHS Secretary Sylvia M. Burwell. “Millions of uninsured Americans qualify for financial assistance, and so could as many as 2.5 million Americans currently paying full price for off-Marketplace coverage. I encourage anyone who might need 2017 coverage to visit and check out this year’s options for yourself.”

Thanks in large part to the Marketplace, in early 2016, the share of Americans without health insurance fell to 8.6 percent, the lowest level in our nation’s history. This year’s Open Enrollment offers the chance to build on that progress and further improve access to care and financial security.

Financial Assistance and Shopping Help Keep Coverage Affordable

Eighty-five percent of current Marketplace consumers receive tax credits that bring down the cost of coverage, and, nationwide, about the same percentage of Marketplace-eligible uninsured Americans also have incomes that could qualify them for tax credits. In addition, an estimated 2.5 million people currently paying full price for health insurance in the off-Marketplace individual market could be eligible for tax credits if they purchase 2017 coverage through the Marketplace.

To read more on the today's announcement click here:

To view today’s report about 2017 Health Insurance Marketplace, visit: 

6 myths about Social Security that voters and presidential candidates should know

Oct 20, 2016 | By Nick Thornton

Presidential candidates Hilary Clinton and Donald Trump were forced in their final debate to address an issue that has been conspicuously absent from this year’s election cycle: Social Security.

Of the topics chosen by Fox News’ Chris Wallace, the last debate’s moderator, “debt and entitlements” topped the list.

That the issue has not been raised in the previous two debates has miffed some advocacy groups. AARP members reportedly sent NBC’s Lester Holt, moderator of the firs debate, 100,000 emails demanding the candidates address their positions on Social Security, according to

The 2017 Social Security cost-of-living adjustment (COLA) will take effect for more than 60 million Social Security beneficiaries beginning in...

Another 10,000 members took to social media urging ABC’s Martha Raddatz and CNN’s Anderson Cooper to raise the issue. Neither did, nor did voters in the town hall format raise it.

A survey from the Pew Research Center conducted earlier this year shows Social Security is a top issue for many voters, and not just seniors. Almost seven in 10 voters said Social Security was “very important” this election season, which was more than the importance respondents placed on trade, the environment and abortion.

Both Sec. Clinton and Mr. Trump outlined their positions on Social Security in a June AARP bulletin.

The Clinton campaign said “Republicans are using scare tactics about the future and effectiveness of Social Security to push through policies that would jeopardize it,” and claimed “the real threat to Social Security is Republican attempts to undermine the bedrock of the system.”

In the bulletin, her campaign said Sec. Clinton would fight any attempt to privatize the program, and said she opposes reducing annual cost-of-living adjustments and raising the retirement age.

The campaign also said a Clinton Administration would expand Social Security’s benefits to “those who need it most,” and said “the most fortunate” would be asked to pay more for expanded benefits.

Mr. Trump said his policy would address the solvency of Social Security and other entitlement programs by expanding the economy, and ultimately tax revenue, through tax, trade and immigration reform.

“I will work with Congress to ensure we have a pro-growth agenda in place,” Trump told AARP. “If we are able to sustain growth rates in GDP that we had as a result of the Kennedy and Reagan tax reforms, we will be able to secure Social Security for the future. Our goal is to keep the promises made to Americans through our Social Security program.”

According to the Social Security Administration’s most recent trustees report, the program’s trust funds will be depleted in 2034 under current law, at which time benefits would have to be cut by about 20 percent. The Congressional Budget Office has predicted the fund’s reserves will be exhausted by 2029.

Last April, the Committee for a Responsible Federal Budget, a non-partisan think tank that advocates for sound fiscal policy, and has scored each candidate’s budget and tax proposals, released a list of the myths surrounding the Social Security debate.

Here is a look at some of the Social Security myths on that list:

Myth 1: We don’t need to worry about Social Security for many years

 CRFB says there is a high cost to waiting to reform Social Security. “The longer lawmakers wait to enact Social Security reform, the more abrupt and less targeted changes will have to be, the less time workers will have to plan and adjust, and the fewer the options policymakers will have. Perhaps more importantly, the size of the problem literally grows over time,” CRFB says.

The payroll taxes that fund Social Security would need to increase 21 percent today to make Social Security solvent. If lawmakers wait until 2034 to address the issue, those taxes would have to increase by 32 percent, CRFB says.

Myth 2: Social Security faces only a small funding shortfall


CRFB says significant adjustments have to be made to address Social Security’s “large but manageable financing gap.”

In 2016, the program is expected to pay out $70 billion more in benefits than it generates in tax revenue. The gap is expected to widen as the population ages. This year, Social Security spending will account for 13.9 percent of country’s total payroll. By 2040, the SSA projects the benefits will grow to 16.7 percent of payroll, even as tax revenue for the program remains equal to what it is today—about 13 percent of payroll.

Myth 3: Social Security solvency can be achieved solely by making the rich pay the same as everyone else

The existing Social Security payroll tax is capped at a worker’s first $118,500 of income. That covers about 83 percent of all the country’s wages, CRFP says, leaving 17 percent of wages untaxed for Social Security.

Policy experts commonly suggest raising or eliminating that cap. Doing so would “significantly improve Social Security’s finances, but it would not by itself make the program sustainably solvent,” according to CRFB.

Even with the cap’s elimination, some combination of reduced benefit increases and higher taxes on wages below the cap would still be needed to make the program solvent for the long run, CRFB says.

Myth 4: Today’s workers will not receive Social Security benefits

Even if lawmakers do nothing, retirees will still receive benefits in 2034. Revenue from taxes would be sufficient to pay about 79 percent of scheduled benefits.

“An immediate cut of that magnitude – particularly for older and lower income retirees – could be devastating. For that reason, most observers agree that Congress should take action to avoid such an abrupt cut,” says CRFB.

Myth 5: Social Security can be saved by ending waste, fraud and abuse

Republicans commonly cite the need to address fraud in the Social Security system as a primary measure to address the larger solvency issue.

While addressing fraud and abuse in the system would be sound policy, even eliminating all fraud would not do much to improve the program’s overall solvency, CRFB says.

That’s because there isn’t enough waste, fraud or abuse to significantly impact the program’s funding shortfalls. The SSA estimates that about $3 billion in improper payments are doled out every year. By contrast, about $150 billion in benefit cuts would have to be made every year going forward to make the program solvent.

At best, eliminating fraud and waste would only close 2 percent of the funding shortfall, CRFB says.

Myth 6: Raising the retirement age would hit low-income seniors the hardest

Critics of raising the normal retirement age argue the most vulnerable seniors would be hit the hardest, but analysis from several sources suggests the contrary.

The CBO says increasing the normal retirement age by one year, to age 68, would reduce the lifetime benefits of the highest earners by 5 percent, and 3 percent for the lowest earners. The Urban Institute came to a similar conclusion.

Saturday, October 22, 2016

2016 Health Insurance Marketplace Training:

Join us for the CMS National Training Program

2016 Health Insurance Marketplace Training:

Health Insurance Marketplaces: Information for Immigrant Families

November 9, 2016

2:00 – 3:00 pm ET


This webinar will provide information about Health Insurance Marketplaces and eligibility based on immigration status. Topics will include

  • Marketplace Eligibility & Enrollment
  • Eligible Immigration Statuses and Documentation
  • Marketplace Affordability
  • Resources

Thursday, October 20, 2016

UnitedHealth earnings: Three things to watch

Monday, 17 Oct 2016 | 3:13 PM ET


As the nation's largest health insurer, UnitedHealth Group's earnings traditionally serve as an industry bellwether, but these days the insurance giant is also an outlier because its biggest insurance rivals are mired in antitrust issues.

With no merger-related headwinds, UnitedHealth's shares are up nearly 14 percent year to date, outperforming the health care sector, which is down nearly 4 percent for the year. By contrast, shares of Aetna are flat on the year, while its merger partner Humana's stock is down nearly 9 percent. Anthem and Cigna have also seen regulatory opposition to their proposed deal, also weighing on their stocks, which both are seeing a double-digit decline year to date.

Analysts are looking for UnitedHealth to report adjusted earnings of $2.08 per share for its third quarter on revenue of $46.1 billion, according to Thomson Reuters.

The insurer raised the lower end of its full year 2016 earnings guidance in July to $7.80 to $7.95 per share, from $7.75 to $7.95 per share.

Here's what to watch:

Health-care costs

UnitedHealth said medical cost growth was manageable in the first two quarters of the year, beyond the costs associated with its money-losing Obamacare plans.

Its medical loss ratio — the percentage of premiums paid in medical claims — edged up to 82 percent in the second quarter. Two of the areas where costs had picked up were emergency-room utilization and specialty pharmacy prices.

The analysts estimate for UnitedHealth's third quarter MLR is 81.1 percent.

The company reports the same morning that the government releases its latest consumer price index data, which of late has shown increased consumer spending on health care.

Obamacare losses

UnitedHealth has been a bellwether on Obamacare plans this year. In April, it announced it would drop out of all but a handful of Affordable Care Act exchanges for 2017, citing larger-than-expected medical costs associated with ACA plans. By late summer, many of its rivals followed suit.

In the second quarter, the insurer estimated full year losses on Obamacare plans would top $650 million in 2016. Any increase in that guidance will likely have a negative read-through for its largest ACA exchange rivals, Anthem, Cigna, Aetna and Centene.

UnitedHealth generally does not provide forecasts for the following year until its analyst day in December, but analysts expect that dropping Obamacare plans will provide a tailwind to the bottom line in 2017.


Optum growth

While UnitedHealth's Medicare and Medicare businesses are producing growth in its insurance membership, it is the Optum division that has been the biggest driver of overall growth.

In both the first and second quarters, Optum revenue grew more than 50 percent year over year, driven by growth of nearly 70 percent in the OptumRx pharmacy benefit management unit.

However, the PBM business is now under scrutiny, in light of rising drug costs. This month, some UnitedHealth members filed a lawsuit accusing the insurance giant of setting high co-pays for drugs, which had been bought cheaply through its PBM, in order pocket higher profits.

UnitedHealth reports third-quarter results Tuesday morning, and has scheduled a conference call to discuss results starting at 8:45 a.m. ET.

Obama makes last stand on healthcare

by Paul Lucas 20 Oct 2016


The healthcare issue has dominated the Presidential debate tussles between Hilary Clinton and Donald Trump. However, the man whose shake up to healthcare has caused such controversy has not finished having his say – with President Barack Obama encouraging people to start enrolling on November 1.

That is the date when the Affordable Care Act opens for 2017 health plans, and Obama has been making his voice heard – most recently making an appearance at Miami Dade College, in Miami, Florida, yesterday.

The sales job for the outgoing President is proving increasingly complex, however, with premiums rising by double digits in many areas of the country and a host of insurance companies having pulled out of his Obamacare program. Nevertheless, Health and Human Services Secretary Sylvia Burwell outlined earlier this week (see article) that she still expects 13.8 million people to sign up for coverage during 2017 – an increase from the 12.7 million figure in 2016.

Obama has outlined a number of tweaks that he believes could improve the law – including allowing a public option that could increase competition. This would see the government create its own health insurance agency that would compete with other companies in the USA.

However, any changes would have to wait until at least January at the earliest, when the new Congress is in place.

Speaking about the plans, Josh Earnest, a White House spokesman, remarked that “the current Congress is one that’s dominated by Republicans who have voted more than 50 times to repeal the law, but have not once in the last six years actually put forward their own alternative proposal.”

According to the White House, taxpayer subsidies would soften any blow of heightened premiums with around 85% of customers able to get this financial assistance.

However, millions are still buying individual policies outside of the healthcare law marketplace with analysts estimating that there are around nine million people across the country with individual policies outside the law, according to an Associated Press report. It is estimated that from this number around five million qualify for the coverage provided by law, with around 2.5 million also having incomes that qualify for subsidies.

Now it is hoped that Obama’s final push can ensure a significant enrolment – with the season beginning on November 1 and closing on January 31.

However, the window for a strong push may be closing rapidly with Republican Donald Trump claiming he would repeal and replace the law if he to become President on November 8.

Where do you stand on the healthcare law issue? Do you think Obama’s stance has been a good one for US healthcare or has it backfired? Leave a comment below with your thoughts.


Moeller on Medicare: Advisors, Beware of Land Mines on Timing, Coverage

Philip Moeller, who has covered Medicare for decades, says the program is monstrously complicated so advisors need to help their aging client base.


Don’t turn an 800-lb. gorilla into an elephant in the living room. In other words, mighty Medicare, the biggest component of U.S. health care -- and the most complicated – needs to be addressed, discussed, and explained to clients.

Indeed, financial advisors have reason to be Medicare-articulate because as their client-base ages, health care plays an increasingly larger role. Consequently, decisions concerning medical insurance greatly affect their financial future.

So says Medicare expert Philip Moeller, in an interview with ThinkAdvisor. He is author of “Get What’s Yours for Medicare: Maximize your Coverage, Minimize Your Costs” (Simon & Schuster). If that title has a familiar ring, it’s because Moeller is co-author, with Laurence Kotlikoff and Paul Solman, of the bestseller “Get What’s Yours – Revised and Updated: The Secrets to Maxing Out Your Social Security” (2016).


The release of Moeller on Medicare was timed to coincide with the program’s open enrollment period, Oct. 15 through Dec. 7. Since Medicare is an annual plan, recipients have the option each year to re-evaluate their coverage and if desired, change it.


The rules of Medicare are complicated and laden with deadlines that are costly to miss.

“Dante had nine circles of hell. Medicare has only five,” Moeller jokes in his book. That’s a reference to the inevitable frustration that comes with navigating the exceedingly complex, opaque system. Since it was created a half-century ago, Medicare has grown monstrously complicated with more and more intricate rules, more buzz words to learn, more decisions to make that affect costs.

Moeller, based in Richmond, Virginia, who has covered Medicare for decades, writes about retirement for Money magazine and conducts the online “Ask Phil” Medicare column for PBS NewsHour’s “Making Sen$e.”

Here are excerpts from our interview:

THINKADVISOR: What is “compressed morbidity,” and why is it your mantra?

PHILIP MOELLER: We’re compressing the period of physical decline into shorter and shorter periods. That is, you function at a very high level until you don’t. It’s a great victory for health care. I don’t want a long period of decline where somebody is wiping drool off my chin.

You note that for the last 30 years, so much has been written about retirement planning but that you’ve seen very little about health care planning.

That’s going to change because people will realize that health care should become an important part of the retirement tool. How can you have a great retirement if you don’t have good health care?

What are the most significant points about Medicare that financial advisors should impart to clients?

That unexpected medical expenses are the biggest retirement surprise most people have. So you need to pay attention. You have to sign up for it at the right time, make sure you purchase the right package of coverage for your situation and then use the insurance you’ve purchased. 

What if they don’t sign up at the right time?

You may end up facing what could be lifetime penalties or have no coverage at all for an extended period. 

What do folks need to keep top-of-mind concerning the part of Medicare that covers prescription drugs?

You need to pay particular attention during the [annual] open enrollment [period when coverage changes are permitted] because formularies [lists of covered drugs and prices] change every year. 

What’s one big way advisors can help clients with Medicare?

There’s a series of high-income surcharges for Medicare premiums [monthly charges deducted from Social Security payments] called IRMAA [Income Related Monthly Adjustment Amounts]. These amounts can be increased substantially to the tune of hundreds of dollars for higher income individuals. But clients might be able to make some adjustments to minimize them. For tax-planning purposes, be aware that there’s a two-year lag. So, 2016 tax returns will determine 2018 IRMAA.

Why take the trouble to change Medicare plans during open enrollment?

It’s a great do-over opportunity. Health insurance plans change. Drug formularies change. Pricing structure can be different from one year to the next. People can certainly leave money on the table – and possibly end up with an inferior health care product – if they don’t take advantage of open enrollment.

Why should folks consider Medicare Advantage plans? These are private plans that are alternatives to “Original Medicare” Parts “A” and “B.” (“A” covers hospital care; “B” for doctor visits and outpatient care.)

They’re the cheapest by far. You can [even] get a Medicare Advantage plan and pay no premium at all. So if you’re really healthy and don’t take meds, it’s very tempting to get one. And [unlike traditional Medicare] some plans cover vision and hearing, and also health clubs. Maybe more than half of all new Medicare plans are Medicare Advantage plans.

What are the disadvantages to these?

They use health care provider networks. And that allows only a certain number of doctors, hospitals and caregivers in their networks. So if, at some point, the doctor you want to use isn’t in the directory, you could be a very unhappy camper. And if you’re in a hospital because of an emergency, some Advantage plans might say that hospital isn’t in their network – and therefore you won’t be covered. Provider directories can change during the year. That’s another reason to pay attention to open enrollment.

Are Medicare Advantage Plans subject to state rules?

No. Federal. Every year insurers look at the amount of subsidy that the government is offering to Medicare Advantage Plans; and based on the relative appeal of that subsidy and their book of business in various geographic areas, they’ll bid to offer coverage. This can change from year to year.

Part “D” of Medicare covers prescription drugs. Hillary Clinton says that if elected president, she’ll try to reduce outrageously high drug prices. 

That would be a very complex process. Drug companies need financial incentives to discover new drugs; but American consumers shouldn’t have to pay almost the full research and development costs for the global drug industry, as we do. The incentives should be shared more equitably with consumers around the world.

Why doesn’t Medicare itself act to lower prices?

It’s against the law for Medicare to negotiate with pharmaceutical companies to reduce drug prices. Insurers can negotiate; but Medicare, which is the 800-lb. gorilla in health care, can’t use its tremendous market leverage to negotiate lower pharmaceutical prices!

How does the Affordable Care Act affect Medicare?

One of the ways is a provision that will do away with the “donut hole” [coverage gap] by 2020. Everybody hates the donut hole because it’s confusing: Medicare Part “D” plans stop covering drug costs after payments reach a certain level every year and then resume after the recipient’s spending has reached a different set-level. Under the Affordable Care Act, the donut hole is becoming smaller and smaller.

How come vision, hearing and dental care aren’t covered by Medicare?

Those are services that everyone uses, so I’m not sure they can be considered under “insurance.” I believe that’s the reality.

Why aren’t white canes for the blind covered but general canes are covered? Where’s the logic?

Medicare has national coverage determination [NCD]. They also have local coverage determination [LCD]. They can have a different rule in one part of the country than in another. You end up with a layering of rules that makes it very difficult, if not impossible, [for them] to be used by the intended beneficiaries.

What about Medigap supplemental policies that Medicare recipients should buy to cover what Medicare doesn’t cover? It’s obviously important for advisors to inform clients.

Yes. The most popular Medigap plan is Part “F” because it provides the most comprehensive coverage. It’s also the most expensive. You can’t get a Medigap plan without getting Medicare Parts “A” and “B.” And Medigap has its own six-month window that begins after you get “A” and “B.” Make sure clients don’t miss the enrollment period because that’s when there’s guaranteed access to Medigap policies, and you can get the best prices.

What else should advisors know about Medigap?

Be aware of the underwriting terms of the Medigap policy their customer is purchasing because this has implications for the future: premiums are increasing. You have to shop for premiums – there’s substantial price variation. Be aware that Medigap doesn’t work with Medicare Advantage plans.

How important and advisable is it to get long-term care insurance, which is not covered by Medicare?

As long as the client can afford to sufficiently insure themselves, I think it’s stupid not to.

Please talk about the “hold harmless” rule.

This means that [most] Social Security beneficiaries who have Part “B” premiums taken out of their payments cannot be asked to pay a higher premium – when Social Security’s annual cost of living adjustment [COLA] is zero or small – because to do so would cause their benefits to decline. However, other Part “B” users, who are not held harmless, include higher income beneficiaries. Part “B” expenses are going up, and [the very modest] COLA [next year] [probably] won’t cover the increase in Part “B” expenses. Tax payers pay 75% of Part “B” expenses.

What about the hot issue of being admitted to a hospital vs. just being there for observation? What should advisors know?

Hospitals were re-admitting a percentage of patients after they received hospital care, and high re-admission rates were costing Medicare a lot of money. So Medicare hired paid auditors to look at admissions that seemed questionable and said that the hospitals had to pay penalties. However, if they admit people on an observational basis, the hospitals don’t pay penalties. But the rule says you need to be admitted for at least two midnights to qualify for subsequent insurance for a stay in a skilled nursing facility. Medicare has been trying to tweak this rule but hasn’t been able to figure out a solution.

What does this all that mean to advisors’ clients?

When they go into a hospital, they better darn well find out on what basis they’re being treated. Fortunately, a new law requires hospitals to tell you. This really makes a difference because if you’re admitted, Part “A” covers you. If you’re an observational patient, Part “B” covers you. Parts “A” and “B” don’t charge the same rates – one may be cheaper than the other – and they don’t cover treatments the same way.

Seems that advisors would be wise to get clients’ adult children up to speed about Medicare’s many facets.

Yes, it’s clear that they need to start helping their parents understand these things because eventually they’re going to pay the bills one way or the other.

You write of something new that’s upcoming: Curative medical care in hospice. Please explain.

It’s a pilot program starting next year in test markets where you’ll be able to go into hospice but still have efforts made on your behalf to make you better. In contrast, traditional hospice ceases medical care.  Ironically, [research] has shown that people in hospice live longer than those [hospitalized]. The environment is much less stressful.

You’re now 70. Do you personally have Medicare?

No. My wife [Cheryl Magazine] still works -- bless her heart -- and as long as you have employer insurance on an active plan, you never need to get Medicare. When my wife retires, I’ll switch to Medicare [from spousal coverage on wife’s plan] and will be able to convert with no penalties whatsoever.

You’re the Medicare expert; so you’ll surely do everything right!

Boy, I’d be embarrassed if I didn’t.