We’re not going to go in alphabetical order, which would be Part A, B, C, then D, but rather in terms of how many beneficiaries are responsible for a premium. This actually makes everything easier to explain. So our order will be Part B, D, C, and, finally, A. Medicare’s such an alphabet soup!

Part B Premium Amounts: All beneficiaries who enroll in Part B, also called Medical Insurance or Supplementary Medical Insurance (SMI), are responsible for a premium; in 2012 the standard premium will be $99.90 per month. Each year Medicare’s actuaries come up with an estimate of how much Medicare Part B will pay out over the next year, and one-quarter of this amount is allocated to come from beneficiary’s premiums. The amount varies each year, and although it usually increases, in 2012 it will go down. Payment: People getting monthly benefits from Social Security, Railroad Retirement, or a federal annuity from the Office of Personnel Management will have premiums taken out of their benefit payments. Everyone else will be directly billed and have to send their payments to the Medicare Premium Collection Center. If you are direct billed, you will be billed quarterly, but you can ask to be billed monthly instead. You can pay these bills by check, money order, or with a variety of credit cards. You can also make arrangements with the Social Security Administration to have someone other than you pay your premium (e.g., a union or a son for a forgetful parent).

Savings Clause: A savings clause is one that prevents beneficiaries of Social Security or Railroad Retirement from being hit with an increase in their Part B premium greater than the yearly cost-of-living increase in their Social Security or Railroad Retirement benefit.” (This increase is also called the “cost of living adjustment” or COLA.) Therefore in 2009 and 2010, most beneficiaries paid $96.40, which was the 2008 premium. This is because they received no COLA increase in 2009 or 2010, so their premiums were frozen.

This savings clause applies only to those who have their Part B premium taken out of their Social Security or Railroad Retirement monthly payment. If you are paying your premium directly to Medicare because you have elected not to draw your Social Security yet, someone else is paying your premium, your payments are in suspense because you are working, or if you get a federal pension instead of Social Security, this does not apply to you. You should also note that this savings clause applies only to Part B premiums. This savings clause is technically called the “Variable Supplementary Medical Insurance” (VSMI) premium.

Late Enrollment Penalties: For one reason or another, you may not have enrolled in Part B at your first opportunity. If so, you will be penalized -- the cost will increase 10 percent for each 12 month period that you could have had but did not have Part B. (The 12 months are total, not necessarily consecutive.) For example, if you reached age 65 in October 2008, but decided not to enroll in and begin utilizing Part B until July of 2010, you would be penalized 10 percent extra. (You did not have it for a total of 21 months.) So in 2012 you would pay $109.90 per month (the standard premium of $99.90 x 110 percent).

If you did not have Part B because you were enrolled in an employer or union group health plan as a worker, or the spouse or dependent of one, or if you were a foreign volunteer, these don’t count as penalty months.

Penalty Rollback: If you became enrolled in Part B before age 65 and had a penalty attached to your premium, when you turn age 65 and continue to get (or become re-enrolled in) Part B, your penalty will be wiped out.

High Income Surtaxes: Beneficiaries who have higher incomes are subject to paying surtaxes on their Part B premiums. (The government euphemistically calls this a “subsidy reduction” because it reduces how much Medicare subsidizes your Part B. It is also called an “income related monthly adjustment amount,” or IRMAA.) The amount depends on your income, how you file your federal income taxes, and your marital arrangements. To determine your income for this purpose, look at your tax return from two years before the year in question (so for your 2012 surtax, you look at your 2010 return), and add your adjusted gross income to any tax-exempt interest reported on your return. This amount is called your “modified adjusted gross income,” or MAGI.

HIGH INCOME PART B MONTHLY PREMIUM SURTAXES

* the surtaxes are for each beneficiary’s premium
# this is the standard premium for 2012
Note: all the income amounts stay the same each calendar year

You’ll get a notice from Social Security each year about what your surtax will be. If you believe they used the wrong income, filing status, or family situation, you can challenge their amount. You can even do this if your financial situation has changed substantially. Managing Your Medicare has extensive information about this. Beneficiaries who are subject to this surtax do NOT get the savings clause protection discussed above.

Low Income / Low Resources Assistance: Medicare beneficiaries who have both low income and modest assets (your home, car, personal possessions, etc., don’t count) can usually get their Part B premiums paid by their state’s Medicaid program. This will happen if they have Part A and either become eligible for Medicaid or if they can meet the criteria to be in a Medicare Savings Program (MSP) as a “Qualified Medicare Beneficiary” (QMB), a “Specified Low-Income Medicare Beneficiary” (SLMB). As an SLMB your monthly income must be less than $1,109 as an individual or $1,246 as a couple. ). As a "Qualified Individual" (QI), Your monthly income must be less than $1,246 for an individual or $1,675 for a married couple living together, and your resources less than $6,680 for a single and $10,020 for a couple. The rules about what counts as each are very complex and vary by state. (The income limits are higher in Alaska and Hawaii; all income amounts will change a bit in early 2012.) Your exact family composition can also make a difference, so you should always apply if you are remotely near these income limits (some states don’t even have a resource limit). It is even possible for only one member of a married couple to qualify under the “spousal denial” process. For those of you who meet the criteria as a Medicaid beneficiary or as a Qualified Medicare Beneficiary (QMB), not only will you have your Part B premiums paid, but your Part A and Part B deductibles and coinsurances too, so it’s truly worth applying for these programs.

Failure to Pay: • If you fail to pay your Part B premium, you will be disenrolled. The process is a little involved, and you will be several notices before this is done, including your premium notice, a delinquency notice, given a grace period, and then a final notice. So you’ll have opportunity to pay up even if you miss your usual payment deadline. But if you don’t pay at all, you will be disenrolled. • If you are disenrolled from Part B and you are in a Medicare Advantage Plan (Part C), you will be disenrolled from it, too. • If you have your Part D prescription drug benefit with your Plan, you will also lose it because you must be in either Part A or Part B. If you are a beneficiary that has only Part B (no Part A), and are in a stand-alone prescription drug plan, you will be disenrolled from it. This is because in order to have Part C, you must have both Part A and Part B. Carefully consider the consequences of not paying your Part B premium if for some reason you decide not to do that.

Let’s now discuss Part D premiums – but only for beneficiaries who are in a stand-alone prescription drug plan, often called a PDP. (You can also get Part D when your join certain Part C Medicare Advantage Plans, but we’ll discuss that when we talk about Part C premiums.)

Part D Premium Amounts: If you join a Part D plan, you will also become responsible for a monthly premium. In 2012, (in the 50 states), these range from $15.50 to $131.80, and the average beneficiary will probably pay just under $40 a month. (There is even one plan in Puerto Rico which charges no premium.) Your plan cannot change its premium during a calendar year, but may change it each new year. The Medicare Plan Finder (on www.medicare.gov) takes each plan’s premium into account when searching for the best overall plan for you. The good news is that Part D premiums for 2012 have come down slightly from 2011.

Payment: You can either get your plan’s monthly premium deducted from your Social Security or Railroad Retirement check, or make arrangements to pay your plan directly. Most plans accept checks, credit cards, automatic withdrawals, etc., so you can do whatever is easiest for you.

Late Enrollment Penalties: As with Part B, you are penalized with a higher premium if you did not join Part D when you first were able to, but it’s determined quite differently. The Part D penalty is computed by determining the total number of months you could have joined Part D but did not, and multiplying this by $0.3108 for your 2012 penalty. (This odd figure is 1 percent of a weighted average monthly premium.) Technically, it’s known as the “national base beneficiary premium,” and it’s computed each year by government actuaries; in 2012 it is a little less compared to 2011, so almost every beneficiary paying a penalty in 2011 will see a slight decrease in 2012.

So if you could have joined Part D in January 2006, when it started, but didn’t join until January of 2012, your penalty will be 72 months (6 years times 12 months) times 31.08 cents, or $22.40 a month (it’s always rounded to the nearest 10 cents). Note that the penalty is the same no matter what the premium for your drug plan. Perhaps it’s worth knowing that your penalty is collected by your plan if you pay your premium directly to it.

Penalty Rollback: If you joined Part D before age 65 and had a penalty attached to your premium, when you turn age 65 and continue to get (or again join Part D), your penalty will be wiped out.

High Income Surtaxes: Beneficiaries who have higher incomes are subject to paying surtaxes on their Part D premiums, just as with their Part B premiums. The rules on who are subject to these, what income counts, what tax years are used, and so forth, are identical to Part B, so refer to the information above. The amounts are different, and they are:

HIGH INCOME PART D MONTHLY PREMIUM SURTAXES

* the surtaxes are for each beneficiary
Note: all the income amounts stay the same each calendar year

These amounts depend only on your income and not on how much your plan’s premium is. If you are in the unfortunate situation where you are subject to a penalty and a surtax, the penalty never applies to the surtax amount. You should also be aware that you pay these surtaxes directly to the government, not to your plan. They are deducted from your Social Security or federal pension; otherwise you are directly billed for these. (Railroad Retirement always bills directly.)

Low Income / Low Resources Assistance: A special program popularly known as “Extra Help” and technically known as the “Part D Low-Income Subsidy” (LIS) can help Medicare beneficiaries with their Part D premiums (as well as with their Part D deductibles and copayments). There are two very different ways to apply for Extra Help.

One option is to go to your state’s Medicaid program, and find out if you are entitled to Medicaid or to one of the Medicare Savings Programs discussed above in the Low Income / Low Resources Assistance section of Part B. Your state’s rules and interpretations will be used to determine your income level, amount of resources, and family arrangements; this may be beneficial to you as states frequently have more generous approaches to these issues than the federal government. If you qualify for any one of these programs, you will automatically be put into “Extra Help.”

A second option is to call the Social Security Administration and apply for Extra Help. It will use a nationwide set of federal rules and interpretations, which may be a little stricter, but the income and resource levels are also higher, so it’s easier to qualify. Generally, if your income is less than $16,335 for an individual or $22,065 for a couple AND your resources are less than $12,640 for an individual or $25,260 for a couple, you will qualify. Income levels are even higher in Alaska and Hawaii. If you do qualify, Extra Help will pay for all or part of your premium (as well as all or part of your deductible, and will limit your copayments). In addition, beneficiaries who get Extra Help may enroll in or change their Part D drug plan any month.

The income and resource limits given above will change in 2012, and probably go up a bit. But if you are anywhere near the limits shown, apply.

Extra Help Premium Upper Limit: No matter how you qualify for Extra Help, you should also know that with regard to your Part D premium, there is an upper limit as to how much Extra Help will pay on your premium, and this differs by state. In 2012, these limits range from $21.30 in New Mexico to $40.90 in Utah, but in most states they are in the low to mid $30 range. These limits are also called the “Low Income Subsidy (LIS) Benchmark Amounts.” If you enroll in a plan whose Part D premium is above this amount, you will be responsible for the difference between the benchmark limit and the total premium. So let’s say that in your state the limit is $31.20 a month, and you pick a plan whose monthly premium is $42.10. You will be responsible for this additional $10.90 a month. Your Medicare & You 2012 printed booklet’s section on Medicare Prescription Drug Plans, in the very back of the booklet, prints the premium amount for a prescription drug plan in blue instead of black if that plan’s premium is under the benchmark limit. (And like almost everything in Medicare, there is an exception. If a plan’s premium is within $2 of the state’s benchmark, it has the option of waiving the small difference if it does so for all Extra Help beneficiaries. If you enroll in such a plan, you will pay NO premium, even if the plan’s published premium a little over the benchmark. And that’s why you will see some premiums in your booklet in blue that are a bit over your state’s benchmark. This is sometimes called the “de minimis policy.”)

One final, important warning: it may well be that you can get a Part D plan with a premium over the benchmark (that is, where you are responsible for the additional over-the-limit premium amount). It may be an overall cheaper plan for you because it has all of your drugs on its formulary, so don’t necessarily avoid over-the-limit plans. The Medicare Plan Finder on www.medicare.gov, or your State Health Insurance Counseling Program (SHIP) (their number is on the back of your booklet) can help with this.

Failure to Pay: • If you fail to pay your Part D premium, your plan has the option to disenroll you. However, your plan must give you a notice and at least a one month grace period before it does this. You should be aware that you have some special protections if there is a mix-up, such as you are being billed by another plan or you have a problem with Social Security withholding your premium, etc. • If you are properly disenrolled, you will be able to enroll again in a Part D plan during the next Annual Election Period (October 15 to December 7 of each year), with an effective date of January 1.

Part C Premiums

Part C Premium Amounts: If you enroll in a Medicare Part C, also called Medicare Advantage or Medicare Managed Care, you will usually be responsible for a monthly premium (a few plans have no premium). You can either join a Medicare Advantage Plan that is stand-alone, in which you get your Part A and Part B services, or a Medicare Advantage – Prescription Drug Plan (MA-PD) where you get those services plus your Part D prescription drug benefit. Monthly premiums can range from zero to several hundred dollars, although the Centers for Medicare & Medicaid Services reports that the average for 2012 will be down by 4 percent from 2011’s average of $39 per plan.

Payment: As with Part D, you can have your monthly premium taken out of your Social Security or Railroad Retirement payment, or you can pay your Plan directly. Most plans accept checks, credit cards, automatic withdrawals, etc., so you can do whatever is easiest for you.

Late Enrollment Penalties:Late enrollment penalties do not exist for Part C.

High Income Surtaxes: High income surtaxes do not exist for Part C, but you, of course, are subject to this for your Part B enrollment, as discussed in that section. If your Medicare Advantage Plan has a prescription drug benefit, you are subject to the Part D surtax, also as discussed above, and you are subject to this Part D surtax even if you are in a zero-premium plan.

Low Income / Low Resources Assistance: The Medicare program does not have any assistance program for paying Medicare Advantage premiums. However, if your Medicare Advantage Plan has a prescription drug benefit, and you get Extra Help, it will pay that portion of your Plan’s monthly premium which is allocated to its drug benefit, up to the benchmark amount for your state. That’s why in the Medicare Plan Finder you will see a breakdown of a plan’s total premium into separate “health” and “drug” amounts. If you choose a plan whose separate drug premium is above the benchmark amount for Extra Help in your state, you will be responsible for paying the leftover amount above the benchmark.

If you are a full dual-eligible Medicare and Medicaid beneficiary, your state may pay your Part C premium. Check with your State Agency or your caseworker.

Failure to Pay: • If you fail to pay your Part C premium, your plan has the option to disenroll you. Your plan must give you a delinquency notice and at least a two month grace period before it does this. You should be aware that you have some special protections if there is a mix-up, such as you are being billed by another plan, or you have a problem with Social Security’s withholding your premium, etc. • If you are in a Medicare Advantage – Prescription Drug Plan (MA-PD), and you are also subject to the Part D surtax but don’t pay it, you must be disenrolled. • If you are disenrolled, you will revert to Original Medicare. • If your Plan has a drug benefit, you will lose it. Typically, you will be able to again enroll in a Medicare Advantage Plan and/or Part D plan during the next Annual Election Period (October 15 to December 7 or each year, with an effective date of January 1).

Part A Premiums

Part A Premium Amounts: Only about one percent of Medicare beneficiaries pay a premium for their Part A. Almost everyone gets this premium free because they worked and paid Medicare taxes under Social Security, Railroad Retirement, or the federal retirement system, or are related to someone who did.

For those who did not and wish to purchase this, and who meet the other requirements, there is a two-tier premium structure. For those who have earned 29 or fewer “quarters of coverage” under Social Security (or its equivalent), you may purchase this for a monthly premium, in 2012, of $451.00. (You are called a “not insured” beneficiary.) If you have 30 to 39 quarters, you will pay $248.00. (You are called a “partly insured” beneficiary.) And, of course, if you have 40 or more, you qualify for premium free.

Payment: You will be billed for these premiums by the Centers for Medicare & Medicaid Services. Because of the high premiums involved, you will be billed monthly. If you also pay for your Part B, its premium will also be on your monthly bill. As with Part B, you can also make arrangements with the Social Security Administration to have someone other than you pay your premium.

Late Enrollment Penalties: If you do not become entitled to premium Part A in the first 12 months that you could have, you will pay a penalty. The penalty is a straight 10 percent, no matter how much longer it took you to become entitled. If you fall into this category, you would pay, in 2012, either a penalty of $45.10, for a total of $496.10, if you are a not insured beneficiary; or a penalty of $24.80, for a total of $272.80, if you are a partly insured beneficiary.

Penalty Rollback: Once you have paid the penalty for twice as many months that you could have had Part A but did not, it will reset to the non-penalty amount. Let’s say that you could have bought it when you first reached age 65 in May 2008, and you did not sign up until the general enrollment period of 2011, and thus you became entitled to Part A in July 2011. In this case, you did not have Part A for 38 months that you could have. You will pay a penalty premium from July 2011 through October 2017, for a total of 76 months, and beginning in November 2017, your premium will reset to the standard premium.

High Income Surtaxes:High income surtaxes do not exist for Part A.

Low Income / Low Resources Assistance: We mentioned the state Medicare Saving Programs which will pay your Part B premium. Another of these programs, the “Qualified Disabled Working Individual” (QDWI) program, will pay a Part A premium under limited circumstances. Generally, you must have been disabled, and then, in spite of your continuing disability, you returned to work. Eventually in this circumstance you will lose your Medicare, but these beneficiaries may purchase Part A. The Qualified Disabled Working Individual program will pay your Part A premium if you meet the low income / low resources limits for this program. The resource limit is the same as the other Medicare Savings Programs, but the monthly income limit is currently $3,715 for an individual and $4,989 for a couple in 2011. These will change a bit in early 2012. Apply to your state’s Medicaid program for this.

Failure to Pay: • If you fail to pay your Part A premiums you will be disenrolled from Part A. • If you are under 65 you will be disenrolled from Part B, as there is a requirement is that those under 65 must have both to have either. • If you fail to pay your Part A premiums, you will also be disenrolled from any Medicare Advantage Plan you are in because you have to have both Part A and Part B to be in Part C. • If you are under 65 and lose both Part A and Part B, you will be disenrolled from your Part D plan as you have to have one or the other to have Part D. So you should carefully consider the consequences of not paying your Part A premium if for some reason you decide not to do that.

About George Jacobs is a retired Federal employee who worked for the Social Security Administration and the Centers for Medicare & Medicaid Services for over 30 years. Since retiring he has volunteered as a Medicare beneficiary counselor. He sits on the boards of two companies which perform services under Federal contracts for the Medicare Program. His book, Managing Your Medicare, is available in our Web store.

Click image to enlarge

Some schools and colleges provide classes to help students become better at finding accurate, reliable information on the Web; most do not. For business people, it is generally a matter of learning by trial and error. Many people just try a phrase or two in a search engine like Google or Bing, and then try to figure out which of the search results they will go with.

Improving your skills

If you are willing to invest some time in learning from the experts, there is an excellent resource of online webinars available. The archive is free, and the webinars are typically each about one hour in duration.

Before you react with a “An hour? No way!” stop and think for a minute about how much time you spend every week, searching on the web. If your class or business tasks require you to do a lot of searches, you are probably investing hours in the task. Would an hour or two of learning be worthwhile if it shaved an hour a month from your search time?

The resource is an archive of recent webinars by Google’s search engine education team. Topics include:

• Tools for Assessing Authority on the Web
• Beyond the First Five Links: Using Google’s Left-Hand Panel to Reveal The Good Stuff

You can find the archive here.

Specifically, I have done an extensive analysis of the availability and costs of the new structure of Medigap policies which went into effect in June, 2010. I will provide some practical guidance so that beneficiaries can more knowledgeably assess the different policies to choose from, and then select the one most appropriate for their individual circumstances.

There is no need to go into explaining the structure; this is all spelled out in Managing Your Medicare, on page 157. Through the CD that comes with that book, you can access a “2011 Medigap Standard Policies Worksheet” to help guide you through the process of selecting a Medigap policy during this current year. (Click on the “check for any updated forms” button on the introduction screen to the CD.)

To bring the Medigap chapter (Chapter 10), “Finding the policy that works for you” up-to-date, now that we have had some experience with the new structure, I will discuss the changes. And, as indicated above, it is based on a detailed review of the new Medigap policies offered for sale, and their current prices. More specifically, I looked at the Medigap policies available in a mix of ten states, and, in each state, examined which companies sold which letter policies and at what rates. (These states were Alabama, California, Colorado, Florida, Nebraska, New Hampshire, New York, Texas, Virginia, and Washington, so you can see I picked some large, medium and small states from all areas of the nation. My blog, www.managingyourmedicare.blogspot.com, has some detailed information on the Medigap policies currently available in each of these states, and you may wish to look at it if you happen to live in one of them.)

Before I present the results, you should be aware that the basic purpose behind the restructuring of the Medigap polices (which, as I said, took place in June, 2010) was to get beneficiaries more involved in seeing what their care was costing and to offer policies that, for a lower premium, would get beneficiaries to pay for more of their services. In other words, the policy makers believe that beneficiaries overutilize the Medicare Program when they are relatively well protected against the costs of medical services, and the new policies tend to make them pay some of these costs, and thus, hopefully, reduce overutilization. More specifically, they introduced two brand-new policies, “M,” where you have to pay half of your inpatient deductible, and “N,” where you have to pay co-payments of $20 for a doctor visit and $50 for an emergency room visit. And, of course, the “F-High Deductible” and the two catastrophic policies, “K” and “L,” were retained, as well as a number of other, more old-fashioned policies, but others of these were dropped. In addition, they tinkered with some of the benefits, but if you are new to Medigap these changes in themselves shouldn’t really concern you. Just be sure you are looking at the new definitions, and be aware that if your spouse bought a policy before June 2010, its benefit structure will be different than yours.

You will note that I haven’t provided any specific prices for policies; this is because they can vary hugely state-to-state, partly because of state mandates, such as using a community rating system (where everyone pays the same premium, regardless of age or condition), and partly because of substantial differences in Medicare utilization and pricing. Just as examples, the average minimum price for a basic “A” Medigap policy for a 65-year old in Alabama is currently $1,296, while this is almost double, $2,489, in New York City. (New York is a community-rated state.) On the other hand, a “B” policy for a disabled beneficiary under 65 in Alabama averages $3,316 per year, but is slightly less, $3,272, in New York City! So you can see the inconsistencies.

Not every insurance company sells each Medigap letter policy. (Interestingly, I have never found a company that offers each and every one of the different policies.) While each has to sell the “A” or basic policy, and either a “C” or an “F”, the actual pattern of which policies are sold by companies is pretty clear. Specifically:

• “A” and “F” policies are the most widely available.
• Next in availability are “B,” “C,” “F-Hi,” “G” and “N.”
• Much less available are “D,” “K,” “L,” and “M.”

As I point out in the book, you probably have a better chance of getting a well-priced policy by sticking to the more widely available options than not.

The Mechanics of Choosing a Medigap Policy

My best advice is that, if at all possible, go to your state insurance commissioner’s website and download or print out or have them send you (some of them have attractive, helpful booklets) the cost of and information on each and every policy that can be sold to you. Make this as individualized as possible, that is, it should pertain to your age, gender, location in your state, any affiliated group you belong to, your tobacco use, etc. And be sure to keep any notations with the policies, for example, that they are SELECT, or guaranteed issue, or attained-age, whatever. If it is not already in this form, put all this in a table or spreadsheet like this, and include the contact information (both their phone number and website) for each company:

Click on the image to enlarge the table.

However, you need to look very carefully at these websites, because many states have not fully reworked their displays of information since the Medigap structure changed, and sometimes they are incomplete or arranged illogically. For example, the data on the special “F Hi-Deductible” policies may be mixed in with regular “F” policy data, or it may be tacked on at the end, next to the policy “N” data, making comparison with a regular “F” policies a bit more difficult. (You can reach your state’s insurance commissioner’s website by going to www.naic.org and clicking on their “States and Jurisdiction Map,” and then on your state. And if, shame on them, it don’t have this available, you might try your SHIP (State Health Insurance Counseling Program); their numbers are in the contact information that comes on the CD with the book, and are also on the back of your Medicare and You booklet.)

As I point out in Managing Your Medicare, a number of factors are taken into account in pricing your Medigap insurance, such as if you use tobacco, your gender, whether your Medicare claims are automatically sent to your Medigap insurer after Medicare pays them (“crossed-over”), and many others. Some states are good at summarizing this information on their websites, and some aren’t. If you can’t access this easily, you may have to talk to a company or agent to pin this information down.

You now have all the basic data you need to choose a Medigap policy. You can now take the “2011 Medigap Standard Policies Worksheet” and use the paragraphs below to start picking out the letter policies and companies that are attractive to you and writing them in the top portion of that worksheet.

And, while this is a little tedious, you should have some idea in mind about how the various letter policies are priced in relation to each other. While this data is a little uneven, the pattern may help you. This shows, in general terms, how much the various letter policies cost in relation to the “A” or basic policy.

Approximate Cost of a Policy Compared to an "A" or Basic Policy

* “M” polices are priced very inconsistently, but run very roughly what an “A” costs.

The table can be put another way, which is more helpful when comparing between letter policies:

If an "A" or Basic Policy Cost $100 a Month, Then These Will Cost About:

           * very roughly

These guides are not only helpful for comparisons, but also in reviewing policies. If you find one which costs way above this pattern, it’s probably a bad deal, but if it runs way below, it may well be a good deal.

The table will also help you spot inconsistent prices. For example, “C” policies don’t cover excess Part B charges, which “F” policies do. So you would expect that “C” policies would usually cost less, but, as you can see in the table, they don’t. Perhaps this is because “F” policies are more widely available. Competition helps. So if you are looking for a “C” policy (perhaps you live in a state which does not permit practitioners to charge above the Medicare approved amounts), make sure your policy is priced below an “F” one.

Talking Points on Choosing a Policy

My experience in counseling Medicare beneficiaries is that they have been though a lot in life, and if you can just give them some “talking points,” that is, make some helpful comments about the options they need to consider, they use these as take-off places to help think though and talk through their issues and choices, and then arrive at a good decision. So here are some talking points about the various Medigap policies. They won’t tell you which letter policy to buy, and, within that, which insurance company to choose, but they will give you some help working though all this. And they do incorporate my analysis of what is actually out there.

• The analysis shows that if you are a man and live in a state where some policies have different prices for males and females, and some don’t (such as Florida), you may get a better deal with a unisex policy, as in general, females pay about 4% less for Medigap policies than males.
• It also shows that SELECT policies, in very general terms, run about 15 to 20 percent less compared to “regular” or “standard” or non-SELECT policies, so these may be able save you substantially over the long term. But always remember, you are locked into a your Medigap insurance company’s network of hospitals and often physicians and other providers, and you should carefully check with your health care providers to see if they are part of this network.
• And you should be aware, that if you buy an attained-age-rated policy that as you age the premium will increase. It currently appears that the increase will be about 15 to 20 percent more when you hit 70, and then about that much more again as you hit 75. So if you so get one at 65, before you buy, look at the increase in rates for the out years, and look for another company if they are much more than these percents. This is an exception to my rule of getting information specific to your current circumstances; you really need to look ahead for when you reach 70 and 75. And remember that if you do get an issue-age-rated or a community-rated policy, they will go up too, but only based on medical inflation, not age. It will take a few more years of experience with these new lettered policies to look at what medical inflation will do to their prices.

And here are some “rules-of-thumb” talking points:

• The only thing “F” pays the “C” doesn’t is excess Part B charges. So, as indicated above, if you live in a state that doesn’t permit these, and don’t travel often to a state that does, do think of buying a “C,” but you may be able to find a cheaper “F.”
• The only thing “B” pays which “A” doesn’t is the Part A inpatient deductible (which is $1,132 in 2011). You can think your probability of being hospitalized is about 25% – so would you want to pay much more than $300 a year for this? On the other hand, coming up with $1,132 at one time may be hard, and of course, you can be subject to this more than once in a year. (Remember that you generally have to pay the Part A inpatient deductible again if you are hospitalized more than 60 days from your last hospital or Skilled Nursing Facility stay.)
• “F-Hi” – the “F High-Deductible” – pays everything the same as the regular “F” policy except you are subject for a $2,000 annual deductible (and this goes up each year). So if you choose this option, look for an “F-Hi” policy which costs substantially less that an “F” one. You won’t find one that costs $2,000 less per year from the same company, but do look at this spread.
• The only thing “C” pays that “B” does not is the Part B deductible ($162 in 2011, it goes up most years) and foreign travel. My analysis shows that most of the “C” policies are priced more than $162 per year than the “B”s, so unless you make very extensive use of foreign travel, these generally are not a great deal.
• “M” pays the same thing as “D” except only one-half of the inpatient deductible (This is $566 in 2011.) So again, think of your chances of being hospitalized and consider it if the premium you would pay for an “M” is worth this. My review shows that because so few of these are sold, that “M”s don’t look like a good deal, but you may find one in your state. “N” policies looks like attractive deals, but when you compare these to “D” policies, you have to pay co-payments of $20 per office visit and $50 for an emergency room visit. Can you find an “N” which is enough lower than a “D” to cover these co-payments, and still save you some premiums?

And always ask your physicians, local hospital, and other providers you use if they will work with a company you are considering for your Medigap insurer. As indicated above, this is especially critical if you are looking at a SELECT policy.

As you go through the table which, of course, you have made specific to your individual circumstances, you will begin to see attractive prices for the letter policies in which you are most interested. And as you spy these out, and note them on your worksheet, you will have the contact information to check further on these policies. Remember you‘ll probably have a Medigap for the rest of your life, so it pays to do some good homework up front to get the very best policy and deal for you. Good Luck!

About George Jacobs is a retired Federal employee who worked for the Social Security Administration and the Centers for Medicare & Medicaid Services for over 30 years. Since retiring he has volunteered as a Medicare beneficiary counselor. He sits on the boards of two companies which perform services under Federal contracts for the Medicare Program. His book, Managing Your Medicare, is available in our Web store.

Click image to enlarge

While researching this whole topic, I ran across several other items of interest. One is that there appears to be a growing concern that the current method which Medicare uses to reimburse Home Health Agencies for their services may not be the best from the perspective of Medicare beneficiaries. These matters have been raised, for example, in a 2010 Wall Street Journal article which indicated that when Medicare changed the way it paid agencies for therapy visits, the number of visits changed to reflect the new payment method, not necessarily therapeutic or medical needs of the beneficiaries. Recently, the Centers for Medicare & Medicaid Services (CMS) commissioned a study which raised concerns as to whether its reimbursement policies adequately ensure access to Home Health Agency care for beneficiaries who have a high severity of illness, have low income, or who live in a medically underserved area.

Best of all, I found on the Centre for Medicare Advocacy website, a “Medicare Home Health Self Help Packet,” which this outstanding Medicare advocacy organization, together with the Connecticut Department of Social Services, a fine office I worked with several years ago, produced to help with this whole issue. And while you may certainly wish to access this by going to their website, clicking on “Info by Topic,” then “Home Health Care,” then scrolling down a bit to “Self Help Packets,” you may find it bit more oriented toward advocates or counsellors than beneficiaries. (And I strongly urge these groups to review the entire package   it is excellent.)

This advocacy organization makes clear three extremely important points:

1. One is that the potential of a patient to improve is NOT a necessary criterion for getting these services. (It refers to this as the so-called “improvement standard.”) Rather, this is an arbitrary and unacceptable one. Home health visits are medically indicated even if they only prevent or slow the patient’s deterioration or the worsening of their condition.
2. Another is that you may be wrongly told that artificial or arbitrary limits restrict the number of visits you may receive. For example, that daily nurse visits cannot be permitted (they can for a period of time), or that only one home health aide visit per day or three per week can ever be covered (not so).
3. The third is that your physician is your key collaborator in making sure you get care you should receive. Having your physician willing to put into writing why you have a medical need for continuing visits and/or therapy is critical to making your case for continued or more Home Health Agency visits. This is because physicians are seen as the “gatekeepers” in fee-for-service Medicare, and their opinions must be strongly and carefully considered in making medical decisions.

The reason this topic is so important is that there is a fundamental tension in the Home Health Agency benefit, is because this is one of the few benefits in Medicare that you are not subject to any deductible or coinsurance liability. No matter how may visits you get, you pay nothing. Not a dime. On the other hand, Home Health Agencies are paid by Medicare under a “prospective payment system” which tends to incentivize them to limit the number of visits they make to you. You want more, they want less.

Remember that there is no time limit to the duration of your Home Health Agency benefits, and, if you have Part B, you get an unlimited number of visits. So there is no overall arbitrary time frame or visit limitation for this benefit.

So if you are trying to recuperate from an onset of illness or an accident, or if you are dealing with a longstanding or worsening chronic condition, you are going to want to get all the visits you need, but the agency will likely try to limit them. One purpose of this article is to give you some guidance on what to do if your agency indicates that it is going to stop or cut back on or even change the kind of visits you are getting when you or your caregivers think they should continue. And the other is to make sure you understand your special rights under this somewhat unique benefit.

Reductions in Visits

If your agency decides it should reduce the number of visits it is making to you, but will continue to visit, it must give you a Home Health Advance Beneficiary Notice (HHABN). For example, it mayreduce the number of your physical therapy visits from three to one aweek. The notice must also be given if it believes it should changethe type of visits you are getting, for example, that you should getoccupational therapy instead of physical therapy. (By the way,beginning April 1, 2011, your Home Health Agency must give you this notice on Form CMS-R-296; if they do not, you have NOT been properly notified.)

The key point here is that if you opt to have them continue past the cut-off or any changes shown in the notice, and to make visits it says are not covered by Medicare, you are out on a limb; if they make the visits and it turns out they are NOT covered by Medicare, you have to pay for them.

This notice from your Home Health Agency will tell you when some of the visits it is making will be reduced or ended or changed, although the agency will continue to give you some visits. It will also tell you how you can appeal this, which is by having them make the visits you feel are needed, and having them submit a “demand bill” to their Regional Home Health Intermediary (RHHI). That is, you demand that you get the care, and they submit a bill for it to their Regional Home Health Intermediary, which in turn makes the decision as to whether or not the care is covered by Medicare.

Regional Home Health Intermediaries are companies Medicare contracts with to process Home Health Agency bills and to make certain related medical decisions and appeals. Their contact information is shown below.)

The downside is that if you choose the option of having your care continue and the Regional Home Health Intermediary decides that the care was not covered, you will be responsible for the payment. Of course, you can appeal this decision. The appeals process, which starts with a request for a redetermination, is laid out beginning on page 194 of Managing Your Medicare the decision notice you get from the Regional Home Health Intermediary will also tell you how to appeal. But if a number of visits are made to you while this long process goes on you may run up quite a tab.

You also have other rights, which we’ll detail later, but among them is the right to complain or grieve your Home Health Agency’s decision to reduce or change your visits. This is because not only do you have the right to complain, but you also have the right to participate in your care planning. You can contact your Home Health Agency and formally complain to them about the reduction or change in visits, and they have to process this complaint in writing. You can also call your state’s agency or department that is responsible for licensing and certifying that a Home Health Agency may be in the Medicare program, and complain to them that your Home Health Agency is inappropriately ending the visits. You can call them on the special toll-free number used for Home Health Agency matters only (your Home Health Agency must give you this number when they begin your care), or their beneficiary number, or both. Finally, you can call the Centers for Medicare & Medicaid Services regional office which serves your state, and complain to them. Vital to all this is getting something from your physician that the reduction or change in the visits in question is medically inappropriate, or that a continuation of visits as currently being made is medically necessary. All this may result in the Home Health Agency modifying its decision to stop, reduce, or change the visits as they proposed, and to now view the visits as covered. However, you are again on a limb because if the Agency is still making the visits and ultimately they are not covered by Medicare, you are liable. Another possibility is calling other Home Health Agencies in your area and asking if they would be willing to serve you.

Cessation of Visits

This section applies when the Home Health Agency decides to completely stop serving you – that is, you will no longer get visits of any kind. Critically important is that, just as with hospital inpatient care, you have the right to have your discharge from a Home Health Agency looked at by disinterested third party PRIOR to your discharge. Your state’s Quality Improvement Organization (QIO) will do this, but you will have to be on “on your toes” to get this done.

In these cases you will always get a notice from the Home Health Agency that is treating you. This formal notice is called a “Notice of Medicare Provider Non-Coverage.” (This is Form CMS-10123. CMS also calls this the “FFS Expedited Review Generic Notice.”) You must get your written notice no later than two calendar days before your discharge or the discontinuation of your services, but in some cases you will get it earlier than this. It will not go into much detail.

This document will tell you when your covered services will end, how much you will have to pay the agency if you want them to be continued, how to get a fast-track appeal, as well as your right to get a more detailed notice about why your services are ending. You have only until noon on the day after the day you receive this notice to appeal to the Quality Improvement Organization. This is why you have to “be on your toes” and scrutinize all the paperwork you get from your Home Health Agency.

(Each state has a Medicare Quality Improvement Organization (QIO). These are companies composed of physicians, registered nurses, and other highly qualified medical professionals that Medicare contracts with to make independent medical decisions and improve qualify of care. Its toll-free number will be shown on the notice you receive.)

Once you have contacted the Quality Improvement Organization, your Home Health Agency will then have to give you a more in-depth rationale, in writing, regarding the reasons it has for discontinuing your services and discharging you. This notice is called a “Detailed Explanation of Non-Coverage.” (This is Form CMS-10124. CMS also calls this the “FSS Expedited Review Detailed Notice.”) The Quality Improvement Organization will use it and whatever other medical records it wishes to obtain, to make its decision as to whether your care should be extended or not. It will ask you and your physician why you think Medicare should continue paying for your home health services, and the Organization is supposed to rule in two days. What’s in your favor in these appeals is that the burden of proof is on your Home Health Agency to demonstrate that the termination of coverage is the correct decision.

If the decision reaffirms the discontinuation of visits and your discharge, you have to decide if you will go along with it. If your decision is that you need more care, you’ll be on your own. You can arrange for it, but you will have to either pay it out-of-pocket or hope that you get a favorable decision by using the next appeals step.

This next step of appeal is called the “Fast Track Reconsideration--72 Hour Turnaround Request”. It’s outlined in section 2.7a on page 198 of Managing Your Medicare. The notice you get from the Quality Improvement Organization will also tell you how to do this. Basically, it involves calling the toll-free number of the Qualified Independent Contractor (QIC) that will be in your notice, and requesting this appeal step. But remember if you do go for the fast track appeal, you have only until 12 Noon on the day before the day you your care will end to appeal to them. The reason that this is called the 72-hour turnaround is that you should get your decision in this time-frame, that is, 72 hours after you make your request. This can be highly beneficial you get a quick decision as to whether your care will be covered, or if you’re liable for its cost.

(The Qualified Independent Contractor is an outfit Medicare contracts with to make independent decisions in certain appeals steps. Additional information about contacting them is shown below.)

Your Special Home Health Agency Rights

As indicated above, you have some special rights with regard to the Home Health Agency benefit. To some extent these are similar to your other Medicare rights, but Medicare also recognizes that your contact with your Home Health Agency is in the privacy of your home, and, unlike hospitals or skilled nursing facilities where public inspections continue, Home Health Agency care is different because it takes place in a private domain. Reflecting this, for an example, is that Medicare requires a special toll-free phone service to your state’s health facility inspectors for beneficiaries to report problems with Home Health Agencies; this is not required for any other type of Medicare provider.

These are your rights under statue and regulation as a Medicare beneficiary with regard to Home Health Agency services. Remember, they are your rights. Use them!

• Notification of Rights: The Home Health Agency must provide the beneficiary with a written notice of the beneficiary’s rights in advance of furnishing care. And remember that the beneficiary’s guardian or family can exercise these rights if the beneficiary has been judged incompetent.
• Right to be Informed about and to Participate in Planning Care and Treatment: This right is critically important. The beneficiary has the right to be informed, in advance, about the care to be furnished, and of any changes in the care to be furnished. In addition, the Home Health Agency must advise the beneficiary - again, in advance - of the disciplines that will furnish the care (for example, a registered nurse, a physical therapist, etc.), and the frequency of the visits to be furnished. The Home Health Agency must also inform the beneficiary of any change in the plan of care before the change is made. And, at all times, the beneficiary has the right to participate in planning their care. Therefore, the Home Health Agency must advise the beneficiary - again, in advance - of their right to participate in the planning of their care and treatment, and in planning any changes to their care and treatment.
• Right to Formally Complain and to Grieve: The beneficiary has the right to make complaints or voice grievances regarding treatment or care that is (or fails to be) furnished, or about anyone furnishing the services, and must not be subject to discrimination or reprisal for doing so. The Home Health Agency must investigate complaints made by the beneficiary regarding treatment or care that is furnished (or fails to be) furnished, and must document both the existence of the complaint and the resolution of the complaint. See below about the Home Health Agency hotline.
• Right to be Informed of Liability for Payment: The beneficiary has the right to be advised, before care is initiated, of the extent to which payment for the Home Health Agency services may be expected from Medicare or other sources, and the extent to which payment may be required from the beneficiary. Therefore, before the care is initiated, the Home Health Agency must inform the beneficiary, orally and in writing, of the extent to which charges will be covered by Medicare, or by any other Federal program, and what charges the beneficiary will be expected to pay. In addition, as these changes, the Home Health Agency must inform the beneficiary as soon as possible. This must always be done within 30 calendar days of when it becomes aware of the change. All these notices must be given orally and in writing.
• Right to be Informed about the Home Health Agency Hotline: The beneficiary has the right to be notified of the availability of the Home Health Agency hotline in their state; when the Home Health Agency accepts the beneficiary, it must advise the beneficiary in writing of the toll-free telephone number, its hours of operation, and that the purpose of the hotline is to receive complaints and questions about Home Health Agencies.
• Right of Respect for Property: The beneficiary has the right to have his or her property treated with respect, and may also make complaints or voice grievances with regard to this right.
• Right to Information about Advanced Directives: The Home Health Agency must inform and distribute written information to the beneficiary, in advance, concerning its policies on advance directives, including a description of the applicable state laws.
• Right of Respect for Confidentiality: The beneficiary has the right to confidentiality of their medical records maintained by the Home Health Agency.

Additional Contact Information

Quality Improvement Organizations (QIO)

Each state has a Quality Improvement Organization. Its phone number may be found on the CD that comes with Managing Your Medicare; on the www.medicare.gov website; or by calling 1-800-MEDICARE; or you may get it from your State Health Insurance Counseling Program, whose number is on the back of your Medicare and You handbook.

Regional Home Health Intermediaries (RHHI)

If you are in this : The name of the Regional Home Health Intermediary (RHHI) for states or jurisdictions is shown below. You must go through 1-800-MEDICARE (1-800-633-4227) to reach it.

• Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont: Associated Hospital Services
  
  
• Delaware, Iowa, Kansas, Maryland, Missouri, Montana, Nebraska, North Dakota, Pennsylvania, South Dakota, Utah, Virginia, Washington DC, West Virginia, Wyoming: Noridian Administrative Services
  
  
• Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas: Palmetto (GBA)
  
  
• Alaska, Arizona, California, Hawaii, Idaho, Michigan, Minnesota, Nevada, New Jersey, New York, Oregon, Puerto Rico, Virgin Islands, Washington, Wisconsin: United Government Services

Qualified Independent Contractors (QIC)

Below is a list of states or jurisdictions, followed by the name and contact details for the Qualified Independent Contractor (QIC) serving them (note: the addresses and phone numbers are different):

• Colorado, New Mexico, Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Florida, Tennessee, South Carolina, North Carolina, Virginia, West Virginia, Puerto Rico, Virgin Islands, Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New Jersey, New York, Delaware, Maryland, Pennsylvania, Washington DC
  
  MAXIMUS Federal Services, Inc.
  1040 First Avenue - Suite 400
  King of Prussia, PA 19406
  Phone: 1-484-688-2000 (not toll-free)
  
  
• Washington, Idaho, Montana, North Dakota, South Dakota, Iowa, Missouri, Kansas, Nebraska, Wyoming, Utah, Arizona, Nevada, California, Alaska, Hawaii, Oregon, Kentucky, Ohio, Indiana, Illinois, Minnesota, Michigan, Wisconsin
  
  MAXIMUS Federal Services, Inc.
  1040 First Avenue - Suite 310
  King of Prussia, PA 19406
  Phone: 1-484-688-8900 (not toll-free)
  
  

Centers for Medicare & Medicaid (CMS) Regional Offices

Following are Regional Office phone numbers for states and jurisdictions:

• Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont: 1-617-565-1232
• New Jersey, New York, Puerto Rico, Virgin Islands: 1-212-616-2222
• Delaware, Washington DC, Maryland, Pennsylvania, Virginia, West Virginia: 1-215-861-4140
• Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee: 1-404-562-7500
• Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin; 1-312-353-7180
• Arkansas, Louisiana, New Mexico, Oklahoma, Texas; 1-214-767-6401
• Iowa, Kansas, Missouri, Nebraska: 1-816-426-2866
• Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming: 1-303-844-4024
• Arizona, California, Hawaii, Nevada: 1-415-744-3602
• Alaska, Idaho, Oregon, Washington: 1-206-615-2354

About 
George Jacobs is a retired Federal employee who worked for the Social Security Administration and the Centers for Medicare & Medicaid Services for over 30 years. Since retiring he has volunteered as a Medicare beneficiary counselor. He sits on the boards of two companies which perform services under Federal contracts for the Medicare Program.

His book, Managing Your Medicare, is available in our Web store.

Click image to enlarge

Caregivers provide assistance that addresses someone’s mental, physical, emotional, or spiritual needs. Your role as a caregiver can exist on different levels and encompass varying responsibilities, but regardless of the type of caregiver you are, you provide valuable assistance to someone who needs it.

In the midst of your role of caring for your loved one, you must remember to only handle what you can and refrain from the pitfalls of being emotionally distanced, both from family members and everyone else. This advice is especially sage if you are a caregiver who plans to, or have been tending to someone for a long time.

If you have siblings, chances are that as you enter the caregiving waters, you and your siblings will first discuss how to appropriate the caregiving tasks. For any number of personal reasons, however, there may be a family member who is uncomfortable with partaking in caregiving duties. In such circumstances, an accepting attitude is key; do not go through the trouble of arguing and trying to force him or her into caregiving tasks.

“A reluctant caregiver is a resistant caregiver and one not helpful to your situation,” says Rick Lauber, an experienced caregiver, in his book Caregiver’s Guide for Canadians. “Caregiving requires ability, desire, trust, and dedication, so if a sibling does not want to help out, it’s best to accept this and carry on.”

If everyone in your family is willing to share the responsibilities, talk openly about each of the tasks that you are willing or unwilling to take up. Although it may be tempting to take on many responsibilities to personally provide assistance to your loved one, don’t be afraid to delegate some of the responsibilities to your family members – after all, they are there to help in times of need. Attempting to take on more than you can would only lead to stress, and may cause you to be emotionally distanced from your loved one and other family members.

Caregivers should keep in touch with friends and hobbies; remembering to take time off is important for emotional balance. Caregiving can be extremely stressful, as you may need to be on a constant lookout and assist even with what seems like menial tasks such as eating, washing, and changing. Things can feel especially tense if your loved one has been diagnosed with Alzheimer’s disease or dementia, as he or she may be more unstable, both emotionally and physically. In such cases, it is all the more true that you should take good care of yourself.

Caregiving can consume a big part of your life. However, never compromise your own well being; decide if caregiving is something you can realistically do well, and if you go ahead with it, be sure to take care of yourself. As Lauber says in his book, “You cannot burn the candle at both ends for long before the candle burns through. Take some time for you and never feel guilty for doing so. This is far easier said than done; however, you will retain your own sanity and not become a martyr.”

About Rick Lauber is a professional freelance writer based in Edmonton, Alberta. Along with his two sisters, he helped to care for both of his elderly parents.

Caregiver’s Guide for Canadians is available in our Web store where you can preview content from the book and view the complete table of contents.

Click image to enlarge