Monday, October 26, 2015

Medicare - What's changing in 2016 and how to keep costs down

"To me, good health is more than just exercise and diet. It's really a point of view and a mental attitude you have about yourself."  --- Albert Schweitzer (1875-1965) German theologian, philosopher and medical missionary. 

Editor's note: Since writing this a few weeks ago, Congress has passed the Bipartisan Budget Act of 2015, which blunted the rate increase on seniors enrolled in Medicare but who have not yet begun taking Social Security benefits. The reduced premium "is really a loan from the U.S. Treasury," said writers at click here for more. 

Since turning 65, I’ve been buying a Medicare Advantage health insurance plan that started out costing me $55 a month. That coverage jumps to $104 a month in 2016, if I continue with that plan. That’s an 89 percent increase in three years during the same time frame that the Federal Reserve Bank says inflation is so low that there won’t be a Social Security increase in 2016.

Not only will my Medicare Advantage monthly rate increase but co-pays for doctors’ visits will jump by $10 a visit, along with other fees. I also learned that instead of a flat dollar amount  I now would be paying 20 percent of open ended costs related to any outpatient surgery. The big shocker was that my total maximum out of pocket expense with my plan went from $6,700 a year to $10,000. That’s real money.

To find out more about what’s going on, I attended a morning workshop last week hosted by the clinic where I receive medical care. The guy who led the presentation works for the clinic, so his one-hour talk only covered the six Medicare Advantage programs accepted by the clinic. He also gets a commission for signing people up to use the clinic.
The programs he talked about all also included drug coverage, which adds to the basic cost. After hearing all the comparables, I decided to jump to a new plan and drop the drug coverage since my annual drug costs come in below the coverage threshold.

So next year instead of a big increase, my monthly Medicare Advantage bill will drop to $45 a month. That’s a $59 a month ($708 a year) savings from what I would have been paying without the change. A better run plan? I don't know. On paper it looks as good as what I have been buying from the other insurance company.

Twenty other seniors were in this meeting, all trying to make sense of what’s going on with Medicare and the big insurance rate increases going on with coverage.

There are at least three groups that I care about being slammed this year.
- Seniors 65 and older who are on Medicare but are NOT yet collecting Social Security benefits.

- Seniors who are buying Medicare Advantage health insurance, which combines Medicare coverage with additional coverage from an insurance company.

- And people younger than 65 who are self-employed (or otherwise don’t have coverage) and must buy their own health insurance coverage. A self-employed friend of mine, who is over 60, but not yet 65 says her health insurance coverage is jumping from $620 to $740 a month, unless she makes some changes. There may be other categories but these three groups are seeing big increases in their 2016 health insurance costs

What is driving-up the price of health insurance for seniors?

There are a couple of reasons. We learned earlier this month that Social Security benefits won’t go up next year because overall inflation throughout the nation is so low. That means seniors now collecting Social Security benefits won’t see an increase in their Medicare withholding. That leaves seniors (over 65) who are NOT YET collecting Social Security as well as NEW 2016 Medicare enrollees picking up all that increase. Some of these rates are jumping by 52 percent. Ouch.

The other reason rates are jumping is because insurance companies now have had a year to see how Obamacare is affecting their operations. Guess what….the uninsured people who signed up for Obamacare are sicker and costing more than planned. So rates are going up to cover those increasing costs. Oregon for instance has approved individual rate increases of between 8 percent and 37.8 percent in 2016. "Our ultimate responsibility to Oregon consumers is to ensure that rates cover the cost of health care, " said Insurance Commissioner Laura Cali this fall . A Silver Standard Plan premium will range from $271 to $389 a month.

What should seniors do? Basically, do what I did….find out as much as possible about your options for holding down costs.

Look for work shops offered by your doctor or clinic. Shop around on the Internet, but keep your research to insurance companies operating your area. But when you find a plan that’s less expensive…make sure your doctor or clinic will accept that coverage. Don’t jump ship on your current coverage until you’ve received the OK from your doctor’s office that it will be accepted.

Here’s why. With Obamacare there are more people looking for doctors than there are doctors. Some providers are saying no to new Medicare patients and saying no to some health insurance plans. Keep in mind that Medicare alone only pays about 80 percent of the cost (as determined by the fed) of providing that care. Hospitals and doctors have long made up for those losses by charging the rest of us more.

Health care reform has changed the rules and the profit-loss formulas. My view is that Obamacare tried to do too many things at once. Now everyone is confused. Yes, we need health care reform…a single payer system would work for me. But that likely would put insurance companies out of business….so good luck with that.

Middle class seniors on fixed budgets are particularly vulnerable to health care cost increases. Both political parties talk about protecting the Middle Class….they could start by fixing Obamacare. I personally don’t like seeing a 90 percent increase in my health insurance rates when overall inflation is running at 2 percent a year.

Meanwhile, keep your doctor!!! The clinic I go to only accepts six Medicare Advantage plans….if you don’t have one of those plans, you can’t see their doctors.
For more:
Medicare Advantage vs. Medicare Supplement programs,
click here.
Medicare enrollment 2016, click here.
10 Things You Must Know about Medicare, click here.
U.S. News & World Report, What to know about Medicare, click here.

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