1. Access to Quality Care--Some people realize that the quality of care available under welfare can be less than private pay. Also, quality nursing homes tend to favor private pay patients during admissions. Being able to choose a nursing home gives a family the freedom to move their loved one into a quality facility, nearby, when the time comes.
2. Burden--Most people don't want to be a burden on their spouse, kids, relatives, friends, etc. This burden is both financial and emotional, resulting in guilt.
3. Asset Protection--Everything an individual worked for can be wiped out by nursing home costs. A lot of people would rather have their home, life savings, and other assets go to their family or charity, instead of a nursing home.
4. Control or Independence--We are used to making choices in our lives. We choose where we want to live, what kind of car we drive, who our doctor is, etc. Most people wish to maintain control, rather than relinquishing it to welfare.
5. Aversion to Welfare--People don't want to be dependent on the government for care. They feel welfare is for the truly needy, not for people trying to hide their assets in order to qualify.
6. Peace of Mind--The peace of mind offered by quality long-term care coverage is immeasurable. Being able to go to bed at night knowing one is protected, instead of worrying about what to do if something happens, is a feeling most people desire.
What's your reason for not having it?????
Tuesday, December 22, 2009
Saturday, December 12, 2009
Baby Boomers and the Long Term Care Partnership: Part III
What did we learn from the 60s? Probably the most important thing that we were able to grab onto and keep is the fact that we can't rely on the government to provide us with everything we want. As Mick Jagger pointed out, "You can't always get what you want, but if you try sometime, you get what you need."
We learned that we have to take care of ourselves, but at the same time we have to have compassion for our fellow men/women.
So, we grew up helping take care of our brothers and sisters, then we started taking care of our own children. As they grew up, we expected them to help take care of their siblings, as we became two income families.
The women's liberation movement meant that moms were no longer expected to stay home, and our want for more luxuries (which eventually became necessities) meant that one income just wasn't enough any more.
And finally, as our children grew into adulthood, we thought we were done being caregivers and we could just begin to live out our empty nest years in peaceful bliss.
But as John Lennon put it, "Life is what happens to you while you are busy making other plans."
Two things happened. First, our parents, who worked so hard to provide the best possible lives for us, and leave us with a legacy of great wealth, started living longer. And our children started having kids of their own.
As fate would have it, our children learned from us that in order to have all of the "necessities" of life, both spouses would need to work.
Thus we became the "Sandwich Generation".
We were given the responsibility of helping to raise our children's children and being the primary caretaker of our parents.
And now, as we enter the autumn of our lives we find that while we are much more affluent than any generation before us, the burdens and lifestyles that we embraced have also left us less healthy than the generation that preceded us. Not only that, there are a whopping 78 million of us!
With the baby boom generation aging and the cost of services going up, paying for long-term care is an issue of pressing importance for policy-makers and individuals alike. While some individuals can count on friends and family to assist with the activities of daily living, many others must determine how to pay for extended home-health services or a potential stay in a nursing facility.
In 2003, the most recent year for which data are available, national spending on long term care totaled $183 billion, and nearly half of that was paid for by the Medicaid program, the joint federal-state health care financing program that covers basic health and long-term care services for certain low-income individuals. Private
insurance paid a small portion of long-term care expenditures—about $16 billion or
9 percent in 2003. With the aging of the baby boom generation, long-term care
expenditures are anticipated to increase sharply in coming decades. The projected
spending on long-term care presents a looming fiscal challenge for federal and state
governments. As a result, some policymakers are looking for ways to reduce the
proportion of long-term care spending financed by Medicaid and promote private
insurance as a larger funding source.
The Long-Term Care Partnership Program is a public-private partnership between
states and private insurance companies, designed to reduce Medicaid expenditures
by delaying or eliminating the need for some people to rely on Medicaid to pay for
long-term care services. Individuals, who buy select private long-term care insurance
policies that are designated by a state as partnership policies and eventually need
long-term care services, first rely on benefits from their private long-term care
insurance policy to cover long-term care costs before they access Medicaid. To
qualify for Medicaid, applicants must meet certain eligibility requirements, including income and asset requirements. Traditionally, applicants cannot have assets that exceed certain thresholds and must “spend down” or deplete as much of their assets as is required to meet financial eligibility thresholds. To encourage the purchase of private partnership policies, long-term care insurance policyholders are allowed to protect some or all of their assets from Medicaid spend-down requirements during the eligibility determination process, but they still must meet income requirements.
In Colorado, for instance, an individual is allowed to keep a house, car, and a total of $2000 in other assets (i.e. savings, investments, etc.). A married couple can keep another $100,000 for the spouse. That would mean that if a couple was worth $500,000 (not counting their dwelling and vehicle), and one of them needed care in a nursing home, they would be required to spend $398,000 before becoming eligible for Medicaid. However, if they had purchased a Long Term Care Insurance Policy that was eligible for the Partnership program, and that policy had paid out $400,000 in benefits and then was exhausted, the spouse at home would be able to keep the entire $500,000.
Long term care insurance coverage is not cheap. In Colorado, a married couple of about 55 years of age could expect to pay around $300 to $500 per month for a good policy with one of the top rated carriers. However, if that couple decides to wait until they are 65, when you factor in inflation, the cost of the policy is between $900 and $1200 per month.
And that doesn't take into account the fact that they are less likely to be able to get coverage at that age because of health conditions.
What kind of legacy do you want to leave? How do you want to be remembered? Just as we need to leave this world a better place than we found it, we need to leave our future generations in better shape than when we arrived.
America’s national debt is a record-breaking $12 trillion, and expected to nearly double in the next ten years. Unsustainable borrowing has created the largest debt in history.
It is not our fault that there are 78 million of us. We are not to blame for the fact that we are living much longer (though less healthier) lives.
However, we can do something to help not only ourselves, but our spouses, and our Children's Children We can take responsibility now, so that we are not a burden to our families, and hopefully not contributing more to an already unfathomable national debt.
We can purchase a Long Term Care Insurance Partnership Policy, and be a part of the solution, rather than the problem. Just like in the 60s, fellow boomers, if you are not a part of the soluciton, you are part of the problem.
If you would like more information about Long Term Care Insurance, please feel free to contact me at george.yardley@physiciansmutual.com.
Thanks for reading my blogs.
We learned that we have to take care of ourselves, but at the same time we have to have compassion for our fellow men/women.
So, we grew up helping take care of our brothers and sisters, then we started taking care of our own children. As they grew up, we expected them to help take care of their siblings, as we became two income families.
The women's liberation movement meant that moms were no longer expected to stay home, and our want for more luxuries (which eventually became necessities) meant that one income just wasn't enough any more.
And finally, as our children grew into adulthood, we thought we were done being caregivers and we could just begin to live out our empty nest years in peaceful bliss.
But as John Lennon put it, "Life is what happens to you while you are busy making other plans."
Two things happened. First, our parents, who worked so hard to provide the best possible lives for us, and leave us with a legacy of great wealth, started living longer. And our children started having kids of their own.
As fate would have it, our children learned from us that in order to have all of the "necessities" of life, both spouses would need to work.
Thus we became the "Sandwich Generation".
We were given the responsibility of helping to raise our children's children and being the primary caretaker of our parents.
And now, as we enter the autumn of our lives we find that while we are much more affluent than any generation before us, the burdens and lifestyles that we embraced have also left us less healthy than the generation that preceded us. Not only that, there are a whopping 78 million of us!
With the baby boom generation aging and the cost of services going up, paying for long-term care is an issue of pressing importance for policy-makers and individuals alike. While some individuals can count on friends and family to assist with the activities of daily living, many others must determine how to pay for extended home-health services or a potential stay in a nursing facility.
In 2003, the most recent year for which data are available, national spending on long term care totaled $183 billion, and nearly half of that was paid for by the Medicaid program, the joint federal-state health care financing program that covers basic health and long-term care services for certain low-income individuals. Private
insurance paid a small portion of long-term care expenditures—about $16 billion or
9 percent in 2003. With the aging of the baby boom generation, long-term care
expenditures are anticipated to increase sharply in coming decades. The projected
spending on long-term care presents a looming fiscal challenge for federal and state
governments. As a result, some policymakers are looking for ways to reduce the
proportion of long-term care spending financed by Medicaid and promote private
insurance as a larger funding source.
The Long-Term Care Partnership Program is a public-private partnership between
states and private insurance companies, designed to reduce Medicaid expenditures
by delaying or eliminating the need for some people to rely on Medicaid to pay for
long-term care services. Individuals, who buy select private long-term care insurance
policies that are designated by a state as partnership policies and eventually need
long-term care services, first rely on benefits from their private long-term care
insurance policy to cover long-term care costs before they access Medicaid. To
qualify for Medicaid, applicants must meet certain eligibility requirements, including income and asset requirements. Traditionally, applicants cannot have assets that exceed certain thresholds and must “spend down” or deplete as much of their assets as is required to meet financial eligibility thresholds. To encourage the purchase of private partnership policies, long-term care insurance policyholders are allowed to protect some or all of their assets from Medicaid spend-down requirements during the eligibility determination process, but they still must meet income requirements.
In Colorado, for instance, an individual is allowed to keep a house, car, and a total of $2000 in other assets (i.e. savings, investments, etc.). A married couple can keep another $100,000 for the spouse. That would mean that if a couple was worth $500,000 (not counting their dwelling and vehicle), and one of them needed care in a nursing home, they would be required to spend $398,000 before becoming eligible for Medicaid. However, if they had purchased a Long Term Care Insurance Policy that was eligible for the Partnership program, and that policy had paid out $400,000 in benefits and then was exhausted, the spouse at home would be able to keep the entire $500,000.
Long term care insurance coverage is not cheap. In Colorado, a married couple of about 55 years of age could expect to pay around $300 to $500 per month for a good policy with one of the top rated carriers. However, if that couple decides to wait until they are 65, when you factor in inflation, the cost of the policy is between $900 and $1200 per month.
And that doesn't take into account the fact that they are less likely to be able to get coverage at that age because of health conditions.
What kind of legacy do you want to leave? How do you want to be remembered? Just as we need to leave this world a better place than we found it, we need to leave our future generations in better shape than when we arrived.
America’s national debt is a record-breaking $12 trillion, and expected to nearly double in the next ten years. Unsustainable borrowing has created the largest debt in history.
It is not our fault that there are 78 million of us. We are not to blame for the fact that we are living much longer (though less healthier) lives.
However, we can do something to help not only ourselves, but our spouses, and our Children's Children We can take responsibility now, so that we are not a burden to our families, and hopefully not contributing more to an already unfathomable national debt.
We can purchase a Long Term Care Insurance Partnership Policy, and be a part of the solution, rather than the problem. Just like in the 60s, fellow boomers, if you are not a part of the soluciton, you are part of the problem.
If you would like more information about Long Term Care Insurance, please feel free to contact me at george.yardley@physiciansmutual.com.
Thanks for reading my blogs.
Wednesday, November 11, 2009
Baby Boomers and the Long Term Care Partnership: Part II
Woodstock--Where were you?August 11, 2009 was the 40th anniversary of Woodstock. An estimated 300,000 people attended the 3 days of peace and love. It was the defining event of our generation. Unfortunately, I was not one of them.
However, I was around in 1969, and Robert Kirkpatrick has written a book about it, titled, "The Year Everything Changed."
It was a year when America witnessed many of the biggest landmark achievements, cataclysmic episodes, and generation-defining events in recent history.
1969 was the year that saw Apollo 11 land on the moon, the Cinderella stories of Joe Namath’s Jets and the “Miracle Mets,” the People’s Park riots, the first artificial heart transplant and first computer network connection, the Manson family murders and cryptic Zodiac Killer letters, the Woodstock music festival, Easy Rider, Kurt Vonnegut’s Slaughterhouse-Five, the Battle of Hamburger Hill, the invasion of Led Zeppelin, the occupation of Alcatraz, death at Altamont Speedway, and much more.
It is often said that if you remember the 60s, you probably weren't there. but perhaps more important than if we remember the 60s, is the question, "What did we really learn from them?"
It was estimated that as of July 1, 2005, there were 78.2 million of us. Many of us have been married and divorced... more than once. We are the generation that pushed the divorce rate up to 50%... and made it seem "normal" and thus acceptable.
7,918 of us began turning 60 each day in 2006.That amounts to 330 every hour.
57.8 million is the number of baby boomers living in 2030, according to projections; 54.9 percent would be female. That year, boomers would be between ages 66 and 84.
Some wonder what effect the boomers are having on the economy, and will have in the future. In 2009, the economy IS the boomers! We represent the vast majority of the work force. There are 75 million of us; we ARE the economy. The huge growth in the economy since the 90s is due, in large part, to 75 million of us working up to our peak earning and spending years. What are we spending our money on? Whatever is being sold... we are buying it. What kind of cars are we buying? What kind are Detroit and Japan selling? We ARE the upper end of the automobile market. Where do we go on vacation? Everywhere. How do we get there? Every way possible. Day care centers are thriving because boomers do not want to take care of the kids we produced. And our offspring think it is supposed to be that way. (Parents are not supposed to stay home and raise their children. Why, that's a terribly stupid idea, huh? That is what day care centers and the government is for.)
The age wave theory suggested an economic slowdown would occur when the boomers start retiring during 2007-2009. And guess what. They are right. Look at what is happening to the economy today.
As the first wave of baby boomers edges toward retirement, a growing body of evidence suggests that we may be the first generation to enter their golden years in worse health than our parents. While not definitive, the data sketch a startlingly different picture than the popular image of health-obsessed workout fanatics who know our antioxidants from our trans fats and look 10 years younger than our age.
Boomers are healthier in some important ways -- we are much less likely to smoke, for example -- but large surveys are consistently finding that we tend to describe ourselves as less hale and hearty than our forebears did at the same age. We are more likely to report difficulty climbing stairs, getting up from a chair and doing other routine activities, as well as more chronic problems such as high cholesterol, blood pressure and diabetes.
Researchers say the findings track with several unhealthy trends, notably the obesity epidemic. Two-thirds of Americans are overweight, and those extra pounds make joints wear out more quickly, boost cholesterol and blood pressure, and raise the risk of a host of debilitating health problems. And despite all those gym memberships, we tend to be less physically active than their parents and grandparents, our daily routines often dominated by desk jobs and the drive to and from work.
Most immediately, we will begin to draw government benefits such as Social Security and Medicare. Both entitlement programs will be exceedingly costly. In 2006, Social Security cost U.S. taxpayers about 4.2% of GDP, or approximately $554 billion. This figure is expected to increase to 6.2% of GDP by 2030, and to continue rising.
Meanwhile, the potential long-term costs of Medicare are even more severe. Currently, Medicare costs U.S. taxpayers about $230 billion per year, or 3.1% of GDP. However, these figures are expected to rise dramatically over the next 20 years as more of us pass age 75. In fact, government analysts estimate that by 2018, Medicare will have surpassed Social Security in terms of its annual cost.
Given these figures, the Social Security and Medicare Boards of Trustees stated in their 2007 Annual Report that, “…currently projected long-run growth rates [for the programs] are not sustainable under current financing arrangements.” Translation: Either long-term-benefits must decrease, or taxes must increase if benefits are to continue at their current levels.
For taxpayers, the Boomers’ retirement means that younger workers will have to bear a much larger burden in order to support the burgeoning ranks of retirees. Currently, there are 3.3 U.S. workers to support each retiree, but by 2030, this number will fall to only two. Given the political clout that seniors have and are likely to retain in the future, an increase in payroll taxes to support the Boomers’ needs seems entirely plausible. Extrapolated over a 10 to 20-year period, such an increase could represent a significant drag on U.S. economic growth. While increases in per-worker productivity may offset some of this burden, it remains to be seen how the U.S. will deal with what is arguably one of the most difficult financial burdens it has ever faced.
Which brings me back to the question, "What did we really learn from 1969?"
I will attempt to answer that in the third and final part of this piece.
However, I was around in 1969, and Robert Kirkpatrick has written a book about it, titled, "The Year Everything Changed."
It was a year when America witnessed many of the biggest landmark achievements, cataclysmic episodes, and generation-defining events in recent history.
1969 was the year that saw Apollo 11 land on the moon, the Cinderella stories of Joe Namath’s Jets and the “Miracle Mets,” the People’s Park riots, the first artificial heart transplant and first computer network connection, the Manson family murders and cryptic Zodiac Killer letters, the Woodstock music festival, Easy Rider, Kurt Vonnegut’s Slaughterhouse-Five, the Battle of Hamburger Hill, the invasion of Led Zeppelin, the occupation of Alcatraz, death at Altamont Speedway, and much more.
It is often said that if you remember the 60s, you probably weren't there. but perhaps more important than if we remember the 60s, is the question, "What did we really learn from them?"
It was estimated that as of July 1, 2005, there were 78.2 million of us. Many of us have been married and divorced... more than once. We are the generation that pushed the divorce rate up to 50%... and made it seem "normal" and thus acceptable.
7,918 of us began turning 60 each day in 2006.That amounts to 330 every hour.
57.8 million is the number of baby boomers living in 2030, according to projections; 54.9 percent would be female. That year, boomers would be between ages 66 and 84.
Some wonder what effect the boomers are having on the economy, and will have in the future. In 2009, the economy IS the boomers! We represent the vast majority of the work force. There are 75 million of us; we ARE the economy. The huge growth in the economy since the 90s is due, in large part, to 75 million of us working up to our peak earning and spending years. What are we spending our money on? Whatever is being sold... we are buying it. What kind of cars are we buying? What kind are Detroit and Japan selling? We ARE the upper end of the automobile market. Where do we go on vacation? Everywhere. How do we get there? Every way possible. Day care centers are thriving because boomers do not want to take care of the kids we produced. And our offspring think it is supposed to be that way. (Parents are not supposed to stay home and raise their children. Why, that's a terribly stupid idea, huh? That is what day care centers and the government is for.)
The age wave theory suggested an economic slowdown would occur when the boomers start retiring during 2007-2009. And guess what. They are right. Look at what is happening to the economy today.
As the first wave of baby boomers edges toward retirement, a growing body of evidence suggests that we may be the first generation to enter their golden years in worse health than our parents. While not definitive, the data sketch a startlingly different picture than the popular image of health-obsessed workout fanatics who know our antioxidants from our trans fats and look 10 years younger than our age.
Boomers are healthier in some important ways -- we are much less likely to smoke, for example -- but large surveys are consistently finding that we tend to describe ourselves as less hale and hearty than our forebears did at the same age. We are more likely to report difficulty climbing stairs, getting up from a chair and doing other routine activities, as well as more chronic problems such as high cholesterol, blood pressure and diabetes.
Researchers say the findings track with several unhealthy trends, notably the obesity epidemic. Two-thirds of Americans are overweight, and those extra pounds make joints wear out more quickly, boost cholesterol and blood pressure, and raise the risk of a host of debilitating health problems. And despite all those gym memberships, we tend to be less physically active than their parents and grandparents, our daily routines often dominated by desk jobs and the drive to and from work.
Most immediately, we will begin to draw government benefits such as Social Security and Medicare. Both entitlement programs will be exceedingly costly. In 2006, Social Security cost U.S. taxpayers about 4.2% of GDP, or approximately $554 billion. This figure is expected to increase to 6.2% of GDP by 2030, and to continue rising.
Meanwhile, the potential long-term costs of Medicare are even more severe. Currently, Medicare costs U.S. taxpayers about $230 billion per year, or 3.1% of GDP. However, these figures are expected to rise dramatically over the next 20 years as more of us pass age 75. In fact, government analysts estimate that by 2018, Medicare will have surpassed Social Security in terms of its annual cost.
Given these figures, the Social Security and Medicare Boards of Trustees stated in their 2007 Annual Report that, “…currently projected long-run growth rates [for the programs] are not sustainable under current financing arrangements.” Translation: Either long-term-benefits must decrease, or taxes must increase if benefits are to continue at their current levels.
For taxpayers, the Boomers’ retirement means that younger workers will have to bear a much larger burden in order to support the burgeoning ranks of retirees. Currently, there are 3.3 U.S. workers to support each retiree, but by 2030, this number will fall to only two. Given the political clout that seniors have and are likely to retain in the future, an increase in payroll taxes to support the Boomers’ needs seems entirely plausible. Extrapolated over a 10 to 20-year period, such an increase could represent a significant drag on U.S. economic growth. While increases in per-worker productivity may offset some of this burden, it remains to be seen how the U.S. will deal with what is arguably one of the most difficult financial burdens it has ever faced.
Which brings me back to the question, "What did we really learn from 1969?"
I will attempt to answer that in the third and final part of this piece.
Tuesday, October 20, 2009
Medicare Supplements VS Medicare Advantage
First, a little history about Medicare. Medicare was enacted in 1965, and is administered through the Centers for Medicare & Medicaid Services (CMS. It is for individuals 65 and over and other individuals with qualifying disabilities.
In 2003, Congress passed the Medicare Modernization Act. This was the biggest change to Medicare since its inception.
Medicare+Choice was renamed Medicare Advantage. Prescription Drug coverage was added. Physical exams were added for new enrollees, and diabetes and heart screenings were also added.
The biggest change (besides the prescription drug coverage) was to how the Medicare Advantage program would be administered.
For reasons still unknown, Medicare advantage plans were given a priority by Congress.
This is how they are supposed to work. Each year Medicare estimates what the average monthly cost will be to administer Medicare coverage for every person in the United States that is on Medicare. The original plan was for every person that opted out of traditional Medicare and into a MA plan, the government would reimburse the plan administrators 95% of that average.
It sounded like a great idea. For example, if it costs Medicare approximately $10,000 each year for everyone on Medicare, and 1 million of them move to a Medicare advantage plan, then theoretically, Medicare would save $500,000,000 each year.
Currently there are approximately 50 million Medicare beneficiaries in the United States. It is estimated that about 20 percent of them have switched to a MA plan. That means that 10 million times the approximate savings of $500 per member should equal a total savings of about $5 billion dollars per year. WOW!! That is awesome.
The reality is that each year Medicare has to re-negotiate with the MA administrators and rather than saving 5 percent, it is estimated that it is costing Medicare 12 percent more than had they stayed in traditional Medicare. That means that the approximately 10 million people who have switched are now costing the program an extra $112 billion. No wonder Medicare is going broke!
What I have addressed so far deals only with the added cost of administrating the MA plans. Next I will address the benefits (or lack thereof) for Medicare recipients who switch to an MA plan.
Medicare consists of four parts.
Medicare Part A is free for those that qualify (meaning those that paid into FICA for enough quarters), and it covers the hospital inpatient and some skilled nursing facilities.
Medicare Part B covers physician and surgeon charges (basically anything that is not covered under Part A, except prescriptions). Enrollment is optional, but recommended the majority of the time. It is not free, and the premium is dependent upon one's income.
Part C is the Medicare Advantage program. Enrollment is optional, but if someone chooses this plan, he/she is leaving traditional Medicare and going into a private plan.
Part D is the prescription drug coverage. It is also optional, and usually recommended, unless an individual has something better.
Under Part A of Medicare an individual must pay a deductible before Medicare begins paying for the hospital stay. In 2009, this deductible is $1068. There are escalating co-pays after 60 consecutive days in the hospital, however, because of the DRG (Diagnostic Related Groups) program rarely does anyone stay that long. However, it is important to know that the hospital deductible is not a calendar year deductible, but rather a "Benefit Period" deductible. A benefit period is defined as beginning on the day a person enters the facility and ending on the 61st day after being released. If a person goes back into the hospital within the 60 days, they will not have another deductible. But if they return after 60 days (even if it is for the same reason as the original stay), they will have to meet another deductible.
Medicare Part A will also cover a skilled nursing stay, if the individual meets all of Medicare's requirements. A person must enter a facility within 30 days of a hospital stay of at least three days. It must be a Medicare approved facility, the individual must be receiving skilled care, and the prognosis has to be that the individual will demonstrate daily progress towards getting out. In other words, you can go there to recuperate, but not to stay. If you meet all of Medicare's criteria, they will pay the whole bill for the first 20 days. Beginning on the 21st day, you will have a co-pay ($133.50 in 2009) for days 21 through 100. After 100 days, Medicare will pay nothing. Usually Medicare pays for about 20 to 25 days.
Medicare Part A (or B) will also pay for blood, after the first three pints, and there is some limited coverage for hospice and recuperative home health care.
Medicare Part B covers in- and out-patient physicians care, surgical services and supplies, therapy, diagnostice tests, durable medical equipment, ambulances, and some preventative services. As I stated previously, the program is optional and the premium is indexed to your earnings. If you make less than $85,000 per year or your joint income is less than $170,000, the premium for 2009 would be $96.40 per month, and can be deducted from your social security check.
Medicare Part B pays most covered expenses at a rate of 80%, after you meet the Part B annual deductible ($135 in 2009). It does not cover 80% of your bill, but 80% of the portion of your bill that is approved by Medicare. If your whole bill is not approved and your doctor does not accept Medicare Assignment, then you could be responsible for the remaining 20% of the approved and any excess charges. Usually this is not a consideration as most (but not all) physicians accept Medicare's approved amount.
Part C is the Medicare Advantage program. It is an option to parts A and B. If you choose a Medicare Advantage plan (there are many types), you are essentially leaving the Medicare program for a private plan.
In 1992, Congress decided that the Medicare Supplement industry was very confusing for seniors, so they passed several laws regulating the insurance industry. The main effect was that Medicare Supplement (or Medigap) plans had to be standardized. At that time, 10 standardized plans were approved and were labeled Plans A throught J. Plan F was the most comprehensive and most popular at the time. No matter what company one purchased a plan from if you bought a Plan F, the benefits were the same from company to company. The main things that the consumers had to be concerned with were the cost of the plan, the company's ratings and the quality of customer service.
In 2003, Congress passed the Medicare Modernization Act. One of the biggest components of the act was the addition of prescription drug coverage (Part D).
However, another result of the bill was the proliferation of the new Medicare Advantage plans. Currently, there are approximately 160 different options available through the Medicare Advantage Program. It is very confusing for seniors (much more so than the Medigap plans prior to 1992). The plans utilize co-pays that vary from plan to plan. Quite a few of them have no cap on the amout an individual might pay out of pocket in a year. You can not carry a Medicare Supplement Plan if you are in a MA plan. They are optionally renewable each year. If they decide, they can pull out of a given area (and this happens frequently). If you move, and the plan is not available in your new location, you have to find another plan, or they can cancel you if you complain too much about the quality of care you receive. You can only see the providers within the network. With most plans, you must have a referral to see a specialist, and every procedure has to be approved by the plan administrator or it will not be covered. The plan administrators are doctors hired by the company, and their main responsibility is to find ways to deny procedures, surgeries, etc. In some cases they are actually given a bonus based upon how much money they save the provider each year. Also, your personal physician can leave the plan at any time he/she so chooses, but you are usually stuck in the coverage until the open enrollment periods (usually at the end or the beginning of the calendar year, depending on what type of plan you are in).
With most of the Medicare Advantage plans, there is no maximum to the amount an individual must pay from their own pocket in a calendar year. Last week, I was visiting with a man who has a Medicare Advantage Plan. He was 66 years old. He informed me that he had been hospitalized three times since August of 2008, and owed a local hospital around $5000. He was living strictly off of his Social Security which brought in about $1200 per month. After doing a financial profile, I determined that his expenses were also running him around $1200 per month. He was unable to pay the money he owed to the hospital. While I was visiting with him, his phone rang. The caller was from a collection agency trying to get him to pay the bill. He informed the caller that he would notbe able to pay the amount due. After he hung up, I advised him to contact the local legal aid society, and explain his situation to them.
All one has to do is go online and google Medicare "Disadvantages of Medicare Advantage Plans", and you will find many articles. A few of the more interesting ones, I've included links to here: http://www.sptimes.com/2007/10/30/50plus/The_unspoken_disadvan.shtml. The title of this article is "The 50 unspoken disadvantages of Medicare Advantage."
To quote an article from the Washington Post, "While the intent of the plans was to save Medicare money, the private plans have had the opposite effect, the three reports said.
The Medicare Advantage plans are paid, on average, 13% more than a comparable patient would have cost in a traditional Medicare plan, said the MedPac analysts."
You can read this full article at: http://www.medpagetoday.com/Geriatrics/Medicare/11936.
The bottom line is that Medicare Advantage is probably here to stay. However, Congress and the President have targeted it as one of the biggest boondoggles in the healthcare system. The message is clear. If this part of the system isn't fixed soon, Medicare will be completely broke very soon.
Medicare Advantage is not a viable alternative to Medicare, not good for the consumer or the government that is currently funding it.
In 2003, Congress passed the Medicare Modernization Act. This was the biggest change to Medicare since its inception.
Medicare+Choice was renamed Medicare Advantage. Prescription Drug coverage was added. Physical exams were added for new enrollees, and diabetes and heart screenings were also added.
The biggest change (besides the prescription drug coverage) was to how the Medicare Advantage program would be administered.
For reasons still unknown, Medicare advantage plans were given a priority by Congress.
This is how they are supposed to work. Each year Medicare estimates what the average monthly cost will be to administer Medicare coverage for every person in the United States that is on Medicare. The original plan was for every person that opted out of traditional Medicare and into a MA plan, the government would reimburse the plan administrators 95% of that average.
It sounded like a great idea. For example, if it costs Medicare approximately $10,000 each year for everyone on Medicare, and 1 million of them move to a Medicare advantage plan, then theoretically, Medicare would save $500,000,000 each year.
Currently there are approximately 50 million Medicare beneficiaries in the United States. It is estimated that about 20 percent of them have switched to a MA plan. That means that 10 million times the approximate savings of $500 per member should equal a total savings of about $5 billion dollars per year. WOW!! That is awesome.
The reality is that each year Medicare has to re-negotiate with the MA administrators and rather than saving 5 percent, it is estimated that it is costing Medicare 12 percent more than had they stayed in traditional Medicare. That means that the approximately 10 million people who have switched are now costing the program an extra $112 billion. No wonder Medicare is going broke!
What I have addressed so far deals only with the added cost of administrating the MA plans. Next I will address the benefits (or lack thereof) for Medicare recipients who switch to an MA plan.
Medicare consists of four parts.
Medicare Part A is free for those that qualify (meaning those that paid into FICA for enough quarters), and it covers the hospital inpatient and some skilled nursing facilities.
Medicare Part B covers physician and surgeon charges (basically anything that is not covered under Part A, except prescriptions). Enrollment is optional, but recommended the majority of the time. It is not free, and the premium is dependent upon one's income.
Part C is the Medicare Advantage program. Enrollment is optional, but if someone chooses this plan, he/she is leaving traditional Medicare and going into a private plan.
Part D is the prescription drug coverage. It is also optional, and usually recommended, unless an individual has something better.
Under Part A of Medicare an individual must pay a deductible before Medicare begins paying for the hospital stay. In 2009, this deductible is $1068. There are escalating co-pays after 60 consecutive days in the hospital, however, because of the DRG (Diagnostic Related Groups) program rarely does anyone stay that long. However, it is important to know that the hospital deductible is not a calendar year deductible, but rather a "Benefit Period" deductible. A benefit period is defined as beginning on the day a person enters the facility and ending on the 61st day after being released. If a person goes back into the hospital within the 60 days, they will not have another deductible. But if they return after 60 days (even if it is for the same reason as the original stay), they will have to meet another deductible.
Medicare Part A will also cover a skilled nursing stay, if the individual meets all of Medicare's requirements. A person must enter a facility within 30 days of a hospital stay of at least three days. It must be a Medicare approved facility, the individual must be receiving skilled care, and the prognosis has to be that the individual will demonstrate daily progress towards getting out. In other words, you can go there to recuperate, but not to stay. If you meet all of Medicare's criteria, they will pay the whole bill for the first 20 days. Beginning on the 21st day, you will have a co-pay ($133.50 in 2009) for days 21 through 100. After 100 days, Medicare will pay nothing. Usually Medicare pays for about 20 to 25 days.
Medicare Part A (or B) will also pay for blood, after the first three pints, and there is some limited coverage for hospice and recuperative home health care.
Medicare Part B covers in- and out-patient physicians care, surgical services and supplies, therapy, diagnostice tests, durable medical equipment, ambulances, and some preventative services. As I stated previously, the program is optional and the premium is indexed to your earnings. If you make less than $85,000 per year or your joint income is less than $170,000, the premium for 2009 would be $96.40 per month, and can be deducted from your social security check.
Medicare Part B pays most covered expenses at a rate of 80%, after you meet the Part B annual deductible ($135 in 2009). It does not cover 80% of your bill, but 80% of the portion of your bill that is approved by Medicare. If your whole bill is not approved and your doctor does not accept Medicare Assignment, then you could be responsible for the remaining 20% of the approved and any excess charges. Usually this is not a consideration as most (but not all) physicians accept Medicare's approved amount.
Part C is the Medicare Advantage program. It is an option to parts A and B. If you choose a Medicare Advantage plan (there are many types), you are essentially leaving the Medicare program for a private plan.
In 1992, Congress decided that the Medicare Supplement industry was very confusing for seniors, so they passed several laws regulating the insurance industry. The main effect was that Medicare Supplement (or Medigap) plans had to be standardized. At that time, 10 standardized plans were approved and were labeled Plans A throught J. Plan F was the most comprehensive and most popular at the time. No matter what company one purchased a plan from if you bought a Plan F, the benefits were the same from company to company. The main things that the consumers had to be concerned with were the cost of the plan, the company's ratings and the quality of customer service.
In 2003, Congress passed the Medicare Modernization Act. One of the biggest components of the act was the addition of prescription drug coverage (Part D).
However, another result of the bill was the proliferation of the new Medicare Advantage plans. Currently, there are approximately 160 different options available through the Medicare Advantage Program. It is very confusing for seniors (much more so than the Medigap plans prior to 1992). The plans utilize co-pays that vary from plan to plan. Quite a few of them have no cap on the amout an individual might pay out of pocket in a year. You can not carry a Medicare Supplement Plan if you are in a MA plan. They are optionally renewable each year. If they decide, they can pull out of a given area (and this happens frequently). If you move, and the plan is not available in your new location, you have to find another plan, or they can cancel you if you complain too much about the quality of care you receive. You can only see the providers within the network. With most plans, you must have a referral to see a specialist, and every procedure has to be approved by the plan administrator or it will not be covered. The plan administrators are doctors hired by the company, and their main responsibility is to find ways to deny procedures, surgeries, etc. In some cases they are actually given a bonus based upon how much money they save the provider each year. Also, your personal physician can leave the plan at any time he/she so chooses, but you are usually stuck in the coverage until the open enrollment periods (usually at the end or the beginning of the calendar year, depending on what type of plan you are in).
With most of the Medicare Advantage plans, there is no maximum to the amount an individual must pay from their own pocket in a calendar year. Last week, I was visiting with a man who has a Medicare Advantage Plan. He was 66 years old. He informed me that he had been hospitalized three times since August of 2008, and owed a local hospital around $5000. He was living strictly off of his Social Security which brought in about $1200 per month. After doing a financial profile, I determined that his expenses were also running him around $1200 per month. He was unable to pay the money he owed to the hospital. While I was visiting with him, his phone rang. The caller was from a collection agency trying to get him to pay the bill. He informed the caller that he would notbe able to pay the amount due. After he hung up, I advised him to contact the local legal aid society, and explain his situation to them.
All one has to do is go online and google Medicare "Disadvantages of Medicare Advantage Plans", and you will find many articles. A few of the more interesting ones, I've included links to here: http://www.sptimes.com/2007/10/30/50plus/The_unspoken_disadvan.shtml. The title of this article is "The 50 unspoken disadvantages of Medicare Advantage."
To quote an article from the Washington Post, "While the intent of the plans was to save Medicare money, the private plans have had the opposite effect, the three reports said.
The Medicare Advantage plans are paid, on average, 13% more than a comparable patient would have cost in a traditional Medicare plan, said the MedPac analysts."
You can read this full article at: http://www.medpagetoday.com/Geriatrics/Medicare/11936.
The bottom line is that Medicare Advantage is probably here to stay. However, Congress and the President have targeted it as one of the biggest boondoggles in the healthcare system. The message is clear. If this part of the system isn't fixed soon, Medicare will be completely broke very soon.
Medicare Advantage is not a viable alternative to Medicare, not good for the consumer or the government that is currently funding it.
Health Care Reform and Medicare
Boomers and the Long Term Care Partnership (Part I)
I hadn’t planned to write such a long article, but as I began researching material for this, I found that there was much that needs to be said. Therefore, I have decided to publish it in two or three parts.
Boomers and the Long Term Care Partnership.It began in 1946, and while there is much debate as to when it actually ended, it is generally agreed that the 76 million American children born between 1945 and 1964 represent a cohort that is significant on account of its size. This group of people is widely known as the baby boomer generation. I am one of them.
A large part of the Baby Boom was an after-effect of World War II. The United States, like many other free world countries, experienced an unprecedented bubble of vigorous economic growth that did not diminish until 1968. Furthermore, in the U.S. the G.I. Bill enabled a record number of people to attend college and obtain, perhaps in many cases, the first college degree in their extended families.
Born in 1953, I was not only the first of my family to graduate high school (1971), I was also the first to attempt any higher education, earning my Bachelor of Arts Degree in 1980. Coincidently, I was a recipient of the GI Bill college benefits.
My interest in composing this article is partially because I have lived through the world that my fellow boomers have experienced, but a more important reason is to hopefully open some eyes as to what might lay ahead for my generation.
Some historians break down the Baby Boomers into two cohorts:
Baby Boomer cohort #1 (born from 1946 to 1954)
Memorable events: assassinations of JFK, Robert Kennedy, and Martin Luther King, political unrest, walk on the moon, Vietnam War, anti-war protests, social experimentation, sexual freedom, civil rights movement, environmental movement, women's movement, protests and riots, experimentation with various intoxicating recreational substances
Key characteristics: experimental, individualism, free spirited, social cause oriented
Baby Boomer cohort #2 (born from 1955 to 1964)
Memorable events: Watergate, Nixon resigns, the cold war, the oil embargo, raging inflation, gasoline shortages
Key characteristics: less optimistic, distrust of government, general cynicism
We were the first generation to be raised on television. We were widely associated with privilege, as many of us grew up in a time of affluence. As a group, we were the healthiest and wealthiest generation to that time, and amongst the first to grow up genuinely expecting the world to improve with time.
We tended to think of ourselves as a special generation, very different from those that came before us. In the 1960s, as the relatively large numbers of us became teenagers and young adults, we, and those around us, created a very specific rhetoric around our cohort, and the change we were bringing about.
An indication of the importance put on the impact of the Boomer Generation was the selection by Time magazine of the Baby Boom Generation as its 1966 "Man of the Year"
This is the end of Part 1. I hope to have Part 2 up soon. Thanks for reading. Opinions welcome.
Boomers and the Long Term Care Partnership.It began in 1946, and while there is much debate as to when it actually ended, it is generally agreed that the 76 million American children born between 1945 and 1964 represent a cohort that is significant on account of its size. This group of people is widely known as the baby boomer generation. I am one of them.
A large part of the Baby Boom was an after-effect of World War II. The United States, like many other free world countries, experienced an unprecedented bubble of vigorous economic growth that did not diminish until 1968. Furthermore, in the U.S. the G.I. Bill enabled a record number of people to attend college and obtain, perhaps in many cases, the first college degree in their extended families.
Born in 1953, I was not only the first of my family to graduate high school (1971), I was also the first to attempt any higher education, earning my Bachelor of Arts Degree in 1980. Coincidently, I was a recipient of the GI Bill college benefits.
My interest in composing this article is partially because I have lived through the world that my fellow boomers have experienced, but a more important reason is to hopefully open some eyes as to what might lay ahead for my generation.
Some historians break down the Baby Boomers into two cohorts:
Baby Boomer cohort #1 (born from 1946 to 1954)
Memorable events: assassinations of JFK, Robert Kennedy, and Martin Luther King, political unrest, walk on the moon, Vietnam War, anti-war protests, social experimentation, sexual freedom, civil rights movement, environmental movement, women's movement, protests and riots, experimentation with various intoxicating recreational substances
Key characteristics: experimental, individualism, free spirited, social cause oriented
Baby Boomer cohort #2 (born from 1955 to 1964)
Memorable events: Watergate, Nixon resigns, the cold war, the oil embargo, raging inflation, gasoline shortages
Key characteristics: less optimistic, distrust of government, general cynicism
We were the first generation to be raised on television. We were widely associated with privilege, as many of us grew up in a time of affluence. As a group, we were the healthiest and wealthiest generation to that time, and amongst the first to grow up genuinely expecting the world to improve with time.
We tended to think of ourselves as a special generation, very different from those that came before us. In the 1960s, as the relatively large numbers of us became teenagers and young adults, we, and those around us, created a very specific rhetoric around our cohort, and the change we were bringing about.
An indication of the importance put on the impact of the Boomer Generation was the selection by Time magazine of the Baby Boom Generation as its 1966 "Man of the Year"
This is the end of Part 1. I hope to have Part 2 up soon. Thanks for reading. Opinions welcome.
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