Thank you to Cathy Forbes from the State Health Insurance Assistance Program for Mercer County presenting on the different aspects of Medicare and providing on overview of the plans available in New Jersey.  Each part of Medicare covers different aspects of physical medical care and as such, has different premiums, deductibles, cost sharing for services, and rules for enrollment.  Therefore, it is important to be familiar with your options, as well as organizations that can help you ensure that you are properly enrolled and getting the best coverage for your personal medical needs.  Additionally, you should always review your plans during open enrollment as deductibles, prescription drug costs, and overall benefits can change from year to year, potentially saving you hundreds of thousands of dollars.

Medicare Part A

Part A of Medicare is your hospital insurance and covers things like hospital stays (bed, board, general nursing care), skilled nursing care at an approved facility (rehab), home health care services, hospice care, and blood transfusions.  There is a monthly premium for Part A, but that is waived if you or your spouse has “paid” into Medicare for at least 10 years (40 quarters) through federal tax withholding.  There is not late enrollment penalty should you refuse to enroll in Medicare when your turn 65.  There is a deductible of $1,484 if you do not supplemental or Medigap insurance.  There are also copays for each hospital stay after 60 days as well as for inpatient rehab stays after 20 days.  It is worth noting that if you receive inpatient care at a hospital that can be provided elsewhere, that will be covered under Medicare Part B.

Medicare Part B

Part B of Medicare is often referred to as the medical insurance part.  Part B covers doctor’s services, outpatient medical services, diagnostic testing, preventative health care services, and other services.  It will also cover ambulance services only if other transportation would endanger your health.  The monthly premium for Part B starts at $148.50 for 2021 and is based off of your last income tax return.  If your annual gross income is more than $88,000 (single) or $176,000 (joint), you will pay a higher premium.  If your annual gross income is less than $17,466 (single) or $23,514 (joint), you may be eligible for the SLMB program that will pay your Part B premium.

There is an annual deductible for Part B of $203 and once that deductible is met, Medicare will pay 80% of the Medicare approved rate for covered services.  If a provider accepts Medicare assignment, they cannot charge more than the Medicare approved rate; if a provider does not accept Medicare assignment, they may charge up to 15% over the Medicare approved rate.

Once you become eligible for Medicare, you must enroll in Part A, but you can defer Part B enrollment if:

• You are still working and covered by health benefits from a large employer (20 or more employees)
• Covered by your working spouse’s large employer

However, you MUST enroll in Part B if you:

• Are on COBRA
• Covered by a small employer
• Have retiree coverage only
• Have Marketplace coverage
• Have no other healthcare coverage

Medicare Part C

Part C is often called Medicare Advantage and oftentimes includes a prescription drug plan (Part D).  Medicare Advantage plans are offered by insurance companies contracted by Medicare.  These plans are either HMO, which requires you to stay within a network, or PPO, which allows you to go out-of-network for a fee.  Within these plans, specific doctors, hospitals or labs may be required, pre-approvals or referrals may be needed, and co-pays will differ.  Be aware that doctors may leave a network at anytime so be sure to verify that they are covered under the plan.  All medical claims will be process through the insurance company rather than Medicare and you only need your Medicare Advantage card when visit a doctor or hospital.  These plans may also offer additional benefits not found in traditional Medicare, including vision, dental, and hearing coverage as well as gym memberships.

Premiums with Medicare Advantage plans can range anywhere from $0 to $196 per month.  Additionally, primary doctor co-pays range from $0 to $35 and specialist co-pays range from $5 – $50.  The maximum amount of out-of-pocket expenses on medical is capped at $7,550 per year for in-network care and after that, the Advantage plan will pay all medical costs.  Each county will have different approved plans so it is important to review all available plans, especially during annual enrollment (October 15 – December 7) and use the Medicare Plan Finder tool to check your medications.

You can switch from Original Medicare to a Medicare Advantage plan during every Annual Open Enrollment and cannot be turned down for any plan offered in your county.  You can also switch from a Medicare Advantage Plan to Original Medicare during the same period, but you must also enroll in a prescription drug plan.  You can also make this switch during Medicare Advantage Plan Open Enrollment from January 1 through March 31.  However, if you do not have a guaranteed issue right, such as the termination of your Medicare Advantage plan, enrolling Medigap plan is subject to medical underwriting and you might be turned down or charged higher prices for pre-existing conditions.

Medicare Part D

Part D is the prescription drug coverage of Medicare and although it is optional, once you become eligible for Medicare, you must have creditable drug coverage.  Creditable drug coverage includes any Medicare Advantage plan or employer, union, or retiree coverage.  Things such as prescription discount cards (Good RX), drug manufacturer programs, and pharmacy or supermarket programs are not considered credible drug coverage.  All insurance companies contracted by Medicare include a prescription drug plan that covers at least 2 prescription drugs in each treatment class, covers insulin and supplies for injection (does not cover test strips), and covers most vaccines, including the vaccine and fee to administer.  However, if a drug is not on formulary, you will have a pay the full cost of the drug.

Drugs on the formulary vary by tier and each tier comes with a different cost.  The tiers are as follows:

• Tier 1 and 2 – Generic medications
• Tier 3 and 4 – Brand name medications
• Tier 5 – Specialty medications
• Tier 6 – Clinically effective, low cost medications, but is not offered by all plans.

There is a penalty associated with late enrollment for Part D.  If a Medicare eligible individual does not have credible drug coverage for any period over 2 months, that person will be charged a monthly penalty of 1% of the national Part D premium ($0.33 in 2020), recalculated annually, for as long as the individual remains without coverage.  This penalty will be added to the monthly premium of a Part D plan and continues for the lifetime of the individual or as long as the individual is enrolled in any drug plan.

Premiums for Part D in NJ for 2021 range from $7.30 to $97.70 per month, depending on the plan. with a median cost of $34.40.  Additionally, there may be a deductible, up to a maximum of $445 that must be met before any financial contribution from the prescription drug plan.  After the initial deductible period, there are 3 different coverage period with different corresponding coverage amounts:

• Initial Coverage Period – You pay the percentage of the drug costs as defined in your plan until the total cost of your medication, including money paid by the plan, reaches $4,130.
• Coverage Gap – After $4,130, you pay 25% of the cost of the drug, including generics, until the total cost of your medication reaches $6,550.
• Catastrophic Benefit – You pay 5% for the remainder of the year and the rest is covered by the your plan.

It is important to make sure you find the most affordable plan based on your medications and financial situation, so it is highly recommended to use the Medicare Plan Finder tool to compare your options.  Remember to look out for quantity limits, prior authorizations, and step therapy requirements that may require you to try other medications before the plan will approve and pay for one recommend by your doctor.  It is  recommended that you review your plan every year during the annual enrollment period between October 15 and December 7.

There are some programs, at both the federal and state levels, that can help pay for some or all of the costs of your Part D plan.  At the federal level, there is the Federal Extra Help program, which you are automatically enrolled in if you are on Medicaid or receive assistance with your Part B premiums.  At the state level, there is PAAD and the Senior Gold prescription discount program.  PAAD will enroll you in a Part D plan and pay all premiums and any late enrollment penalties.  There is a cap of $5 for generic and $7 for brand name covered medications, but you must meet certain income limits to qualify: less than $2,367 per month if single and less than $2,900 per month if married.  The Senior Gold prescription discount program, while less comprehensive than PAAD, will enroll you in a Part D plan at any point in the year, but does not cover any penalties or premiums.  You will only be required to pay $15 and then 50% of the remaining balance of your medication and the income requirements are less restrictive: less than $3,200 per month if single and less than $3,734 per month if married.  You can apply for all of these programs by filling out the NJ Save application, available at https://www.state.nj.us/humanservices/doas/home/ap2.html.

Medicare Advantage Plans in NJ

In 2021, there are 60 Medicare Advantage plans available in NJ that are dependent upon the county you reside in.  For example, 34 of the 60 plans are available in Mercer County.  There are 6 plans that do not offer prescription drug coverage so you would be responsible for enrolling in a separate prescription drug plan.   Plans are either PPO or HMO and offer some vision, dental, and hearing coverage.  Almost half the plans with drug coverage have a $0 premium and several plans offer a discount between $40-60 on your Part B premium.

If you are currently enrolled in a Medicare Advantage Plan, please check you mail for information from your current plan provider.  Some plans are seeing increases in premiums, changing the benefits they offer, changing copays for services, or changing rules regarding networks.  Additionally, some plans are terminating in some counties (1 in Mercer County), which will allow those members to enroll in another Medicare Advantage Plan or a Medigap plan with a guaranteed issue right.

Final Thoughts

Medicare can be a complex and difficult issue to navigation, especially when you add in Medicare Advantage plans that can change from year to year.  It is highly recommended to review all of your Medicare information each year as the annual enrollment period approaches (October 15-December7).  If you need help with enrolling in Medicare, Medicare Advantage plans, or government assistance programs, please reach out to your county State Health Insurance Assistance Program office.  If you are having trouble locating your county SHIP office or live in Mercer County, please reach out to Cathy Forbes at cforbes@chsofnj.org or 609-273-0588.

You can download a copy of the presentation slides at https://www.njstatelib.org/wp-content/uploads/2020/11/Medicare-Open-Enrollment-Presentation-Slides.pdf .  Additionally, you can view a recording of the presentation at https://youtu.be/CfOwBF4BdW0.