Medicare Updates & Boomer Essentials

1. 2018 Central IN FPA “CE Day”Mike Curtiss – Vrabec Insurance • Agenda • Recent Medicare Developments • What Boomers Need to Know About Medicare • Closing Comments

2. Medicare Suffixes

3. Sample New Medicare Card

4. New Card Letter of Explanation

5. New Medicare Card Issues

6. Medicare Board of Trustees annual report to CongressMedicare Financial Outlook - Highlights • 87% of Part A financing is from the 2.9% payroll tax plus IRMAA • Part B financing is of from general revenues (71%) and beneficiary premiums (27%) • The 2018 report projects the Part A trust fund will be depleted three years earlier than the 2017 report (2029 vs. 2026) • Factors include: • demographics • lower projected wages and GDP • lower tax revenues as a result of the 2017 tax cut legislation • Higher Part A benefit spending • Higher spending due to repeal of the ACA individual mandate • Higher spending due to repeal of the Independent Payment Advisory Board • Proposed solutions include restructuring benefits and cost sharing, increasing premiums, raising the eligibility age and moving to a premium support system • Between now and 2050 age 65+ Americans will double and 80+ will triple • Long term spending projections: 2.9% of GDP in 2018, 6.1% in 2047

7. A New Medicare Advantage optionwill be available to Hoosiers in 2019 Central Indiana residents currently have access to several Medicare Advantage plans, all of which are either HMO’s or PPO’s In 2019 a Medicare Medical Savings Account (MSA) will be offered These plans combine a high deductible medical plan with a Medicare funded savings account Participants use MSA funds to pay Medicare covered expenses If expenses exceed MSA funds participants pay until deductible is reached after which all expenses are covered If expenses are less than the MSA balance remaining funds carry over to succeeding years MSA’s do not include Rx coverage so a separate Part D PDP is necessary Current Medicare enrollees will have the opportunity to switch to the MSA during the Annual Enrollment Period, 10/15/18 – 12/7/18

8. Medicare Basics in Less Than One Hour What Baby Boomers Need to Know About Medicare

9. A Brief History of Medicare • Signed into law by President Johnson July 30, 1965 • 19 Million enrollees within the first 12 months • Approx 58 million enrollees today • Notable changes to Original Medicare (Parts A & B) • 1972 – coverage for under age 65 on SSDIB • 1980’s – supplemental insurance plans standardized • 1997 – Medicare Part C (Medicare Advantage) introduced • 2003 – Medicare Part D (Prescription Drugs) introduced • 2010 – ACA introduced no cost preventative services along with reduced Part D “donut hole” costs • More to follow….

10. What Is Medicare? National health insurance program for people 65+ Administered by the Centers for Medicare and Medicaid Services (CMS), an agency within the Dept. of Health and Human Services Enrollment through the Social Security Administration (SSA) Don’t confuse Medicare and SS eligibility

11. Who Is Eligible for Medicare? • Everyone over 65 • All U.S. citizens • Legal residents who have lived in the U.S. continuously for at least 5 years • Some people under 65 who are eligible for Social Security disability benefits

12. Medicare Enrollment

13. Four Parts of Medicare Part D Medicare Prescription Drug Coverage Part A Hospital Insurance Part B MedicalInsurance Part C Medicare Advantage Usually→ Provided by Medicare Provided by private insurer that contracts with Medicare

15. Basic Principle of Enrollment Unless you are covered by an employer group plan that covers 20 or more employees,* you need to enroll in Medicare when you turn 65 *Coverage must be based on current employment of self or spouse

16. What if You Don’t Enroll in Medicare on Time? • You may pay late-enrollment penalties. • Your health care expenses may not be covered by insurance. • Your private insurance options may be limited.

17. How Do You Enroll in Medicare? • If you are receiving Social Security when you turn 65: • Medicare Parts A and B are automatic (can decline if don’t want Part B) • Coverage starts 1st of month turn 65 • Parts C and D are not automatic; must choose private insurer and proactively enroll

18. How Do You Enroll in Medicare? • If you are not receiving Social Security when you turn 65: • Must sign up through Social Security Administration during a Medicare enrollment period • Initial enrollment period: If you are not covered by a group plan at 65 • Special enrollment period: If you are covered by a group plan at 65 • General enrollment period: If you missed your initial or special enrollment period

19. Source: Centers for Medicare and Medicaid Services (CMS)

20. Be careful enrolling in Part A during the IEP if still working • Part A generally has no premium • It provides secondary coverage to employer plans for those who continue working beyond 65 • However . . . Do not sign up for Part A if employer plan (≥20 employees) is a high deductible health plan paired with a health savings account because HSA contributions must stop once enrolled in Medicare • One more thing – enrolling is SS after age 65 leads to a 6 month retroactive effective date (or to one’s birthday if earlier). HSA contributions during this period would be considered excessive

21. Who Signs up for Part B During the Initial Enrollment Period? • People who are not covered by a comprehensive employer-sponsored group health plan that covers 20 or more employees when they turn 65 — i.e., people who are: • Not working • Self-employed • Employed by a company with <20 employees • On COBRA • Receiving retiree health benefits • Employed by a company whose health plan is less comprehensive than Medicare

22. Part B Special Enrollment Period (SEP) • For people who did not sign up during their initial enrollment period because they were covered as a worker or spouse of a current worker by a large (≥20 employees) group plan. • Special enrollment period for Part B: • Anytime before coverage ends • The 8-month period starting the earlier of when employment ends of when group coverage ends • Watch out for buyout or severance periods that exceed 8 months

23. Part B General Enrollment Period For those who missed the initial and/or special enrollment periods, they can sign up during the general enrollment period, Jan.1 – March 31. Coverage starts July 1.

24. Part C Enrollment Periods Initial – same 7 month period as the Part B IEP Special – no later than two months after loss of creditable coverage Other– during the Oct 15 – Dec 7 annual enrollment period (AEP)

25. Part D Enrollment Periods • Initial – same 7 month period as the Part B IEP • Special – no later than 63 days after loss of creditable coverage • Other– during the Oct 15 – Dec 7 annual enrollment period (AEP) • Two options for Part D • Standalone prescription drug plan • Medicare Advantage plan that includes drug coverage

26. Best Time To Enroll in Medicare To avoid late-enrollment penalties: Sign up during initial or special enrollment period To avoid gaps in coverage: Sign up before current coverage ends

27. How to Sign Up for Parts A & B Go to www.ssa.gov or medicare.gov. Call Social Security at 800-772-1213. Visit a local Social Security Office If applying after turning 65 you will need to prove you’ve had creditable coverage

28. Medicare and Private Insurance

29. Out-of-Pocket Costs Paid by Medicare Beneficiaries • Premiums • Part B premiums paid to Medicare • Income Related Monthly Adjustment Amounts (IRMAA) • Private insurance premiums for • Part D drug plans • Medicare supplemental policies • Medicare Advantage plans • Other out-of-pocket costs (Utilization) • Deductibles/copays/coinsurance • Portion of doctor bills not paid by Medicare • Services not covered by Medicare

30. Monthly Premiums • Part A – paid to Medicare • $0 if self or spouse paid into Social Security ≥40 quarters (10 years) • $232/mo. if 30-39 quarters SS • $422/mo. if <30 quarters SS • Part B – paid to Medicare • $134.00/month in 2018 • Plus income-related adjustment if applicable (IRMAA) • Part D – paid to private insurer • Varies with plan (avg. premium nationwide = $33.50/mo) • Plus income related adjustment if applicable (IRMAA)

31. Monthly premiums for Parts B & D Including 2018 Income Related Adjustment Amounts These do not include premiums for Medicare Advantage or Medicare supplement plans

32. 2017 DeductiblesAmount You Pay • Part A - $1,340 per spell of illness • Part B - $183/year • Waived for some preventive services Part D – $405/year for standard benefit – can be less

33. CoinsuranceAmount You Pay • Part A • Hospital • $335/day for days 61-90 • $670/day for days 91-150 • Skilled nursing: $167.50/day for days 21-100 • Part B • Assigned claims: 20% of Medicare approved rate • Unassigned claims: 20% of approved rate + balance of actual charge up to an additional 15% of the approved charge

34. 2018 Part D coinsuranceMedicare’s standard benefit design; individual plans vary and may pay more • Some factors affecting overall drug expense: • The plan’s formulary 2. Drug costs paid by the plan • 3. Plan Tiers (generic, brand, specialty 4. Retail vs. Mail Order

35. What Original Medicare (A and B)Does Not Cover • Prescription Drugs • Long-term (custodial) care • Care delivered outside the U.S. • Dental care • Vision care • Hearing aids • Cosmetic surgery • Acupuncture and other alternative care • Amounts over Medicare-approved amount • Amounts not covered by deductibles and coinsurance (20%)

36. What Supplemental Insurance May Cover in Full or Part • Deductibles and coinsurance amounts, such as: • The Part A deductible • Hospital costs after 60 days • The 20% of doctor bills that Medicare doesn’t pay • Amounts the doctor charges over the Medicare-approved amount • Prescription drugs • Depends upon the plan’s formulary and “tiering” • The deductible (maybe) • Most of the cost of certain drugs during initial benefit period and catastrophic coverage period

37. Medicare Supplemental Insurance Voluntary Supplements Original Medicare A and B Issued by private insurance companies (with Medicare oversight) Unbundled approach – separate medigap for medical and PDP for prescriptions Bundled approach – medical and Rx coverage included in single plan

38. Medicare Supplements – Medigap Policies Medigap insurance companies can only sell “standardized” Medigap policies Do not work with Medicare Advantage No network limitations You pay a monthly premium (often increases annually) Costs vary by plan, company, and location Do not cover prescription drugs; separate Part D prescription drug plan (PDP required) May require underwriting beyond OE/GI period

39. Medigap Plans

40. Medicare Advantage Plans Health plan options approved by and contracted with Medicare Also called Medicare Part C Run by private companys Medicare pays the plan a “per head” rate for each enrollee Managed care network doctors & hospitals (HMO/PPO) Plan generally include prescription drug coverage May include extra benefits like preventative vision, dental, hearing and fitness club membership 5 star rating system used to differentiate among plans

41. Shop Carefully for Private Insurance • Medigap policies are standardized but premiums vary considerably • Drug plan benefits vary considerably • Choose the plan offering the coverage you need for the medicines you take (formularies and tiers) • Medicare Advantage plans vary considerably • Evaluate the plan’s physician network to be sure your doctors are included • Understand the ability to move between types of plans (AEP)

42. How to Sign Up forParts C, D or Medigap Coverage • DIY - enroll directly in the selected plan • Contact a volunteer counselor at SHIP (State Health Insurance Assistance Program) • Work with a knowledgeable, properly licensed and appointed insurance agent • No cost “penalty” for using an agent • Be aware of agent limitations

44. In Closing Most individuals have a limited understanding of Medicare Analysis of doctor and Rx usage is key to identifying suitable options Part D drug costs is often the determining factor Medicare costs (Part B, supplemental and Part D premiums + medical and Rx copays/coinsurance) can shock retiree budgets Helping Advisors Help the Elderly

45. Thank you!