As you read this on Dec. 1, you probably are grateful that the snow finally has left us, Thanksgiving is over and we have 3 1/2 weeks before Christmas. My thinking turns instead to “We are now two weeks into the six weeks of Medicare open season.” In actuality we are much further along than that, with the extended open season more than 1,300 residents of Clallam County had available when their Medicare Advantage plans announced their demise from our area.
I thought I would share some facts and figures that have proved interesting, at least to a numbers nerd like myself. At Castell Insurance in early October, we sent out more than 1,400 prescription drug review sheets to our clients. Of the 550 or so we have received back, we have recommended 60 percent of those folks stay with their current plan as it still is appropriate for their needs.
When I say appropriate for their needs, I do not necessarily mean the one with the absolute lowest cost. We generally do not recommend a change unless we are sure that we can save a person at least $200 during the course of the upcoming year.
That means we have recommended a change to more than 200 of our clients and, with an average savings per client of $347, we have saved our clients collectively more than $70,000. Not a bad start and we still have another full month to go. We all are caught up and all our clients are aware of their situations for 2011. Can you say the same?
So, if you have not yet reviewed your Part D prescription plan for 2011, I urge you to do so. As mentioned, the average savings per person we change is $347, but for a few people their actual savings are in excess of $1,000. This generally occurs when a plan’s formulary changes and a person’s drug will not be covered for the next year. Without reviewing the 2011 plan material closely, it could slip by unnoticed.
One of the best tools we rely upon to review a person’s needs is the www.Medicare.gov website. In the past I have shouted the praises of this site from the rooftops. But now, while I am still thrilled with the tool, we have learned of some inaccuracies where we have to use common sense or logic to get to the bottom line.
The three examples that jump to mind were when one report showed a low-cost generic would cost more than $120 with one plan and only $15 with another. The next case was when a report said a brand name drug was a generic and after we explored further with the actual company literature it was obviously not a generic and had a correspondingly higher co-pay and restrictions.
The last case was one a client pointed out as the system showed an artificially low-cost of a medication. It was a medication I was not familiar with and so the client did hours more research to get the facts.
The bottom line is that the Medicare.gov site should be used as a guide and not absolute gospel. If something looks too good to be true, it probably is.
Now I will give you a few updates on Medicare supplements available in the state. United Health Care, the underwriter for the AARP branded products, just announced a 6.3-percent premium increase for their most popular Plan F. However, they also just announced a 4.9-percent premium decrease on the newest plan they offer, Plan N.
I think that in the next five years Plan N will become the most popular supplement due to the lower cost and modest deductibles and co-pays.
In addition, as federal contributions are scaled back for Medicare Advantage plans, as they are scheduled to in 2012, it will make this plan even more desirable. Remember, you heard it here first.
Premera nixes E, J Supplements
A peculiar thing is happening with Premera Blue Cross and its Medicare Supplement polices for the Public Employee’s Benefit Board and the Washington State Health Care Authority.
Premera had issued group policies to members, and group policies are under a different set of rules from the individual policies.
Individual policies are “guaranteed renewable for life,” where an insurer can only cancel a person for nonpayment of premiums. Group policies do not have that level of protection and can be cancelled at the discretion of the company.
Why is this news, I can hear you asking.
Well, Premera has decided to cancel all subscribers who were covered under Medicare Supplement Plans E and J and automatically move everyone to Plan F unless they opt out of that transfer.
Plan F is a wonderful plan, but for members who will pay the $173 premium from Premera, I advise you to shop around as lower cost plans for identical coverage are available.
This change is a cause of concern for many members who enjoyed a grandfathered provision of prescription drug benefits under their pre-2006 Plan J. This plan included some prescription drug benefits that were deemed by the federal government not to be as good as Medicare Part D.
These people are losing their prescription drug benefit through no fault of their own but they are now eligible to purchase a Medicare Part D plan from a company of their choosing. However, the kicker is that because their old Plan J is not “creditable coverage,” they will have to pay a penalty each month for the rest of their lives.
In the literature Premera sent to all members, they calculate the penalty to be approximately $17.50 per month in 2011. This penalty will increase in future years as the average cost of plans increases. Remember, the penalty is calculated at 1 percent of the average plan premium for each month you were eligible and did not participate.
So, from Jan. 1, 2006 (when Part D was first available) to Jan. 1, 2011 is 60 months or a 60-percent lifetime penalty. From talking to Premera clients, they are mightily ticked that they have to pay more than $200 per person per year for a penalty because of this move.
In closing, you have 30 days left to review all your options for 2011, so please do not procrastinate. Contact those great folk at SHIBA or call Medicare at 800-633-4227.
Phil Castell is an independent insurance agent in Sequim. He can be reached at 683-9284 or PhilCastell@msn.com.