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EXPECT AN EXPERT: The Basics of MedicareDANIEL DENNEHY-RODRIGUEZMedicare & Individual Product SpecialistHenderson Brothers

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Statement of IntentThe purpose of this seminar is to instruct our clients about the basic structure of Medicare and the types of plans available for purchase when applying their Medicare benefit.

These events are meant to be informative, and we want our audience to ask questions during and after the presentation to encourage understanding.

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According to the Kaiser Foundation, there are about 50 million Medicare recipients, meaning that one in five Americans are receiving Medicare benefits.

In Pennsylvania alone, there are about 2.5 million Medicare members, which is about 30% of the state’s population.

People 65 and older

People under 65 with certain disabilities

People of any age with End-Stage Renal Disease (ESRD)

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WHO QUALIFIES?

MEDICARE

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WHAT ARE THE DIFFERENT PARTS OF MEDICARE?PART AHospital insurance; “Brick and Mortar”

PART BMedical insurance; “Talent”

• When a Medicare recipient accepts Parts A and B, he/she will by default receive “Original Medicare” coverage.

• SUPPLEMENTAL COVERAGE: Works as a secondary payer to Original Medicare. This allows for the insured to use the Medicare network versus the network prescribed by a managed care option.

PART CMedicare Advantage Plans: Managed Care options (i.e. HMO or PPO plans) run by Medicare-approved private insurance companies. These plans include drug coverage as well (Part D).

PART DPrescription drug coverage

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RETIREMENT BEFORE 65If you have retired before 65, you must enroll in Parts A and B, which will begin on the 1st day of your 65th birth month. You will then want to purchase some sort of additional coverage using your Medicare benefits.

RETIREMENT AFTER 65If you decide to work beyond 65 and remain enrolled in a company health plan, check to make sure the health plan does not contain an “assumption of benefits” provision that may apply to you. Check before you decline Medicare. This provision, which is enforced by national insurers on many policies covering fewer than 100 employees, will limit payment on claims in certain circumstances with the assumption that you are enrolled in Medicare Parts A & B.

If your health plan does not contain an assumptions of benefits provision, then the following scenarios may apply:

• If your company has fewer than 20 employees, Medicare is primary.

• If your group insurance has an HSA, you DO NOT want to enroll in Part A; you want to continue to benefit from your HSA.

NOTE: If you are able to decline Medicare while working and you continue to contribute to a Health Savings Account (HSA), make sure you stop contributing well in advance of applying for Medicare to avoid a tax penalty. In many cases Medicare will make Part A effective retroactively, up to six (6) months prior to your application date.

Check with your local Social Security Office to find out when Part A would become effective for your particular situation.

WHEN SHOULD I ENROLL IN MEDICARE?

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WHEN AM I ELIGIBLE?WHEN CAN I SIGN UP FOR PARTS A & B? • Scenario 1 (First Eligible): You have a 7-month period

that begins 3 months before you turn 65, includes the month you turn 65, and ends 3 months after you turn 65.

• Scenario 2 (Employer Coverage Ends): If your coverage ends under a spouse’s group plan or you retire after 65; you qualify for Special Enrollment period to join Part A and/or Part B and additional benefits (60 days).

• Scenario 3 (General Enrollment Period): If you didn’t enroll in Part B when first eligible, you can sign up between January 1st—March 31st of each year.

WHEN DOES MY COVERAGESTART FOR PARTS A & B? • Scenario 1a: If you enroll during the 3 months before

your 65th birthday, your coverage will start on the 1st day of your birthday month.

• Scenario 1b: If you enroll the month you turn 65, your will coverage start the 1st after you sign up.

• Scenario 2: If you enroll when you retire, your benefits will activate the first of the subsequent month after your Group benefits end. You will need to direct Social Security to ensure this occurs.

• Scenario 3: If you enroll during General Enrollment Period (January 1st - March 31st), your coverage starts July 1st. In this scenario, though, you will owe a 10% penalty of the Part B premium for each full 12 months you could have enrolled but did not.

NOTE: There is a Late Enrollment Penalty if you delay enrollment in Medicare. You have 8 months to enroll in Medicare once you stop working OR after your employer coverage ends (whichever happens first). You should plan ahead and visit Social Security before your employer coverage ends, so you don’t have a gap in coverage.

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NOTE: We suggest that as you approach your retirement, you visit Social Security to set up your entitlement benefits. If Part A is not automatic for you, then you will need to enroll onto this benefit manually online at www.medicare.gov.

Hospital insurance that helps cover inpatient care, skilled nursing facilities, hospice care, and home health care.

HOW MUCH DOES IT COST?• Most people don’t pay a Part A premium,

because they or their spouse worked 40 quarters and paid Medicare taxes in doing so. This is called “Premium-Free Part A.”

• Naturalized citizens, or anyone who has not worked 40 quarters (or 10 years), will need to pay for Part A and would arrange this through Medicare.

HOW DO I GET PART A? Many people automatically get Part A when they turn 65 because they have begun to receive Social Security payments at 62.

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Helps cover medically-necessary services like doctors’ visits, outpatient care, labs, x-rays and other medical services, such as some preventive services.

HOW MUCH DOES IT COST?• If you accept Part B, you pay a Part B premium

each month. Most people will pay the standard premium amount. For 2019, it is $134.00 per month.*

• A portion of Medicare recipients will be charged an Adjusted Gross Income modifier (AGI) essentially a tax for being within a higher tax bracket on Medicare (see appendix).

HOW DO I GET PART B?If you do not want Part B, you can elect to delay this through Social Security. Otherwise, you will be sent a bill from Social Security to pay for Part B (or it will be deducted from your Social Security funds).

*2019 figures subject to change in November of 2018. We will update this presentation when the new figures are released by Social Security.

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HOW IS IT ADMINISTERED?You must join through a private insurance company, each plan will vary by cost and coverage (i.e. formulary, network, and cost sharing).

WHAT DO I PAY?• In the case of a PDP, the member pays a

premium.• Medicare Advantage plans will only ever

have one premium for medical and Rx coverage.

HOW DO I GET PART D?• Purchase drug coverage with Original

Medicare: a Prescription Drug Plan (PDP).• Pick a Medicare Advantage plan that offers

Part D coverage. (You must have Part A and Part B to join a Medicare Advantage Plan.)

Prescription drug coverage offered to everyone with Medicare parts A and B.

NOTE: Even if you do not take prescriptions, Medicare requires that you carry Part D coverage. If you are uncovered for a period of time greater than two months, you will receive a fine called the Late Enrollment Penalty (or LEP) later in life.

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WHAT IS THE COVERAGE GAP?• AKA “Donut Hole”• Temporary limit on what the drug plan will

cover for drugs.• The coverage gap begins after you and your

drug plan have spent a certain amount for covered drugs.

2019 COVERAGE GAP DETAILS• The Initial Coverage Limit is defined as

an amount of coverage where the insured will pay a defined copay or coinsurance. When this amount has been spent against the price of the drug—the amount being $3,820—the member will then fall into the coverage gap called the “Donut Hole.”

• During this time, the beneficiary pays for 37% of generic drug costs and 25% of brand name drug undiscounted costs (drug manufacturers provide a 70% discount on brand name drugs).

• Once beneficiary expenditures (including drug manufacturer discounts) reach a total of $5,000, the beneficiary is through the coverage gap and reaches catastrophic coverage. You pay a reduced copay or coinsurance on all covered drugs until the end of the year.

COVERAGE GAP/ DONUT HOLE (LITTLE-TO-NO COVERAGE)

CATASTROPHIC COVERAGE (COVERAGE FROM PLAN, BUT AT DIFFERENT RATE)

COVERAGE BEGINS (JANUARY 1)

INITIAL COVERAGE FROM PLAN

COVERED FOR REST OF YEAR (DECEMBER 31)

NOTE: Some Part D plans will require the member to accumulate a $415 deductible towards prescription costs before plan copays/coinsurances begin.

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MEDICARE ADVANTAGE PLANSAMPLE MEMBER

Health Insurance Plan Name

Member ID: 012345601Group ID: 001000-G86PCP: DOC OFFICEPhone: (412) 123-4567

COPAYMENTS:

Office Visits: $0/$20 RX: $4/ $12/ $27/ $90Specialists: $40 ER: $100

Part D Prescription Card

Enrollee Name

Health InsurancePlan Name

Plan <G123456_001>

RxBIN <123450>RxPCN <PCNNUM>RxGrp <GRPNUM>

Enrollee ID

Group Number Issued:

Issuer (1234) 12345678900

<VALUED CUSTOMER>

<00123456789>

<0012> <01/2018>

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HOW DO I SUPPLEMENT MEDICARE?

Medicare Advantage plans often include coverage for:

• Parts A & B• Part D prescription• Extra benefits (dental, vision, gym

membership, etc.)

PART D PRESCRIPTIONDRUG PLAN (PDP)

PART C MEDICARE ADVANTAGE PLAN

SUPPLEMENT PLAN

Health Insurance Plan Name

Plan <G123456_001>MEMEBERSHIP ID

MEMBER: <VALUED CUSTOMER>

<00123456789>

EFFECTIVE DATE: <01/2018>

MEDICARE SUPPLEMENT (MEDIGAP)

ORIGINAL MEDICARE (PARTS A + B)

Medicare Advantage plan replaces Original Medicare

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MEDICARE SUPPLEMENTA.K.A. “MEDIGAP” Used as a secondary insurance to Original Medicare. These plans cover the 20% that Medicare does not pay.

• Different Medigap plans cover different services, so it is important to know what your supplement covers during your initial enrollment.

• Supplements charge an additional premium in addition to your Part B and require that you purchase a PDP plan. Also, as an insured ages, the premium will become more expensive.

• Also, supplements will not cover anything that Original Medicare does not pay for, thus vision, dental, and out-of-country emergencies are not covered. You can purchase additional plans to cover these benefits.

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Medicare Advantage plans (A.K.A. “Part C” or “M.A. Plans”) are offered by private companies approved by Medicare. They are typically offered with HMO or PPO plan designs.

C = A + B + D + EXTRA BENEFITS

ALL IN ONE PLAN Like a Swiss army knife, Part C contains thedifferent kinds of coverage you need all in one plan.

EXTRA BENEFITSIf you join a Medicare Advantage Plan, the plan will provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance coverage. Medicare Advantage plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D), and the private insurance company you purchase from will provide all claims payments, documents, and customer service.

Medicare Advantage plans also offer portable coverage and offer protection when traveling overseas.

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You are allowed to switch plans every year, during Annual Election Period (October 15th—December 7th) and whichever plan you elect would begin on January 1st of the subsequent year.

OCTOBER 15TH — DECEMBER 7TH

ANNUAL ELECTION PERIOD (AEP)

MEDICARE ADVANTAGE PLAN TIMELINE

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QUESTIONS?

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CONTACT USDANIEL DENNEHY-RODRIGUEZMedicare & Individual Product SpecialistDJDENNEHY@HENDERSONBROTHERS.COM(412) 261-1842 x316Schedule an appointment with Dan via our online scheduling service. Visit the following link to access Dan’s calendar: bit.ly/dandennehy

MEREDITH FELTONBenefits Marketing CoordinatorMEFELTON@HENDERSONBROTHERS.COM(412) 261-1842 x317

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APPENDIX

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RESOURCESDISCOUNTED MEDICATIONSwww.needymeds.orgwww.goodrx.com

MEDICARE www.medicare.gov1-800-633-4227

PACE/PACENET https://pacecares.magellanhealth.com/

SOCIAL SECURITYwww.socialsecurity.gov1-800-772-1213

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MODIFIED ADJUSTEDGROSS INCOME

IF YOUR YEARLY INCOME IN 2017 (FOR WHAT YOU PAY IN 2019*) WAS:

YOU PAY EACHMONTH (IN 2019)

File Individual Tax Return

File JointTax Return

File Married & Separate Tax Return

Part B Premium

Part D IRMAA

$85,000 or less $170,000 or less $85,000 or less $135.50 Your plan premium

$85,001—$107,000 $170,001—$214,000 Not Applicable $189.50 $12.40 + your plan premium

$107,001—$133,500 $214,001—$267,000 Not Applicable $270.90 $31.90 + your plan premium

$133,501—$160,000 $267,001—$320,000 Not Applicable $352.20 $51.40 + your plan premium

$160,001 — $499,999 $320,001 — $749,999 $85,001 — $414,999 $433.40 $70.90 + your plan premium

$500,000 or more $750,000 or more $415,000 or more $460.50 $77.40 + your plan premium

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EXTRA HELP

MEDICAIDApply to State Medicaid office. Help paying Medicare Part A and/or Part B premiums and, in some cases, deductibles and coinsurance/copayments.

MEDICARE SAVINGS PROGRAMApply to State Medicaid office or Social Security Administration (SSA) at 1-800-772-1213 or apply online at http://www.socialsecurity.gov/prescriptionhelp.

SUPPLEMENTAL SECURITY INCOME (SSI) BENEFITSApply to State Medicaid office. For 2019, the standard benefit requires the beneficiary to pay: $415 deductible 25% of prescription drug costs between $415 and $3,820 = $851.25.

Beneficiaries may qualify for help with health care and other costs through a variety of programs:

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PART D LOW-INCOME SUBSIDYApply to State Medicaid office and the State will check for eligibility for this and other programs such as the Medicare Savings Program. Persons interested in Part D help only also may contact the SSA.

If a beneficiary has limited income and resources, he/she may qualify for the low-income subsidy (LIS) to cover all or part of the Part D plan premium and cost-sharing. In 2018, to qualify for the LIS:

• Beneficiary income may not exceed 150% of the Federal Poverty Level (FPL). The 150% FPL varies geographically as follows:

ƛ 48 states - $18,210 (individual)/$24,690 (couple) in 2018.

ƛ Alaska - $22,770 (individual)/$30,870 (couple) in 2018.

ƛ Hawaii - $20,940 (individual)/$28,395 (couple) in 2018.

• Beneficiaries resources may not exceed $14,100 (individual)/$28,150 (couple).

• Individuals qualifying for a low income subsidy (LIS) or a partial LIS have lower cost sharing.

EXTRA HELPFor 2019, individuals qualifying for full LIS (income less than 135% of the Federal Poverty Level and resources below the applicable threshold) have $0 deductible and cost sharing of:

• Maximum cost sharing up to the out-of-pocket threshold of:

• $3.40 for generic drugs• $8.50 for other drugs• No cost sharing after the out-of-pocket

threshold.

For 2019, individuals qualifying for Partial LIS (income less than 150% of the Federal Poverty Level and resources below the applicable threshold) have $83 deductible and maximum cost sharing of:

• 15% up to the maximum out-of-pocket threshold

• Maximum cost sharing after the out-of-pocket threshold of:

ƛ $3.40 for generic drugs ƛ $8.50 for other drugs

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LATE ENROLLMENTPENALTY: PART BMedicare is administered by the Centers for Medicare & Medicaid Services, an agency of the U.S. Department of Health and Human Services.

Individuals who do not enroll in Part B when first eligible (e.g., at age 65) can enroll during a General Enrollment Period, January 1st – March 31st.

Part B coverage begins on July 1st of the year they enroll.

Late Enrollment Penalty for Part B: The Part B premium is increased 10% for each full 12-month period the beneficiary could have had Part B but, did not enroll.

EXCEPTION: Individuals who have group health plan coverage based on their own current employment or the employment of a spouse are not subject to the premium increase and may enroll in Part B anytime while covered under the group health plan or during a special enrollment period that occurs during the 8-month period immediately following the last month of the group coverage.

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LATE ENROLLMENTPENALTY: PART DMedicare is administered by the Centers for Medicare & Medicaid Services, an agency of the U.S. Department of Health and Human Services.

Individuals who do not enroll in Part D when first eligible (e.g., at age 65) can enroll during a General Enrollment Period, January 1st – March 31st.

Part D coverage begins on July 1st of the year they enroll.

Late Enrollment Penalty for Part D: The Part D premium is increased 1% for each full 12-month period the beneficiary could have had Part D but, did not enroll.

EXCEPTION: Individuals who have group health plan coverage based on their own current employment or the employment of a spouse are not subject to the premium increase and may enroll in Part D anytime while covered under the group health plan or during a special enrollment period that occurs during the 8-month period immediately following the last month of the group coverage.

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MORE ON PART DThe amount beneficiaries pay while in the coverage gap decreases by a small percentage each year until 2020 when they will be responsible for only 25% of brand and generic drug costs.

The Initial Coverage Stage is defined as a $415 deductible which when met, will be replaced by a 25% coinsurance until $3,820 has been spent by both the Rx Carrier and Consumer.

Nominal costs under Catastrophic Coverage: Once beneficiary expenditures (including drug manufacturer discounts) reach a total of $5,000, the beneficiary is through the coverage gap and reaches catastrophic coverage. On any future prescriptions the beneficiary pays either a co-pay of $3.35 for generic drugs or $8.35 for brand name drugs or a co-insurance of 5%, whichever is greater.

If a beneficiary has limited income and resources, he/she may qualify for the low-income subsidy (LIS) and receive extra help from Medicare to cover all or part of the Part D plan premium and cost-sharing.

To qualify for extra help, beneficiary income may not exceed 150% of the Federal Poverty Level (FPL). The 150% FPL varies geographically. For the main 48 states, the limits include:

• $18,210 for an individual• $24,690 for a couple