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Medicare supplement modernization will take effect in June

Wednesday, March 31, 2010

Major changes will be taking place for Medicare supplements beginning June 1. Changes always add to confusion and concerns many people on Medicare have. There will be a lot of publicity about these changes in the next two months. For most, the changes will not have any affect on the Medicare supplement policy they now have. Still, information about the changes will have many concerned.

With this column, and with future columns, I will attempt to explain what is going on with what is referred to as Medicare supplement modernization. Your questions about this subject will be welcome.

In general, individuals that have a Medicare supplement plan prior to June 1, may keep their plan and the benefits within those plans. Medicare consumers will be confused and will want information about the changes being made.

Medicare was established in 1965 when Johnson was president and implemented in 1966. At that time there was a lot of disagreement about the establishment of Medicare which was called National Health Care for Senior Citizens. Since then it has had general acceptance and most people want to protect the benefits received from Medicare.

Dad developed cancer in the '70s. It was a great benefit to the family that he had Medicare. Without it the family may have lost the farm due to his illness.

Medicare supplements were standardized in the early '90s. Before that there were a lot of variations among the Medicare supplements that was often confusing. Some of the seniors bought two or more supplements fearing that they might not have adequate coverage. With the standardization, it became against the law for a supplement to be sold to an individual that had coverage unless they dropped what they had -- individuals could not have more than one Medicare supplement.

With Medicare standardization all of the Medicare supplements are the same. Companies could choose what plans they were offering. All that were offering an "F" were all the same and that has been true with any of the other plans, such as a "C" or a "D".

With the Medicare supplement modernization that will replace the Medicare supplement standardization in June, the biggest change in Medicare will be taking place since Part D and Medicare Advantage were implemented in 2005. The Medicare Modernization Act was passed in 2003 which established Medicare Advantage, Part D and the Medicare supplement modernization that is about to go into effect.

Now let's do a review of Medicare which provides coverage to almost 44 million people. Traditional Medicare includes Part A, Part B and Part D. Medicare Advantage includes Part C and Part D.

Part A Medicare covers inpatient hospital care, skilled nursing, hospice and blood. Part B Medicare covers doctor services, preventative and diagnostic services and durable medical equipment. Medicare members pay a monthly premium for Part B coverage. For current Medicare members having their premium withheld from their monthly Social Security and income under $85,000 the monthly premium is $96.40. For all others the premium is $110.50.

Medicare Part C is referred to as Medicare Advantage. It must cover at least what Medicare covers. The members continue paying the premium for Part B, plus the premium for Part C if there is any. Out of pocket cost may vary by plan. Medicare members cannot have a Medicare Supplement plan and a Medicare Advantage plan at the same time. Medicare Advantage plans may or may not include the members Part D.

Plan D is the outpatient drug benefit for Medicare beneficiaries. Plans vary by premium, benefits, co-pays, covered drugs, etc. The plan must be equal or greater than the standard coverage established by CMS. Most beneficiaries are aware of the donut hole, which may be going away. One of the items in the Health Reform bill passed by the House of Representatives Sunday was the elimination of the donut hole. This will now go into effect. Nothing is free, so most likely the deductibles and co-insurance will go higher for every Part D member.

Medicare supplement plans, sold by private insurance companies, are designed to cover gaps in Medicare coverage. They are guaranteed renewable. Clients with Medicare supplement plans can see any doctor who accepts Medicare, which is often a major advantage over many of the Medicare Advantage Plans. Medicare supplement plans are currently "standardized:meaning each of the plans is standardized from carrier to carrier, making the only difference the plan premium and service. Originally in 1990 there were 10 plans -- A to J. Two high deductibles plans were added in 2007 -- F and J. Later Plans K and J were added.

A summary of the Medicare Supplement Modernization that will be taking place June 1 include: Plans E, H, I and J are being eliminated, Plan G's excess charges are increasing from 80 percent to 100 percent, at home recovery and preventative care benefits are being eliminated from all plans due to underutilization and outdated benefit, Plans M and N are being created to offer lower premium plans for higher cost sharing, and a Hospice benefit is being added to the core benefits

Leonard Ernsbarger
Leonard At Large