Audio version of This Blog
Although Medicare is fantastic insurance with a lot of coverage, there are definitely some pitfalls to it that can be classified as, for lack of a better term, dumb! In the video and blog I am going to review what I consider to be the five dumbest rules that Medicare has put into place.
#5 - Excess Charges
Number 5 on my list of Medicare’s dumbest rules is going to be excess charges. If you don’t know what an excess charge is, you aren’t alone! To put it simply, when a doctor decides to accept Medicare, he or she is given two options; accept Medicare assignment as a participating provider, or do not accept Medicare assignment as a non-participating provider.
Luckily, the majority of doctors- around 97%- accept Medicare Assignment and do not charge an excess charge. If, however, you do use a doctor who does not accept Medicare assignment, they do have the ability to bill an excess charge. An excess charge can only be up to 15% of the Medicare-approved payment. This means that whatever Medicare is paying the doctor, you can pay an additional 15% on top of that bill.
Medicare Supplement Plans G and N cover all Part B excess charges. The popular Medigap plan that leaves the possibility of an excess charge is Plan N.
There are also some states that do not allow excess charges:
- New York
- Rhode Island
*In CT, you must be a member of CONNMAP/QMB
Have questions about plans that cover excess charges? Give us a call at 877-885-3484 to speak with an experienced agent!
#4 - Knowing How Many Employees Your Employer Has
Number 4 on my list of Medicare’s dumbest rules is someone turning 65 needing to know the number of employees your employer has. Medicare is things separated two different ways if you are planning to continue working past the age of 65. The key factor is whether your employer has more than or fewer than 20 employees. If you work for a company that has thousands of employees, this isn’t a big deal, but if you work for a very small company that may have fewer than 20 full-time employees, you fall into a very specific category when it comes to Medicare.
#3 How Medicare Treats Differently Based on Employer Size
Number 3 on my list of Medicare’s dumbest rules is related to number 4. If your employer has fewer than 20 employees, when you turn 65 Medicare becomes your primary insurance. This means that if you work for a smaller company, you need to enroll in Original Medicare Parts A and B are your primary insurance when you become Medicare eligible at age 65. With Medicare becoming your primary insurance, your employer insurance is now secondary.
This can be a big problem for multiple reasons. The first issue is if you have a spouse on your employer plan who is younger and not Medicare eligible. Typically, an employer plan is not designed to work as a secondary to Medicare, so you would not want both plans at once. With a younger spouse who needs your employer insurance, this isn’t totally plausible, and you end up carrying two different insurances for yourself that do not work well together. The other issue surfaces when you retire or your spouse becomes Medicare eligible and you decide to leave your employer plan. At this point, if you have already been enrolled in Medicare Part B for months or even years, you have also already exhausted your open-enrollment window for a Medicare Supplement plan, and now will have to be in good enough health to pass medical underwriting. Medical underwriting is not an issue if you are healthy, but can be problematic if you have had any health issues. There are alternate avenues like something called guaranteed issue, but it gives your no choice in your plan and can end up at a higher premium.
Have questions about medical underwriting? Give us a call at 877-885-3484 to speak with an experienced agent!
#2 - Observation Vs. Inpatient
Number 2 on my list of Medicare’s dumbest rules is the difference between an inpatient hospitalization and observation. Depending on what you are hospitalized for, you may be recommended to discharge to a skilled nursing facility for a rehab stay. This stay is not long-term care, but short-term rehabilitation that is approved by Medicare. Medicare pays for days 1-20, and if you have a Medicare Supplement, that plan will typically pay for up to 100 days.
Where the dumb rule comes into play is that you have to be admitted as an inpatient to the hospital for 3 days to qualify for Medicare funded rehabilitation at a skilled nursing facility. Sounds easy enough right? Not quite. You can be in the hospital overnight and be considered observation, NOT inpatient. If you are coded as being admitted for observation, Medicare will not pay for your rehabilitation. This means that you will end up with the entire bill for rehab after discharge even though you were hospitalized!
Although you can’t control how you are admitted, Medicare leaves it up to you to make sure that you are coded as an inpatient before being discharged to a skilled nursing facility. The fact that overnight hospitalizations are not automatically inpatient stays definitely qualifies as a dumb Medicare rule!
#1 COBRA and Retiree Coverage not Creditable
We’ve made it all the way to #1! Number 1 on my list of Medicare’s dumbest rules is COBRA and retiree coverage not counting as creditable coverage. This rules applies to anyone who decides to not enroll into Medicare during the Initial Enrollment Period (IEP) when turning 65. Not everyone is ready to retire or pick up Medicare when first eligible at 65. If you continue working and have active employer-sponsored group health insurance, when you decide to retire you shouldn’t have any problems enrolling into Medicare. If you elect from COBRA or retiree coverage, though, problems begin to arise!
In order to qualify for what Medicare calls a Special Enrollment Period (SEP), meaning you can pick up Medicare whenever you’re ready after age 65, you must be leaving creditable coverage. Creditable coverage is generally considered active employer-sponsored health insurance. If you are no longer working, but have something like COBRA or retiree insurance through your former employer, Medicare does NOT consider this creditable. This means that you will not qualify for an SEP when that coverage ends. Rather, you will have to wait until the General Enrollment Period (GEP), which is from January 1st- March 31st, to enroll into Medicare, with coverage beginning July 1st.
Further, you will also be penalized on both your Medicare Part B and Part D premiums for the length of time you did not have creditable coverage. That’s right! You will actually pay even more for your Medicare. The penalty grows the longer you are without creditable coverage and is a lifetime penalty tacked onto your premium every single month.
This rule is hands down the most frustrating because you are being punished for not having insurance, when you actually do have insurance! Unfortunately, Medicare does not budge on what is creditable and what is not, so it is important to understand that if you use COBRA or retiree coverage after age 65, you will be penalized.
What To Do Now?
Now that we know what some of the dumb rules are related to Medicare, what is there to do now? The best answer would be to make sure we complete your enrollment on time and into the right plan so you don’t have to worry about any missteps! Give us a call at 877-885-3484 to speak with an experienced agent, and we will help get your to where you need to be!