This is the time of year when everyone who already has a stand-alone Medicare Part D prescription drug plan or a Medicare Part C Advantage plan that includes Part D gets a letter from their current plan. There are two types of letters. Most people receive a renewal notice for the current plan with next year's premium. Others receive a more unwelcome communication that says their policy will no longer be offered in 2017. As a result, their coverage ends Dec. 31. They must make other arrangements or face the consequences of no coverage.
Most people are upset and anxious when they receive these notices. Typically, the insurance company has decided not to offer a particular plan as a business decision. That company may even offer other policies that are quite similar to the existing one. There has been lots of news coverage about various insurers withdrawing offerings in some parts of the country. Even though most of those changes pertain to coverage for people under 65 and not on Medicare, the stories can cause heightened angst about finding alternatives.
I recently received a question from a client who heard their insurance provider is pulling out of many states and wondered if I knew if they were affected. I explained that that generally pertains to folks who are not on Medicare. I advised them to look at their individual notice to see if there has been any change to their coverage.
For individuals who are losing coverage, it is imperative they take action to put another plan in place by Jan. 1 or face coverage gaps that can be very costly. The good news is that discontinuation of a current Medicare Part D or C plan offers Medicare beneficiaries extra protection regarding additional time to find a new policy and other coverage options.
If people don't take action before Dec. 31, they will no longer have insurance to pay for prescription medications and other out-of-pocket expenses on Jan. 1. They will only have original Medicare Parts A and B starting Jan. 1. Those who apply for a new policy by Dec. 31 will not experience a costly gap.
Beneficiaries are granted additional time beyond year-end to identify and sign up for a replacement plan or plans. They can buy a new policy with prescription drug coverage by Feb. 28. If beneficiaries wait to enroll until January or February 2017, that coverage starts on the first of the following month.
Those who do not join a new plan by the end of February 2017 will not, most likely, have another opportunity to sign up for Medicare prescription drug coverage in 2017. They will have to wait until 2018. That can be a long lag resulting in a costly coverage void in several ways. First, they will have to pay for their prescription medications in full during the interim, which can cost thousands of dollars. Second, these people will have to pay the deductibles, copayments and coinsurance for health care services under original Medicare Parts A and B if they had a Medicare Part C Advantage plan that previously reimbursed those charges. Third, those folks will pay a lifelong late-enrollment penalty of 12% per year when they sign up for coverage in the future.
Another advantage that beneficiaries over 65 have are guaranteed issue rights to purchase a Medigap supplemental policy. Guaranteed issue can be a valuable exemption from usual and customary health insurance issuing practices and pricing for individuals who are beyond the Medigap initial enrollment period which ends, for most people, at 65 ½ years of age. That means that a Medigap plan must accept the applicant. The person does not face additional underwriting, exclusions or higher premiums.
People need to keep the discontinuation letter that they received from their current insurance company as evidence of that entitlement. To exercise the guaranteed issue right, they must purchase Medigap within 63 days of Dec. 31, which translates into no later than March 4. Medicare beneficiaries under 65 may find they are not able to buy a Medigap policy. Even if they can identify a Medigap policy, the prices are often extremely high and not a great value.
An excellent source of free advice and assistance to identify new coverage are the State Health Insurance Assistance Programs, otherwise known as SHIP. SHIP services are available in every community in the United States. The programs offer one-on-one counseling and information to people with Medicare, and their families. To locate the particular SHIP program that covers your area or that of a loved one, go to ShipTalk.org and look up the service in any county in the U.S. Make sure to contact SHIP early in the shopping process to increase the likelihood that they can help, as their resources are stretched thin during this time of year.
A word to the wise for those who are caregivers for someone who is on Medicare is to watch that person's mail for Medicare coverage notices. When that isn't feasible, ask your loved one if they have received any notices. If they are unsure, you can assist them in contacting their insurance provider. It is much easier to deal with securing new coverage now than wait for a nasty surprise later.
Katy Votava, Ph.D., R.N., is president of Goodcare.com, a consulting service that works with financial advisers and consumers on health care coverage.