Southern Senior Care Blog

What does that mean?

The senate passed House Bill 1633 on Wednesday July 9th, by a “veto proof” margin of 69-30. The bill passed through the house with an overwhelming 355 to 59 votes. So, even though the white house has threatened a veto, this bill will likely survive. So, what does that mean to the millions of retirees who have Medicare and Medigap Insurance, or a Medicare Advantage Plan?

There are many moving parts to this bill. The primary goal of the bill is to block a scheduled 11 cut to Doctors who treat Medicare Patients. Doctors are obviously happy about this. So if Medicare is going to continue paying this 11%, where is the money coming from. Well, it will be largely funded by cutting about 13 billion dollars in Medicare Reimbursements to companies who are offering private Medicare plans.

Also called Medicare Advantage Plans, these private plans have been extremely popular over the last two years and some estimates state as many as 20% of Medicare recipients are using a Medicare Advantage Plan. If there is a 13 billion dollar cut, then companies offering Medicare Advantage plans will do one of three things:

1. Increase the premiums of their Medicare Advantage plans
2. Decrease the benefits of their Medicare Advantage Plans
3. A combination of 1 & 2
4. Discontinue the Medicare Advantage plans

What should Medicare Recipients do?

Right now the smart thing to do wait and see what happens. The white house still has their say. And if the bill is vetoed, it is possible (though unlikely) that it will not pass again. If it does pass, it will not affect the premiums of Medicare Advantage plans this year. The 2009 annual enrollment goes from November 15 to December 31. It is during this time that individuals can switch from original Medicare to a Medicare Advantage plan or decide to disenroll from their Medicare Advantage plan and go back to original Medicare. This is also the time that you add or change Medicare Prescription Plans. 2009 premiums will all be announced before this time, so everyone will have the information they need to make an educated decision.

Additionally, Medicare “Open Enrollment” is from January 1 through March 31. You can make one change to your Medicare or Medicare Advantage plan during this time. However, you cannot add or remove drug coverage during the Open Enrollment. So you really have four and 1/2 months starting November 15th to study and make changes to your Medicare coverage. And then, worse case, you can change it again next November.

If you have Original Medicare and a Medicare Supplement

This bill does not affect Medicare Supplements the same. In fact, this is likely a good thing for Medicare Supplements. The doctors are continuing to get their reimbursements and Medicare Supplements will continue to pay the balance. Our recommendation to individuals or couples who currently have Original Medicare and a Supplement is the same as it has been - If you can comfortably handle the premiums of your Medicare Supplement (Medigap) plan, then keep it.

That said, also keep in mind that you can change Medicare Supplements ANY TIME you want. If there is a company offering the supplement you have for a lower premium, then you should certainly consider switching. Since Medicare supplements are standardized, the only difference to you is the premium. Let me repeat, if you have a Medicare Supplement “Plan F” from XYZ company and you are paying $200/month for it, and you can get a Plan F from ABC company for $150, then you should almost certainly switch to company ABC. By staying with company XYZ, you are simply “Tipping” them $600/year for providing their service.

As soon as we have more information on Medicare Bill 1633, we will post it on this blog.