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What is a “doughnut hole?”
No, not the tasty kind, but the Medicare-related financial trouble kind. It was just one of the many questions a handful of people asked during a Medicare seminar at the Shelbyville Senior Community Center on Monday night.
For many seniors turning 65, trying to figure out Medicare is a struggle. That is where Leigh Ann Cottongim Barcellona comes in, a representative from Physicians Mutual who provides consultations on Medicare and led the information session. Barcellona helps people find the best possible Medicare plan for them.
Step by step, she explained the various parts of the system, and its costs.
Part A of Medicare covers hospital inpatient benefits, covering room and board at a hospital in times of illness. After paying a benefit period deductible of $1,184, the government will pay for 100 percent of hospital costs for the first 60 days checked into the hospital, will pay for all but $296 a day between days 61-90, all but $592 a day for days 91-150, and will cease paying for room and board after 151 days.
The other key component of Medicare, part B, pays for doctors, medical tests, preventive services, and surgeries. It requires an annual deductible of $147, and pays for 80 percent of most procedures and services.
But that’s just the start. Then there are prescription plans (Part D) and “Medigap” supplementary plans.
The prescription drug business has perhaps seen the biggest change in the past decade as a result of the government insurance plan. The Medicare Modernization Act in 2003 and its full implementation in 2006 added the Part D of Medicare in the form of a customizable prescription drug plan.
Supplementary plans can be confusing as well. Depending on when you purchase a plan, prices can vary drastically, Barcellona said. One type of plan payment increases in price as the owner of the plan ages but initially starts cheaper than other payment options.
Another option is to purchase a plan that uses the issue age premium method. According to a person’s age, they will pay a certain premium for the plan, however, the price for the year the plan started is the price the premium will remain for the rest of the plan owner’s life.
Or you could drop all of that together and go with a Medicare Advantage plan, which replaces Medicare and doesn’t allow for supplementary plans but, according to which plan purchased, could include a non-customizable drug plan.
Barcellona said Medicare does change year to year, but it is the Medicare Advantage plans, because of their yearly basis, that often change cost and coverage more often than seniors would like. It may not be the best idea to keep renewing the same Advantage plan year after year, because it may no longer be the best choice, Barcellona said.
“It changes constantly,” said Jackie Corum, who was there with her husband Mike. “Come back in a couple of months, and it will be completely different.”
Other changes to Medicare came and continue to come as a result of the Affordable Care Act passed in 2010. The government act changed Medicare in numerous ways, such as providing free annual wellness check ups and improving preventive care, Barcellona said.
And it also will address the mysterious “doughnut hole,” seeking to eliminate it by 2020.
So what is the “doughnut hole?” It’s a coverage gap in Medicare Part D plans. Before 2011, after the initial coverage period, Medicare users had to pay 100 percent out of pocket for drugs at full price, until reaching the “catastrophic” level of $4,750 total out of pocket for drugs, after which the government would once again step in to help pay.
The Affordable Care Act requires prescription drug companies to give 50 percent discounts on name brand drugs for people who are in the “hole” and is seeking to eliminate the problem all together in the next decade.
Mike Corum said he is turning 65 in August and that he recently signed up for a Medicare Advantage plan. He has been mining as much information as possible to decide whether or not he made the right choice or needs to change back to regular Medicare. The information session was helpful to him, he said.
At the very least, he now knows what the “doughnut hole” is.