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Health Care – Finding Your Own Insurance
Should You Find Other Insurance?
For most retirees, staying in Lucent’s health plan is probably the best option. Consider the following: • Lucent’s plan is a comprehensive medical plan that is as good as, or better than, most employer group plans. • The retiree plan for the under-65 people is the same plan offered to active employees. • Lucent still subsidizes the retiree and, for some retirees, still subsidizes dependents. This is a big savings over finding other insurance, especially if you don’t have dependents. • Lucent may make changes to its health plan in the future, even perhaps not subsidizing retirees at all. However, as long as Lucent doesn’t go bankrupt, it will most likely continue to provide ACCESS to health care. This is a major benefit. The Kaiser Family Foundation annual survey of employers is the most widely quoted source of information in the industry. It has a long history of survey data. Its 2004 survey states, “The percentage of employer offering retiree benefits has fallen significantly over the past 25 years.” It goes on to say that only 36% of large firms now offer retiree coverage. Many of those who offer retiree coverage just provide access, they don’t subsidize the cost of the premiums.
On the other hand, if you have other options (like a current job or if your spouse has a current job), it is worth comparing the plans and the costs (see the section below). One advantage of going with another employer’s plan as an active employee is that the premiums are pre-tax. In a retiree plan the premiums are not pre-tax. This is an IRS rule.
Other Employer Group Plans
The best way to find other (non-Lucent) health insurance is through another employer’s group plan. If you or your spouse is eligible under another plan, compare the plans carefully: • Are your doctors in the network? • What is the open enrollment policy? Some plans have open enrollment at the beginning of each year. Others may not have open enrollment at all; you are only allowed to enroll if you are a new employee or have a major life status change (defined differently under different plans). One of the life status changes is usually “loss of other coverage.” Question the benefits manager about whether Lucent plan changes qualify as losing your health insurance. One of the definitions that many plans use is that “the other coverage terminated due to loss of eligibility, or due to termination of employer contributions.” Usually this wording is used to accommodate people who lose their jobs and then become eligible for COBRA (see the paragraph about COBRA below). In the case of Lucent, many retirees have lost employer contributions for their spouses which may also qualify. • What are the pre-existing conditions clauses? Legally an employer group insurance plan cannot deny coverage of pre-existing conditions, but there may be a waiting period before they will cover these conditions. This is part of HIPPA (Health Insurance Portability and Accountability Act of 1996) which states: “A group health plan or a health insurance issuer offering group health insurance coverage may impose a preexisting condition exclusion with respect to a participant or beneficiary only if the following requirements are satisfied: o a preexisting condition exclusion must relate to a condition for which medical advice, diagnosis, care or treatment was recommended or received during the 6-month period prior to an individual's enrollment date; o a preexisting condition exclusion may not last for more than 12 months (18 months for late enrollees) after an individual's enrollment date; and o this 12- (or 18-) month period must be reduced by the number of days of the individual's prior creditable coverage, excluding coverage before any break in coverage of 63 days or more.” • Compare the cost of premiums with the Lucent plan, but also compare all the variables of coverage: Co-payments, coinsurance, deductibles, annual out-of-pocket maximums, life-time out-of-pocket maximums, etc. Co-payments are usually dollar amounts (for example, you might pay $20 for a brand-name drug for a 30-day supply). Coinsurance is usually a percentage (for example, you might pay 20% of the reasonable and customary fee for a doctor office visit).
If you enroll in another plan and then lose that coverage (e.g., lose your current job), you will be offered COBRA benefits from that employer for 18 months. However, during the COBRA period you will probably pay 100% of the cost; that is, the employer will not subsidize. Therefore, it is important to remember that you can opt back into Lucent’s plan.
You can get back into Lucent’s plan during the November open enrollment time (effective January 1). You can also get back in during the year if you have a major life status change. Here, too, losing your health insurance meets this criterion. However, you have to notify Lucent’s enrollment center within 31 days after the event. If you miss the 31-day window, you have to wait until open enrollment time.
Insurance Outside an Employer’s Group Plan
Obtaining insurance directly through an insurance company or through the group plan of an association has to be viewed with a very critical eye.
• You, of course, have to look at all of the items in the previous section. However, if the insurance is not through a group plan, there may be no legal obligation to cover pre-existing conditions. • Read ALL fine-print. • What happens if you get seriously ill? Will the insurance become unaffordable? Will you be dropped from the plan? • Don’t be penny-wise and pound-foolish. Spending more money to be covered under an employer’s plan (including the Lucent retiree plan) may be money well spent in a catastrophic situation. A very major illness could be a financial catastrophe on top of the physical and emotional catastrophe. Avoiding this should be your main goal in having health insurance. • If you look for an individual plan, stick to the large companies like Blue Cross/Blue Shield. BC/BS has one of the largest networks and negotiates the best prices.
The following web sites have some really good consumer tips for finding insurance and comparing plans: http://www.ahcpr.gov/consumer/insuranc.htm http://www.ahcpr.gov/consumer/hlthpln1.htm
The National Association of Insurance Commissioners (NAIC) also has a good site: http://www.naic.org/ The NAIC has a way to research companies: http://www.naic.org/cis/index.do
Fraud Alert
Health insurance availability and cost, as well as the rising ranks of the uninsured, have led to scams in the industry.
Remember: If it sounds too good to be true, it probably is.
Medicare-eligible Retirees
With the new Medicare Part D prescription drug program, there are more options for Medicare-eligible retirees. Some of the major alternatives: • Stay on Lucent’s plan which supplements Medicare and provides prescription drug coverage. This plan is considered “creditable coverage” by Medicare which means if you need to enroll in Medicare Part D in the future, you won’t pay any premium penalties.
• Find a Medigap plan, like an AARP Blue Cross/Blue Shield plan, for medical AND enroll in Lucent’s “Rx Only” plan for prescription drugs. This Rx-only plan is also considered “creditable coverage” by Medicare. • Find a Medigap plan, like an AARP Blue Cross/Blue Shield plan, for medical AND enroll in a Medicare Part D plan.
Medical-only considerations: • Lucent’s Medicare-supplement plan is not a “Medigap” plan. The Lucent plan helps pay for catastrophic events; that is, it pays after you have satisfied an annual “out-of-pocket maximum.” A Medigap plan has better first-dollar coverage. Most good Medigap plans will pay the 20% that Medicare doesn’t pay. Sometimes a deductible has to be met before the Medigap plan starts paying, but that deductible is usually lower than the Lucent plan’s out-of-pocket maximum. • It is possible that Lucent’s plan covers more types of events than the typical Medigap plan. You have to compare carefully and decide what is important to you. • The following is from the NAIC web site mentioned above. It lists the ten things you should know about buying a Medigap policy: 1. Know Why You Might Need a Medigap Policy A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan does not cover. If you are in the Original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will each pay their share of covered health care costs. 2. Some Examples of “Gaps” in Medicare You may want to buy a Medigap policy because Medicare does not pay for all of your health care. There are “gaps” or “out-of-pocket” costs that you must pay in the Original Medicare Plan. Some examples of costs not covered are hospital stays, skilled nursing facility stays, blood, Medicare Part B yearly deductible and Medicare Part B covered services. 3. Some Examples of Care Not Covered by Medigap Long-term care, Vision or dental care, hearing aids and private-duty nursing are things that a Medigap policy will not cover. 4. Eligibility Requirements To buy a Medigap policy, you generally must have Medicare Part A and Part B. You are guaranteed the right to buy a Medigap policy if you are in your Medigap open enrollment period or covered under a Medigap protection. You might not be able to buy a Medigap policy if you are in a Medicare Advantage Plan, have Medicaid, already have a Medigap policy or are under the age of 65 and you are disabled or have End-Stage Renal Disease. 5. Pre-Existing Conditions A pre-existing condition is a health problem you had before the date a new insurance policy starts. In some cases, if you have a health problem before your Medigap policy started, a Medigap insurance company can refuse to cover that health problem for up to six months. This is called a “pre-existing condition waiting period.” The insurance company can only use this kind of waiting period if your health problem was diagnosed or treated during the six months before a Medigap policy started. 6. In Most Cases, You Cannot Be Dropped From Medigap If you bought your policy after 1990, the policy is guaranteed renewable. This means your insurance company can drop you only if you stop paying your premium, you are not truthful about something under the policy or the insurance company goes bankrupt. Insurance companies in some states may be able to drop you if you bought your policy before 1990. If this happens, you have the right to buy another Medigap policy. 7. Shop Around for the Best Medigap Policy Look for a Medigap policy that you can afford and that gives you the coverage you need most. As you shop for a Medigap policy, keep in mind different insurance companies may charge different amounts for exactly the same Medigap policy, and not all insurance companies offer all of the Medigap policies. 8. Make Sure the Insurance Company is Reliable To help you find out if an insurance company is reliable, you can take the following actions: Stop before you sign anything, call your state insurance department and confirm that the insurance company is licensed to do business in your state. You can also call the State Health Insurance Assistance Program in your state. These programs can give you free help with choosing a Medigap policy. 9. Watch Out for Illegal Insurance Practices You should know it is illegal for anyone to pressure you into buying a Medigap policy, lie or mislead you to switch to another company or sell you a second Medigap policy when they know that you already have one. It is also illegal to sell you a policy that cannot be sold in your state. 10. Understand Your Medigap Rights and Protections You need to know that under Federal law, you have rights and protections regarding your Medigap coverage. These include your right to buy Medigap coverage, protections if you lose or drop your health care and your protections for people with Medicare under the age of 65. Call your State Health Insurance Assistance Program to better understand these rights and protections.
Prescription Drug Coverage Considerations: • Lucent’s prescription drug coverage is excellent, even if expensive. • If you decide to look for your own Medicare Part D coverage, use Medicare’s web site: http://www.medicare.gov/ to research plans. Look for the link to “Medicare Prescription Drug Plan Finder” and then “Find a Medicare Prescription Drug Plan.” Or you can choose the link to “Formulary Finder” which allows you to list the drugs you take and the site will search for the Part D plans that match your list. • The three things you should look for in a Medicare Part D plan: o Are the pharmacies convenient and the ones you want to deal with? o Are your drugs listed as covered? Some of the less expensive plans only cover a limited number of drugs. You should look for plans with wide coverage. Even if you use Medicare’s Formulary Finder and choose a plan in which your drugs are covered, what about future prescriptions. You probably want a Part D plan covering a wide variety of drugs. o What is your total out-of-pocket costs for the prescription drugs you will purchase in a year plus the Part D premium? How does this compare to the Lucent Rx-only premium plus out-of-pocket costs? • One thing you should know about the Medicare Part D plans is that no matter how they are structured, you have to pay out $3,600 during the year (excluding premiums) before Medicare starts paying at the catastrophic rate of 95%. So, your annual risk is $3,600 plus 5% of the cost above that. • REMEMBER: It is very important to be enrolled in a plan that is “creditable coverage” (like Lucent’s plan) or in a Medicare Part D plan. If you are not enrolled in one of these and decide you need Medicare Part D later, you will pay a premium penalty of 1% per month!
The content above reflects the research and opinions of Lola Hotchkis who submitted the document to the Lucent Retiree Organization on Oct. 24, 2005. |