Private Medicare Plans Medicare Training – Topic 2 r. 2016-08-27

Topic Overview Medicare Plan Types Medicare Advantage Plans Prescription Drug Plans Combining Medicare Plans Financial Assistance Programs

Part 1: Private Medicare Plans Medicare Plan Types Part 1: Private Medicare Plans

The Medicare Program Part A Part B Medicare Part C Part D Original Medicare Private Medicare Plans As we discussed in our first topic (Original Medicare), Medicare is arranged into four primary parts labeled A through D. In this module we will focus on Parts C and D (Private Medicare Plans). We will review another private Medicare option—Medicare Supplements—in more detail in a later module.

Private Medicare Options Beneficiaries may choose to buy Medicare coverage from private insurance companies They have three primary options… Medigap Part D Plans Part C Plans In this module we will focus on Part C and D plans; however, Medigap is a third option offered by private insurance companies. The following slides will give a general overview of Part C and D plans. A separate module will discuss Medigap plans in detail. For now, it is important to note that only Medigap plans are rightly known as Medicare Supplements. Part C and D plans are NOT Medicare Supplements. They have their own designations, as we will see.

Part C – Medicare Advantage (MA) Plans Plan Networks Other Benefits Part A and B Benefits Medicare Part C is a private health insurance option designed for all-in-one coverage under one plan. The Medicare Part C program is also known as Medicare Advantage (MA). MA plans must include the same or better coverage as Original Medicare (Parts A and B). MA plans generally include additional benefits and services that go beyond Original Medicare, such as: Gym memberships and fitness programs Nurse hotlines Discounts on holistic services such as vitamins, massage therapy, and acupuncture MA plans generally use plan networks to keep costs low. We will cover these in more detail later in this module.

Part D – Prescription Drug Plans (PDP) Network Pharmacies Drug Tiers Plan Formulary Medicare Part D plans are also known as Prescription Drug Plans (PDPs). Recall that Original Medicare usually only covers drugs administered in a hospital or doctor office setting. To cover drugs from a retail or mail-order pharmacy, beneficiaries must enroll in Part D coverage. This generally covers generic, brand name, and specialty drugs, arranged in three to five tiers. Just as Part C plans use networks to control costs, Part D plans use plan formularies to keep their costs low. A plan formulary is a list of drugs the plan will cover, along with any special rules that apply, such as step therapy or prior authorization. We will cover this in more detail later in this module.

Medicare Advantage Prescription Drug Plan (MAPD) MAPD Plans Part C Plan Part D Plan Medicare Advantage Prescription Drug Plan (MAPD) Many Medicare Advantage plans combine the benefits of Part C and Part D into one plan. These plans are known as Medicare Advantage Prescription Drug (MAPD) plans.

Medicare Advantage Plans Part 2: Private Medicare Plans

Medicare Advantage Eligibility To enroll in a Medicare Advantage (MA/MAPD) plan, beneficiaries must: Be a lawful U.S. resident Have both Medicare A and B Live in the plan’s service area Enroll during a valid enrollment period Before beneficiaries may enroll in a Medicare Advantage plan (MA or MAPD), they must meet all the above criteria. Recall that Part C plans use networks. Many of these are confined to a specific geographical area, known as the plan’s service area. Beneficiaries’ primary physical address (NOT mailing address, PO box, or secondary address) must be within the plan’s service area. NOTE: If beneficiaries have multiple addresses and are unsure which is their primary address, ask: From what address do you file your taxes? Medicare Advantage plans have an Annual Election Period from October 15 to December 7 each year. Beneficiaries may only enroll during this period unless they are new to Medicare or qualify for a Special Election Period. (Enrollment periods will be discussed in more detail in a later module.)

Medicare Advantage Networks Health Maintenance Organization (HMO) Preferred Provider Organization (PPO) Private Fee-for-Service (PFFS) Private Medicare Health Plans can take a number of forms. To avoid confusion, we will focus on the three primary types we actively enroll in our operation. Each of these is discussed in more detail on the next few slides.

Special Needs Plans Available MA-HMO Plans Pros Low Premiums Low Cost Shares Special Needs Plans Available Cons In-Network Only* Referrals Required Small Networks (https://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/hmo-plans.html) (https://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/special-needs-plans.html) Health Maintenance Organizations are known to focus on coordinated care, preventive treatment, and tight cost control. HMO’s are generally the only MA plans to offer Special Needs Plans (SNPs). SNPs (pronounced “snips”) are plans specially designed to benefit enrollees with unique needs due to one of the following: Qualifying for both Medicare and Medicaid (a.k.a. Dual Eligible Plans or DE-SNPs) Having a chronic medical condition (a.k.a. Chronic Care Plans or C-SNPs) Residing in a healthcare institution such as a nursing home (a.k.a. Institutional Plans or I-SNPs) NOTE: Due to the specialized nature and requirements of SNPs, outsourced employees must not enroll these plans. For these reasons, they are generally known for the following: Enrollees must select a Primary Care Physician who must give referrals within the plan’s network for Specialist care. (Primary Care Physician is often referred to as the Gatekeeper.) Coverage is limited to in-network care only. Except for emergency care or out-of-area dialysis, enrollees must pay the full cost for out-of-network services. Networks are usually confined to a local metro area or small region within a state. NOTE: Some HMOs offer a Point-of-Service (POS) option that allows out-of-network coverage at a higher cost share. * Plans must cover emergency care and out-of-area dialysis as in-network

Pros Cons MA-PPO Plans In- and Out-of-Network Coverage No Referrals Local or Regional Networks Cons Higher Cost Out-of-Network Moderate to High Premiums Non-Network Providers May Reject (https://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/preferred-provider-organization-plans.html) Preferred Provider Organizations focus on flexibility by allowing enrollees access to out-of-network care while incentivizing them to use network providers to control costs. For these reasons, PPOs are known for the following: Enrollees generally pay more if receiving care from a non-network provider. While some low-cost PPOs are available, they generally have relatively moderate to high premiums. Providers are under no obligation to accept out-of-network patients. Enrollees must call ahead to ensure they will accept their plan for services to be covered.

Pros Cons MA-PFFS Plans No Network Restrictions No Referrals Network Options Available Cons Providers’ Choice to Accept Coverage High Premiums Limited Availability (https://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/private-fee-for-service-plans.html) Private Fee-for-Service plans focus on freedom to go to all providers who accept Medicare nationwide, as long as they also agree to the terms and conditions of the plan. In some cases, PFFS plans may have networks embedded in their plans as a convenience to enrollees. Network providers have already agreed in advance to accept the plan and its enrollees. For these reasons, PFFS are known for the following: Enrollees must get approval in advance from non-network providers on a visit-by-visit basis to ensure they still accept both the patient and the plan’s terms and conditions. Non-network providers have full discretion to accept or reject the plan’s terms and conditions or to accept or reject patients on an individual basis from one visit to the next. PFFS plans generally have the highest premiums compared to other MA options. PFFS plans are rare in many markets.

PFFS PPO HMO Plan Cost Comparison Service Area Monthly Premium Generally, a plan’s monthly premium increases with the plan’s service area. Service Area

MA Out-of-Pocket Limits (2016) In-Network Maximum $6,700 Out-of-Network Maximum $10,000 Includes both in- and out-of-network costs 2017 AHIP – Module 2, Slides 12 and 14 list CMS out-of-pocket limits on MA plans Unlike Original Medicare, Medicare Advantage plans are legally required to have out-of-pocket limits. This means beneficiaries have an annual cap on how much they spend out of their pocket for covered Medicare expenses. After they reach their plan’s limit, the plan must pay 100% of covered costs. Out-of-pocket Limits include the following costs: Deductibles Coinsurance Copays Out-of-pocket Limits do NOT include: Monthly premiums Prescription costs Non-covered expenses NOTE: The out-of-network limit is for the combined in- and out-of-network costs.

Prescription Drug Plans Part 3: Private Medicare Plans

Prescription Drug Plan Eligibility To enroll in a Prescription Drug Plan (PDP), beneficiaries must: Be a lawful U.S. resident Have either Medicare A or B Live in the plan’s service area Enroll during a valid enrollment period Before beneficiaries may enroll in a Prescription Drug Plan (PDP), they must meet all the above criteria. All of the criteria are the same as a Medicare Advantage plan, except one. Beneficiaries are NOT required to have both Parts A and B to enroll in a PDP. They may have both, or one or the other. Again like Medicare Advantage, PDPs have an Annual Election Period from October 15 to December 7 each year. Beneficiaries may only enroll during this period unless they are new to Medicare or qualify for a Special Election Period. (Enrollment periods will be discussed in more detail in a later module.)

Creditable Drug Coverage Drug coverage is considered creditable* if the plan meets or exceeds: Formulary guidelines Part D standard coverage *All MAPD plans and PDPs are considered creditable drug coverage

Formulary Guidelines (2017 AHIP, Module 3, Slides 16 and 20) Formularies must include: 2+ drugs in every therapeutic category Generic drugs Brand name drugs But may NOT cover: Weight loss drugs Fertility drugs Erectile dysfunction drugs Vitamins (2017 AHIP, Module 3, Slides 16 and 20)

Special Formulary Rules Plan formularies may include special restrictions on some covered drugs Step Therapy Lower cost drugs must be tried first Prior Authorization Plan must approve in advance of coverage (2017 AHIP, Module 3, Slide 15)

Part D Standard Coverage Initial Coverage Coverage Gap Catastrophic Coverage Initial Coverage Limit TrOOP Limit Phase 1 Phase 2 Phase 3

Part D Initial Coverage (2017) Beneficiary pays $400 deductible + 25% coinsurance Plan pays 75% after deductible is met Initial Coverage ends when combined total reaches $3,700

Part D Coverage Gap (2017) Generic Rx Brand Name Rx Beneficiary pays 51% Plan pays 49% Beneficiary pays 40% Plan pays 10% Manufacturer discounts 50%

True Out-Of-Pocket (TrOOP) Limit (2017) Beneficiary’s Contributions Coverage Gap Manufacturer Discounts Qualified Financial Assistance When TrOOP is $4,950, Catastrophic Coverage begins Only formulary drugs obtained through a plan pharmacy count toward TrOOP

Part D Catastrophic Coverage (2017) Generic Rx Brand Name Rx Copayment $3.30 Coinsurance 5% Copayment $8.25 Coinsurance 5% Beneficiary pays whichever is larger Beneficiary pays whichever is larger

Part D IRMAA (2016) Annual income at or below $85,000 per person National Average Part D Premium $34.10 Income-Related Monthly Adjustment Amount (IRMAA) + $12.70 + $32.80 + $52.80 + $72.90 Annual income at or below $85,000 per person Annual income above $85,000 per person The Part D premium increase for individuals making above the specified income limits is known as IRMAA: Income-Related Monthly Adjustment Amount. https://www.medicare.gov/part-d/costs/premiums/drug-plan-premiums.html Below is the 2016 Part D IRMAA table (from Medicare.gov). All annual income limits are double if including spouse’s income. Part D IRMAA premium is calculated as the premium of the plan purchased plus the amount indicated below. $85,000 or less = Premium Only Above $85,000 up to $107,000 = Premium + $12.70 per month Above $107,000 up to $160,000 = Premium + $32.80 per month Above $160,000 up to $214,000 = Premium + $52.80 per month Above $214,000 = Premium + $72.90 per month

Part D Late Enrollment Penalty (2016) Adds 1% of $34.10 (or $0.34)* per month without Part D Penalty is indefinite https://www.medicare.gov/part-d/costs/penalty/part-d-late-enrollment-penalty.html *Part D Late Enrollment Penalty is based on the national average monthly premium, NOT the plan premium.

Annual Election Period (AEP) October 15 Enrollment Begins December 7 Enrollment Ends January 1 Coverage Begins Although we will discuss enrollment periods in more detail later, it is good to note that the general time frame for beneficiaries to enroll in a Medicare Advantage plan is during the Annual Election Period (AEP).

Combining Medicare Plans Part 4: Private Medicare Plans

Plan Combinations With so many options, Medicare has rules around which plans can go with one another NOTE: It is imperative that agents understand these guidelines, as making the wrong choices could have an adverse effect on a beneficiary’s coverage.

Medicare Advantage and Medigap Medigap plans work with Original Medicare only It is illegal to sell a Medicare Advantage plan to Medigap enrollees, unless they disenroll from the plan Medicare Advantage Medigap

Medicare Advantage and Drug Coverage Generally, beneficiaries who want drug coverage with a Medicare Advantage plan must enroll in a Medicare Advantage Prescription Drug plan (MAPD) MA Rx MAPD

Stand-Alone Prescription Drug Plans Stand-alone PDPs are primarily designed to work with: Original Medicare Medigap MA-PFFS

MA and Stand-Alone PDPs MA-Only HMO PPO PDP MA-Only PFFS PDP Beneficiaries may not enroll in both a MA-only plan that is HMO or PPO and a stand-alone PDP. The only MA-Only plan type that can combine with a stand-alone PDP is a PFFS.

Automatic Disenrollment Understanding plan combinations helps to avoid mistakenly disenrolling beneficiaries from other coverage

What happens when you enroll in MAPD and the beneficiary already has… MAPD Enrollment What happens when you enroll in MAPD and the beneficiary already has… MA-Only The beneficiary will gain drug coverage The beneficiary will replace prior health coverage Stand-Alone PDP The beneficiary will gain health coverage The beneficiary will replace prior drug coverage Another MAPD The beneficiary will replace all prior coverage

MA-Only HMO or PPO Enrollment What happens when you enroll in MA-Only HMO or PPO and the beneficiary already has… Another MA-Only The beneficiary will replace prior coverage Stand-Alone PDP The beneficiary will lose drug coverage The beneficiary will gain health coverage MAPD The beneficiary will replace health coverage

MA-Only PFFS Enrollment What happens when you enroll in MA-Only PFFS and the beneficiary already has… Another MA-Only The beneficiary will replace prior coverage Stand-Alone PDP The beneficiary will keep drug coverage The beneficiary will gain health coverage MAPD The beneficiary will lose drug coverage The beneficiary will replace health coverage

Stand-Alone PDP Enrollment What happens when you enroll in stand-alone PDP and the beneficiary already has… MA-Only (HMO or PPO) The beneficiary will lose health coverage The beneficiary will gain drug coverage MA-Only (PFFS) The beneficiary will keep health coverage Another Stand-Alone PDP The beneficiary will replace prior drug coverage MAPD

Financial Assistance Programs Part 5: Private Medicare Plans

Help for Low Income Beneficiaries Beneficiaries have two primary sources of financial aid with Medicare Medicaid Low Income Subsidy / Extra Help

Medicaid Eligibility Who qualifies? Most Individuals at less than 135% of Federal Poverty Level Some disabled individuals at less than 200% of Federal Poverty Level Must apply with and be approved by the State Medicaid office https://www.medicaid.gov/medicaid-chip-program-information/by-topics/eligibility/seniors-and-medicare-and-medicaid-enrollees.html

Medicaid Financial Assistance What does it help with? Part A and/or B Out-of-pocket Costs Part A and/or B Premiums Additional Medicaid Benefits https://www.medicaid.gov/medicaid-chip-program-information/by-topics/eligibility/seniors-and-medicare-and-medicaid-enrollees.html

Medicaid Benefits What additional benefits does Medicaid offer? Skilled nursing beyond 100 days Eyeglasses Hearing aids

Extra Help Eligibility (2016) Who qualifies? Annual income below $17,820 individually or $24,030 with spouse (<150% FPL) Assets below $13,640 individually or $27,250 with spouse Must apply with and be approved by the Social Security Administration https://www.medicaid.gov/medicaid-chip-program-information/by-topics/eligibility/seniors-and-medicare-and-medicaid-enrollees.html For LIS eligibility, assets include bank accounts, stocks, and bonds, and exclude home, car, or any life insurance policies

Extra Help Financial Assistance (2016) What does it help with? Part D Out-of-pocket Costs* Part D Premiums https://www.medicaid.gov/medicaid-chip-program-information/by-topics/eligibility/seniors-and-medicare-and-medicaid-enrollees.html *Extra Help recipients never enter the coverage gap and pay no more than $2.95 per generic or $7.40 per brand drug.

Important Considerations No two beneficiaries are alike Actual assistance from Medicaid or LIS varies greatly by income and state Coordination of Benefits Medicaid recipients may enroll in any MA plan they wish It does NOT have to be a Dual Eligible plan To avoid issues, ensure providers accept both the plan and Medicaid NOTES: Various levels of Medicaid and LIS exist for different income brackets. The actual benefits it provides will depend on the state and income level of the individual. We strongly advise our agents against discussing specifics about Medicaid benefits with Medicare beneficiaries. It is best to refer them to their local Social Security Administration or Medicaid office for details on how their financial assistance works. If enrolling a Dual Eligible beneficiary in a standard (non-SNP) plan, agents must read the standard benefits and disclose to the enrollee that these cost shares will apply if the enrollee loses Medicaid. Agents must always state the required disclaimer that enrollees must continue to pay their Part B premium; however, they may add: “If Medicaid currently pays your Part B premium, they will continue to do so after you enroll in this plan.” Additionally, it is imperative that agents advise enrollees to ensure their providers accept both the plan and Medicaid to avoid issues with coverage. Although some enrollees are cost-share protected due to their Medicaid status, this is not true for all Medicaid recipients.

Special Election Period for Medicaid/LIS Both Medicaid and LIS/Extra Help recipients have a year-round Special Election Period Plans will take effect Day 1 of the next month

Recap Private Medicare Plans Part 1 Medicare Plan Types What are Parts C and D of Medicare? Part 2 Medicare Advantage Plans Who qualifies and how are they structured? Part 3 Prescription Drug Plans Who qualifies and how does creditable drug coverage work? Part 4 Combining Medicare Plans How can plans be combined and what pitfalls should we avoid? Part 5 Financial Assistance Programs Describe the primary types of financial assistance in Medicare.

Thank you for your attention. Private Medicare Plans