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Friday, March 04, 2011

High Deductible Plans and Medicare Part B Don't Go Together

Those of you who have reached or are approaching age 65 have an extra decision to make regarding our Open Enrollment. You are or soon will be enrolled in Medicare Part A, which is free and automatic for U.S. citizens. This covers hospitalization, nursing homes, skilled nursing facilities, and some home health. This does not impact your group insurance decision at all.

What is an issue is whether or not you should take Medicare Part B, which covers physicians, outpatient procedures, and durable medical equipment. Part B must be elected and will cost you, for this year, at least $1,384.80 for the next 12 months. In our opinion, and that of our broker Corporate Benefits Alliance, this coverage will not pay more in benefits than you'll pay in premium (see chart).


Now before your eyes gloss over, let's walk through it.

Medicare pays 80% (you pay 20%) after a $162 deductible. Medicare is always the payer of last resort, but it will pay its portion between the $162 Medicare deductible and the $1,200 Blue Cross deductible. That totals $830 in benefits ($1,200 - $162 deductible = $1,038 x 80%).

After you've reached $1,200 in medical bills your Blue Cross insurance kicks in at 80%, making Medicare secondary. In the coordination of coverage rules for Medicare, it will pay whatever Blue Cross does up to the limits of Medicare's coverage. Because Blue Cross pays 80%, and Medicare pays 80%, Medicare will pay nothing else. You pay 20% until your total out of pocket reaches $8,800 (a rarity)and then Blue Cross pays 100%.

The coordination of these two coverages means that you'll pay $567 more in Part B premium that you'll ever receive in benefits.

Bottom line: if you have Parts A and B you don't need to elect our coverage. If you have Part A and want a Blue Cross High Deductible Plan you should not elect Medicare Part B.

4 comments:

Anonymous said...

Question for you:

My son is an ESRD patient and is in the first 30 month period.

We have a primary plan with a $2000 deductible. He also has Medicare Part B.

From what you say, will medicare pay 80% of that deductible after its deductible (I thought it was $115)?

So I come up with (2000 - 115) * 80% = 1508.

Am I doing something wrong?

Will medicare pay 80% of the doctor copay as well?

Jim Thomason said...

Anonymous,

Not being a medical professional I had to look up ESRD. Unless I pulled the wrong link, it appears to be End Stage Renal Disease. My post was relating to Thomas Nelson employees at or near age 65 and how they might coordinate Part B with our HDP plan. I know nothing about Medicare as it relates to non-retirees with chronic or critical care issues and would not hazard a suggestion.

Anonymous said...

Question for you: I was on a High Deductible Health Insurance plan in 2012, paid for by my employer. I didn't work over the summer, so I enrolled in Medicare part B for three months. Then I went back to my High Deductible plan through my employer for the remainder of the year. I also have an HSA that I used to pay my medical expenses. Now I'm doing my taxes, and I'm getting a message from Turbo Tax saying that none of my medical expenses are deductible. Please help! I think I might have done something wrong by having an HSA for even 3 months while on Medicare Part B. Also depend on deducting medical expenses on my tax return for the credit. THank you for any help you can give!

Jim Thomason said...

Anonymous,your question is a tax question rather than simply a benefits question, and I claim no expertise in tax matters. I suggest you contact the IRS Telephone Assistance line at 1-800-829-1040. I find that when you reach out to the government for assistance you are pleasantly surprised with the service, which is free. If you don't want to ask the government you can of course go to your own tax preparer, but since you have Turbo Tax I assume you prefer to do your own. Either way, best of luck!