How well do you understand your health coverage? In the world of health insurance and, to a lesser extent, Medicare, a single misstep can trigger massive out-of-pocket costs. Bottom Line Personal asked patient advocate Maura Carley, MPH, CIC, to share some of the coverage misconceptions she has encountered.

Medicare Matters

One spouse transitioning onto Medicare can reset the other spouse’s deductible. A couple obtained health insurance together through the individual market until the older spouse switched to Medicare at age 65. The insurance company told the not-yet-Medicare-eligible spouse that she would have to enroll in a new plan when the older spouse enrolled in Medicare. Problem: She had already met her annual deductible, so if she enrolled in a new plan, she would have to meet a new deductible.

What to do: Couples enrolling in individual coverage together in years leading up to Medicare eligibility should have the younger spouse serve as the “subscriber.” If your insurer tries to reset your deductible, contact your state’s insurance department for advice.

Medicare’s 100 days of nursing home-care doesn’t mean what you think it means. A Medicare recipient’s ability to care for himself was rapidly deteriorating, and a move to a nursing home seemed inevitable. His adult children examined their father’s Medicare benefits and discovered that Part A provides up to 100 days of nursing home coverage—but they mistakenly thought this meant Medicare would pay dad’s nursing home claims for 100 days. Problem: Medicare will not pay for a nursing home stay needed just because the recipient cannot safely take care of himself. Medicare’s nursing home benefit is available only immediately following a hospital stay of at least three days…and only if the patient requires “skilled services” in an inpatient setting to treat medical issues related to that hospital stay. Even if those conditions are met, Medicare covers nursing home costs only as long as those inpatient skilled services are needed—100 days is the maximum, not a guaranteed coverage duration.

Also, days 21 to 100 of this coverage with original Medicare have $194.50-per-day co-pays. Many but not all Medicare Supplement plans provide coverage for these co-pays. Medicare Advantage plan members should check with their plans to understand what is covered.

What to do: Don’t expect Medicare to be the answer to the question, How are we going to pay ongoing nursing home bills when it is not safe for the individual to live alone? Medicare coverage in a nursing home is for patients who are receiving skilled services, such as physical or speech therapy, and are recovering from illness or injury. The main payment options for long-term care (LTC) in a nursing home are paying out of pocket…having LTC insurance…or having hybrid life insurance featuring an LTC component—but policies must be obtained while the policyholder is healthy. Many individuals in nursing homes spend down assets until they are eligible for Medicaid, which is coverage for individuals who have little income and/or assets.

The death of a spouse can affect a 65-or-older widow/widower’s ­coverage in unexpected ways if he is not yet on Medicare. A man in his late 60s obtained health coverage as a dependent through his wife’s employer’s group plan—then his wife died. He received a letter from the employer’s benefits department offering him the option of remaining on the company’s plan by paying out of pocket for COBRA coverage. He liked the coverage and had met his annual deductible, so he chose the COBRA coverage option. Problem: COBRA is secondary coverage for people who are Medicare eligible—it will pay as though Medicare paid first even if that individual is not enrolled in Medicare. If a person in this situation is not enrolled in Medicare Part B, he is likely to be responsible for the amount that Medicare would have paid.

What to do: If you lose access to a group plan after age 65, you almost certainly should decline COBRA and enroll in Medicare immediately. Even better: Sign up for Medicare Part A as soon as you reach 65 even if you don’t need it right away, unless you have a plan with a Health Savings Account (HSA) and want to continue contributing to that HSA.

If you have active group coverage through your or your spouse’s work and the employer has 20 or more employees, Part A will be secondary to the group coverage. If you continue working beyond age 65 or are married to a spouse with active group coverage through an employer with 20 or more employees, you are not required to enroll in Medicare Part B. 

Rules for people working beyond age 65 who work for employers with fewer than 20 employees vary by state and plan, so you need to know whether you are required to enroll in Medicare Parts A and B. Your employer and/or the ­broker should know what is required.

Group and Individual Coverage

If you’re not yet on Medicare…

In-network providers might insist  that you pay more up front than you owe. An ophthalmologist’s office insisted that a patient pay $100 at time of service even though this patient’s insurance plan had a $35 co-pay. Weeks later, the patient received an Explanation of Benefits (EOB) statement from her insurer confirming that she was responsible for only the $35 co-pay. Problem: When this patient called the ophthalmologist’s billing staff to ask for a refund, they dragged their feet about returning her money.

It has become common for health-care providers to overcharge in-network patients. Sometimes this happens accidentally—insurance coverage can be difficult even for health-care ­providers to understand. But sometimes it’s intentional—providers don’t like to wait to receive payment from insurers and don’t want to risk not getting paid if an insurer rejects the claim. Overcharges are especially common with high-deductible plans…and/or when patients have met their plans’ out-of-pocket maximums. Once this maximum is met, the patient should no longer have to pay co-pays to in-network providers.

What to do: Know what your deductible and co-pay are and whether you’ve met your out-of-pocket maximum. Push back if a provider asks you to pay more. If a provider insists on an overpayment, pay with a credit card—it often is easier to challenge an overpayment through the credit card issuer than wait for a refund from the provider. After the claim is processed, review the EOB from your insurer. If you were overcharged, contact the provider and insist that a refund be issued immediately. If you don’t receive the refund promptly, contact the credit card issuer to dispute the overcharge. Act quickly—your legal right to dispute a credit card overcharge extends for only 60 days after that charge appears on your credit card statement.

Enrolled in coverage doesn’t necessarily mean entitled to coverage. A woman had been divorced for years but continued to obtain coverage as a dependent on her ex’s employer’s group plan—her ex didn’t report the divorce to his employer. The insurer sent this woman an insurance card each year and paid her claims. Problem: She was not entitled to the coverage. If the insurer discovered this, it could refuse to pay her future claims and sue her to recoup the years of claims it had paid following the divorce. This isn’t the only way people can end up enrolled in coverage that they aren’t entitled to—people who obtain coverage on the individual market sometimes relocate outside their plan’s coverage area but fail to change plans.

What to do: Never interpret an insurer sending you an ID card and/or accepting your premium payments as evidence that you can remain on a plan following a divorce or a move—that might just mean the insurer hasn’t yet noticed that you’re now ineligible. Plan in advance of divorce or relocation so you will know when to enroll in a new plan. You should qualify for a “special enrollment period” when you face the loss of coverage, but if you miss that window, you risk having no coverage until the next open-enrollment period.

Nontraditional coverage options can be risky. A woman signed up for a “limited benefit” health plan after confirming that her preferred hospital was in its network. Problem: When she spent five days in that in-network hospital following a stroke, the plan contributed only $15,000 toward a bill of $175,685. Problem: “Limited benefit plans,” “short-term health plans,” “association plans” and “Christian cooperatives” often have lower premiums than coverage through Affordable Care Act (ACA) exchanges. But these plans often fail to protect enrollees against the risk of financial ruin. Not only might the plan cover a smaller percentage of medical bills than an ACA plan, it might not have negotiated rates with the in-network providers, leaving enrollees to pay potentially exorbitant rates. There also have been cases of Christian cooperatives going bankrupt, leaving ­enrollees with unpaid claims.

What to do: When you need individual coverage, buy it through your state or federal marketplace or directly through a reputable insurer. You want the coverage and consumer protections associated with an ACA-compliant plan.

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