Call Summary
Medicare Network Conference Call
April 8, 2003
When Retiree Health Insurance Disappears
I. Introduction
The topic of this call was how SHIPs assist retirees to assess their options when they lose their retiree health insurance. While the topic was inspired by the Bethlehem Steel bankruptcy and the plight of the 95,000 Bethlehem Steel retirees who lost their retiree health insurance as a result, the issues are actually far broader. As employers assess the costs of health insurance, many are cutting back or eliminating retiree coverage. SHIPs are aware of other large companies that are going out of business or declaring bankruptcy, thereby causing retirees to lose health insurance. The numbers of retirees affected by the loss of retiree health insurance is growing, and it is, therefore, important for SHIPs to stay up to date on the very complex issues related to the choices retirees must make when their retiree health insurance disappears.
II. Medicare-eligible Retirees
A. Medicare Part B Enrollment
The first step for Medicare-eligible retirees is to assure that they enrolled in Medicare Part B promptly upon retirement. Timely Medicare Part B is essential in order to avoid delays in Medicare Part B coverage and imposition of a penalty premium. (See the background materials prepared for this call for more information about Medicare Part B enrollment.). SHIPs pointed to many cases in which retirees had understood the law and had not timely enrolled in Medicare Part B. Sometimes, employers do not properly counsel workers who are about to retire as to the consequences of failing to timely enroll in Medicare Part B. Many seniors do not comprehend that the 10 percent per year penalty premium lasts forever and increases by 10 percent for each year Part B enrollment was improperly delayed. Some employers tell employees they must enroll in Medicare Part B, even if they continue working. Employees, who follow this advice will not have the benefit of the Medigap Open Enrollment Period when they need it, upon retirement, they lose their comprehensive employer group health insurance.
Retirement is a time at which critical decisions must be made, and seniors may become trapped if they make the “wrong” decision about Medicare Part B enrollment.
Some SHIPs work with large employers to educate and counsel workers about how to prepare for retirement, including the need to enroll in Medicare Part B during the Special Enrollment Period. Several SHIPs shared their pre-retirement education materials to us. Click here to see Iowa’s “Ready to Retire,” and click here to see North Carolina’s “Roadmap to Medicare.”
SHIPs have brought to the attention of CMS the need to more clearly explain Medicare Part B enrollment to working seniors in Medicare and You handbook.
Note: In comments to CMS on a draft of Medicare and You 2004, HAP made suggestions to CMS about improving the message on Medicare Part B enrollment. HAP’s comments focused mainly upon promoting the importance of the SHIPs’ work with Medicare beneficiaries. Click here to view HAP’s comments.
SHIPs observed that a change in the law to extend the Special Enrollment Period to help retirees would help Medicare beneficiaries of all ages avoid the often catastrophic consequences of failing to timely enroll in Medicare Part B. At this time, Congress does not appear to be headed in this direction.
B. Choosing Between Medigap and COBRA
Medicare-eligible retirees losing retiree health insurance may elect COBRA. They may also take advantage of a guaranteed issuance period for Medigap policies A, B, C, and F. Some states offer additional protections beyond those afforded by federal law. It is important for SHIPs to be well-versed in state law enhancements to the basic federal legal Medigap protections.
The availability of prescription drug coverage is often the biggest factor retirees consider when deciding whether to elect COBRA or purchase a Medigap policy. Cost is the other factor they should assess. The federally guaranteed Medigap policies do not offer prescription drug coverage. Some states have prescription drug assistance programs that can help retirees with modest economic means.
Note: The Medicare Rights Center website contains a list and links to each of the state-operated pharmaceutical drug programs. See http://www.medicarerights.org/searchframeset.htm.
Some retirees elect COBRA because the care they need for their medical condition has been covered by the employer group health insurance, and they are uncertain as to whether Medicare and Medigap will cover their treatments.
COBRA coverage generally does include a prescription drug benefit. Yet COBRA is very expensive, and the benefit package is subject to change by the employer. The former employer has the right to change the employer group health insurance benefit package for all who are covered by the group, including COBRA-covered retirees.
COBRA enrollees who find they cannot afford the premium cost have no right under federal law to guaranteed issuance of any Medigap policy. Some states have addressed this dilemma through state law. Maryland enacted legislation requiring guaranteed issuance of all Medigap policies to all Medicare beneficiaries, regardless of age, during the 63 days following the termination of retiree health insurance plans.
Note: On April 9, 2003, HAP issued a Medicare alert about the Maryland legislation and would like to hear from SHIPs in other states about legislative or regulatory efforts to address these issues. Click here for the New Maryland Medigap Guaranteed Issuance Law.
In May, 2003, CMS has released a Program Memorandum, “Interaction between COBRA and Medigap Guaranteed Issue Requirements in Situations Involving Termination of Employer Group Coverage--Bulletin 03-02," stating that Medicare beneficiaries have a guaranteed issuance period when COBRA ends, since COBRA is an employee welfare benefit plan. The CMS Program Memorandum may be viewed at http://www.cms.hhs.gov/medigap/mdgp0302.pdf
When large corporations, such as Bethlehem Steel or Montgomery Ward declare bankruptcy, a corporate acquisition or reorganization may result in COBRA being offered to retirees for life. In these cases, the COBRA coverage is not exhausted unless the COBRA entity discontinues offering all health insurance or ceases to exist. COBRA-for-life can present serious difficulties to retirees. The company may reduce the health insurance benefit package for all who are covered, including COBRA-for-life retirees, or may raise the price of the insurance. Since COBRA-for-life, by definition, does not terminate, should a retiree become unable to afford the COBRA premiums and seek to replace COBRA with other health insurance, there is no protection in federal law requiring guaranteed issuance for purchase of a Medigap policy and, likewise, no federal protection against the imposition of pre-existing condition limitations or exclusions.
C. Veterans Health System
Many retirees who lose retiree health coverage are veterans or the spouses or widows of veterans. As of January 17, 2003, many veterans discovered that they may not enroll in the Veterans Administration Health System at this time. Enrollment for Priority 8 veterans, who do not have a service-connected disability and whose eligibility is means-tested, was suspended indefinitely on January 17, 2003.
Note: HAP is in the process of arranging for an Issue Brief on veterans’ health benefits. We will alert our networks when it is posted.
D. Health Insurance as Dependent of a Working Spouse
For a retiree losing health insurance who has a working spouse, there may be another option. A spouse who is employed by a company with more than 20 workers may enroll the retiree as a dependent. The enrollment must be made no later than 30 days after the retiree loses the retiree health insurance. The benefit package offered by the working spouse’s company should be carefully scrutinized to assess whether this is a good option for a retiree losing health insurance.
E. Qualified Medicare Beneficiary (QMB) and State Drug Assistance Programs
Many widows of Bethlehem Steel retirees live on very limited income and assets. Often, the widow’s sole benefit from the company was payment of the health insurance premium. For these individuals, Q.M.B. and state drug assistance programs, where available, may offer the best combination of programs to provide health coverage.
III. Non-Medicare-eligible Retirees
A. COBRA Versus Individual Conversion Policies
Younger retirees who are not eligible for Medicare when they lose their health insurance face a drastically different situation. Whereas Medicare beneficiaries have Medicare as their primary health insurance, younger retirees mUst take action to avoid the stark possibility of no health insurance at all once their former employee ceases offering retiree health insurance.
For such a retiree, the primary health insurance options are COBRA or an individual conversion plan. In counseling these retirees about COBRA, emphasis must be placed upon explaining COBRA. The cost and the availability of the Trade Adjustment Act health care tax credit to pay 65percent of the COBRA insurance premium must be explained. The tax credit is available to qualified retirees between the ages of 55 and 65 and their spouses aged 55 to 65.
Note: For more detailed information, see the background material on the Trade Adjustment Act tax credit for more information: http:/assets/docs/New_Tax_Creditfe07.docdocID=442.
Individual conversion policies are often heavily marketed and may appear attractive to retirees. Many retirees express the desire to remain with the same insurance company from which they have always obtained their health insurance coverage. It is necessary to explain to such retirees that if they purchase an individual policy immediately upon losing their retiree health insurance, they will have no protection against the imposition of a pre-existing condition limitation or exclusion. They must first exhaust any COBRA benefits offered to them in order to obtain the HIPAA health insurance portability protections of guaranteed issuance and the prohibition against the imposition of pre-existing condition limitations or exclusions. Moreover, most individual policies will not be eligible for the 65 percent Trade Adjustment Act tax credit.
IV. Insurance Sales Marketing Issues
SHIPS have encountered questionable insurance marketing tactics. These have included
- Misrepresenting of the availability and coverage offered in the individual market through conversion policies;
- Misleading Medicare-eligible retirees into believing that that they can qualify for a Medigap policy that includes prescription drug coverage. After retirees take an insurance exam they are not offered plans H, I or J, but rather are offered a Plan A, B, C, or F policy, along with a drug discount card.
CMS is interested in such questionable practices. Please keep HAP informed of SHIP encounters with such sales tactics.
V. SHIP Response
The essential role of the SHIPs in responding to the retirees affected by the bankruptcy of Bethlehem Steel has been widely acclaimed. SHIPs were the only independent source of information and guidance, providing the Bethlehem Steel retirees with clear, accurate, objective and timely face-to-face counseling and assistance. The SHIP response offers a model for mobilizing to meet similar crises that may arise.
The termination of retiree health insurance by a large company engenders the same urgent crisis environment as do the M+C non-renewals. The same general strategies that SHIPs developed to approach M+C non-renewals are applicable to situations in which large numbers of retirees lose retiree health insurance.
- Prepare accurate and easy-to-understand materials.
- Create screening tools that can be used by counselors to help guide people through the pros and cons of the options available to them.
- Plan for large group educational meetings and anticipate the need for multiple opportunities for individual counseling sessions.
These strategies make it easier to deal with massive volume counseling services that SHIPs are called upon to provide in crises like those caused when large companies cease offering retiree health insurance or when M+C organizations non-renew.
HAP will continue to follow these kinds of crises so as to be abler to offer back-up and resource support to SHIPs.
VI. Conference Call Materials
Background material for this call, prepared by HAP, includes:
Information about the Trade Adjustment Act tax credit that assists certain retirees in paying for designated health insurance plans. Click here for the Trade Adjustment Act Health Care Tax Credit information or go to http:/assets/docs/New_Tax_Creditfe07.doc
These three information briefs were customized by HAP for the Baltimore County, Maryland SHIP which worked with 20,000 Bethlehem Steel retirees. In preparation for the April, 2003 Medicare Network conference call, HAP removed the Maryland-specific information and inserted references to indicate where state law may provide more or different protections for retirees losing health insurance.
Jack Vogelsong, Pennsylvania APPRISE Program, shared the counseling tips he prepared in anticipation of Town Hall meetings at which hundreds or thousands of Bethlehem Steel retirees would need assistance. For the counseling tips, click here.
VII. Announcements
A. HAP’s new Web homepage has been launched. Please give us your feedback. We will be updating the information on our homepage every few weeks, so please check it out regularly.
You must register with HAP in order to receive our e-mail announcements and alerts. If you did not get several e-mails from us about this conference call, you are not registered with us. Please go to our homepage http://www.healthassistancepartnership.org/, and click on sign up to go through the registration process. It will only take you a few minutes.
B. The next Medicare Network Conference Call is scheduled for Wednesday, May 21, 2003 at 3:00 P.M. EDT. Please note that we are resuming our regularly scheduled time on the third Wednesday of the month at 3:00 P.M. Eastern time. Our topic is the HIPAA privacy rule and its impact on SHIPs.
C. The Final M+C Appeals Regulation published in the Federal Register. You can read the final regulation and the CMS commentary on it by clicking here http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-8204.pdf. These regulations make changes that have the effect of watering down the rights of M+C enrollees who want to appeal adverse Medicare determinations made by M+C entities. For example, they reduce the number of days by which an M+C organization must give an advance notice of termination of a service. In addition to M+C rules, the new regulation also changes the long-standing rule requiring hospitals to give Medicare patients advance notice of decisions that patients are no longer in need of acute hospital care. Under the new rule, notice is only required if a patient objects to a verbal notice that the hospital believes the patient is ready to leave. HAP is preparing an update on Medicare appeals, WHICH will be posted on the HAP Web site.
D. Medicare Stop Smoking Demonstration Project: is enrolling seniors in seven states. The states are Alabama, Florida, Missouri, Nebraska, Oklahoma, Ohio, and Wyoming. According to the project web site, www.qualidygm.org/mssp/,
[a] wide variety of services are offered to help seniors who smoke and want to quit. These services may include counseling; drugs that help seniors quit smoking such as the nicotine patch, special consumer booklets and a telephone information line staffed by professional counselors. Seniors who are interested in quitting smoking may join the program from now until September 30, 2003. Seniors interested in joining the program must: be 65 years or older; have Medicare Part B coverage; be in the Medicare fee-for-service program; live in one of the seven states that offer the program; and be a cigarette smoker who is thinking about quitting.
According to the Web site, as of June 23, 2003, close to 3,000 Medicare beneficiaries have signed up to participate in this project.
E. Two Kaiser Family Foundation reports on long term care insurance will be of interest to SHIPs. They are:
F. The HAP 2004 Second Annual Conference will be held on January 20-21, 2004 at the Mayflower Hotel in Washington, D.C. Please send us your suggestions for workshops topics, speakers you’d like to hear at our conference, and other ideas for making our second conference even better than our first one. Stay tuned for more exciting information from us about the conference.
G. HAP Story Bank Initiative: Astrid Schmidt reported that HAP is developing a story bank to collect stories about the value of consumer health assistance programs. These stories may show the successes of consumer health assistance programs, or they may illustrate systemic issues encountered frequently by consumer health assistance programs. The story bank can be a repository for these stories, which will be useful in promoting consumer health assistance programs and in illustrating systemic issues encountered by consumer health assistance programs for decision makers and opinion leaders. Astrid and Hilary will be calling a representative sampling of state SHIP directors to discuss this initiative in greater detail. Please let Astrid or Hilary know if you would like to be included on our call list.
Thank you all for participating. Please contact Hilary, hdalin@healthassistancepartnership.org with your questions, comments, suggestions and ideas.
