Safe Money - 10-19-24

Episode Transcript

Speaker 1 (00:00):
Good morning to all. This is the third Saturday of
October twenty twenty four. Craig Schillig here, and this is
Safe Money. As a reminder, Halloween is less than two
weeks away, so get your costumes and candy ready. We
are here every Saturday to talk with our listeners about
financial strategies we use to manage and protect assets safely. Now,

(00:24):
I know you're accustomed to hearing Dick do all the talking.
I'm Craig Schillig, the son of Dick Shelig. I'm an
independent insurance broker here in Iowa, Illinois. I've been an
insurance agent for over twenty four years. I've learned a
few insurance strategies during that time, like using annuities as
safe money harbors, or using cash value life insurance to

(00:48):
supplement retirement income. Just a reminder, call our office at
five six three three three two two two zero zero
if you'd like I like to enroll into one of
my virtual Medicare community meetings that I do via zoom.
I give these throughout this month and in November, and

(01:10):
a couple dates in December. I'll share those with you
in a little while. Today, I'd like to discuss Medicare
Part Y that's DAS and drug. This program began back
in two thousand and six. These can be standalone prescription
drug plans also called PDP plans, or a drug plan

(01:33):
embedded within a Medicare Part C advantage plan, or sometimes
referred to as MapD plans. Some companies you've probably heard
of are Etna, Silver, Script Blue, Crossbow Shield of Illinois,
Wellcare Medicare Blue, which is owned by well Mark United Healthcare,

(01:56):
and that's just to name a few. In twenty twenty five,
there will also be Signa, Humanna and clear Spring Health.
My office represents many of these companies and we can
assist you as needed. In Iowa, Illinois for twenty twenty five,

(02:17):
if you're looking for a standalone prescription drug plan, you
have sixteen different choices across six companies, both going for
the annual enrollment period. If we're talking about Medicare advantage
plans that include a drug plan in Iowa, there are

(02:37):
forty nine plans to choose from across ten companies for
next year, or if you reside in Illinois, there are
forty five Medicare Advantage prescription drug plan companies to choose
from across eight company names. First, I'd like to talk
to you about the LP that's known as the late

(03:01):
enrollment penalty. If you enroll into a Part D plan late,
you may pay a penalty. Now. If you don't remember
anything else I tell you today, please remember this topic.
You must have a drug plan when you become eligible
for Medicare, even if you don't take prescription medication. Now,

(03:24):
if you're employed age sixty five years age or older,
and you have an employer provided health coverage now, and
that group plan meets the Medicare standard, you're okay. There's
nothing you're going to need to do. There's no changes
that are needed now. If you cease working full time
via a termination of employment, you decide to retire, you

(03:50):
cut back working full time and go to part time employment.
And then if you lose your group coverage status, you
only have sixty three three days to get enrolled into
a plan without being late, So keep an eye on that.
It's a sixty three day rule. This late enrollment penalty
is an additional amount charged by Medicare that will be

(04:14):
added to your Part D premium if you didn't enroll
in a prescription drug coverage plan when initially eligible for
Medicare and you didn't have any other credible drug coverage,
or you didn't enroll in a prescription drug coverage plan
within sixty three days of losing your credible drug coverage.

(04:38):
To avoid this from happening, enroll in a prescription drug
coverage plan when you're initially eligible for Medicare. If you
qualify for extra help or you're on what's referred to
sometimes as LIS known as low income subsidy, then this
rule does not apply to you. The late enrollment penalty

(05:00):
is one percent for every month that you should have
had coverage and you either chose not to have coverage
or you didn't have coverage at that time. The one
percent per month formula is calculated against the previous year's
national average. Now you would think that if you miss
one month one percent isn't so bad. Well, let me

(05:25):
give you an example here. That penalty increases every year
with a three percent cola known as a cost of
living adjustment. So in year two that penalty would now
be four percent, and if that goes and that would
go up three percent every year following you until your death.

(05:48):
The twenty twenty four national average for drug plans was
thirty four dollars and seventy cents of monthly premium. Now,
that's a lot higher than what most drug plans are
here in the Quad city area. That's the national average
number that they use in order to calculate your penalty.
We would take thirty four times point zero one, which

(06:09):
calculated is point three four zero seven. And if you miss,
say a six month time period or six months of
coverage during that time period when you were supposed to
enroll and you didn't, the penalty would be two point
zero eight or two dollars and eight cents monthly premium

(06:32):
in the first year. Now a lot of people will say, well, Craig,
two dollars and eight cents, big deal, that's not a
big deal. Well, the route they do round up to
the nearest dime or point one zero, and then in
year two that increases by three percent, and then in
year three that'll be six percent, in year four that'll

(06:55):
be nine percent, and that just keeps going up. I
currently have some clients in their late eighties or early
nineties that didn't sign up for Part D when they
were supposed to. Their current monthly late enrollment penalty is
greater than their current monthly plan premium. I've had a

(07:20):
few cases where and they just can be older, but
they got some bad advice or they didn't follow the rules.
It didn't work with anybody. In a lot of cases,
there were people that didn't take medication, so they never
signed up. Well, now they're starting to take medication, so
they enroll for a plan, then they find out that

(07:42):
they have to pay this penalty. So don't let that
happen to you. So let's talk a little more about
prescription drug coverage. Understanding Medicare drug payment stages. Prescription drug
costs can change during the year depending on which payment
stage you're in. There's three drug payment stages in twenty

(08:03):
twenty five. As part of most prescription drug plan benefit highlights.
There's the deductible, the initial coverage stage, and the catastrophic
coverage stage. Some other items that you want to keep
in mind what the member would typically pay, what the

(08:23):
plan typically pays, and then of course what the stage
limit is. Let's talk about the annual deductible first. What
the member typically pays is one hundred percent of the
deductible until you reach that amount. The plan during that
time would typically pay nothing. This stage limit varies by

(08:44):
the plan, but this stage does end once you're deductible
is met. Please note that if your plan doesn't have
a deductible, then this stage doesn't apply to you. Now.
Some plans currently have a deductible of zero dollars, but
they cannot go higher than five hundred and forty five
dollars annual deductible for twenty twenty four. Now, to confuse you,

(09:10):
some contracts say you pay the deductible first, while other
plans will say that you pay the deductible between some
number between zero and five forty five. So some plans
will say we only charge up to a four hundred deductible,
some could be two fifty. It just depends. Some plans

(09:30):
say that you only pay the deductible on brand name medication,
so that'd be tiers three, four, and five, but not
on generics tiers one and two. My point is that
all prescription drug plan contract terms can be and usually
are different from company to company, and you need to
read the finer points and not just look at what

(09:52):
the total overall cost number is because there are differences
among the contracts. The maximum drug deductible next year in
twenty twenty five will be five hundred and ninety dollars,
up from five hundred and forty five dollars now. The

(10:12):
initial covered stage is the number that typically pays a
copay or co insurance amounts. The plan typically pays the
balance after the copey and co insurance amount are paid.
In twenty twenty five, Once your total out of pocket
costs reach two thousand, this stage then ends. That's a

(10:33):
nice benefit from this year because currently the total out
of pocket number is eight thousand dollars, So we're going
from eight thousand max out of pocket to two thousand
for total drug costs in twenty twenty five. During the
catastrophic covered stage, you pay zero for Medicare Covered Part
G medications. In the catastrophic phase, what the plan pays varies,

(10:57):
but typically the plan will pay the full cost of
your Covered Part D drugs. The stage limit then runs
through the end of the plan calendar year. New in
twenty twenty five the Medicare Prescription Payment Plan. This is
otherwise known as M three EP and no I'm not
talking about MP three players that you buy your kids

(11:19):
or your grandkids. Members can opt into this program, which
allows prescription costs to be spread across monthly payments that
are billed directly to the plan member. When a member
fills a prescription by a part D plan, they won't
pay anything at the pharmacy counter. The insurance company will

(11:41):
just direct bill you. Members will receive a bill each
month from the plan. The bill them out can vary
from month to month based on the prescriptions that are filled.
Please remember this is not a cost saving program and
they won't benefit everyone. A couple of questions that come

(12:01):
up with this program. Are there any specific criteria the
member must meet in order to qualify for the M
three P program. If the member is eligible for a
PDP or an MPD plan and has active or future
effective coverage, they can elect to participate in the M

(12:22):
three P program. There's no minimum threshold for the cost
of their medications to sign up. However, the member cannot
pick and choose what medications are applied now. If a
member is terminated from the M three P program for
a non payment during the plan year, they are not

(12:43):
permitted to re enroll in the program unless coverage was
reinstated for good costs. Members also will be ineligible for
participation in the M three P program in future years
if they owe and overdue M three P balance on
that plan. When can a member elect into the M

(13:06):
three P program? Members may opt into the M three
P program prior to the beginning of the plan year,
or in any month during the plan year. Members may
also opt into M three P during the Part D
plan an annual enrollment period, initial Part D enrollment periods,

(13:27):
or if you qualify for special Part D enrollment periods
under special election periods. Can a member be terminated from
the program? Members will be terminated from the M three
P program if they fail to pay their monthly bill
them ount after the required grace period, which is going

(13:49):
to be sixty days. Members also may voluntarily terminate from
their participation in the plan if they want to are
responsible for paying any past due balances if they voluntarily
or involuntarily terminate from the program. Though at this time

(14:10):
there is no collection process. Who is not likely to
benefit from the Medicare Prescription Payment Plan Someone who's yearly
drug costs are low and relatively the same each month
payments they or others make on their behalf, and they
won't hit the two thousand annual out of pocket maximum.

(14:34):
They have a health reimbursement arrangement. Maybe they have a
health savings account, or they have some other secondary coverage
from a retirement benefit plan, they qualify for extra help
or another government program to help save on their prescription
drug costs, or if they receive help paying for their

(14:57):
drugs from other organizations like state pharmaceutical assistance program, some
type of coupon program, or any other health coverage. Let's
talk about some prescription drug coverage definitions. Out of pocket costs,
pharmacy networks, the drug list otherwise known as the formulary,

(15:19):
tiered formulary, step therapy quantity limits, prior authorization formulary and
utilization exceptions, and coverage decision timelines. Out of pocket costs.
That's the total amount you and others on your behalf
have paid for Medicare covered Part D drugs. Remember the

(15:43):
maximum out of pocket costs for twenty twenty five will
be two thousand dollars the pharmacy network. To receive Part
D benefits, you must use a network pharmacy and show
your member ID card. You may receive additional safe means
on your prescriptions by using a preferred retail pharmacy or

(16:04):
by using a mail order service pharmacy and having your
medications delivered to your mailbox. The formulary, otherwise known as
the drug list. The formulary is a list of prescription
drugs covered by a plan. Now Medicare sets the standards
for the types of drugs Part D plans must cover,

(16:25):
but each plan can choose the specific brand name in
generic drugs to include on its formulary. Most twenty twenty
five enrollment guides will have a QR code to the
official drug list for each plan, so you can just
use your smartphone camera to look this stuff up very easily.

(16:46):
Tiered formulary tier one through tier five, and sometimes tier six,
depending on the drug plan. The lower the T number means,
the lower the cost of the drug is to you.
Drugs cost less than Tier two drugs, and so on.
There are five formulary tiers that plans use to organize

(17:07):
their medication coverage. Typically, drugs on a lower tier cost
less than drugs on a higher tier. Additionally, plans may
change a deductible for certain drug tiers and not for others,
or the deductible amount may differ based on that certain
drug tier. For example, Tier one is known as Preferred

(17:30):
Generic drugs. Tier two are known as generic drugs, Tier
three are known as preferred brand name drugs, Tier four
are known as non preferred drugs, and Tier five are
known as specialty drugs. Please understand that some specialty drugs
are sometimes covered by Medicare part be as a boy.

(17:53):
This comes up with some cancer treatment medications some chemotherapy
drugs if they have a a long research track record
on what they do or what the result is. Step
therapy is one way that companies can help save money
on your prescriptions by offering lower cost drugs that can

(18:14):
treat the same medical condition as brand name drugs. Now
you may be asked to do step therapy, which involves
trying to prefer generic before your plan will cover a
brand name drug. Quantity limits. Some drugs have quantity limits
where the plan will cover only a certain amount of

(18:34):
a drug for one cope or over a certain number
of days. The limits may be placed to ensure safe
and effective use of the drug. If your doctor prescribes
more or thinks the limit is not right for you
for your situation, you and your doctor can ask the
plan to cover the additional quantity prior authorization before your

(18:59):
plan will cover certain drugs. Your doctor may need to
provide information confirming a drug is being used correctly for
a medical condition covered by Medicare. You may be required
to try a different drug before the plan will cover
that prescribed drug. Formulary and utilization exceptions. If you need

(19:22):
a drug that's not currently covered by your plan, you
may ask for a formulary exception, which is coverage for
your drug even if it's not on the drug list.
Ask for a utilization exception, which waves coverage resritions or
limits on your drug or the amount of the drug

(19:44):
coverage Decision timelines. If your doctor has submitted an exception
request on your behalf, generally a decision will be made
within seventy two hours. You can also request an expedited
or faster decision if you or your doctor b leave,
your health requires it or due to a medical condition,

(20:05):
or if you need the drug faster than the seventy
two hour old period. You may qualify for financial assistance.
Depending on your financial situation. You may qualify for help
paying for your Part D plan premiums or your Part
D prescription drugs through a low income subsidy or what's

(20:28):
sometimes known as extra help. If you have Medicaid now
you already have extra help. Remember, if you are now
on Medicare and you'd like to change your choice of
Medicare party plans for twenty twenty five, you have until Saturday,

(20:49):
December seventh to do so. This is the annual enrollment period. Now,
I encourage everybody who is on Medicare. If you have
a drug plan, and it doesn't matter if you'll or
on a standalone drug plan or a Medicare advantage plan
that has a drug plan built in, you need to
look at what next year's plans are going to be

(21:11):
because a lot of them are changing, a lot of
them are going to require a deductible up front, a
lot of them will some of them are going to
require a different type of deductible. Part of this is
going to be due because your max out of pocket
is going to be capped a two thousand instead of

(21:33):
eight thousand. So a lot of people are going to
get hit with a bigger first quarter drug bill due
to those deductibles coming into play. Also, note that a
lot of drug plans are increasing their premiums and because
they're just being forced to, so please address that issue

(21:55):
before December seventh. Just remember I give monthly virtual meetings
for two different companies every month. In one meeting, I
will cover the Medicare Supplement plan with a standalone drug plan.
That meeting is usually sponsored by well Mark. At the
second virtual meeting, I focus on the Medicare Advantage Plan

(22:16):
and I cover the benefits of that platform. United Healthcare
is the sponsor for that meeting. Some of my next
virtual meeting dates are going to be this week anyway.
I'll do a meeting on Tuesday, October twenty second. I'll
also do a meeting this week on Thursday, October twenty fourth.

(22:39):
The following week, I'm going to do one on Monday, Wednesday, Friday.
So those dates are going to run October twenty eighth,
October thirtieth, and November one. All those meetings will be
at ten am. United Healthcare is sponsoring those meetings. I
cover the four pieces of Medicare, and I will cover

(23:02):
I'll talk specifically about Medicare parts and Medicare Advantage plans,
but I will also go into the changes for the
Part D drug plans for twenty twenty five. You're welcome
to call my office at five six three three three
two two two zero zero for the Zoom meeting codes

(23:24):
and additional dates and times, because I will do some
the third week of November and the second week of
December to close out this year. You're also welcome to
email me at Craig at Craigschilig dot com and I'll
spell that out for you. That's cr Aig at cr

(23:50):
ai G S c h I l lig dot com.
I can send you the virtuales and be happy to
host that meeting. They're very informal. It puts you in
a virtual room with other people just like you who

(24:12):
may have Medicare questions regarding your plan or your situation,
and I'm happy to help with that. This is Craig
Chilly with Safe Money.