Tag Archives: Rehab

Medicare, Rehab, and “Failure to Improve”

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After a hospital stay, Medicare-covered people may need rehab to continue improving from the treatment that the hospital provided.  (As discussed in the March 10, 2017 installment, the hospital stay must be at least three days and a full “admission” to the hospital.)  In the past, as a way to save money, Medicare would cut off rehab for someone who wasn’t getting better (or wasn’t getting better fast enough.)

BUT, Medicare’s rules don’t allow for a cut-off of rehab for a failure to improve.  Medicare got sued to stop using the “improvement” standard.  A class action lawsuit was filed in 2011 in Vermont, Jimmo v. Sebelius (Kathleen Sebelius was the United States Secretary for Health and Human Services between 2009-2014.)  Jimmo and the other claimants pointed out that the Medicare rules do not set restoration of the patient’s condition as the only goal of rehab.  Instead, the rules specifically list the preservation of current capabilities and the prevention of further deterioration as alternate goals if restoration isn’t possible.

Now, restoration is listed in the rules as the goal of rehab when the patient is trying to recover from a malformed body part.  Unfortunately, that restoration goal came to be applied to most or all rehab programs, not just to malformed limbs.  Using a “failure to restore” the patient’s function test allows payment to be cut off earlier in the rehab process than would using a “preservation of current function/prevention of deterioration” test.  Cutting off rehab earlier saves Medicare and its insurance affiliates save a great deal of money when rehab gets shut down early.  As a result, bit by bit, most or all rehab patients came to be measured by their progress toward restoration of function, and when the patient failed to improve toward that goal, payment for rehab get cut off.

The Jimmo lawsuit forced Medicare to face its failure to follow its own rules.  The Jimmo lawsuit didn’t go to trial but, instead, led to a settlement agreement that Medicare would stop improper use of the “restoration” standard and its “failure to improve” test for ending rehab payments.  (The restoration goal still applies to malformed body parts.)  The judge approved the settlement as a court order.

Unfortunately, years later, rehab providers and Medicare’s insurers are still applying the failure to improve standard.  The Jimmo case went back to court to demand that Medicare follow the settlement agreement.  (Based on the resulting court order, it appears that the judge is not happy with Medicare.)  Under the new court order that adds to the original settlement agreement, Medicare must undertake an effort to educate the public that the failure to improve test does not apply.

To patients undergoing rehab, the Jimmo case is the basis to argue that rehab should not be ended.  The proposed ending of rehab must come in writing with an explanation of the right to appeal.  The Jimmo settlement is an argument to present in the appeal.

Unfortunately, many hearing officers are more familiar with the incorrect approach that “failure to improve” is a reason to end rehab than they are familiar with the Jimmo agreement.  Appeals about the continuation of rehab may require the help of an attorney who works in Medicare or Medicaid.

Also, the Jimmo settlement does not get rid of the 100-day limit on Medicare payments for rehab.  The 100 days of available rehab does not reset unless the patient can go 60 days without needing Medicare’s support for the health issue that led to rehab.  If the family is concerned about the patient going 60 days without needing more medical help, the family may not wish to push the Jimmo issue too far.  The family may wish to “save” some of the 100 days.

In summary, if a patient seems to be getting pushed out of rehab early and the patient or family wishes rehab to continue, argue that Medicare can’t cut off rehab for a failure to improve.  Use the name “Jimmo,” so the care provider, insurer, or hearing officer can look for the agreement.

Medicare, Rehab, and Observation Status

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Rehab is expensive.  No surprise there.  Under the right circumstances, the person getting rehab care sees little or no cost.  Under the wrong circumstances, the person getting rehab will get stuck with the entire cost.

Just to be sure we all understand, “rehab” is rehabilitation.  An example of rehab is the effort to strengthen the legs after a knee replacement.

In our discussion today, rehab follows a hospitalization.  Most often, rehab takes place in a nursing home or in a facility similar to a nursing home that has chosen to focus on rehab services.  (There is a trend to rehab at home, relieving the insurer from the room and board cost of a care facility.)

To have Medicare or an Advantage Plan cover rehab, the patient must be admitted to a hospital for a three-day period immediately before the start of rehab.  If such a hospitalization took place and the patient has Medicare, then Medicare will usually pick up the entire bill for the first 20 days of rehab and all but $165 of the costs for any additional days (up to 100.)  The patient or supplemental insurance picks up the $165.  If the patient has an Advantage Plan, the plan’s rules will control how the costs of rehab will be handled.  (Ed. Note:  The $165 amount was inserted on 3/20/2017 after receiving new information.)

Separate from rehab, hospitals have economic pressures to control who gets “admitted” to the hospital.  If a Medicare-covered person is re-admitted to the hospital within 30 days, Medicare will penalize the hospital for the first hospitalization for not treating the patient’s malady adequately enough the first time that another hospitalization was needed.  The penalty will be a reduction in the Medicare reimbursement for the first hospital stay.

Because the risk of this payment reduction, hospitals tend not to “admit” someone on Medicare if the hospital’s staff isn’t sure that the patient can be cured.  Many chronic illnesses of older adults can’t be cured.  Perhaps they can be treated, or perhaps the symptoms can be controlled, but the illness may not be curable.  The lack of a cure creates a stronger likelihood of the need for more hospital care for the same person for the same medical needs.  This risk of more care creates a high risk of a “readmission” for the patient.  So, the hospital has a reason to look for a way to avoid admitting someone with an uncurable chronic illness or with symptoms that can’t be completely diagnosed.

Hospitals have started to use “observation status.”  Observation status takes place in the hospital in a hospital bed in a hospital room and looks just like an admission to the hospital, but it’s not an admission.  A person on observation is “outpatient” for billing purposes.  Medicare is billed via Part B rather than Part A.  Advantage Plans are billed via outpatient billing codes.  But, the patient doesn’t see a difference.

If a patient goes from observation status to rehab, the rehab will NOT be covered by Medicare.  Rehab in a nursing home or rehab center can cost $10,000 per month.  Unfortunately, someone on observation status may not know that rehab won’t be covered by Medicare or an Advantage Plan until it’s too late.

So, a person on Medicare or an Advantage Plan who is in the hospital (or the person’s loved ones) needs to advocate for full admission to the hospital.  When the patient goes into a hospital room (i.e., not in the emergency room any more,) ask if the patient is admitted or on observation status.  (Just using the terminology will get the staff’s attention.)  If not admitted, demand to know why.  Demand to know how to get fully admitted  Demand to be fully admitted.  Talk to the hospital social worker.  Talk to the nurses.  Talk to the doctors.  Talk to the patient ombudsman.  Talk to anyone necessary to get a full admission.  (It may not happen, but if you don’t try, it definitely won’t happen.)

Check again everyday.  (Status can change at any time.)

Being an advocate isn’t fun (for most people,) but it may be necessary.

Medicare Annual Enrollment is here. Choose your insurance plan wisely.

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This week’s blog continues the break from the ongoing discussion of the changes to Ohio Medicaid’s Aged, Blind and Disabled (ABD) program.  That series will resume soon.

Medicare’s “Open Enrollment” period has arrived for next year’s coverage.  To have an insurance plan for the upcoming year to help cover the 20% of medical costs that Medicare will not cover, a Medicare-eligible person must enroll in the plan of his or her choice by December 7.  (Open Enrollment is October 15 to December 7 each year.)  The new policy will take effect on January 1.

People who have Medicare available to them have three basic options for medical insurance.  So called “straight Medicare” provides the insured person with Medicare coverage for 80% of medical costs.  The insured person is responsible for the other 20% as a co-pay.  People who do not wish to pay the 20% co-pay can purchase either Advantage Plans or Medicare Supplements.An Advantage Plan is an insurance policy that pays most or all of the 20% of medical costs that Medicare does not cover.  The amount of the insured’s new co-pay depends on the Advantage Plan that the insured chooses.  Generally, the higher the premium, the lower the co-pay.  There are plenty of other options that change the price and co-pay as well.  (An Advantage Plan actually steps into the shoes of Medicare and pays the 80% in addition to whatever costs exceed the insured’s co-pay.  The Advantage Plan insurance company receives both the premium of the individual insured person and a payment from the Medicare program in lieu of Medicare’s usual 80% payment towards the insured’s costs.  The Advantage Program’s coverage of Medicare’s portion of costs is generally not noticed by the insured.)  Because an Advantage Plan is a “replacement” for Medicare, it can have some limitations in covered services or in approved service providers as compared to “straight Medicare.”  In addition, there are many different Advantage Plans, each offering slightly different coverage, from which to choose.

When an insured person has a Medicare Supplement (sometimes called a Medi-Gap policy,) the Medicare program pays its usual 80% pays the insured’s medical costs, and the Supplement pays the 20% not covered by the Medicare office.  Medicare Supplements, because they supplement Medicare rather than replace Medicare, do not generally have any differences from Medicare in covered services or approved service providers.  There are many different Supplements.  The differences among Supplements generally is small, but worth examining.
Please be aware, it isn’t necessary to have Medicare additional insurance.  Someone can choose “straight” Medicare in which he or she must cover the 20% Medicare co-pay by himself or herself.    It costs nothing in a year during which that person has no medical issues.  It can, though, without warning, cost lots of money if that person has an accident or needs an operation, for example.  Each person on “straight” Medicare could pay 20% of $0 or 20% of $200,000, or 20% of any amount depending on what happens during that year.  Before choosing traditional Medicare, you must decide whether you wish to assume the risk of a big surprise in health costs during the coming year.
The monthly premium for an Advantage Plan is generally much lower than the premium for a Medicare Supplements.  (Some Advantage Plans have a $0 premium, in fact.)  An Advantage Plan’s limitations on services and providers is the trade-off for a lower premium.  The most glaring difference, though, between Advantage Plans on the one hand and both straight Medicare and Medicare Supplements on the other hand is the coverage of post-hospitalization rehabilitation services.
With straight Medicare and Medicare Supplements, an insured person who has been admitted to the hospital for three days and then needs post-hospitalization rehab can have 100 days of rehab coverage.  Someone on an Advantage Plan may have rehab coverage end before 100 days have elapsed.  An Advantage Plan (because it has rules slightly different than straight Medicare) can determine that rehab is not helping the insured person and can end coverage.  Sometimes the rehab coverage is stopped as early as day 20.  (Advantage Plans used to base their decisions on ending rehab payments on on day-to-day progress reports.  Now, Advantage Plans must now look at week-to-week comparisons or even bi-weekly comparisons.)  Still, rehab can be very expensive, so Advantage Plans have a strong incentive to end rehab coverage as early as possible.
(“Admission” to the hospital rather than “under observation” in the hospital is a very important distinction in the availability of any insurance coverage for rehab.  That issue is not handled differently by Medicare, Advantage Plans, or Medicare Supplements, though.  Consequently, the “admission” versus “observation status” issue is not important to today’s discussion.  I mention it here as a side note because it is an important issue for all people insured through Medicare.)
Even though we are in an “open” enrollment period, someone covered by any form of Medicare cannot simply switch plans on demand.  Medicare, unlike the Affordable Care Act, allows the insurance company to make underwriting decisions on individual plans.  Trying to move to a plan that provides more coverage may require a medical examination and will certainly require answering medical questions.  Generally, I urge people to move to a Medicare Supplement, if they can (as long as the premium isn’t prohibitive.)
If a Medicare Supplement is not available, an alternative is an Advantage Plan or even straight Medicare with a separate Hospital Indemnity policy.  (The cost of an Advantage Plan plus Hospital Indemnity policy is usually less than a Medicare Supplement.)  A Hospital Indemnity policy is subject to underwriting, though.  Someone who exhibits symptoms that are a concern for the Hospital Indemnity insurance company may not be able to get such a policy.
Without considering the cost of premiums, my preferences for medical insurance is a Medicare Supplement.  My second choice is an Advantage Plan with a Hospital Indemnity policy.  My third choice is straight Medicare.  Finally, my fourth choice is an Advantage Plan.  (Because I provide legal services to people who need long term care or that have special needs, my clients have health concerns.  That possibly causes my preference for the broad coverage that supplements provide.)
No matter your preference, seek out a Medicare insurance agent that represents more than one insurer.  Don’t just assume that the person at the table in your local grocery, pharmacy, or department store can give you all the options.  If the person at that table sells insurance for just one company, please consider whether you want to find more options before deciding.
But, don’t go it alone.  Get help from an insurance broker.  These insurance plans are complicated, and there are many different choices among Advantage Plans and among supplements.  Let someone help you figure out your best options.  Their help doesn’t cost you anything.  They’re paid by the insurer you choose.
Choose your plan wisely.
Acknowledgement:  Thanks to Michael Whitaker of Premier Solutions Group in Brookpark, Ohio for helping me understand Hospital Indemnity insurance.

You may already be in a Medicaid Spend-Down

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If you are married, and you or your spouse has been in the hospital and/or rehab and/or nursing home for more than 30 consecutive days, you may already be in a Medicaid spend-down for long term care coverage.  And you don’t even realize it!

Let’s start with a discussion of the amount of savings or assets that the “well spouse” can keep when the “ill spouse” asks Medicaid to pay for his or her long term care.  By savings or assets, I mean what is left at the end of the month after income is received and bills are paid.  Medicaid labels savings and other assets as “resources.”  The amount of resources that the “well spouse” can keep at the time the “ill spouse” gets Medicaid coverage is called the Community Spouse Resource Allowance, commonly abbreviated to CSRA.

For most couples, the CSRA is half of the assets at the time the “ill spouse” had to move out of the house for medical reasons and stayed out of the house for 30 days or more.  The first day of the month during which the “ill spouse” moved out is called the “snapshot date.”  (That’s not the official terminology, but I like that term because it’s the most descriptive of what happens.)

Please realize that, on the “snapshot date,” the “ill spouse” is almost always still at home and may not realize that, before the month is over, he or she will be out of the house for medical care and/or custodial care for an extended period of time.  (The “ill spouse” is out of the house on the “snapshot date” only if the “ill spouse” becomes ill or gets injured on that first day of the month.)  The “snapshot date” on the first day of the month seems illogical because, most of the time, nothing medical happens on that day.  It’s logical only when you realize that Medicaid works in whole months.  It’s just too difficult to break financial records down into individual days.

If the couple had less than $47,688 on the “snapshot date,” the “well spouse” will be allowed to keep more than half of the resources because the “well spouse” is allowed to keep the first $23,844 of resources as the minimum CSRA.  (Unfortunately, if the couple has less than $23,844, Medicaid will not give money to the “well spouse” to bring him or her up to the minimum.)

If the couple has more than $238,440 in resources, the “well spouse” will not be able to keep a full half because the maximum CSRA is $119,220.  Any resources above the “well spouse’s” $119,220 will be attributed to the “ill spouse.”

Note:  The minimum and maximum CSRA are adjusted each year for inflation (if there is inflation.)  The Medicaid page at ProtectingSeniors.com is updated from time to time with these amounts and other related Medicaid eligibility figures.

If the couple has between $47,688 and $238,440, the CSRA is half of the resources.

Note:  Some assets, most notably the couple’s home, are not counted in “resources.”

So, after all that, the “ill spouse’s” resources at the time he or she asks Medicaid for help is the couple’s total resources above the CSRA (that the “well spouse” gets to keep) and the $1,500 that the “ill spouse” gets to keep (expected to become $2,000 in July 2016.)  All of the couple’s resources above the CSRA plus $1,500 must be spent-down before Medicaid will cover the “ill spouse’s” expenses for long term care.

So, why does all this minutia mean that someone might already be in a spend-down.  It matters because the “snapshot date” isn’t tied to long term care.  It’s tied only to the “ill spouse’s” absence from the home for medical reasons for at least 30 days.  The “snapshot date” from an injury or illness earlier in life (but still during the marriage) may be useful to save assets if the “ill spouse” later needs long term care.

I know, you’re still confused.  That last paragraph didn’t help, did it?  (Some people would describe that as a good lawyer’s answer:  entirely correct but completely incomprehensible.)  So, let’s tell this with a story.

For the rest of this discussion, I’m going to give names to the “ill spouse” and the “well spouse” in hopes of keeping further confusion to a minimum.  So, the “ill spouse” is going to be Ward, and the “well spouse” is going to be June.

Ward dropped a cleaver (sorry, couldn’t resist) on his foot 10 year ago, on January 6.  He needed surgery and several weeks of rehab.  He returned home on February 5 .  (As long as he was out for 30 days, additional days don’t matter for this discussion.)  Let’s say that Ward and June had $100,000 in resources on January 1 ten years ago (the “snapshot date” for his foot injury.)

Ward recovered and returned to work.  He continued to make money, and their savings grew.

So, now, 10 years later, Ward has a debilitating stroke.  June can’t take care of him by herself and needs to move Ward into a nursing home.  (By the way, this scenario also applies to home care and to assisted living.)  June would like to apply for Medicaid to help pay for Ward’s care.  At the time of Ward’s stroke, they have $200,000 in resources (on the first of the month.)

Based on the $200,000 in current resources, Ward would have to spend-down $98,500 (the amount left after half of $200,000 is reserved for June and $1,500 is reserved for Ward) before Medicaid will pay for Ward’s care.

BUT, Ward has already had a “snapshot date.”  Ten years ago, he was out of the house for medical reasons for at least 30 days.  At that time, he and June has $100,000 in countable resources.  As a result, Ward needs to spend down only $48,500 to get Medicaid coverage to pay for his nursing home stay after the stroke.  June was allowed to keep $150,000 rather than $100,000.  BIG DIFFERENCE.

Note:  The “snapshot date” resulting from Ward’s cleaver accident applies only to Ward’s future need for long term care.  If June, rather than Ward, has the stroke, the earlier “snapshot date” doesn’t apply.  Now, if June had a significant illness or injury of her own that resulted in her own medical stay out of the house for at least 30 days at some point in the past, that would create her own snapshot date.

So, if you’ve stuck with me during this 1,000 word shaggy dog story, here’s the payoff:

If you know a couple (maybe you and your spouse) in which one of them has had a 30 day stay out of the house for medical reasons, the couple should preserve all of their financial records from that time.  (For example, bank statements, investment statements, real estate values, IRA statements, life insurance cash values, and annuity statements.)  Those records might be very valuable in case the same person needs long term care in the future.

Boy, that installment was about as difficult to follow as War and Peace.  Sorry about that.  I couldn’t find a way to make it any simpler.

 

Medicare Open Enrollment is here. Choose your insurance plan wisely.

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This week’s blog takes a break from the ongoing series about Legal Issues when someone has Dementia to discuss a topic that is important at this time of year.

Medicare’s “Open Enrollment” period has arrived for 2016 coverage.  To have an insurance plan for 2016 to help cover the 20% of medical costs that Medicare will not cover, a Medicare-eligible person must enroll in the plan of his or her choice by December 7, 2015.  (Open Enrollment is October 15 to December 7 each year.)  The new policy will take effect on January 1.

People who have Medicare available to them have three basic options for medical insurance.  So called “straight Medicare” provides the insured person with Medicare coverage for 80% of medical costs.  The insured person is responsible for the other 20% as a co-pay.  People who do not wish to pay the 20% co-pay can purchase either Advantage Plans or Medicare Supplements.

An Advantage Plan is an insurance policy that pays most or all of the 20% of medical costs that Medicare does not cover.  The amount of the insured’s new co-pay depends on the Advantage Plan that the insured chooses.  Generally, the higher the premium, the lower the co-pay.  There are plenty of other options that change the price and co-pay as well.  (An Advantage Plan actually steps into the shoes of Medicare and pays the 80% in addition to whatever costs exceed the insured’s co-pay.  The Advantage Plan insurance company receives both the premium of the individual insured person and a payment from the Medicare program in lieu of Medicare’s usual 80% payment towards the insured’s costs.  The Advantage Program’s coverage of Medicare’s portion of costs is generally not noticed by the insured.)  Because an Advantage Plan is a “replacement” for Medicare, it can have some limitations in covered services or in approved service providers as compared to “straight Medicare.”  In addition, there are many different advantage plans, each offering slightly different coverage, from which to choose.

When an insured person has a Medicare Supplement (sometimes called a Medi-Gap policy,) the Medicare program pays its usual 80% pays the insured’s medical costs, and the Supplement pays the 20% not covered by the Medicare office.  Medicare Supplements, because they supplement Medicare rather than replace Medicare, do not generally have any differences from Medicare in covered services or approved service providers.  There are many different Supplements.  The differences among Supplements generally is small, but worth examining.

Please be aware, it isn’t necessary to have Medicare additional insurance.  Someone can choose “straight” Medicare in which he or she must cover the 20% Medicare co-pay by himself or herself.    It costs nothing in a year during which that person has no medical issues.  It can, though, without warning, cost lots of money if that person has an accident or needs an operation, for example.  Each person on “straight” Medicare could pay 20% of $0 or 20% of $200,000, or 20% of any amount depending on what happens during that year.  Before choosing traditional Medicare, you must decide whether you wish to assume the risk of a big surprise in health costs during the coming year.

The monthly premium for an Advantage Plan is generally much lower than the premium for a Medicare Supplements.  (Some Advantage Plans have a $0 premium, in fact.)  An Advantage Plan’s limitations on services and providers is the trade-off for a lower premium.  The most glaring difference, though, between Advantage Plans on the one hand and both straight Medicare and Medicare Supplements on the other hand is the coverage of post-hospitalization rehabilitation services.

With straight Medicare and Medicare Supplements, an insured person who has been admitted to the hospital for three days and then needs post-hospitalization rehab can have 100 days of rehab coverage.  Someone on an Advantage Plan may have rehab coverage end before 100 days have elapsed.  An Advantage Plan (because it has rules slightly different than straight Medicare) can determine that rehab is not helping the insured person and can end coverage.  Sometimes the rehab coverage is stopped as early as day 20.  (Advantage Plans used to base their decisions on ending rehab payments on on day-to-day progress reports.  Now, Advantage Plans must now look at week-to-week comparisons or even bi-weekly comparisons.)  Still, rehab can be very expensive, so Advantage Plans have a strong incentive to end rehab coverage as early as possible.

(“Admission” to the hospital rather than “under observation” in the hospital is a very important distinction in the availability of any insurance coverage for rehab.  That issue is not handled differently by Medicare, Advantage Plans, or Medicare Supplements, though.  Consequently, the “admission” versus “observation status” issue is not important to today’s discussion.  I mention it here as a side note because it is an important issue for all people insured through Medicare.)

Even though we are in an “open” enrollment period, someone covered by any form of Medicare cannot simply switch plans on demand.  Medicare, unlike the Affordable Care Act, allows the insurance company to make underwriting decisions on individual plans.  Trying to move to a plan that provides more coverage may require a medical examination and will certainly require answering medical questions.  Generally, I urge people to move to a Medicare Supplement, if they can (as long as the premium isn’t prohibitive.)

If a Medicare Supplement is not available, an alternative is an Advantage Plan or even straight Medicare with a separate Hospital Indemnity policy.  (The cost of an Advantage Plan plus Hospital Indemnity policy is usually less than a Medicare Supplement.)  A Hospital Indemnity policy is subject to underwriting, though.  Someone who exhibits symptoms that are a concern for the Hospital Indemnity insurance company may not be able to get such a policy.

Without considering the cost of premiums, my preferences for medical insurance is a Medicare Supplement.  My second choice is an Advantage Plan with a Hospital Indemnity policy.  My third choice is straight Medicare.  Finally, my fourth choice is an Advantage Plan.  (Because I provide legal services to people who need long term care or that have special needs, my clients have health concerns.  That possibly causes my preference for the broad coverage that supplements provide.)

No matter your preference, seek out a Medicare insurance agent that represents more than one insurer.  Don’t just assume that the person at the table in your local grocery, pharmacy, or department store can give you all the options.  If the person at that table sells insurance for just one company, please consider whether you want to find more options before deciding.

But, don’t go it alone.  Get help from an insurance broker.  These insurance plans are complicated, and there are many different choices among Advantage Plans and among supplements.  Let someone help you figure out your best options.  Their help doesn’t cost you anything.  They’re paid by the insurer you choose.

Choose your plan wisely.

Acknowledgement:  Thanks to Michael Whitaker of Premier Solutions Group in Brookpark, Ohio for helping me understand Hospital Indemnity insurance.

 

Legal Issues when someone has Dementia – Think about Medical Insurance

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This week’s blog continues the discussion of Legal Issues when someone has Dementia.  The introductory installment (April 30, 2015) put forth the issue of “Who can speak for someone with dementia?”  The May 14, 2015 installment discussed the situation where the person with dementia has Advance Directives in place.  The May 21, 2015 installment discussed the legal issues in determining whether a dementia sufferer can choose to have new Advance Directives prepared.  The May 30, 2015 installment discussed options in preparing a Health Care Power of Attorney.  The June 4, 2015 installment discussed how to decide whether to prepare a Living Will.  The June 11, 2015 installment discussed some of the basic issues in preparing a General Power of Attorney.  The June 18, 2015 installment discussed the importance of making the General Power of Attorney “durable.”  The June 25, 2015 installment discussed the importance of NOT making the General Power of Attorney “springing.”  The July 2, 2015 installment discussed revoking prior Powers of Attorney.  The July 9, 2015 installment discussed Do Not Resuscitate orders.  The July 16, 2015 installment discussed the Right of Disposition designation.  The July 23, 2015 installment discussed the Will (or Last Will and Testament.)  The July 31, 2015 installment discussed beneficiary designations on life insurance policies, IRAs, annuities, etc.  The August 6, 2015 installment discussed whether to pre-plan a funeral.  The August 14, 2015 installment discussed choosing a final resting place.  The August 28, 2015 installment discussed pre-planning the funeral ceremony.  The September 3, 2015 installment discussed when and how to pay for the pre-planned funeral.  Today’s installment will discuss medical insurance choices.

Today’s installment continues the discussion of issues to manage when someone finds out that he or she has a disease that causes dementia.  These issues should be managed before the dementia gets worse, before the disease takes away the person’s ability to make decisions.  Along with the issues previously discussed, someone who has dementia (or his or her family) should look at the different options to pay for his or her upcoming medical costs.

Because the vast majority of people who have dementia related disease are seniors, this installment will focus on Medicare options.  The people who have dementia related disease that are not yet old enough to qualify for Medicare have health insurance options very similar to those available to people with special needs discussed in the March 5, 2015 installment of this blog.  (Someone who becomes disabled (from the dementia related disease or from some other cause) can get Medicare 25 months after the disability is recognized by the Social Security Administration.  These people have the same Medicare options as seniors.)

People who have Medicare available to them have three basic options for medical insurance.  So called “straight Medicare” provides the insured person with Medicare coverage for 80% of medical costs.  The insured person is responsible for the other 20% as a co-pay.

People who do not wish to pay the 20% co-pay can purchase either Advantage Plans or Medicare Supplements.

An Advantage Plan is an insurance policy that pays most or all of the 20% of medical costs that Medicare does not cover.  The amount of the insured’s new co-pay depends on the Advantage Plan that the insured chooses.  Generally, the higher the premium, the lower the co-pay.  There are plenty of other options that change the price and co-pay as well.  (An Advantage Plan actually steps into the shoes of Medicare and pays the 80% in addition to whatever costs exceed the insured’s co-pay.  The Advantage Plan insurance company receives both the premium of the individual insured person and a payment from the Medicare program in lieu of Medicare’s usual 80% payment towards the insured’s costs.  The Advantage Program’s coverage of Medicare’s portion of costs is generally not noticed by the insured.)  Because an Advantage Plan is a “replacement” for Medicare, it can have some limitations in covered services or in approved service providers as compared to “straight Medicare.”  In addition, there are many different advantage plans, each offering slightly different coverage, from which to choose.

When an insured person has a Medicare Supplement, the Medicare program pays its usual 80% pays the insured’s medical costs, and the Supplement pays the 20% not covered by the Medicare office.  Medicare Supplements, because they supplement Medicare rather than replace Medicare, do not generally have any differences from Medicare in covered services or approved service providers.  There are many different Supplements.  The differences among Supplements generally is small, but worth examining.

Advantage Plan premiums usually cost about one-third of Medicare Supplements.  (Some Advantage Plans have a $0 premium, in fact.)  An Advantage Plan’s limitations on services and providers is the trade-off for a lower premium.  The most glaring difference between Advantage Plans on the one hand and both straight Medicare and Medicare Supplements on the other hand is the coverage of post-hospitalization rehabilitation services.

With straight Medicare and Medicare Supplements, an insured person who has been admitted to the hospital for three days and then needs post-hospitalization rehab can have 100 days of rehab coverage.  Someone on an Advantage Plan may have rehab coverage end before 100 days have elapsed.  An Advantage Plan (because it has rules slightly different than straight Medicare) can determine that rehab is not helping the insured person and can end coverage.  Sometimes the rehab coverage is stopped as early as day 20.  Rehab can be very expensive, so Advantage Plans have a strong incentive to end rehab coverage as early as possible.

(“Admission” to the hospital rather than “under observation” in the hospital is a very important distinction in the availability of insurance coverage for rehab.  That issue is not handled differently by Medicare, Advantage Plans, or Medicare Supplements, though.  Consequently, the “admission” versus “observation status” issue is not important to today’s discussion.  I mention it here as a side note because it is an important issue for all people insured through Medicare.)

Someone who has a dementia causing disease is likely to need much greater medical attention than before the dementia started.  Accordingly, someone suffering from dementia (or his or her family) may want to change to an insurance plan with greater coverage than he or she had previously.  (Open enrollment for such a switch falls between October 15 and December 7 each year, with the new policy taking effect on January 1 of the next year.)

Unfortunately, someone covered by any form of Medicare cannot switch plans on demand.  (Medicare, unlike the Affordable Care Act, allows the insurance company to make underwriting decisions on individual plans.)  Trying to move to a plan that provides more coverage may require a medical examination and will certainly require answering medical questions.  If the dementia related disease has been identified by a doctor or is noticeable to an insurance company underwriter, a more generous plan may not be available.  Accordingly, I urge anyone who believes that he or she is in the early stages of a dementia related disease to move to a plan with better coverage (if necessary) at the next open enrollment period.  Generally, I urge people to move to a Medicare Supplement, if they can.

If a Medicare Supplement is not available, an alternative is an Advantage Plan or even straight Medicare with a separate Hospital Indemnity policy.  (The cost of an Advantage Plan plus Hospital Indemnity policy is usually less than a Medicare Supplement.)  A Hospital Indemnity policy is subject to underwriting, though.  If someone with a dementia related disease waits too long, the Hospital Indemnity policy may not be available either.

Without considering the cost of premiums, my preferences for medical insurance for someone who has a dementia related illness is a Medicare Supplement.  My second choice is an Advantage Plan with a Hospital Indemnity policy.  My third choice is straight Medicare.  Finally, my fourth choice is an Advantage Plan.  I realize that my preference is for the most expensive insurance.  When someone learns that he or she has dementia, I suggest that he or she abandon price sensitivity and try for the best coverage.  (The insurance may not be available because of the dementia or some other pre-existing condition, but, with the disease likely only to get worse, trying to get the best insurance as soon as possible is a good idea.)

Most people on Medicare keep their existing insurance plans from year to year.  Someone who believes that he or she has the early stage of a disease that causes dementia should take a hard look at his or her insurance choices at the next open enrollment period.

Acknowledgement:  Thanks to Michael Whitaker of Premier Solutions Group in Brookpark, Ohio for helping me understand Hospital Indemnity insurance.