The gentleman was exploring a possible knee replacement. Knowing that the patient was in his early 70s, the physicians assistant (PA) said, “We have a lot of hoops to jump through before Medicare will pay. You know the government is getting more and more involved in medical decisions.”
The PA was referring to the Patient Protection and Affordable Care Act of 2010. Physicians who treat Medicare and Medicaid patients are hit with what Sandra B. Reed, president of the Medical Association of Georgia, calls “an increasingly punitive administrative burden (e.g., prior authorizations, coding, audits) as a result of a multitude of government rules and regulations.” (Atlanta Forward blog 9/6/12). To make matters worse, the Medicare Payment Advisory Commission has noted that hospitals lose money on Medicare and Medicaid patients, which is why costs are shifted to those with private insurance or the uninsured that can pay.
The boomers are an active bunch. As they move into their fifties and early sixties, they envision running, dancing, hiking, and playing tennis and basketball like they were in their twenties. The result is an upsurge in osteoarthritis, the breakdown of joint cartilage in the knees and elsewhere. Demand for knee and hip replacements is surging as boomers roll into Medicare eligibility at the rate of roughly 10,000 per day for the next 19 years!
The gentleman explained that he only had Medicare Part A (hospital coverage) and that his primary coverage was through his work as he was employed full time. The PA smiled and said, “Well, that makes things easier.”
Sandra Reed declares that “Medicaid is flawed and unsustainable.” In April, the trustees of the Medicare fund affirmed that that safety net also is on an “unsustainable path.” “Unsustainable” is not a political campaign scare word. It is realty, a collision between economics and demographics. The number of physicians who will treat Medicare and Medicaid patients is shrinking as the government cuts payments to medical service providers, while demand soars.
The conversation between the PA and the patient about a knee replacement is indicative of an important financial planning fact. The type of insurance that you have matters. If you leave work before age 65 and Medicare eligibility, there are critical medical coverage implications that must be well understood prior to your last day at work. And what you don’t know about Medicare can cost you big time!
The Medicare open (annual) enrollment period for 2012 runs from October 15 to December 7. Many seniors are baffled by the various Medicare enrollment periods and choices, as are boomers called upon as caregivers or advice givers to aging parents and other loved ones. Original Medicare (Parts A & B) has a plethora of options, and then one must sort through a daisy chain of Advantage Plan and Prescription Drug Plan decisions.
The eight week period starting October 15 offers Medicare beneficiaries the option of enrolling in a new or different Advantage Plan or Prescription Drug Plan for 2013. Studies have shown that a majority of people do not have the most cost efficient coverage based on their medical and prescription drug needs. Financial advisors are equally confounded by the corn maze of choices. Some engage outside experts to advise clients on a consulting fee basis that allows understanding of the client’s medical condition and drug formularies. Those who rely on a sales pitch or plans hawked by various organizations may or may not make an optimal choice.
The Initial Election Coverage Period is for newly eligible Medicare beneficiaries when you turn 65. Yes, you should register for Medicare even though you have not reached full retirement age under Social Security.
There are other enrollment rules too complex to explain in a short column. The message? Be informed and ask for knowledgeable help. Complexity and confusion can be costly!
Lewis Walker is President of Walker Capital Management LLC. and Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with the Walker Capital Companies. 930 East Jones Bridge Road ▪ Suite 150 ▪ Norcross, GA 30092 ▪ 770-441-2603 ▪