Earlier this year the company notified Medicare-eligible retirees that their medical insurance coverage through the company was going away the 1st of 2015, and could be obtained from the AON Hewitt Health Exchange.
The notice also said they would help offset some of the costs, and that more information would be available this Summer.
We are not insurance experts, but we do have a lot of information about these changes.
1. First, these changes only affect those retirees who are 65 and older. If a retiree is under age 65 and is on Medicare because they have been on Disability for 2 years, they will not be affected – their company insurance continues as before. (Update: This was changed in 2016 for the 2017 benefit year. Now all Medicare eligible retirees are now affected)
2. Next, Medicare has been and continues to be your primary insurance. The company insurance was supplementary, which means it would cover some of the costs that Medicare did not cover – deductibles and co-insurance costs primarily.
3. The company is eliminating its supplementary medical insurance for retirees 65 and older, and they are encouraging retirees to use AON Hewitt’s Retiree Health Exchange to purchase that supplemental coverage.
4. If a retiree does use AON, the company will contribute $2,700 for the retiree to a Health Reimbursement Account (HRA), and will contribute $1,500 for a spouse who also gets their supplemental insurance from AON. The money in that HRA can be used to help pay for insurance costs and medical costs that are not covered by insurance.
5. The signup period for the supplemental insurance is October 15th – December 7th. You must choose your new supplemental insurance in this time period or you will not have supplemental coverage in 2015.
Clarification on the signup period for the supplemental medical insurance with AON Hewitt:
The normal signup period for Medicare supplemental coverage is October 15th – December 7th of every year.
The AON Hewitt signup information you have received states that their signup period is October 1st – December 31st. But, some of the options and the associated cost figures were not available on their website until October 15th. That’s the reason we used a begin date of October 15th.
The normal Medicare end date for signup is December 7th, and it is not wise to wait until the very last minute to sign up for insurance coverage. However, AON Hewitt has stated that their signup period extends until December 31st, and they are making appointments for mid-December to sign up for coverage.
6. The AON representatives started having phone appointments with all affected retirees in July and August – everyone we have spoken to about these calls has been very complimentary about the AON reps; evidently, they are very knowledgeable and helpful. Those representatives will call you back in November to find out which supplementary insurance plan you chose, and to help you sign up.
7. AON has a website that you can use to find information about the different choices and costs. That website is http://retiree.aon.com/att. However, the cost figures were not available until October 1st; and some of those cost figures will not be available until October 15th. In addition, you will need to read and understand the following two options when making your decision.
8. Option 1 – Medicare, with Medigap, plus Part D. You can use standard Medicare (Part A & B) from the government, along with supplementary (Medigap) insurance from AON, plus Medicare Part D (prescription drugs) insurance, also from AON.
a. Medicare Part A covers hospitals, but it has a deductible and some copayments you have to pay.
b. Medicare Part B covers doctors, but it has a monthly premium and a deductible and some copayments you have to pay.
c. Medicare Part B costs $104.97 per month in 2014 and 2015. There is no premium for Part A.
d. The Medigap, or supplementary, insurance typically takes care of the things that Part A & B don’t pay for, such as deductibles and coinsurance costs. This is available from AON. There are 10 plans – Plan A, B, C, D, F, G, K, L, M, and N – they have standard features set by the government that includes what they will pay for. Plans F & G tend to be the most popular because they pay the most. For more information, see page 93 of the “Medicare & You 2015” book from Medicare.
e. Medicare Part D is prescription drug insurance. It is also available from AON. On the AON website you will have many choices of insurance companies. To narrow down your choices, you will need to enter the names of the drugs you normally use, then compare the total costs of the different companies. Pay close attention to the total costs – they are important because that includes the deductible (if any), the drug costs, and the copayment amounts. The drug costs can vary dramatically between insurance companies, and between pharmacies.
9. Option 2 – Medicare Advantage (HMOs & PPOs). Instead of using standard Medicare Parts A, B, & D, plus Medigap, you could choose to use Medicare Advantage from a private insurance company, also available through AON. These plans can change dramatically from year to year, and may not be offered in this State in future years.
10. Typical costs of premiums:
Medicare Part A - $0
Medicare Part B - $104.97/month
Medicare Part D - $20 - $100/month, possibly more
Medigap Plan G - $100 - $150/month, possibly more
All of this can be confusing – if you have questions, please feel free to contact your financial advisor at Sound Financial Strategies Group. We are not insurance experts, but we can get you pointed in the right direction.