Financial misconceptions about Medicare

Like most rural areas, northern Michigan faces a growing elderly population with increasing medical needs and worrisome longterm care costs.

As a physician for primarily geriatric and complex patients, the questions I hear frequently involve Medicare. Understandably, the questions are usually about what their insurance covers, and these are the common topics:

Medicare is available at 65. The cost is lowest if the person or their spouse has worked full-time for at least 10 years. It is important to enroll in Medicare on time because, unlike Social Security, when a person reaches eligibility but enrolls late, they incur increased monthly Medicare penalties for a lifetime. You read that correctly: If you enroll in Medicare late, you will pay for that delay the rest of your life. Apparently, it is that important the government control your health care.

Medicare is broken into parts A, B C and D.

Part A is excellent hospitalization coverage, which most people understand. Everyone under Part A has a deductible every year. Most people do not understand this.

Part B pays for roughly 80 percent of outpatient health care after an annual deductible, while 20 percent of outpatient costs are the patient’s responsibility.

Common misunderstanding: Emergency room, same-day surgery and observation status are only covered by Part B. Medicare regulation states it is not hospitalization. Roughly one-third of what laypersons consider “hospitalization” is not — it is “observation,” so the patient gets billed at least 20 percent of those charges.

Part C is optional. Called Medicare Advantage, it has more coverage flexibility conforming to individual needs and can wrap parts A, B and D into one plan. The overall coverage for Medicare Advantage is not only more comprehensive than traditional Medicare, but also can reduce the need for “medi-gap” insurance (supplemental plans addressing the 20 percent of uncovered cost mentioned above).

Part D is prescription drug coverage, an excellent financial deal for patients on chronic medication.

How can you further reduce your health care burden?

First, enroll in Medicare when eligible, avoiding financial penalties. Take time to re-evaluate your health care needs each year. Most wasted money is on excessive supplemental plans and excess medication. If you have an employer-based retirement plan, determine how that plan covers the Medicare gaps before considering a third insurance.

Second, if you will be in the hospital, bring home medications in the prescription bottle, along with any inhalers and CPAP device, then ask the nurse if the physician will write an order allowing your own medication to be used while hospitalized. If not, you will pay hospital prices these treatments. However, never take medication without telling your nurse. This ensures safety and that you’re only paying for those medications specific to that stay.

Third, don’t get fined for Medicare fraud or abuse. Medicare makes $6 in fines for every $1 it spends investigating fraud. Fraud detection has increased nearly five-fold. In short, Medicare is stepping up prosecution, which is much easier than raising taxes.

What does Medicare consider fraud or abuse? You’d be surprised.

Filling prescriptions in your name that someone else uses is fraud. Hospitalizing someone you “can no longer take care of at home” is fraud if the hospital staff is complicit in deception (but considered abuse if unaware). While such social admissions tug heavily on health care workers’ hearts, allowing or misinforming the doctor or nurse in this regard is fraud. If detected, such fraud can destroy not only the patient financially but can place an entire community hospital at risk, depending upon the level of involvement of the doctors, nurses and administration. In layman’s terms, if it is care you’d have to do at home for a baby, then it is not a medical need for an adult, and Medicare expects you to pay for it. That’s just the law and costly to break.

Seniors are often the victims of health care fraud as well. Medical identify theft, sometimes occurring at “free” health screenings, allows identity thieves to commit fraud in your name using your insurance. Check every medical bill. Ensure you recognize the physician and service that was provided. Shred all insurance items prior to disposal.

Lastly, plan appropriately. Too many patients have been impoverished due to lack of longterm care insurance. Before retirement, invest heavily in your Health Savings (HSA) account. When considering retirement, longterm care insurance is important. Longterm (assisted living/nursing home) care is not covered by Medicare, the unhappy alternative being liquidating nearly all assets to qualify for Medicaid. Most persons face a gradual decline, so should strongly consider longterm care insurance to increase care options and avoid sacrificing their estate or impoverishing their spouse. For persons with a terminal diagnosis, hospice care, a Medicare benefit, is the best choice for both financial and comfort reasons. These two services are highly under-utilized in rural areas.

Dr. Allan P. Frank is a physician with Northern Health and Wellness Inc. in Alpena.