August 21, 2023 By

Q&A: A health crisis brings high medical bills. Here are tips for dealing with the costs

Dear Liz: I have been diagnosed with Stage 4 cancer which has metastasized into at least two areas. Surgery, chemo, perhaps a stay in rehab and possibly radiation therapy will be prescribed by my oncologist. In order not to deplete my retirement savings (the oncologist estimates that I will live longer — years — if the treatment goes well), what resources can be identified to help financially with co-pay, medical and prescription costs? I already know about hospital benevolence programs. I am going to revert to my monthly “austerity” budget, watching every penny of my expenditures and trying to avoid or reduce them. I will be unable to work part time, as I have been doing, for at least this year. I am 70. I have Medicare and a Medicare supplement plan as well as a Part D prescription plan. Thank you for any suggestions.

Answer: You’ve just received a shocking diagnosis and it’s understandable that you’re worried about the costs you’ll face.

Your Medicare supplement plan — also known as a Medigap plan — is designed to cover some or all of the costs not paid by traditional Medicare, including co-payments, co-insurance and deductibles. The plans with lower premiums typically have skimpier coverage. You’ll want to carefully review your plan to see what coverage you have.

You probably will have questions, so consider connecting with your State Health Insurance Assistance Program. This program can refer you to a government-funded counselor who can provide free Medicare counseling. You can find your regional SHIP using the online locator or by calling (877) 839-2675 and say “Medicare” when prompted.

Ask your oncologist about lower-cost treatment options and any charitable programs they have or are aware of. Benefits.gov can show you what government programs might be available to help with costs, while 211.org can help you check if there are any local programs. You may be able to seek out cheaper prescriptions through online pharmacies, GoodRx, NeedyMeds, manufacturer discount programs or Medicare’s Extra Help program, which helps Medicare recipients with limited means to afford their medications.

Another option for people with catastrophic medical bills is to file for bankruptcy. Your retirement accounts would be protected, but you’d want to discuss your options with a bankruptcy attorney long before you file.

While you’re researching, keep in mind that the U.S. medical system is set up to push treatment, often regardless of the cost, efficacy or toll on quality of life. Physician and certified financial planner Carolyn McClanahan warns that people can find themselves on a “medical treadmill” that continues pushing painful, debilitating and costly treatments with little or no real benefit to the patient.

Consider having a frank talk with your oncologist about how much more time each treatment will likely get you — not just in a best-case scenario, but in an average-case scenario — and how you are likely to feel during the treatment. A second opinion may also be a good idea. These discussions can help you decide if you want to pour all your available resources into paying for treatment or if there are other options that would allow you to better enjoy whatever time remains.

McClanahan recommends picking up a copy of Katy Butler’s excellent book, “The Art of Dying Well: A Practical Guide to a Good End of Life.” Despite its title, the book doesn’t just focus on the very end of life, but also provides essential information about how to best navigate the healthcare system as an older person.

Filed Under: Health Insurance, Medical Debt, Medicare, Q&A
August 15, 2022 By

Q&A: How your health insurance costs could rise because of a Roth IRA conversion

Dear Liz: With the recent stock market correction, I am considering doing a Roth conversion on an existing IRA now that it is worth less. I can handle the accompanying income tax hit. But while I see plenty of ink spilled on how a Roth conversion can increase Medicare premiums, what about Affordable Care Act costs? Is it the same story there: Will a one-time income spike this year due to Roth conversion impact what I pay all next year for ACA health insurance?

Answer: Potentially, yes. Roth conversions count as income for Affordable Care Act subsidies, so a large enough transaction could increase the premiums you pay.

A conversion allows you to transfer money from a regular IRA or 401(k), which would be taxable in retirement, to a Roth IRA, which would be tax free. If you expect to be in a higher tax bracket in retirement, conversions can make sense — you’re paying income taxes at the lower rate now, rather than the higher rate later. But obviously higher health insurance premiums would offset some of that benefit.

A tax pro can help you model conversions of different sizes to see the effects on all your finances, not just your tax bill. It’s possible that a partial conversion could help you take advantage of the current downturn without dramatically increasing your health insurance costs.

Filed Under: Health Insurance, Q&A, Retirement Savings Tagged With: , ,
October 4, 2021 By

Q&A: What you should know about Medicare, Medigap and Advantage plans

Dear Liz: I’ve read your most recent columns about Medicare Advantage and believe that more should be said before people decide to go that route.

You mentioned that switching from Medicare Advantage to Medicare itself can be problematic. As a couple who have had both plans and now have Medicare with a Medigap plan, I want to say that the best (and, by the way, easiest) switch my husband and I made was to go back to Medicare.

People should understand that Medicare Advantage plans become their primary insurance, severely limiting their ability to go to whatever doctor or hospital is most convenient. When traveling, they are limited to the hospital and doctor they chose with their Advantage plan, the one near home! My husband also could not go to a doctor I had because we were signed up at different local hospitals.

So I phoned Medicare in 2009 and a young man was so helpful, and in no time we were back on Medicare. He said to go to the Medicare website, choose from the many Medigap options offered that suited our needs, and we did. It was that easy.

We opted for no copays, skilled nursing care, and much more. Granted, our monthly premiums are more than they would have been before, but since that date we have not laid out one cent for medical care including doctor visits, my husband’s open heart surgery (at a hospital of our choosing), emergency room and surgery for my broken ankle, and annual EKGs to monitor his heart.

Surprisingly, we also have coverage for foreign medical treatments and took advantage of that in 2018 for minor surgery needed. The Medigap insurance covered 80% of that when our travel insurer refused to pay.

Our Medigap policy also allows us to go to any doctor or hospital without a referral. And, of course, Medicare is accepted throughout the U.S., and Medicare Advantage plans are not. The tens of thousands of dollars we have saved in the last 11 years make it worth paying more each month, and we have peace of mind.

Answer: Thanks for writing and for sharing your experience.

For readers who haven’t kept up with the discussion: Medicare Advantage plans are offered by private insurers as an all-in-one alternative to traditional Medicare, the government-administered health insurance program for people 65 and older. Medicare Advantage plans typically cover some things that Medicare does not, such as vision, dental and hearing care, but the plans also have regional networks of providers you’re expected to use. You’ll pay more, and sometimes all, of the bill if you use out-of-network providers.

Traditional Medicare allows you to go to any doctor or hospital that accepts Medicare — which includes the vast majority of both — but can have substantial copays and other cost-sharing. A supplemental plan or Medigap plan offered by a private insurer can cover those costs, and most Medigap plans also offer emergency coverage abroad.

The premiums for Medicare plus Medigap can be higher than those for Medicare Advantage plans, but ultimately may prove more cost-effective for people who travel frequently or who want more choice about their care.

If you sign up for a Medigap plan when you first enroll in Medicare, the insurer is required to take you. If you miss that open enrollment period, an insurer can charge you more or even deny you coverage because of preexisting conditions.

There are a few exceptions, however. If you initially enrolled in a Medicare Advantage plan but want to switch to Medicare plus a Medigap plan within the first 12 months, you’re allowed to get a Medigap policy without underwriting.

Filed Under: Health Insurance, Q&A Tagged With: , , ,
August 30, 2021 By

Q&A: Retiring early doesn’t mean losing affordable health insurance

Dear Liz: I am 55 and have health issues that I don’t talk about at work. I want to retire soon. I know that getting health insurance is going to be hard. I am just at a loss as to how I am going to keep working when I don’t feel well. What are my options?

Answer: In the past, getting health insurance could be difficult or prohibitively expensive if you had even relatively minor health conditions. That changed with the Affordable Care Act, which requires insurers to extend coverage without jacking up the premiums for preexisting conditions. In addition, most people qualify for tax subsidies that reduce the premiums, and those subsidies were expanded this spring when President Biden signed the American Rescue Plan into law. You can start your search for coverage at HealthCare.gov.

Before you quit, however, consider whether your employer could make accommodations that would allow you to continue working. Many people at 55 don’t have enough saved for a comfortable retirement that could last decades. Shifting to part-time work, if your employer allows it, could help you continue to save or at least reduce the amount you need to withdraw from your savings.

Filed Under: Health Insurance, Q&A, Retirement Tagged With: , ,
June 28, 2021 By

Q&A: What you need to do when free health insurance for unemployed people ends Sept. 30

Dear Liz: My husband lost his job and we are on COBRA continuation coverage for our health insurance. We won’t have to pay the premiums through Sept. 30, thanks to the American Rescue Plan, which passed in March. Is there anything we can take advantage of Oct. 1 if my husband is not back to work? I understand that there’s a special enrollment period right now for Affordable Care Act coverage that ends Aug. 15. My husband’s 18 months of COBRA coverage ends in December but it’s very expensive and we’d like something cheaper.

Answer: The two of you should be allowed to switch to an Affordable Care Act policy once your free COBRA coverage ends.

COBRA allows people to extend their workplace health insurance for up to 18 months after losing their job, but as you’ve noted, the costs can be high. COBRA coverage requires paying the entire premium that was once subsidized by the employer, plus an administrative fee. ACA policies, by contrast, are typically subsidized with tax credits that make the coverage more affordable.

The American Rescue Plan requires employers to pay COBRA premiums for eligible former employees for April through September. The employers will be reimbursed through a tax credit. (The subsidy may last fewer than six months if someone’s COBRA eligibility ends before September, or if they become eligible for group coverage through their job or their spouse’s job.)

When the premium-free coverage ends, your husband would be qualified for a special enrollment period that allows him to switch to an Affordable Care Act policy.

Not only that, but anyone who is unemployed at any point during 2021 will qualify for a premium-free comprehensive policy through the ACA for the rest of the year. HealthCare.gov will have details later this month.

Filed Under: Health Insurance, Q&A Tagged With: , ,
June 1, 2021 By

Q&A: If you lost your job, here’s how to find free health insurance

Dear Liz: I have read that the unemployed can qualify for free health insurance through the Affordable Care Act exchanges. I’m trying to confirm whether my state, which did not accept expanded Medicaid coverage, is offering this to its residents. My position was eliminated with no warning because of the pandemic and I’m finding Healthcare.gov rather convoluted to navigate.

Answer: It may be July before the ACA exchanges reflect the extra tax credits that will make comprehensive health insurance free for anyone who receives unemployment benefits in 2021.

Some of the health insurance changes authorized by the American Rescue Plan, which President Biden signed in March, went into effect April 1. Those included providing larger tax credits that lowered costs for most people who buy health insurance on the exchanges and increasing the number of people who qualify for those premium-reducing credits.

In the past, people with incomes above 400% of the poverty line typically didn’t qualify for subsidies that lowered their costs, but now people with incomes up to 600% of the poverty line — up to $76,560 for a single person or $157,200 for a family of four — can qualify, according to medical research organization KFF (formerly Kaiser Family Foundation). The law also created a new special enrollment period that extends through Aug. 15, 2021.

The exchanges have been slower to reflect the increased tax credits for people who receive unemployment benefits at any point during 2021. These credits will effectively allow those who don’t have access to other group coverage to qualify for a free silver plan with a $177 deductible. The U.S. Centers for Medicare and Medicaid Services has promised that the credits “will be available starting this summer.”

You shouldn’t be without health insurance, so you could sign up for coverage now and update your information when the increased tax credits become available.

But you may have another option. The American Rescue Plan also requires employers to provide free COBRA coverage from April 1 through Sept. 30 to eligible former employees who lost their healthcare coverage because of involuntary termination or a reduction in hours. (Employers will get a federal tax credit to cover their costs.)

Even if you turned down COBRA coverage when you lost your job — as many people do because it’s so expensive — you could still get free coverage if it hasn’t been more than 18 months since you lost your job. Employers are required to notify eligible former employees by May 31. If you haven’t heard from yours by then but think you’re eligible, reach out to the company’s human resources department.

Filed Under: Health Insurance, Q&A Tagged With: , ,
November 18, 2019 By

Q&A: How Medicare, COBRA interact

Dear Liz: You recently wrote about how Medicare coverage interacts with employer coverage. My husband will retire next year at age 65. His company has over 20 employees, so it’s considered a large company plan that won’t require him to sign up for Medicare. Is it better for him to elect family COBRA coverage for 36 months and defer Medicare coverage, since his company healthcare plan will be superior to Medicare? Can he elect Medicare coverage once COBRA terminates? Coverage matters more than costs.

Answer: He shouldn’t put off signing up for Medicare, because COBRA won’t insulate him from penalties.

The previous column mentioned that Medicare Part A, which covers hospital visits, is usually premium-free, but people generally pay premiums for Medicare Part B, which covers doctor’s visits, and Medicare Part D, which covers prescription drugs.

Failing to sign up when you’re first eligible for Part B and Part D typically means incurring permanent penalties that can be substantial. You can avoid the penalties if you’re covered by a large employer health insurance plan — but that plan must be as a result of current employment, either yours or your spouse’s. Once your husband retires, his employment is no longer current, so he should sign up for Medicare to avoid penalties.

If you or any other dependents need coverage, he may end up paying for additional insurance through COBRA on top of what he pays for Medicare. He can have both COBRA and Medicare for himself if his Medicare benefits become effective on or before the day he elects COBRA coverage. If he starts Medicare after he signs up for COBRA, his COBRA benefits would cease but coverage for you and any dependent children could be extended for up to 36 months. Another option to consider would be to cover you and any dependents using a plan from an Affordable Care Act marketplace. You may want to discuss your options with an insurance agent before deciding.

In fact, getting expert opinions is a must, because Medicare rules and health insurance in general can be so complex. Anyone nearing 65 also would be smart to discuss their individual situations with their company’s human resources department and then confirm the information with Medicare before deciding when and how to sign up.

Filed Under: Health Insurance, Medicare, Q&A Tagged With: , , ,
October 28, 2019 By

Q&A: Medicare vs. spouse’s health plan

Dear Liz: I am planning to retire in a few months at 65. My husband, who is five years younger, works for a corporation that provides excellent health insurance. When I sign up for Medicare, will I still be able to stay on my husband’s health insurance? Which insurance will be listed first for coverage?

Answer: The rules are different depending on whether your husband’s insurance is considered a large employer plan or a small employer plan.

If the plan covers 20 or fewer employees, his employer can boot you off the plan or make it secondary to Medicare. If the plan covers more than 20 employees, though, the employer typically can’t treat you differently from younger employees and spouses and must allow you to stay on the plan, which would remain your primary insurance with Medicare as the secondary insurer.

Medicare penalties are another issue to consider. Medicare Part A, which covers hospital visits, is usually premium-free, but people generally pay premiums for Medicare Part B, which covers doctor’s visits, and Medicare Part D, which covers prescription drugs. If you don’t sign up for Medicare Part B and Part D when you’re first eligible, you could face permanent penalties that would raise your monthly premiums for life.

These penalties don’t apply if you put off signing up for Part B and Part D because you’re covered by a large employer health insurance plan from current employment, either yours or your spouse’s. Once that employment or coverage ends, though, you’ll need to sign up for Part B and Part D promptly or the penalties kick in.

Notice the use of the words “typically,” “normally” and “generally” in the paragraphs above. Medicare’s rules and exceptions can be tricky to navigate. Talk to the benefits manager at your husband’s company so you know where you stand, and what parts of Medicare to sign up for as you turn 65.

Filed Under: Health Insurance, Q&A Tagged With: ,
October 7, 2019 By

Q&A: If long-term care insurance costs too much, you have a choice to make

Dear Liz: We were told to buy long-term care insurance early because waiting too long would make it more expensive and perhaps unavailable. I bought mine when I was 55. At the time, it was $2,400 a year. Unfortunately, the premiums just kept going up. I am now 77, and the premium this year was $4,470. The letter informing me of this increase said that next year it will go up 6% to $4,738, and 6% again the following year to $5,022. It’s very clear to me that buying the insurance early was definitely not an advantage. The insurer will obviously keep raising the premium at will. Since I am, like most people my age, on a fixed income, the time will come when I simply cannot afford these premiums. I will then lose the insurance plus all I have paid into it all these years. People should be told that the premiums will continue to rise, and that the time may come when the cost is beyond what anyone on a fixed income can afford.

Answer: Many people are in the same unfortunate situation. They purchased policies because they thought it was the prudent thing to do, only to face the possibility of losing coverage as premiums continued to rise.

Companies that offered long-term care insurance starting in the 1980s and 1990s discovered they didn’t price the coverage accurately. Far fewer people dropped their policies than expected, while the costs of long-term care increased more than anticipated. Many insurers stopped offering the coverage, and massive premium increases were the norm for a while.

Insurers can’t raise premiums “at will,” by the way. The increases must be approved by regulators, who weigh the effects on customers against the possibility an insurer might go under and be unable to pay anyone.

The companies still selling long-term care coverage now offer less generous policies that probably won’t require huge premium increases. Still, many financial planners advise their clients who are buying coverage now to expect their premiums to increase 50% to 100% over their lifetimes.

It’s important to keep in mind that insurance is not like an investment or a savings account. You don’t buy homeowners insurance hoping your house will burn down someday so that you can get your money back. You buy it to protect your finances against catastrophic loss. So it’s not as if you received nothing in return for your long-term care premiums: You were protected against a potentially catastrophic cost that — fortunately — didn’t happen.

That doesn’t mean you were wrong to expect your premiums to remain affordable. Given your current reality, though, you’ll need to decide if you want to risk dropping coverage entirely or if reducing coverage might be an option. Many people in your situation have opted for longer waiting periods, lower inflation adjustments or a reduced benefit period to keep premiums affordable.

Filed Under: Health Insurance, Q&A Tagged With: ,
January 7, 2019 By

Q&A: How to find affordable healthcare insurance

Dear Liz: I am 25 and work two part-time jobs, neither of which offers health insurance. Once I’m 26, I will no longer be able to remain on my parents’ policy. Do I need a full-time job to receive health benefits, or do I have other options?

Answer: You currently have other options, but you may still want to look for a full-time job that offers this important benefit.

Although a Texas judge ruled the Affordable Care Act unconstitutional, the law giving people access to health insurance remains in effect while legal challenges play out. You can start your search for coverage at www.healthcare.gov. The open enrollment period for most people has ended, but some states including California have extended the deadline to Jan. 15. In addition, you would qualify for a “special enrollment” period once you turn 26 and lose eligibility for coverage on a parent’s plan.

If the ACA does go away, health insurance may become harder to qualify for and more expensive. Group health insurance through an employer may become your best option.

Filed Under: Health Insurance, Q&A Tagged With: , ,