Medical Information

Questions arising during the reading of this materiel may be sent to Chuck Austin nchryslerro@ncro.org.

2008 - Some General Advice & Costs re Medical Coverage

General - First, note that this advice assumes that the individual is 65 years old or older and is eligible for Medicare. Second, while some general advice is offered, recognize that individual needs and desire may vary greatly depending on such things as: age, how high medical coverage may be in the individuals life priorities, geographic area and the availability of facilities and medical resources in that area, both the general and special medical and prescription needs of the individual, availability of funds, etc. Opinions on "best" vary considerably. With that said, here we go.

Medicare Advantage or Traditional-

The first major decision – Do you want a Medicare Advantage plan (medical and prescription drugs in one plan) or the separate medical plan and prescription plan? A lot of insurance sales people and large medical plans really, really promote the Medicare Advantage plans.

You probably will receive tons of "mailers" and see many TV and magazine ads for Medicare Advantage plans. Indeed, the Medicare Advantage Plans are described as low cost efficient plans and probably are in some cases (well run plans in large population areas with extensive medical doctors, hospitals and facilities). Or, if you have very few medical and prescription needs, it may be an economical choice. However, in many cases where an individual requires a lot of medical support, these plans are heavily criticized for restricting the availability of: specialists, doctors, hospitals, some treatments, certain prescription drugs, etc. Some of the most severe critics and horror stories involve Medicare Advantage plans.

Read some Internet discussion or congressional hearing reports re some of these plans. If an individual wants to be able to select a medical doctor and/or facilities Medicare Advantage probably is NOT what is desired. Carefully check exactly what hospitals, doctors, etc are available with the specific plan you are considering. When you signup you are signing up for a full year and will not be able to change until the next open period (generally change Dec to Jan each year).

Medicare (Traditional) –

This really has two parts – * Part, A which is hospital care, skilled nursing, etc, * and Part B, which is doctor, lab, home heath, outpatient, etc. Most medical facilities and groups accept Medicare but you need to confirm PRIOR to running up any bills. Cost for the coverage is deducted from Social Security payments. Basically the federal government spells out in great detail exactly what will and will not be covered and how frequent or for how long and how much they will pay.

Doctor offices generally will provide some guidance on coverage but be careful and check yourself (Medicare annual book or internet). Note, however, it has an annual deductible and only covers 80% of the allowed price – so you must cover that deductible and the other 20%, which could be significant on any major surgery or medical problem.

"Medigap" Policies -

This is intended to cover some of what the basic Medicare did not cover – some of the other 20% and depending on the policy, perhaps deductibles, or additional items/charges. This is NOT a policy to cover something Medicare would not cover –if Medicare did not cover, this will not either. Don’t believe a claim by some policies that only they will give you continual coverage and only they will eliminate other claim forms – they all do this.

Generally you may have to give them a copy of your "Notice of Creditable Coverage" (formal letter from previous employer/provider – do NOT lose it either) and once you sign up they notify Medicare and the paperwork flows – after Medicare pays, they pay – you receive copies of all (tons of paper).

There generally are three types – Issue-age policies, attained-age policies and community-rated policies. The attained age start out looking inexpensive but as years pass can become rather expensive. Generally it is best to go with an issue-age or community rated policy. Also, all of the plans are designated letters "A" through "J" for standardized coverages --- some cover one thing, the next covers something else. The "Medicare" annual book describes what each covers (If you can’t find it then just go to the AARP site.

Plans "C" and "F" generally provide greater coverage and are more popular (and cost more). If you are considering a certain plan, try to find what letter coverage it has. Many seem to prefer the carriers they have had from the past like Blue Cross/Blue Shield of ______.

Do NOT just go with whatever your company may offer. Look at the entire market. You might do well to at least CONSIDER various Humana and AARP (really United Healthcare) plans. (Note: If you elect a Medicare Advantage Plan you will not have this.)

Medicare D (Prescription Drugs) –

IF you take a lot of prescriptions this is your most important decision. Basically, as you order more and more prescriptions Medicare pays most up to a certain point, then you pay real heavy (most call it "the donut") and once your total costs reach a certain very high level Medicare again pays most. A lot of plans do not cover certain "specialty" and other drugs – very complex from one plan to another.

If you and your spouse take a lot of drugs, make a very detailed and accurate list (name and exact dosage) and prepare to spend several hours on the Internet for a complete analysis. You need to go to the Medicare web site for the section on prescription drugs – it is excellent. Follow the directions, for each of you put in each and every drug name/dosage and be sure to save (they will assign a number and be sure to write it down so you can go back or update changes). It will give you a total annual cost (premiums and all drug costs) for all plans offered in your state. You can sort from least expensive to most expensive. Pick one and then it will give you a month-by-month total of your costs. Look at several. It also can offer suggestions of generic drugs to lower the costs.

Generally you will want to zero in on:

• a company or plan that you think you could trust at your location;

• low total annual costs (may not be THE lowest but will include all premium and drug costs) and

• has a relatively reasonable cost during those expensive "donut" months. (Note: some may have low premiums and low annual but really sock it to you for months and you cannot afford those peaks.)

Most companies offer three levels of coverage with different names like "gold", "standard", etc (varies with cost and amount of coverage) and this analysis will consider them all. You probably want to have the same plan for yourself as well as your spouse so you may want to do a lot of looking -- at this one and then that one. Some plans allow you to mail order a three-month supply and only pay for two months. And, every year around November, the various plans revise their premiums and drug cost schedule so you need to completely reevaluate.

If you take very few drugs or mainly generic drugs you may just want to go with the cheapest plan you can find. Note that in the last year or so Wal-Mart (and indeed many competitors) now offers around 350 prescriptions at only $4/mo or $10 for 90 days. A number of over-the-counter alternatives also may be considered instead of the more expensive prescriptions. At the same time we have seen some of the more expensive specialty drugs costing over $800 for a 90-day supply.

(Again, if you elect a Medicare Advantage plan you will not need this type of policy.)
 

Dental –

Years ago dental insurance provided extensive coverage. Over the years, however, the degree of coverage has been greatly reduced. As such, many retirees have decided to simply pay as you go and not purchase dental insurance. (A recent brief survey within Chrysler indicated that only 55% now have dental insurance.) Although there are a handful of possible policies, we have found that the Delta Dental plan offered in the name of your old employer (e.g. "DaimlerChrysler Post-65 Retirees") provided the best coverage at the best price and they have a couple of options.
 

Eyeglasses – To the best of our knowledge, no one has any eyeglass insurance. A number of chains offer good prices and specials and the Internet even has some very low-cost mail program that are reported to be excellent (see http://zennioptical.com/
 

Other

Be sure not to forget the need for Long Term Care Insurance. Some reports note that for those over 65 around 70% will require some type of long term assistance at some point in their lifetime. Medicare only provides certain specified limited care and continuing care can be very expensive.

The following pages include two tables which detail medical expenses for a small family (one male adult who retired from an executive position at Chrysler after 38 years, one female adult, and one dependent child who is a full time student at college). The adults are both 72 and live in a rural area in a southern state. They both take medications for allergies, blood pressure, and cholesterol. In addition each has different heart conditions requiring other medications. Both also take vitamins, exercise and see doctors and dentists on a regular basis. Names have been deleted so that there is no personal embarrassment, criticism of why this or that, or calls for more advice – we simply do not want our names all over. It will be apparent that there could be many questions on each entry for each table. Following the two tables is an explanation of some of the significant points.

DISCLAIMER: Although this information is believed to be accurate, it in fact could be inaccurate in whole or in part therefore, it is your responsibility to research the various medical plans and the services provided by them. NCRO-DS-07/28/2008 _________________________________________________________________________________________

COMPARISON 2006 AND 2007 MEDICAL EXPENSES
Notes: – is expenditure or reduction in check from DaimlerChrysler or Social Security

+ is additional received

Considerable time was spent on the internet reviewing for this area Medicare listings for both Medigap policies as well as the Medicare Part D. Detailed lists of actual prescriptions (8 for self and 15 for spouse) were included. The best (considering firm, total annual cost and cost during donut) were selected as shown above. All rates are as shown on their respective internet site, generally for our current age. Several prescriptions may still be changed to generics to achieve further reductions. The benefit of "before tax" for spending account not included – and cost for time use of money also not included. Long Term Care Insurance not shown but could be included in both years.

 medical-DC-comparison-12-04-06

ESTIMATED 2008 MEDICAL EXPENSES

Medicare Insur (spouse $96.40/mo X 12) $1,156.80

Medicare Insur (self $96.40 /mo X 12) 1,156.80

Medigap Insur (AARP both; $301.62 X 12) 3,619.44

Dental Insur (Delta both; $72/mo X 12) 864.00

Medicare D Insur (Prescription Pathway, $138.60/mo ea X 12 X 2) 3,326.40

Prescriptions (Our costs from 2007 actual – spouse) 3,996.93 Prescriptions (Our cost from 2007 actual – self) 1,889.07

Dental exp ($784 actual plus $200 est rest) 1,000.00

Dependent medical (Deducted from pension $110/mo) 1,320.00 Less Chrysler spending account ($1,805 self $1750 spouse) -3,555.00 Sub total $ 14,774.44

Long Term Insurance (both $372.55/mo X 12) 4,470.60

Total $19,245.04

MEDICAL COVERAGE

 The first table is "Comparison 2006 and 2007 Medical Expenses". This is a historic table which was prepared in December 2006 and shows mostly actual figures for 2006, when Chrysler did provide the medical coverage, and projected figures for 2007, when Chrysler provided a medical spending account but all other was basically Medicare or self-funded. (At the time there were detailed printouts and records to support this summary but have long since been tossed at this point.)

Looking down the 2006 monthly column, there is the expense for the retiree paid portion of the Chrysler medical coverage and also the "special benefits" credit Chrysler had provided at that time. Medicare Part B costs also shown and were taken from Social Security payments. At that point in time there was a good record for prescription costs (really only for the two adults) for the first 6 months of 2006 so they were simply converted to a monthly basis.

Now, looking at the 2007 monthly column – the above expense and credit items are eliminated and the Medicare Part B cost is shown as the same (actually went up a little). For medical coverage, we did a lot of evaluation, clearly did not want Medicare Advantage plans and eventually selected the AARP (United Healthcare) Plan F which offered a 5% discount when handled together. (In the past 18 months we have been very pleased with this decision but will always evaluate annually.)

The decision re Medicate D (prescription drugs) required extensive evaluation on the Medicare Internet site--- every one of our actual specific drugs was included and every possible plan was considered. The decision came down to a Humana plan or a Prescription Pathway Platinum plan and we went with the latter – felt it was best considering total, monthly and our drug coverage. (This has been a good decision and we did continue for 2007 but will re-evaluate every year.) The first entry shows the premium costs while costs further down the page show the totals given on the web site for all the drugs for both adults for the year.

Also, we considered dental coverage – not many plans available, seriously considered cash basis only but eventually decided to take the Delta Dental Option I for a couple of years and those premiums are listed. This last entry shown as a credit is the new 2007 Chrysler medical spending (allowed $1,750 ea). We did accumulate our expenses, made one claim in June 2007 and wiped out the account.

Although some consider "Long Term" insurance a medical expense it was not shown in this table because it would be identical for both years. Also, over-the-counter expenses (aspirin, vitamins, band aids, etc) were not included simply because we do not keep track of those items. A couple of other footnotes are at the bottom. Bottom Line – we were a little over $7,000 worse off for the year – or around $600 worse off per month on average. Actually, it was lower in early months but significantly higher in later months when drug costs hit "the donut".

We tried to submit the medical spending account early enough so that money would be back to help during these months of high prescription costs. Also attached is a chart "Estimated 2008 Medical Expenses". The first two entries, each at $1,156.80, are for the Medicare deducted from each Social Security payment each month – firm numbers. The Medigap Insurance (AARP Plan F) for both for each month, again firm numbers. The Dental Insurance (with Delta Dental) for both is $72/mo and also is firm. This year to date has had significant and unusual dental expense $784 to date – self had two filling and one additional cleaning while spouse had gum problem that resulted in oral surgeon and then some treatments due to the Boniva being taken which was attacking the jawbone (also see prescription, below). Total is projected at $1,000 for the year.

Medicare D policy, for prescription drugs (Prescription Pathway Platinum, still found to be an economical best coverage plan) is $138.60/mo for each. The prescription costs beyond the policy premiums shows actual 2007 figures. At this point it probably is appropriate to compare the initial 2007 estimates from the first chart to the 2007 actuals listed here. The 2007 actuals spouse (also used for 2008 estimates) is $3,996.93 compared to the earlier estimate of $3,893.41—which is quite close.

On the other hand the 2007 actuals for self were $1,889.07 vs. the $3,916.92 earlier estimate – an overestimate of around $2,000. In reality there were a number of changes for both. Instead of the Allegra the generic fexofenadine was taken. For the Nexium, first the generic omeprazole was used and then changed to over-the-counter Prilosec. The spouse had tried various Osteoporosis drugs and was on Boniva, which had to be discontinued due to a side effect on the jawbone (see above re dental expense).

Earlier both were taking both Lipitor and Zetia, which was changed to Vytorin, which was later changed to the generic Simvastatin. Some of the spouse’s heart medications were changed and now a very expensive (some 3 mo supply is just over $800), but very helpful drug Renexa is included.

The one dependent is covered with general Chrysler medical coverage and the cost to us of $110/mo is deducted from the pension check. Chrysler has increased the medical spending account slightly for 2008 to $3,555 (increased from $1,750 to $1,805 for self but continuing spouse at the same $1,750). So that helps reduce the costs and in July one claim was filed for the entire amount. Thus total 2008 medical expenses are estimated at $14,774.44, with the Chrysler spending subtracted. If the cost of Long Term Insurance, which can be included in the spending accounts and any IRS deductions, is added the bottom line is $19,245.04