Episode 31 – PEBB and Medicare overview
Episode transcript:
[music intro]
Jenny
Welcome back to Fund Your Future with DRS. We know that for a lot of public employees, those who are approaching retirement, medical insurance coverage is a scary but important topic. And on a previous episode, we talked with Tim from the SHIBA program, and SHIBA provides one on one counseling for Medicare options.
And today we have Ellen from the Washington State Health Care Authority, who’s the Medicare manager for PEBB. And we’re going to continue our conversation about what Medicare options are available for PEBB and SEBB retirees. Welcome, Ellen.
Ellen
Thank you.
Seth
Ellen, so, every time I read or try to learn about Medicare, I get a little bit confused because it’s like an alphabet soup of letters. There’s Part A, B, C, D, E, F, G. I’m probably missing some of the important letters in there as well. And then I think some of the plans also go by other names, Medigap, Medicare Advantage, all sorts of different, sometimes interchangeable words and letters.
So, could you just maybe start with just helping us define what the individual parts are that people might need to know about?
Ellen
Sure. So, first of all, Medicare has Part A, Part B, Part C and Part D. Any other letter refers to a plan. So, like a Medicare supplement plan, and we’ll go into that in a minute.
But Medicare Part A is inpatient services, hospital services, Medicare Part B is doctors and outpatient services and specialists durable medical equipment. It covers a bunch of things, including some vaccines.
Medicare Part C is what a carrier gets if they are offering a Medicare Advantage plan. So, Medicare Part C refers to Medicare Advantage, Medicare Part A and Medicare Part B together are referred to as original Medicare or traditional Medicare. All of the PEBB Medicare plans work with traditional Medicare or original Medicare, but they work together in different ways.
Medicare Part D (like drugs) refers to the drug plans. And I try to be very careful about Medicare Part B (like boy) because that’s a premium for which members have to pay separately apart from what they pay to HCA. Medicare Part D is included in a couple of the PEBB Medicare plans.
Plan F is an old plan, if you will. It was offered by Premera. It has been closed enrollment since January 1, 2020, and it has been replaced by the Premera of Plan G. So letters after D refer to different plan types and currently PEBB offers Plan G.
Seth
And just for my clarification and you mentioned that Parts A and B, are original Medicare. And my understanding is that there is a cost associated with Part B, but that for most people automatically comes out of their Social Security payments. If you’re receiving Social Security, you’re paying in?
Ellen
Correct. So, to be eligible… first of all, Medicare Part A automatically comes out of your Social Security as long as you’ve worked at least ten consecutive quarters in a job that pays into Social Security. So, most people have that automatically. Part B, yes. If you are drawing from your Social Security and taking Part B, you can have your Part B premium, and that’s paid directly to Medicare separate from what’s paid to HCA. You can have that withdrawn automatically from your Social Security payments.
Seth
Perfect.
Jenny
So, what are the Medicare plans that are available to Medicare eligible retirees and PEBB?
Ellen
So, first of all, let me start by saying that if you are in SEBB which is the School Employees’ Program and you retire, you automatically transfer over to PEBB. So, all retirees from the state systems are in PEBB and we do have a number of plans available. So, we have Coordination of Benefit Plans. We have Medicare Advantage plans that are HMO those and I will explain all the acronyms here. We have MAPD plans that are PPOs and we have Medigap or Medicare supplement plan. So, let’s talk about what those are.
COB is a Coordination of Benefits plan. It means it works with traditional Medicare and Medicare pays primary for medical services, everything else is covered by the plan. And in that we have UMP classic Medicare, which is the uniform Medical plan, classic Medicare or KP Washington original Medicare. Those are coordination of benefits plans.
Then we have traditional HMOs, which is Health Maintenance Organization, Medicare Advantage plans through Kaiser. So, Kaiser Northwest — which ironically, is available only in southwest Washington— has a plan called Senior Advantage. And one of the hints is: if the word “advantage” appears anywhere in the plan, you know, it is a Medicare Advantage plan because otherwise you can’t use that term.
And then KP Washington, which is the rest of Washington state in most areas, offers a plan called Medicare Advantage. Those plans, as I mentioned, are Health Maintenance Organizations. That means they have a limited network of providers and you have to see in-network provider. And they’re also regional plans; you have to live within a specific service area.
Then we have MAPD, which is a Medicare Advantage, including prescription drug coverage. These plans are available from UnitedHealthcare. We have PEBB Complete and PEBB Balance. The difference is that PEBB Complete is virtually all $0 co-pays. PEBB Balance balances a slightly lower premium every month with having to pay co-pays, if you see a doctor or have other services. Those plans, the UnitedHealthcare plans are PPO, which is Preferred Provider Organization plans. They are nationwide and offer a very broad network so that there are lots of providers. Virtually anybody who accepts Medicare and there’s no difference in co-pay between in-network services and out-of-network services.
And then finally, the Medicare supplement plan or Medigap plan is Premera Plan G. Medigap means that it’s really meant to cover the 20% that Medicare does not cover. So, for either inpatient services or outpatient services, Medicare pays 80% and the member has to pay 20%. Most people have some sort of supplemental insurance to cover that 20%. And that’s what a Medigap plan does. But it’s important to note that it has no drug coverage and therefore the member has to buy an individual commercial, standalone Part D plan for prescription coverage.
Jenny
And there’s a lot of options there. And if it’s possible to talk about it, sort of differences or similarities between what active employees have in PEBB or SEBB versus when they retired, like UMP, for instance. I recognize that one. That’s what I have for my health insurance coverage. Moving from that as a current PEBB employee to a retiree.
Ellen
Right. A Medicare retiree.
Jenny
Right.
Ellen
So, the plans are very different than anything on the active side because Medicare is going to be either the primary payer or the plans are working in coordination with Medicare. And so Medicare is the only coverage such as Medicare Advantage plans. So really, there’s a big difference. For example, in SEBB there are Premera active employee plans. It’s a very different than Premera Plan G.
So, it’s really important when one transitions to Medicare eligibility to find out what the different options are and how they work with Medicare and how they work within the PEBB portfolio.
Seth
In some ways, I think it’s similar to some of the other conversations we were having with folks from the health care authority. You’re going to have to think about what your network is and what your where your providers are and what the different insurance plans would cover. And you even mentioned this that some of these plans are more regional and some of them are more kind of nationwide or have broader coverage, which I think is similar.
As an active employee, I’m thinking about… I want to make sure [like] when I just went through open enrollment, I want to make sure my chiropractor is in my network.
Ellen
Yeah, yeah. So, in the PEBB Medicare portfolio, I think that the way to say this is the broadest coverage first, which is all of the plans are nationwide, except for the Kaiser plans. So those are the only two that really are not nationwide. And as I said, those are HMOs and therefore they have a regional aspect to them.
You have to live in the right service area, and they also have a limited network. Once you go to them that you have to use their network providers, all the other plans. So, the original Medicare plans, which is Uniform Classic Medicare or the Kaiser original Medicare or Premier Plan G or the UnitedHealthcare plans, those are all broader. Let me just say that the Kaiser original Medicare does have a limited network and does have regional component to it, but the other plans are nationwide and you can see any provider, as long as that provider accepts Medicare because of the provider has opted out of Medicare, then your claim would be denied.
The network component is still important and it’s important to find out if the provider is in the network. And most importantly, does the provider accept the plan because for example, with the UnitedHealthcare products, it doesn’t matter whether the provider is in-network or out of network in terms of copays, but it does matter whether they accept the plan or not.
So, accepting the plan means that they are willing to bill United directly and therefore you don’t… You as a member don’t have any reimbursement issues or, you know, any responsibility for following through on that. But if the provider says, “No, I don’t work with United,” then you can still see them. You have to pay upfront and then you get reimbursed.
On a different, slightly different note… A question that we get very often has to do with international travel. Washington State has very active retirees and there’s a lot of international travel that goes on and I am looking forward to that myself. And only the Uniform Medical Plan Classic Medicare and the UnitedHealthcare Medicare Advantage prescription drug plans cover international claims. International claims are covered by the member paying upfront and then seeking reimbursement.
So, the reimbursement process is the same for UMP Classic Medicare as it is for United. You have to submit the bills and then you get reimbursed 100%.
Jenny
Okay. That’s a really good distinction because like you said, obviously a lot of retirees do enjoy international travel and you want to be able to make sure that your expenses are going to be covered, at least that you can submit these reimbursements and have the correct insurance.
Seth
Ellen, you talked a little bit about this in your last answer as well, kind of when you’re looking at these different plans, they also have different costs associated with and paying for different things at different points in the process, whether that’s paying a premium or paying a co-pay. I did a little bit of research before you came over on trying to understand the variation in costs, and it’s pretty significant.
You’re talking, some of the plans, for people who are Medicare eligible between $135 or $532. But when you compare that to people who aren’t Medicare eligible and are retirees, you’re talking about somewhere between like $700 or $1,000. I think it’s important to remember that Medicare is picking up a big portion of the cost once you’re over 65.
So, could you help us understand a little bit about the difference between the costs?
Ellen
So, it’s really important to understand who pays what when. So, for active employees, it’s a reminder for everybody that their employer is paying 85% of the cost. Once you retire or you no longer have an employer to pay that 85%. So, if you’re not yet Medicare eligible, guess what? You have to pay that 85%. And that’s part of why for non-Medicare retirees, insurance is very expensive.
For Medicare retirees…not only does Medicare pay most of it and there are federal moneys that are available to different carriers, different plan types that help lower the premium costs directly. But the state also has an explicit Medicare subsidy, and that is currently set at $183 or 50% of the premium, whichever is less. It’s important to note that when HCA publishes the premium or talks about the premium or even the prices that you just mentioned Seth, those premiums are after the subsidy has already been applied. So, the Medicare explicit subsidy helps further reduce the costs for Medicare retirees within Washington state.
Jenny
So obviously, there’s a lot of options here and a lot of information that people go through a process as they’re preparing for retirement. Are there common mistakes that people make when selecting PEBB retiree plans?
Ellen
Yeah, pretty much the most common mistake, I think is forgetting to sign the documents, the application. A signature is needed for Medicare Advantage plans, for plans that include Part D. So, it’s really important that we have that. And if you are covering yourself as a subscriber and then your spouse, your spouse has to sign as well. And so, we see a lot of forgetting that.
Or not including the Medicare information, we need to know people’s Medicare Part A and Part B, effective dates. And it’s important to know that if you are retiring and turning 65 or newly enrolling in Part B coverage, you can get a letter from Medicare, from the Social Security Administration that indicates when your Medicare Part B will be effective. And that letter can also serve in the interim until you receive your Medicare card as proof of Medicare coverage. And that’s needed for that.
And then the error, if you will, that has the biggest consequence, is if you sign your documents after the intended effective date. Let’s say you retire March 31st, so you really want your retiree coverage to be effective April 1st. But if you sign your form on April 2nd or any other day in April, it can’t be retroactive. It can’t be effective on April 1st. So, you have to be sure that you’re signing before for the intended effective date — and I know that there’s lots of pieces of the process of retirement. My husband just went through it himself.
One of the things to keep in mind is: when do you want your retiree coverage to be effective? And ensure that you have filled out all the paperwork and signed all the different things to make that happen.
Seth
It’s a really good point, I think… I don’t know Jenny if we’ve ever talked about this on the podcast because it’s not uncommon for people to contact our office and say, “Hey, I quit employment a month ago, why haven’t I got a check yet?”
And I imagine the same thing happens with health care thinking like, “I’m just used to all of this happening through my employer. I just assumed my coverage would carry over.” And that could be really hard. I mean, especially if you’re in the middle of some sort of medical procedures or services that you might have this gap in coverage.
Ellen
Yes, absolutely. It’s very important to remember that retiree coverage is a whole different process, a whole different product than what’s available to active of employees. And that’s why you must sort of let PEBB know what’s going on in your life so that we can ensure that you’re covered properly. And there are some strict rules around Medicare and gaps and there are some penalties on the federal level that can be very hefty. And it’s important to know that you’ve done everything that you can to ensure you have no gaps in coverage.
Jenny
It almost sounds like to approach it from the standpoint [that] you would be starting a new job. There are going to be new forms to fill out. There’s different percentages that are taken out of your pay. There’s all these things to look at. So, it’s completely changing from one side of the coin to the other and all the paperwork that has to be filled out in between.
Ellen
Jenny, that’s a great analogy and it’s really important to remember that unlike a new job, you do not have the personnel office or the HR office to help you with all of this. So however, the HCA PEBB customer service folks are very skilled at helping people navigate all of this, and their number is 1-800-200-1004. And especially for people who are thinking about retirement outside of the open enrollment period, it’s really important to talk with PEBB in advance and sort of make sure that you know what is expected of you.
Jenny
Because of that open enrollment period. Do you end up seeing a lot of retirees during that fall time period?
Ellen
Interestingly enough, there are some little wrinkles. One is because our medical insurance runs from January 1 to December 31, we don’t see a lot of retirees in the November, December, January 1 timeframe. There are some who are going to retire December 31st and want their coverage effective January 1 So open enrollment can help them deal with that.
For teachers who are coming out of SEBB and going into PEBB as retirees, the most common time for retirement is June or the end of the school year or maybe even September, because it’s the start of the new school year and they know they’re not going to start [school].
So, there’s flux throughout the year. You know, there’s sort of not as many standard times for public employees, but certainly for the K-12 employees. It’s more common either June or through the summer.
Seth
I feel like you gave us a little bit of a hint of, far as, contacting HCA early, and that’s like the one phone number I have memorized, providing that for folks when they need to follow up. If they ever ask if they have more questions or more things they need to follow. “But have you talked to HCA?” That’s always a key thing to keep in mind.
But are there other places people can go to get more information about the Medicare options that are going to be available to them?
Ellen
So again, the HCA website, which is hca.wa.gov is a good place to start and if you look at PEBB and SEBB, you can see a dropdown across the top for different active employees or retirees. If you click on the retirees, it takes you to a bunch of different resources of things that are available for retirees. We are doing a lot more in terms of getting the word out about different resources like Social Security. [And] DRS, you know, the need to sort of put all these different resources together to have an effective retirement.
Jenny
Yeah, at DRS we are trying to be the other side of that coin as well. And we’re always getting questions about Social Security and HCA and being that extra resource. We have our retirement checklist of “here’s where you can go for more information about these particular topics.”
Ellen
We’ve actually used that retirement checklist as sort of a model for more information from HCA about different phases, different places in the timeline and where you can find information.
Jenny
Oh, okay!
Seth
Yeah, I love the analogy of starting a new job, but not having an HR office and you kind of have to be your own HR office and there are these resources that are out there and available for you, but there isn’t any one person. You are the one person that’s going to have to help you — help yourself navigate those different forms.
Ellen
We always have to be advocates for our own health care, but it’s especially important when you’re a Medicare retiree. And, you know, one of the advantages I often get asked is: Why PEBB? Should I join PEBB? Why do I need to think about this? The answer is yes. You need to think about it. And there’s two basic advantages, if you will, for being part of PEBB.
One is that PEBB stands between you and the plan. So, we can do escalation, we can do problem solving, we can do troubleshooting. We can intervene and ensure that claims are being processed in a timely fashion and appropriately.
The second is that most importantly, PEBB plans are very different than the commercial market. So, one of the top differences is that in PEBB, Medicare enrollees can switch every year during open enrollment from any Medicare plan to any other Medicare plan for which they’re eligible. Which is all the plans except maybe the regional requirements that have to be met with KP. But, having that flexibility with no underwriting, no preexisting conditions fees, no extra costs, all of that is an advantage of being part of PEBB.
So it’s really important if you are retiring and you’re eligible for Medicare, but you’re not yet taking it for some reason, it’s important to defer your coverage and be sure that you defer PEBB by having appropriate other group employer group sponsored plans that are available to you because it will help you come back later when you need PEBB coverage.
Seth
Yeah, I just want to play out that scenario with an example because I think it’s really important because people think, “Hey, I’m retiring, I’m just going to go on my spouse’s insurance because they’re still working. I’m not going to think about PEBB.” But it’s really important to contact PEBB and say: “Hey, I’m not ready for this yet, but I’m going to defer it. I’m going to jump on once my spouse retires and then I’m going to start my insurance.”
And there are all sorts of rules around this. We’re not going to get into the nitty gritty details about it, but making sure once again, you’re keeping HCA in the loop about “what are my plans? You know, I might not be starting my pension yet. I might just be waiting to retire. But I need to defer this health care coverage. So, I have that option down the road.”
Ellen
Absolutely. And the plans within PEBB are richer and usually much less cost. You talked earlier, Seth, about not just co-pay costs or premium costs, but there’s lots of other costs. So, for example, there are zero premium Medicare Advantage plans on the commercial market. However, the out-of-pocket that you have to spend starts at $5,000. So that’s a lot of money.
You know, the PEBB Complete plan, for example, starts at $500 maximum out-of-pocket. So, it’s really important to look at all the different cost elements where they are, who’s spending money where. And, you know, it’s not just premiums, it’s not just co-pays. It’s looking at the total package and making those comparisons.
Seth
Yeah, I think we cover all of our questions for a very complicated topic and we could talk for hours and not, you know, scratch the surface of all your knowledge about Medicare Ellen, but we really appreciate you coming in and talking with us and kind of giving us the… I don’t know if I would say like the college 101 version, maybe it’s the college 98 version of Medicare. We’re still just learning.
Jenny
This is just the intro class on the first day of your 101 [class].
Seth
But [we] very much appreciate that you came in.
Ellen
Thank you so much for the opportunity.
Jenny
Yeah. Thank you very much.
[music outro]
Disclaimer
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