Question: My husband and I both worked in school systems in different districts and actually in different states. We both have retiree health insurance AND Medicare A & B. Should we keep our retiree health insurance? It is getting pretty expensive.

Answer: Wow, that is an interesting scenario. At first I thought “Different states … How can that be?” Then I remembered how close to Pennsylvania we are. You could easily have worked in different states, and for a number of years my husband worked in Erie, Pa. So now, I see how that can happen. Let’s get to that question, actually that pile of questions.

I must first say that I could never give good advice with limited amount of information. An insurance choice decision is made on a number of factors (variables), such as how much your plan costs (premium); who and where your doctors are located; where you spend your time; how often you go to the doctor; how you are treating any chronic or serious medication conditions (cancer, diabetes, renal failure); what medications you take; and what pharmacy you use. There are so many, many questions that I don’t have the answers for your situation.

I would like to handle this question a little more broadly, and talk generally about pricing, Medicare, and other alternative products.

You were correct in signing up for Medicare Parts A & B, because you are both retired. You need to have Medicare Parts A & B, if you are not going to work. The insurance benefits that you carried from the school system you worked in, are generally products that work with Medicare. Most times the retiree plans are PPO’s or HMO’s, so Medicare goes inactive and all your claims go to the PPO and HMO plans the school systems offer you. There are some schools where the retiree benefits are in addition to Medicare, with Medicare being primary and retiree health system being secondary. New York State plans tend to be the PPO and HMO’s. I have seen Pennsylvania plans that are both ways. I try to steer clear of advising about plans I am not familiar with.

I will say that the difficulty in talking about leaving a retiree system is that it usually is a one-time decision. Once you leave the plan, you usually cannot get back into the retiree health insurance.

I also would like to mention that if the school system is providing some sort of payment towards your insurance, I would usually recommend keeping that retiree product. That subsidy of the premium is a valuable benefit and should not be thrown away without serious consideration.

I will speak primarily to the locally available school system retiree products. I have been talking with a number of school system retirees, and many local products have seen some significant price increases over the last few years. These products are almost exclusively Medicare Advantage Products (PPO variety). They are useful and comprehensive products. The problem is they are getting so expensive with regard to the monthly premium. It is hard to justify spending between $300 and $520 monthly for the premium, and then still pay co-pays for doctors, procedures, and hospital stays for some of the plans.

Another issue with some of the retiree plans concerns the BlueCross/Blue Shield PPO plans and their coverage in Pennsylvania. There was a significant change for the Pennsylvania UPMC facilities and the coverage with BC/BS PPO plans for 2019. This rule is a bit complicated. In Pennsylvania, all UPMC facilities are now ‘out of network’ with any BC/BS plan (think about that 36-state BlueCard network). But BC/BS of Western New York has negotiated a contract with Hamot UPMC to be ‘in network’. So the concern of UPMC coverage should be the other locations in Pennsylvania, like Pittsburgh and the other locations of this UPMC Provider network. This could make some retirees consider different alternatives.

These retiree plans do have some valuable benefits, the biggest of which I believe is the prescription drug benefit. The PPO plans often have very good drug coverage. The prescription drug coverage has five tiers of pricing and you pay the same price all year long for all medications within each tier. So if a medication is $40 in January, it is that same price in March, July, September and all the way through December.

As some of you know when you have a Medicare Part D Prescription Drug Plan, your co-pays change as the year progresses. In the beginning you may have a deductible of $415, where you pay full price. Then during initial coverage, you pay their set co-pays, maybe $0, $7, $47 or maybe $100 or more. That co-pay amount stays for a number of months and then you may hit the coverage gap and begin paying 25 percent (brand name) or 37 percent (generic). That coverage gap begins when your medication total cost is $3,820 and more. So during the coverage gap your cost is a percentage of the total negotiated medication cost. A $100 generic becomes $37 to you. A $100 name brand becomes $25 to you. Increase the costs of the medications and your co-pays go up proportionally. If your medication is very expensive as you progress through the year, your medications become 5 percent in the catastrophic coverage.

So in comparing this complicated math structure of the part D plans to the retiree drug benefit of $0, $10, $20 or $40 depending on the tier, you can see why some individuals stay with their retiree coverage even though it is expensive. But for some individuals who don’t take a lot of medication or any medication, s the retiree coverage worth it??

That right there is the “million dollar question”! Actually more like a “$500 question”.

Your insurance under Medicare is very comprehensive. We have talked about Medicare Supplements in the past, which can be as little as $58 monthly or as much as $224 monthly, with AARP United Health Care plans. I talk about these because they are the lowest monthly premiums. You can choose another company and your premiums will be higher. Then you add on a prescription drug plan monthly premium ranging in cost from $15.50 to $92.90, (the average cost is $39 monthly). You can see that a Medicare Supplement highest cost plan of $224 plus a Part D of an average $39 comes in much lower than the retiree plan monthly costs. Your Health Insurance coverage with this Medicare Option is national, no “in or out’ of network, and your medical costs are covered in full, with the most comprehensive option under the Supplement Plan F.

This change could save you lots of money when compared to the school system retiree options with much high premiums. The biggest difference is the drug coverage. The retiree plans gives you very good drug coverage, especially for Name Brand medications, or expensive medications. If you do not take a lot of these types of medications, and/or if you are eligible for NYS EPIC drug coverage, it may be worth evaluating different options outside of your retiree benefits.

I do want to stress again, that if the school system you retired from is paying a portion of your health insurance premium, I would strongly caution you against dropping that retiree coverage.

It is important to remember that because you are part of a group plan you have Special Enrollment Periods available to you, so you are allowed to leave the plan almost anytime. It is very important to remember that if you leave your retiree benefits, you may not be able to ever get those benefits again. Once you leave it, it is never again available to you as an option. So this isn’t a decision you should make lightly.

I hope I answered some of your questions about your retiree benefits and helped you to understand some of the options. I would also encourage you to contact us, or someone else to review your options and alternatives under Medicare.

To contact Janell Sluga, GCMC with questions or concerns, please call 720-9797 or e-mail her at janells@lutheran-jamestown.org.