Retiree Medicare Presentation by Aon Hewitt May 11, 2015

San Francisco HSS

Medicare EducationMay 11, 2015

Aon Hewitt | Consulting | Health & Benefits Proprietary & Confidential | May 11, 2015 2

Introductions and Welcome

■ David Rew— Senior Medicare Consultant—Aon

■ Brent Crane— Senior Vice President—Aon


Agenda

■ Learn about Medicare

■ Questions

■ Understanding group health plan options

■ Questions


Federal Government Administration

■ Social Security Administration— Apply for retirement, disability, and Medicare benefits— Works with CMS by enrolling people into Medicare— www.ssa.gov/medicare/

■ CMS – Centers for Medicare & Medicaid Services— Administers the Medicare program— www.cms.gov


What is Medicare■ A Federal insurance program for people:— 65 years of age or older— Under age 65 with certain disabilities

■ Including Amyotrophic Lateral Sclerosis (ALS)■ Any age with End-Stage Renal Disease (ESRD)—Kidney disease and on dialysis

— Surviving spouse (must remain single and have been married at least 9 months)

— Divorced spouse (married at least 10 years, plus other requirements)

■ Other Eligibility Rules:— U.S. citizen OR— Legal resident in the U.S. for 5 years or longer


Parts of the Medicare Program

■ Medicare Part A: Inpatient hospital insurance■ Medicare Part B: Outpatient medical insurance— Original Medicare Part A and B created in 1965

■ Medicare Part C: Medicare Advantage— Original Medicare plus extra benefits and services at extra cost— Created in 1997

■ Medicare Part D: Prescription drug insurance— Created in 2006


Medicare Part A and B (Original Medicare)

Part Acovers

hospital stays

Part Bcovers

doctors andoutpatient visits


What Is Covered ■ Part A covers part of the following services:— Inpatient hospital care — Inpatient care in a skilled

nursing facility (not custodial or long-term care)

— Hospice care services — Home health care services

What You Pay■ Enrollment in Medicare: Part A is automatic for those people who have worked 40 quarters in their lifetime and does not have a monthly premium— If you have not, there could be

a monthly premium

■ Deductible: per benefit period■ Benefit period: starts the day you leave the hospital after spending a night and lasts 60 days

Medicare Part A Inpatient Hospital Care


What Is Covered ■ Outpatient care:— Doctors visits— Outpatient hospital— Blood

■ Preventive care■ Mental health (outpatient)■ Ambulance services■ Laboratory services

What You Pay■ Premium: Monthly— Social Security determines the

premium amount based on the last 2 years of taxable income

■ Deductible: Annual■ Coinsurance:— Medicare pays 80%— Participant pays 20%

Medicare Part B Outpatient Hospital & Doctor Care


2015 Part B Premium

Modified Adjusted Gross Income in 2013*:

Individual Tax Return

Joint Tax Return

You Pay Social Security

$85,000 or less $170,000 or less $104.90

$85,001 – $107,000 $170,001 – $214,000 $146.90

$107,001 – $160,000 $214,001 – $320,000 $209.80

$160,001 – $214,000 $320,001 – $428,000 $272.70

Above $214,000 Above $428,000 $335.70

* Premiums are based on modified adjusted gross income from 2 years prior


Not covered by Medicare Part A and B

■ Long-term care■ Routine dental care■ Dentures■ Vision■ Cosmetic surgery■ Acupuncture■ Hearing aids and exams for fitting hearing aids■ Other—check on www.medicare.gov


Initial Enrollment Period (IEP) for Part A and B

Seven months, beginning three months before month of eligibility

■ Do not have to be retired■ Already receiving Social Security or Railroad Retirement benefits?

— Enrollment is automatic at age 65

■ Otherwise, contact the Social Security Administration to enroll

Month1

Month2

Month3

65thBirthdayMonth

Month5

Month6

Month 7

February March April May 2ndBirthday

June July August


Special Enrollment Period (SEP) for Part B

Enroll anytime while working OR within 8 months after the month active employment ends or employer coverage ends, whichever happens first

■ Must have employer or union group health coverageAND

■ Coverage is based on active employment— Individual’s or spouse’s— COBRA does not count


Medicare Card


Features■ Includes Medicare Parts A and B coverage

■ Some include prescription drug coverage—Part D

■ Network based plans—HMO’s and PPO’s

■ May offer extra coverage— Vision— Hearing— Dental — Health/wellness programs

What You Pay■ Medicare Advantage Plan premium (if any)

■ Copays/coinsurance and deductibles

■ Out-of-pocket maximum■ Part B premium (see page 10)■ Part D premium if high income

(see page 18)

Medicare Advantage Plans (sometimes called MAPD)Part C


Coordination of Benefits

■ Medicare Advantage Plans like Kaiser Permanente Senior Advantage and Blue Shield of California 65 Plus include Medicare Part D— Enrollee assigns Medicare to insurer (meaning that Medicare will provide payment

to the insurer)— Enrollee receives covered service from provider in managed care network

— Enrollee makes copay at point of service, based upon plan contract— Medicare pays insurer per member per month (PMPM)

■ Retiree plans like the City Health Plan— Enrollee does not assign Medicare to insurer— Medicare is primary payer and insurer is secondary

— Enrollee receives covered service from provider in or out of network

— Enrollee pays copay or coinsurance based upon plan contract


Medicare Part D Plans

■ Each plan has its own unique formulary— This is the full list of drugs covered in each plan— The formulary can change every year or more often— Medicare discourages the use of high risk medications

■ Each drug is placed into a tier system— The higher the tier, typically the higher the copay/coinsurance

■ Enrollee will pay a copay/coinsurance for each drug for the entire year— Enrollee must make sure their prescription drugs are covered in the

formulary— If a drug(s) is not in the formulary, enrollee can work with their doctor to

send in a request to the insurer for a possible exception

Prescription Drug Coverage


Modified Adjusted Gross Income in 2013*:

Individual Tax Return

Joint Tax Return

You Pay Social Security

$85,000 or less $170,000 or less Your plan premium

$85,001 – $107,000 $170,001 – $214,000 $12.30 + your planpremium

$107,001 – $160,000 $214,001 – $320,000 $31.80 + your plan premium

$160,001 – $214,000 $320,001 – $428,000 $51.30 + your plan premium

Above $214,000 Above $428,000 $70.80 + your plan premium

2015 Part D Premium

* Premiums are based on modified adjusted gross income from 2 years prior

2016 San Francisco HSS Proposed Plans


2016 Plans

Good news! ■ No changes in current plans

Blue Shield of California (65 plus, Access +) Kaiser Permanente Senior Advantage

City Health Plan—United HealthCare Choice Plus

■ Retiree only premiums continue at no cost and retiree plus first dependent premiums will continue to be subsidized

■ Possible greater choice


■ All HSS Medicare plans use a Medicare managed care product for pharmacy benefits called EGWP (Employer Group Waiver Plan)

■ Each plan has a similar formulary which limits or may exclude some medications

Prescription Drug Benefits


Medicare Advantage HMO■ Only for members that live in the Blue Shield 65Plus HMO service area

■ Member assigns Medicare to Blue Shield (and Medicare will pay Blue Shield a capitated rate PMPM (per member per month))

■ Member MUST obtain coverage from HMO providers (unless emergency services are needed)

■ HSS pays Blue Shield premiums per member per month (PMPM), Blue Shield pays for Medicare expenses and members pay a copay

■ This plan has benefits that exceed Medicare

Blue Shield of California (65 Plus HMO)


Medicare Coordinated Plan■ HMO only for members living outside the 65 Plus Plan service area■ Member retains Medicare card■ Member MUST obtain coverage from HMO providers (unless emergency services are needed)

■ HSS pays Blue Shield premiums (PMPM), Blue Shield coordinates with Medicare

Blue Shield of California (Access +)


Medicare Advantage HMO■ Only for members who live in the Kaiser Permanente HMO service area

■ Member assigns Medicare to Kaiser (and Medicare will pay Kaiser Permanente a capitated rate PMPM (per member per month))

■ Member MUST obtain coverage from Kaiser Permanente HMO providers (unless emergency services are needed)

■ HSS pays Kaiser premiums (PMPM), Kaiser pays for Medicare out-of-pocket expenses and members pay a copay

■ This plan has benefits that exceed Medicare

Kaiser Permanente Senior Advantage


Preferred Provider Organization (PPO)■ Ideal for members that live outside of the HMO area■ Member retains Medicare card■ Three levels of coverage:— In-Network Providers— Out-of-Network Providers

— Out-of-Area Providers

■ HSS pays the doctor and hospital bills after Medicare and the member pays an out-of-pocket percentage coinsurance for doctor and hospital bills

■ HSS pays UHC an administration fee and a PMPM premium for the EGWP pharmacy coverage

■ Member pays $250 deductible per person■ Member pays 15% coinsurance after Medicare for In-Network ■ Member pays 50% coinsurance after Medicare for Out-of-Network

City Health Plan—United HealthCare Choice Plus


2016 Possible Changes and New Options

Potential additional plan choices (PROPOSED)

■ United HealthCare (UHC) Medicare Advantage National PPO

■ Blue Shield National PPO


■ This plan is an additional option■ Members may see any willing Medicare-participating provider in or out of the UHC NPPO Network— The NPPO Network has a 97% provider match with the City Health Plan

■ Member assigns Medicare to UHC■ HSS pays UHC premiums (PMPM), UHC pays for Medicare expenses

■ Members pay a copay (In-Network & Out-of-Network are the same)■ There is no annual deductible■ This plan has benefits that exceed Medicare

United HealthCare Medicare Advantage National PPO


Blue Shield National PPO

Blue Shield National PPO (in lieu of the Blue Shield Medicare Advantage 65 Plus Plan)■ No change in benefits, copays or out-of-pocket maximums■ Expands network nationally to any willing Medicare provider■ Lower premiums than the Blue Shield Medicare Advantage 65 Plus Plan■ Change in funding: from capitation to fee-for-service■ HSS pays Blue Shield premiums (PMPM), Blue Shield coordinates with Medicare and members pay a copay


Questions from the Audience

Government & Nonprofit

Retiree Medicare Presentation by Aon Hewitt May 11, 2015