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Pension Plans & Medicare Advantage

More and more pensions are launching Medicare Advantage options.

Enhanced Medicare Advantage plans have become all the rage among pension plans attempting to cut retiree benefit costs.

If your pension plan has offered you automatic enrollment in Medicare Advantage (if you “do nothing”), or the choice to opt out, read on…

Coverage

Medicare Advantage, aka Medicare Part C, functions like commercial insurance.

Enhanced Medicare Advantage plans use private health insurance like HMOs and PPOs to cover the services provided under Medicare Parts A and B. Access to medical providers is only available within specific networks contracted by the enhanced Advantage plans. These plans claim that most providers will accept Medicare Advantage Plus and that, if they don’t, you can submit an out-of-network claim.

Most Medicare Advantage plans (whether enhanced or not) may offer coverage for services and benefits not covered by traditional Medicare Parts A & B. These may include vision care and glasses, dental care, and hearing aids. Some even offer gym memberships and transportation services. Most plans include prescriptions without the additional cost of a Medicare Part D Rx plan.

Premiums

Low or non-existent premiums are another major benefit of a Medicare Advantage plan. With Original Medicare, you pay premiums for Part B, Prescription Part D, and a supplemental plan if chosen, all of which can add up. And the cost of Medicare can affect your Social Security payments as well.

Pension Plan Offerings Can Be Confusing

Each pension plan and their health insurance program will have unique procedures. Read over the instructions carefully before deciding whether to accept the plan or to opt out. Pay special attention to any pre-certification rules which can get in the way of easy access to the medical providers you need.

If you decide to opt out, be sure you understand how to do that.

The Situation for Retired New York City Employees

Some New York City public service retirees with Original Medicare may have the option of selecting a supplement with a zero or partially reimbursed premium in addition to annual reimbursement of Medicare Part B & IRMAA premiums. Or, if they go into Medicare Advantage, they will pay no premiums.

The Story

New York City had planned to move City retirees from their current Medicare and supplement plan coverage to the Medicare Advantage plan. However, for these retirees, access to doctors and services would be limited by the Medicare Advantage plan. And if they opted out of the plan, they’d be stuck paying monthly premiums of $191 per person to retain Original Medicare and supplement plans.

The NYC Organization of Public Service Retirees sued the City over these concerns as this New York Daily News article describes: “But the NYC Organization of Public Service Retirees, a group of ex-cops, firefighters and other retired workers, sued over the move, charging that the new plan would result in inferior coverage, including by imposing complex new preauthorization rules for specific medical procedures.”

The Ruling

On March 3, 2022, Manhattan Supreme Court Justice Lyle E. Frank ruled against the City’s plan and, as a result of the ruling, the penalty will no longer be imposed.

The ruling also allows for additional three months to opt out of Medicare Advantage to any retiree who wishes to do so after the March 31 deadline.

How to Opt Out for NYC Public Service Retirees

Eddy & Schein Group’s insurance specialist, Madeleine Cody, has been following this issue for the past several months and has reviewed the ruling. Here are her recommendations for opting out.

Important Steps for Opting Out:
  1. Confirm that your address is correct in all City, union, and employer files.
  2. Complete a separate opt-out form for each Medicare-eligible participant (i.e., you, your spouse, and/or other dependents).
  3. Opt out well before the deadline of March 31.
Multiple opt-out methods – Online, Fax, Phone, Mail

Madeleine recommends you use at least two methods. She suggests the following:

  1. First, opt out online, but DO NOT submit the opt-out form online more than once.
  2. Then follow up with a phone call to the Medicare Advantage plan’s helpline.
    Confirm your online opt-out is on record. Also, use the verbal opt-out option if available (be sure to get the representative’s name and a reference number).
Don’t See Your City Agency Listed?

For NYC retirees whose City agency does not appear in the dropdown list on the online opt-out form, choose “Unknown/Other” and follow these steps:

  1. Fill out the online form and make a copy of it.
  2. Fill out the paper form from the Enrollment Guide with the correct agency name.
  3. Send in these 3 things via fax (877-494-7195) or email (NYCMAOPTOUT@empireblue.com): the paper form, a copy of the online form (if possible), and an explanatory cover letter.
Keep an Eye on the Paperwork

Pay attention to mail sent from your pension plan and/or medical insurance companies, in case your pension plan is changing how your insurance is structured. Check that all information is correct and inform the plan if it’s not.

Look carefully at 1095B forms. We have even seen these forms sent to our clients’ deceased spouses saying they were still covered by health insurance. If this happens, make sure the pension plan has the necessary documentation for a deceased person.

Eddy & Schein Group has extensive expertise in helping retirees understand and manage Medicare. If this or any other Medicare situation seems overwhelming, please contact us. We’re here to help.

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