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Lewis Schiff
Reina Schlager
Modernizing Medicare: Remove a Home Health Benefit, Now?

Certain Medigap plans will be losing a valuable private home health benefit on June 1, 2010. Why advisors should scrutinize how this elimination affects their clients.

March 18, 2010
by Reina Schlager, CPA, PFS

2010 Medicare changes are coming because of HR 6331, also known as the Medicare Improvements for Patients and Providers Act (MIPPA, passed July 9, 2008). This has been dubbed the “Modernization of Medicare” initiative. Among other provisions, it authorized the implementation of proposed Medigap (Medicare Supplement) modernization changes approved by the NAIC (National Association of Insurance Commissioners).

At a time when almost every government initiative for long-term care promotes aging in place and home care, the private “At-Home Recovery” benefit in certain Medigap plans will be dropped for plans purchased effective June 1, 2010. This means, in order to have or keep this benefit, your plan must be in place May 1, 2010.

Medigap plans contractually promise to continue your benefits as long as you pay your premium. So, if you have the “At-Home Recovery” benefit in your plan when June 1 comes along, you do not lose it, as long as you stay with that contract and continue to pay your premium.

What Is At-Home Recovery?

In the world of standardized Medigap plans, it is found in plan options D, G, I and J. Medicare-approved home health is paid 100 percent under Medicare Part A. Medicare Home Health, though, is limited to skilled care and may not provide additional personal-care services that may be needed. The Medigap policies with the At-Home Recovery benefit adds some coverage for personal care services. Your client should be covered for actual charges up to $40 a visit, as long as their doctor certifies the private, personal-care services during recovery from an injury or sickness for which Medicare approved a home-care treatment plan and you are receiving Medicare Home Health visits. The number of visits covered under At-Home Recovery can neither exceed seven days a week, nor can it exceed the number of Medicare-approved home visits. There is a calendar year maximum of $1,600 and this can be during the period of time you are receiving Medicare Home Health covered visits — or within eight weeks of the last Medicare-approved visit.

Example: The patient goes home and is under a plan of Medicare-approved home visits scheduled for three days a week, with 12 visits covered fully by Medicare in a month’s time. With a doctor’s certification for personal care during this recovery period, there would be up to 12 personal care/private home health visits covered for actual charges up to $40 a visit that can reinforce Medicare Home Health visits concurrently or extend home care by being used within the eight week period following the last Medicare Home Health visit.

Depending on your local cost of home care and the level of private home health services ordered, $40 may cover one or two hours in full – and you can leave it at that or order more care and pay the additional cost 
out-of-pocket.

Why is this valuable home care benefit being removed? My assessment is because it has not been utilized. If you shop plans, there is little or no cost difference for plans with and without this benefit. What an inexpensive time to add it!

Why Has It Not Been Used?

This is NOT paid by Medicare. It is fully borne by the insurance carrier. It is a benefit that requires knowledge on the part of the policyholder to understand the benefit is there order the care and then know how to make a claim. Currently, seniors show their Medicare and Supplement cards at time of medical service and claims process automatically. At-Home Recovery is a “manually claimed” benefit, and art that has been lost — a generation of seniors may not remember the days when benefits were only received when you filed a paper claim to your Medigap company.

What Can Your Clients Do?

Have your clients call their current carrier. If they do not have At-Home Recovery in their current policy, see if they can add it by May 1 and if it makes economic sense to do so. There are association-based plans that require little to no underwriting and offer plans A through J nationwide.

If your clients are in a Medicare Choice plan and can afford a Medigap policy, consider a change, now, before “At-Home Recovery” is eliminated and have them get back into the Medigap arena. Your clients do NOT have to wait for November’s annual open enrollment to leave a Medicare Part C (Advantage — Medicare Health Plans — like HMOs and PPOs) program. If your clients do leave a Medicare Part C program, it normally includes their Part D prescription benefits, as well, so the policyholder would have to make sure they have adjusted not only to a Medigap plan, but a stand-alone Part D prescription one, as well.

Conclusion

Educating our seniors about the benefit they have or what is available to them would provide some citizens with the only private home care coverage they can obtain — instead of removing the option. Could a grass roots effort keep this benefit from being eliminated? I doubt it. The largest association that might spearhead this movement — also offers the insurance and may have a conflict of interest.

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Reina Schlager, CPA, PFS, RHU, a member of the AICPA’s PrimePlus/ElderCare Task Force, is a financial advisor with SCHLAGER SCHLAGER & LEVIN (SS&L). SS&L provides tax advice. Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through SS&L, a Registered Investment Advisor. Cambridge and SS&L are not affiliated.