On Target November
  • Mort Reinhart
  • School Employees Health Plan Changes Medicare Carrier  



    Effective January 1, 2019, the School Employees Health Benefit Plan (SEHBP) will make Aetna 10 and 15 the Medicare plans for all retirees currently covered by Medicare and Horizon 10 or Horizon 15. According to all information available from the Division of Pensions, the change in provider, which will move retiree coverage from the Original Medicare category to the Medicare Advantage category, will not have any effect on the coverage provided to Medicare recipients. Everyone will have the same benefits as before.


    Retirees (1) not eligible for Medicare coverage (under 65) or (2) Medicare eligible (age 65 and over) who are not covered by Medicare and Horizon 10 or 15 are not affected by the change. 


    Medicare, which is the primary health insurance for retirees 65 and over, has evolved from a sole coverage program provided by the federal government (Original Medicare) into two types of coverage: Original Medicare and Medicare Advantage.  Original Medicare provides eligible retirees with hospitalization (Part A) and medical and surgical care (Part B). Both parts contain a deductible payment, which must be met before any payment is made, and a co-insurance feature, which is paid by the participant along with the insurance payments after the deductible is met. Retirees usually purchase supplemental plans offered by private insurance carriers to pay for the deductibles and the co-insurance that would otherwise be their responsibility.


    Medicare Advantage plans are offered by private insurance carriers and provide full coverage for participants. These plans are regulated by the federal government and are required to provide all the benefits of Original Medicare. In that regard, they must offer coverage that is comparable to the Original Medicare’s Part A and Part B. In the case of Aetna 10 or 15, the insurance company will take the place of Original Medicare and will provide both primary and secondary coverage for both hospital stays and for medical and surgical procedures. There will be no need to purchase supplemental coverage for deductibles or co-insurance. 


    The announcement of the change has generated some questions and comments regarding the new coverage:


    • Will I have to change doctors?  No.  You can use any doctor who accepts Medicare, as you did before.


    • Will my prescription plan be affected?  No. Your prescription plan will remain the same.


    • Will I continue to receive reimbursement for my Medicare Part B premiums?  Yes. While you will continue to have your Medicare Part B premium deducted from your Social Security check, you will receive the reimbursement of those premiums in your monthly pension check (and at the end of the year), if you qualify,  in the same manner as before. ( Note: not everyone receives reimbursement of Part B premiums.  Only retirees who had 25 years of credit at retirement and had at least 20 years of credit on June 28, 2011 receive reimbursement of their Medicare Part B premium.)


    • Is it true that there will be a reimbursement of up to $250 per year for both retiree and spouse for the $10 co-payments for physician visits?  Yes. At the end of the year, a check will be sent to the retiree equal to the co-payments paid for physician visits during the year. The maximum amount for each of the participants will be $250.


    • The State has said that it is going to save several million dollars by switching.  How can the benefits be kept at the same level while the cost of the program drops?  Currently the State is self insuring the health programs, which means that the State is assuming the risk if the cost of the program exceeds the income.  After January 1st, the program will become an insured plan and the risk will be assumed by Aetna. The State will only pay a specific premium to the carrier. If benefits exceed the premium payments, the excess cost will be borne by Aetna. The State’s cost can be stabilized in this manner. (This is a simplistic answer. Insurance costs are much more complicated because of the unknown risk factors that must be calculated in determining premiums.) Regardless, self insurance carries a greater risk for the purchaser (State) than paying for an insured plan. (Aetna)