Ford: Should I Stay Or Should I Go?

14,000 Ford Salaried Employees Offered Buyouts

Let’s remove the Ford-specific headline. Th fact is that companies are attempting to cut costs. Ford employees will face difficult choices. Here are a list of things to consider.

  • Income replacement. Reportedly, the buyout would include between 3 months and 18 months of a person’s salary. Then what?
  • Pension. While mass-conversion of people’s pension to a lump-sum buyout option is not allowed any longer, this is different. For some, this is going to be appropriate. Not for everyone. There is no single solution here. In prior editions of this Newsletter, we have published MetLife’s findings regarding people’s ability to manage lump-sum payments.
  • Health (surprise) will be an important input. We are biased here, but the fact is that all of the inputs to this important decision will greatly depend on a person’s health and the health of dependents. Healthcare costs, expected longevity, and financial portfolio risks are all affected by the health situation of the person. It is inconceivable that we would provide any financial advice to someone without the client’s thoughts and understanding of his/her health situation.
Coming Soon to Dearborn MI: GH2 Benefits will be hosting a no-obligation seminar in Dearborn, MI, with details coming soon.


Medicare Deadline Approaches: Special Notes

December 7 Approaches Quickly

The Annual Election Period runs between October 15 and December 7. During this period, you can change your Medicare Advantage or your stand-alone prescription plan. Further, you can change your mind, as many times, as you want, through the end of December 7. The last plan selected is the one that will be in effect on January 1, 2017.

Medicare Advantage Plans Evolve

Depending on the Medicare Advantage plan, you may be required to have a Primary Care Physician, whose referral is necessary in advance of seeing a specialist. Generally speaking, this is an HMO. For HMOs, it can be the case that you would be responsible for the entire cost if the healthcare provider is not part of the network. There is also a twist, called HMO-POS, where in some instances, you can receive healthcare services from providers that are outside the network.

There’s more. There has been an increasing number of HMO and HMO-POS plans that will allow you to visit a specialist, who is inside the network, without a referral. This may be called “Open Network” by your Medicare Advantage provider.  

As always the case, PPOs will allow you to receive healthcare services from providers outside the network, but you must keep in mind that your out-of-pocket expenses will very likely to be higher, when compared to using providers inside the network. In addition, it is usually the case that your health deductible will be much higher when you use providers outside the network.

Dental / Vision

Many Medicare Advantage plans have very basic dental and vision benefits embedded within the plan. However, these benefits are usually very light. For example, it is usually the case that major restorative dental services are not included.

Many (if not most) Medicare Advantage plans also include an enhanced dental/vision option. This year, there are additional restrictions, mandated by the CMS (Center for Medicare and Medicaid Services), that disallow the marketing of these enhanced features in advance of a person enrolling in a Medicare Advantage plan. However, if a consumer proactively asks, then the question can be answered.

Medicare Advantage and Observation Status

The newly-enacted “two midnight rule” should make the controversy that surrounds observation status and skilled nursing facility care less difficult to manage. To review, if you are a patient in a hospital for a period that crosses two midnights, then you are presumed to be admitted on an inpatient basis, in which case you are covered by Medicare Part A, and if you stay over 3 midnights, then that will allow you to receive skilled nursing care  (or home health care) for the first 20 days, without charge.

Unfortunately, that does not completely solve the issue. For example, you could be admitted to a Skilled Nursing Facility directly, without hospital admission. While not the most probable outcome, these types of circumstances can occur more than originally believed. The point? Certain Medicare Advantage plans eliminate the requirement for inpatient hospital stay altogether, and beneficiaries in those plans can receive skilled nursing facility care without fulfilling the 3-day inpatient hospital stay altogether.

The General Point

These are just a few simple examples of details embedded in Medicare Advantage plans. It is an admittedly incomplete list. However, the general point is that the details within the Medicare Advantage plans can offer features (or risks) that may mean that using the time, between now and December 7, to review the plans available to you, a worthwhile use of time.

Nothing from BCBS Michigan yet….

Tick, Tock…

It doesn’t change my thought process. I have very specific thoughts for those that are:

  • Turning 65 years old this year, OR have turned 65 after Feb 1, 2016
  • In good to excellent health and under the age of 70
  • Over 70
  • Has a poor health situation

If you have Legacy Plan C, the silence is deafening. I have placed the call to both the carrier and the regulator. If you fit one of the 4 groups very specifically, you can contact us for our individual thoughts. We cannot reveal these online because we are concerned that the meaning may be misunderstood or misconstrued by you, or the person that reads this. It’s our responsibility to avoid this, at all costs.

All BCBS has said is that “it will change, we are unaware of what those changes will be.” Nothing more than that. This is of little or no comfort to those left without the information required.



Get Your Turning 65 Flyer Here

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Federal Employee Health Benefit (FEHB): How-To

The Federal Employees Health Benefits Program (FEHB) is a comprehensive benefits program for both active employees and retirees. There are a lot of important details to keep in mind.

a. The Part B Late Enrollment Penalty is not waived if you decide to enroll in Medicare Part B in the future. That amount will be 10% for each 12-month period that you were eligible to enroll in Medicare Part B, but did not. The penalty never expires. This may be important because the facts provided here presume a level of income. You will need to consider whether this level of income is projected to remain stable in the future. This has additional complications, since IRMAA (which you have included in your calculations) is also projected to increase as a result of the two legislative actions enacted earlier this year, the “permanent doc fix,” and the Bipartisan Budget Act passed in late autumn.
b. FEHB plans will vary depending on the state of your residence. The implication is that the premium also varies widely, the network will also vary, and can change at any time. The information provided suggests that costs are minimized by staying with the FEHB program, but that is highly dependent on the fact that you would be subject to IRMAA. If you were not subject to IRMAA, and your Part B premium was the standard $121.80/month, then the conclusion that you could reach may be entirely different. Enrollment in Medicare Part B is possible, without a conflict with an FEHB platform.
c. Notably, enrollment in Medicare Part B and Medicare Advantage, along with FEHB, also poses no conflicts. That means that enrollees can receive benefits above and beyond those included in original Medicare, such as discounts on health clubs, weight loss programs, and limited dental/vision benefits. Certain Medicare Advantage plans have zero premium (but they will all require enrollment in Medicare Part A and Part B). Last point: you can change your mind if you cancelled FEHB benefits, enrolled in a publicly-available Medicare Advantage plan, and the wanted to re-enroll in the FEHB program.
Once you have considered all of the points stated here, you should also consider the premium being charged by the FEHB versus the plans available in the private market, such as Medigap or other Medicare Advantage plans. While the FEHB is undoubtedly a good program the question is “price,” and whether the competitive market provides a superior price with superior coverage.
It is very important to note that married couples are affected greatly here since you the premium for the annuitant (retiree) is lower than the premium charged to the spouse. That means that a separate selection may be best for the spouse of the annuitant because of lower cost, superior benefits, or both.
For example, Medicare Part B with a Medigap plan can be very close in premium to FEHB premiums, but without any network, and Medigap coinsurance/copayment levels will remain constant through time, at a time that it would be more likely that you would require medical attention. The flip side of this coin is that FEHB plans have no Part D “Coverage Gap,” otherwise known as the “donut hole,” which is scheduled to close in 2019.
For FEHB-eligible retirees (“annuitants”), then, the choices are complicated, and will vary greatly among these factors. In these instances, a highly-qualified, unbiased advisor may be a good idea in order to help “sort out” all of the moving parts.

Medicare 2016 Changes

My blog post as Expert Contributor to Humana-powered website,, is here.

Medicare 2016 Changes

There are some changes to Medicare that are forthcoming, above and beyond the changes announced in the headlines.

Please see an updated grid of original Medicare rates here.

Higher premiums

In 2016, the Part B premium will not increase for 70% of existing Medicare beneficiaries. Originally, an increase of greater than 50% was supposed to occur, but last-moment legislative action prevented this. Therefore, only new Medicare beneficiaries and high-income earners (subject to IRRMA) will face higher Part B premiums. Bottom line: existing Medicare beneficiaries that earn less than $85,000 ($170,000 for married couples) will face no increase in Part B premiums. New enrollees will not be as fortunate: $121.80 a month will be the monthly Part B premium.

Higher Deductible and Copays

In 2016, the Part A deductible will be $1288.00 per benefit period, from $1260.00 in 2015. The Skilled Nursing Facility coinsurance amount will be $161.00 per day, during days 21-100. The Part B deductible will be $166.00 for the year. It is important to note that the “hold harmless” provision that would’ve protected 70% of Medicare beneficiaries (when Social Security benefits do not increase) does NOT protect beneficiaries from Part A or Part B deductibles or copays.


For high-income earners, Medicare Part B and Medicare Part D adjustments will increase. The reality is that the increase is the result of two factors. First, the “permanent doc fix” enacted in April 2015 made an initial increase in the IRRMA. Second, the last-minute budget deal during November 2015 created a second increase. This means that while the second factor may decline, the first reason for an increase in IRMAA will remain intact. Further, you must remember that IRRMA is, in fact, a “rate,” not an “amount.” The “permanent doc fix” has legislated a higher rate, which implies that if Part B increases, then the IRRMA will increase by a higher rate, meaning that the IRMAA will also be higher.

Two-Midnight Rule

Retroactive to October 1, 2013, the much-discussed “two-midnight rule” will take effect. This means that if you are admitted to the hospital, and that hospital stay is expected to cross two midnights, then you will be presume to have inpatient hospital status. This is very important because it addresses many misunderstandings regarding Part A. First, inpatient hospital status means that Part A will be the coverage, and not Part B. Second, and related to the first point, Skilled Nursing Facility care can be covered by Part A, if your hospital stay lasts over three midnights.

It has been the case that Medicare beneficiaries have been unaware of their patient status in a hospital, and then have been transferred to a Skilled Nursing Care facility. If the patient was not admitted on an inpatient basis, then the Part A benefit under Skilled Nursing Facility care would not apply, but instead, would be covered by Part B (with 20% coinsurance, after covering the Part B deductible). Under the “two-midnight rule,” one important layer of this confusion should be resolved. It is important to note that the three-day criteria still remains in effect. A patient must be both admitted on an inpatient basis, and that hospital stay must cross three midnights, in order to be covered by Part A at a Skilled Nursing Care facility.

Medicare Open Enrollment Ends Soon

Halfway Point of the Annual Election Period

The Medicare Annual Election Period ends in 4 weeks on December 7th. Current Medicare beneficiaries have the unrestricted right to change Part D (stand-alone prescription drug) plans, and Medicare Advantage plans.

Observations from the Market

There are many reasons that one should review their benefits annually. The main one is that since Medicare Part D and Medicare Advantage plans are annual contracts, all terms and conditions are subject to change. That means premiums and cost-sharing can change. The approved drug lists, otherwise known as the formulary, can also change. In fact, it would be reasonable to conclude that the moving parts are likely to change. Let’s examine why.

First, Medicare itself can change the list of approved medications for a particular medical condition. Second, beneficiaries should be aware that the carriers are trying to balance the costs of their respective plan, and remain competitive in a very competitive world. This can be observed in the market, that certain plans have improved, on an overall cost basis, when compared to others. It isn’t all good news: the average number of plans have declined per region for 2016, when compared to 2015. Further, premiums have increased, from an average of $33.41 in 2015 to an average of $34.10 in 2016. This also means that the Late Enrollment Penalty for Part D has increased from .3341 to .3410 a month (which you multiply by months, and then round to the nearest $0.10).

Networks in Medicare Advantage Can Change

This can be both positive and negative. There are subtle changes among the many Medicare Advantage plans in the market. The “not subtle” changes centers on the providers in a network. While premiums have remained relatively steady, you may notice that providers that accept a particular Medicare Advantage plan in one year, may not the next year. Every January and throughout the first quarter, beneficiaries are frequently surprised when the provider that they have seen may not be included in a network in the following year. That will result in either a) higher out-of-pocket expenses if you have a PPO, or b) no coverage at all for certain HMO Medicare Advantage plans.

Assisted Living / Skilled Nursing Facilities Remain Tricky

If you live in an assisted living facility, but do not require skilled nursing facility care, then Medicare Advantage can be challenging to administer. In many cases, there are on-site, or on-call medical providers at the facility. The facility and the provider may separately be considered in or out of network. Trying to get the accurate information regarding the network “status” can be very frustrating for a Medicare beneficiary and his/her family members. Further, diagnostic tests may be conducted off-site, or an in-network doctor may be required to use a testing facility that is out-of-network. The handling of this can vary wildly from facility to facility. Given that these are all subject to change annually, a Medicare Advantage beneficiary may want to check as many of these as he/she can, in advance.

It’s Not Likely to Ease

Recent headlines regarding a potential Medicare premium increase for existing beneficiaries, as well as the last-minute measures to prevent this (in 2015) have highlighted one central fact: the demographic and fiscal challenges remain to both Social Security and Medicare, and beneficiaries will need to keep informed for the changes that result.