Retiree Medicare Presentation by Aon Hewitt May 11, 2015

San Francisco HSS
Medicare Education
May 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 A
covers
hospital stays
Part B
covers
doctors and
outpatient 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
Month
1
Month
2
Month
3
65th
Birthday
Month
Month
5
Month
6
Month
7
February March April May 2nd
Birthday
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 coverage
AND
■ 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 plan
premium
$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
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
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

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Retiree Medicare Presentation by Aon Hewitt May 11, 2015

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