As a columnist writing about retirement-related financial issues, it helps to have my 98-year-old father serve as a laboratory allowing a glimpse into the challenges that seniors have to confront. The latest issue I've had to face is that his Medicare Part D drug coverage lapsed 15 months ago for reasons that make no sense. So, I’m working to put Humpty Dumpty back together again. More on this in a moment.
Three years ago, his former employer --- a Fortune 500 company --- decided to stop paying premiums on health insurance for retirees. In this case, they had been paying for a Medicare supplement plan for Dad and Mom since he had retired about 30 years ago. They shifted to a Section 125 flexible spending plan into which they deposited a few thousand dollars per year which could be applied to the cost of his supplement policy which costs $3,600 per year. They basically reneged on a part of the deal they had had with him as their employee.
By my way of thinking, when a company has a population of employees who work with the understanding that their compensation from year to year includes the commitment to provide health insurance throughout retirement, then until they go bankrupt they need to stick to that promise. They can change it for new hires, of course, but not for people who worked on the basis of that promise. If the company has to pay their CEO several million dollars less to meet their obligations to long term former employees --- or cut their dividends to stockholders --- that’s just business.
At the time I went through this transition in my parents’ behalf, I spent almost four hours on the phone. At the time, I asked a very helpful person how the average senior retiree could ever navigate these decisions and make any sense of what they need to do. The answer from someone working in a phone bank in Salt Lake City was that it is always extremely difficult and heartbreaking in many cases. Many seniors just can’t understand the basic framework of information that would lead to an informed decision.
So, my latest challenge is to reinstate a drug coverage policy that mysteriously lapsed fifteen months ago. So far, I've spent three hours on the phone starting with the on-line pharmacy that assured me three months ago that coverage was current but that they had to submit claims manually instead of electronically. They said everything would be fine and that the accumulation of $6,000 in drug bills would be worked out by the system. This week, they informed me that after further “research” they learned that Dad had not been covered since July of 2013. Without notifying us, the insurance company had stopped deducting the $41 monthly premium from his checking account. I have been paying bills all along which I assume had been the 20% co-insurance amount plus the famous “doughnut hole.” Monthly bills had been about $100 or so then they moved to roughly $300 --- not a material difference considering what followed. Then, starting in April of this year, the monthly bills were $634, $587, $966, $1,488, $2,118, and $847 respectively. After the $966 month was when I called to find out what was wrong with the insurance and was assured that he was still covered --- just a victim of technology.
It turns out that he lost his coverage in July of 2013. When Dad moved from Florida to California in January of 2013, we were supposed to change carriers or change to a different program. No rationale for why a mail order pharmacy doing business throughout the country would require such a change. And, there was no notice to us that we needed to make the change or that coverage had lapsed. I had no reason to notice that they had stopped automatically deducting premium payments.
My “broker” on this coverage is AARP, so we’ll see how effective they will be at reconstructing what should have happened. I’ll let you know if they allow me to pay back premiums to reinstate the coverage retroactively. Or, will I have to take them to small claims court and generate some adverse publicity. Meanwhile, while I have the energy and the knowledge to sort through this quagmire and go to battle, my heart goes out to the senior citizens who simply get rolled over by an user-unfriendly system that offers little in the way of consumer hand-holding.