As of this writing, it appears that, come September 1, 2023, the only choices Medicare eligible NYC retirees will have for health insurance are the Aetna Medicare Advantage Plan, the HIP-VIP plan (if they live in NYC) or waiving their NYC health coverage altogether and finding their own Medigap coverage. If the worst should come to pass, what will it cost you if you decide to waive your NYC health coverage because you don’t want to be forced into a Medicare Advantage plan? Consider that you will:
- Forgo NYC’s reimbursement of your Medicare Part B premiums, including IRMAA (Income-Related Monthly Adjusted Amount)
- Have to pay premiums for your own Medicare Supplemental plan
- Possibly (if waiving NYC health coverage means losing Welfare Fund benefits) have to pay premiums for your own Medicare Part D drug plan and also lose the WF vision, hearing and dental benefits [the PSC is working on this right now]
First, to see what you are paying now in Medicare Part B premiums, look at the statement that Social Security sent you in late 2022 titled “Your New Benefit Amount.” It lists the exact amount Social Security is deducting each month for “Medicare Medical Insurance Premiums.” In 2023 this monthly amount ranges from $164.90 if you are not paying IRMAA, to $560.50 for individuals with MAGI (Modified Adjusted Gross Income) of more than $500,000 per year: https://www.cms.gov/newsroom/fact-sheets/2023-medicare-parts-b-premiums-and-deductibles-2023-medicare-part-d-income-related-monthly [Note: all prices in this article are the costs in 2023; all premiums—Medicare Part B premiums, as well as private Medigap premiums—will almost certainly increase in future years.]
Estimating Annual Costs
To estimate total annual costs for paying for one’s own health insurance, let’s use Jane Jones, a 75-year-old female non-smoker living in NYC, as an example. Her income is just enough to put her in the first IRMAA bracket, so she is paying $230.80 per month, or $2,769.60 per year to Medicare for Part B premiums.
To get an idea of what it would cost to purchase her own Medigap plan, Jane starts with the Medicare webpage “Explore your Medicare coverage options”
https://www.medicare.gov/plan-compare. She enters her zip code, selects Medigap Policy, then fills in her age and sex, and indicates “no” to tobacco use. She picks Medigap Plan G because she feels it is most similar to SeniorCare (her current NYC plan); Plan G pays all Medigap costs except the $226 Part B deductible. By clicking on “View Policies,” she sees that the lowest-priced Medigap Plan G offered in her zip code is $282/month or $3,384 per year. She also notes that New York State uses “Community Pricing”—the same price for everyone regardless of age, sex or health status.
Since Jane knows that the PSC-CUNY Welfare Fund will continue to provide her Part D drug plan, she can now calculate her total costs. For Jane Jones, living in NYC, the annual cost of waiving NYC health insurance is $6,154 for Medicare Part B premiums and a Medigap policy. If Jane lived in Livingston, New Jersey, her Part B premiums would stay the same ($2,769.60 per year) but the monthly premium for the least expensive Plan G Medigap policy would be $165 per month (or $1,980 per year). However, if she picks this plan (which uses “Attained Age pricing”) her costs will go up as she gets older. So, her total annual costs in NJ for the first year would be $4,750.
If Jane Jones lived in Delray Beach, FL, the cheapest Plan G Medigap plan would cost her $229 per month ($2,748/year) and with that plan (which uses “Issue Age Pricing”) the price will not change as she gets older (although premiums will likely increase due to inflation). Her annual costs in Florida then would be $5,518.
Now consider Sam Smith, an 87-year-old man with the same income as Jane who smokes. In NYC his annual costs would be the same as Jane Jones: $6,154, since NY uses “Community Pricing.” But if he lived in Livingston, NJ, his Plan G premiums for the cheapest plan (which uses “Issue Age Pricing”) would be $277/month (or $3,324/year) and would not change as he got older. Sam Smith’s annual costs in NJ would be $6,094. If Sam lived in Delray Beach, FL, his cheapest Plan G (which also uses “Issue Age Pricing”) would be $316/month ($3,792/year) for a total annual cost in Florida of $6,562.
As you can see, the financial costs of waiving NYC retiree health insurance are considerable, with prices varying by locality, sex, age and smoking status. There are cheaper Medigap plans to explore but they involve co-pays or high deductibles. These sample charts might help you compare the costs, advantages and disadvantages of different plans: https://psc-cuny.org/wp-content/uploads/2023/06/Medigap-comparison-chart.pdf
Even though the web-based materials Medicare provides, as cited above, are clear and pretty comprehensive, there is also a heavy non-financial cost in the time and effort that must be spent understanding the options and learning how very, very complicated the system is. One of the benefits we have had with NYC health insurance is not having to worry about this at all.
(Updated 6/11/23; an earlier version of this article appeared in Turning the Page, May 2023, p.3)
Published: June 16, 2023
