I have been bothered by some statistics in an article by Sam Wood on philly.com concerning how many people did not sign up for Part B when first eligible and therefore pay a penalty on top of their Part B premium once they do sign up. Wood dug up the number from the Congressional Research Service. It was 750,000 in 2015 and this group is paying on average a 29% penalty meaning they on average sign up 2-3 years later than they should have.
That 750,000 equals a little more than 1% of the people on Medicare. So 1% of people in any group do dumb things, you say; end of subject. But the 750,000 actually represents 20%-50% of the people who could potentially be affected by the penalty because most of us have to sign up for Part B in order to get our supplement. Even if we did not know the rule, we would find out about it long before we would have to pay a penalty.
So who falls through that crack since almost everyone on Medicare is effectively forced to get a supplement. The answer -- apparently -- is that most of the 750,000 take the risk of paying a Part B penalty somewhere in the future on purpose:
- Around 1% of all the people on Medicare are also on VA and have no need for B in general.. but they will pay later if they change their mind – About 10,000 of the people in the VA system on Medicare pass on Part B
- Another 1% of the people on Medicare live outside the U.S. and have no need for Part B in general (in fact, all of Medicare itself is no good to them outside the U.S. period unless they travel back and forth)… but they will pay later if they change their mind and want to leave the Riviera and come home – about 10,000 make this decision
- Around 40% of us on Medicare have private group retiree insurance as a supplement (instead of public Part C or private Medigap) and although most of those in this cohort are required to have Part B by former employers (e.g., the state of Massachusetts), Federal retirees and some others are not. So many in this cohort often intentionally forgo Part B knowing that some day for some reason they may have to pay a penalty; that decision is not accidental, particularly among those in the Federal Employee Health Plan system – about 200,000 intentionally take the risk
- Some people on Medicare do not join B when they should because they are high income (but not working or not working for a company that provides employer insurance) and would need to pay a very large surtax to get Part B. But then as their income comes down as planned by a financial manager (maybe after 3 years), paying the standard Part B premium plus a 30% penalty average for the rest of their lives makes more financial sense than paying the huge standard Part B premium and surtax for three years – maybe 50,000 (these people are typically much older than 65 when first eligible so "rest of their lives" is not an actuarially big number)
- Around 5% of the people on Medicare (but this number is decreasing rapidly as the cohort dies off) never joined Medicare Part B because of the initial rules of their group (typically local governments) but later the group retirement plan decided to pay the penalty for them because that is a better deal for the group's finances than carrying the retirees with the younger people in the group – also maybe 50,000 or so but could be higher
- Around 10% of us in total (5,500,500) have Medicaid and whether or not we do not have Part B accidentally or intentionally is irrelevant because we do not pay the penalty – maybe there are 200,000 of us in this group
- Some people ARE dumb when it comes to financial management and do not make good decisions – so maybe of the 750,000 of us paying the Part B penalty, 200,000 of us ARE dumb
That means the percent that accidentally do not sign up for Part B when they should is more like one third of one percent of all the people on Medicare, not 1%.
OK, what does this have to do with Charles Shumer, Abraham, and Genesis? Shumer wants to pass a law that says everyone will get mailed a letter when they are 64 years and 6 months old reminding them to think about this issue even though 99.7% of us already do. Then they will get another letter three months closer to their birthday. This letter is going to get lost in the 2000 other letters we all get as we approach Medicare age.
But it's like when Abraham argued with God about saving Sodom and Gomorrah. Abraham asked God if He (or She) would save the cities if there were just 50 righteous people in them; God said "yes," He (or She) would save the cities for the sake of the 50. What about 40, Abraham dared to say? God replied, OK, even for 40. Abraham kept lowering the bar and in the end God said even if there were only 10 righteous people in Sodom and Gomorrah, He (or She) would save the other umpteen thousands of wicked inhabitants for the sake of the 10 (see Note).
Shumer's law requiring that all of 100% us be sent a notice is not going to change the fact that 0.3% of us do dumb things. But what the hell (sorry, God).
NOTE: In the end, God decided there was only one righteous person in Sodom and Gomorrah. He (or She) gave that guy a heads up to leave and then wiped the places out.
Comments