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A Medicare Market Niche - Health Plans for Seniors with Special Needs

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The Medicare Modernization Act of 2003 (MMA), best know for creating the new entitlement Part D for prescription drug coverage, also created the Medicare Advantage program. This allows private plans to offer replacement Medicare coverage with additional benefits on a voluntary enrollment basis. MMA also created a new category of Medicare Advantage plans known as “special needs plans.” SNPs were designed for people who had particular circumstances that could be better addressed by a health plan designed for their special needs. There are three types of SNPs:

  • Institutional SNPs designed for people in long-term custodial care in nursing homes
  • Chronic condition SNPs for people with a particular diagnosis, such as congestive heart failure, chronic obstructive pulmonary disease, or Alzheimer’s disease
  • Dual-eligible SNPs, meant for people who qualify for both Medicare and Medicaid

By January 2008, there were 775 SNPs available across the country. There are now about 70 institutional SNPs, about 265 chronic condition SNPs, and about 440 dual-eligible SNPs.

Enrollment in SNPs is permitted on a year-round basis. Any Medicare beneficiary can enroll in a SNP if they meet the qualification criteria. Enrollees can also opt out at any time and return to fee-for-service Medicare. The institutional and chronic condition SNPs are determined by the client’s health status, whether they are in a long term care facility, or if they have received a qualifying diagnosis.

The dual-eligible SNP criteria are based on the client’s income level. If they have Medicare and their income falls below the level required of their state’s Medicaid program, they have the option of joining a dual-eligible SNP.

Under normal circumstances, a person who qualifies for both Medicare and Medicaid has comprehensive coverage. Medicare coverage for such a “dual” is no different than any other Medicare beneficiary. There are the usual deductibles, copayments and lifetime limits. However, because the beneficiary also qualifies for Medicaid, they have additional coverage at no cost to them that covers all the deductibles and Medicare copayments and adds important additional home care and long term care benefits. A dual will get full coverage for custodial care in a nursing home if they meet the admission criteria.

A dual prior to 2006 would have also received drug benefits through Medicaid. Beginning Jan. 1, 2006, all duals were auto-assigned to a Part D prescription drug plan. Because the duals’ income qualifies them for Medicaid, they also receive low-income subsidy coverage under Part D that eliminates deductibles, most copays, and the “doughnut hole.” In most cases, they are subject to only a nominal $1 to $3 copay for generics or brand-name drugs.

With this triple hit of Medicare, Medicaid, and Part D, duals have comprehensive coverage and would not seem likely candidates for a Medicare Advantage plan or other supplemental products. However, the coverage is provided through three different plans, each administered by a different entity. Medicare, a federal program, is administered by a Medicare intermediary. Medicaid is a state program administered by each state through its own bureaucracy. And Part D is a federal program administered by private companies under contract to Medicare.

Duals are challenged to contend with three ID cards, three description of benefits, three sets of claim forms, and three different customer service numbers.

The introduction of a SNP can integrate all of these into one plan, so the member — or the member’s caregiver — deals with a single card, telephone number, and set of claim forms.

SNPs often assign each member a nurse care manager who works closely with the family in planning and overseeing all medical decisions for the member. Having a nurse care manager streamlines the care process and also offers a personal touch to the member or for adult children acting as caregivers. Since a major goal of a SNP plan is to keep the member healthy, out of the hospital, and at home among the family, these options are likely to have great appeal to duals worried about being admitted to a nursing home or to their adult children caregivers seeking solutions for their parents.

SNPs should not be overlooked as an option for any Medicare beneficiary. They are called special needs plan for a reason; they cater to smaller cohorts of people whose special needs may not be addressed by fee for service Medicare or traditional Medicare wraparound, supplemental or Advantage products. It requires a bit of research, but the benefits of a SNP can be worth the additional effort.

John Baackes is the CEO of Senior Whole Health, a voluntary health care benefits plan for low-income seniors in New York, Connecticut, and Massachusetts. For more information, visit

To find out if any SNPs are near your clients, a good recommended reading resource and is “Medicare & You – 2008,” the U.S. government’s annual guide to Medicare coverage published by the Centers for Medicare and Medicaid Services (CMS). The guide is available in geographic-specific versions and can be viewed online at .


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