The Basics of Medicare

By: Kevin R. Albaum, Esq.

Medicare is government health insurance that is administered by the Centers for Medicare and Medicaid Services (“CMS”). As a general rule, anyone is who is sixty-five (65) years old and is either a U.S. citizen or a permanent resident (who has lived in the United States at least 5 years) may receive Medicare health insurance coverage. Additionally, individuals under age sixty-five (65) who have been receiving Social Security Disability benefits for 24 months may also be eligible for Medicare benefits. In the typical scenario, a person becomes first eligible to enroll in Medicare three (3) months before their 65th birthday and then has seven (7) months after their initial eligibility date to enroll in Medicare coverage options discussed below.

Medicare consists of 5 different types of coverages as follows:

Part A- Hospital Coverage: This coverage pays for room and board in the hospital or skilled nursing care (for a short period of time). Cost: In most instances, there is usually no premium as long as you or your spouse has worked 10 years in the U.S.

Part B- Outpatient Coverage: This coverage pays for things like lab work, doctor visits, surgeries, medical equipment, etc. Parts A and B combined are considered “Original Medicare”. Cost: The premium is generally $134 per month unless you are a “high-income earner”, in which case the premium may be higher. If you are already receiving Social Security retirement benefits, the premium may be deducted automatically from your monthly benefits.

Part C- Medicare Advantage Plans: Medicare Advantage Plans or “MA Plans” are an alternative to a combination of Original Medicare (Parts A and B). These “all-inclusive” plans are administered through private insurance companies instead of the government-run Original Medicare. They were created to provide a lower-cost alternative to Original Medicare, and MA Plans often create cost savings by offering the subscriber lower premiums along with higher shares of costs as you need medical services. There are a variety of these plans offered. Most of them are either Preferred Provider Organization Plans (“PPOs”) or Health Maintenance Organization Plans (“HMOs”). These PPOs and HMOs have health care providers “in network”, and you may be required to use in-network providers if you want to keep your co-pays and deductibles low for medical services. The benefits offered by the different plan options vary in coverage and cost, but they are required to provide at least the same level of coverage as Original Medicare. MA Plans may also offer other options for dental, vision, drug coverage and some other benefits.

Part D- Prescription Drug Coverage: If you choose Original Medicare, you will likely also want to also enroll in a prescription drug coverage plan. A prescription drug plan will be purchased from a private insurance company and will enable you to purchase prescription drug prices for much lower than retail prices. Cost: The average national premium is averages $35 per month for a Part D plan. The Medicare website allows you to search and compare available Part D plans in the region where you live. Before you choose a Part D plan, it is recommended to carefully examine the company’s formulary drug list under the plan to make sure it provides for your current drugs. If the drug is not provided under the plan, you may be subject to a higher price.

Medigap Coverage a/k/a Supplemental Plans: Medigap plans cover what Medicare Parts A and B do not cover, such as deductibles, coinsurance, copays, foreign travel emergencies, etc. The point of Medigap coverage is to pay a monthly premium to avoid being hit with an astronomically large bill as medical needs occur. Medigap plans are on average more expensive than MA Plans. because Medigap plans offer more inclusive coverage. Under Medigap plans the subscriber may not be required to pay co-pays for certain medical services. The subscriber may also have more freedom to choose providers than if they were in a MA Plan with in-network restrictions.

A retired person without any employer coverage should either have a MA Plan (from a private insurance company) that covers hospital coverage, outpatient coverage, and prescription coverage or a combination of Part A and Part B (from the Government) and Part D and a Medigap plans (from private insurance companies).

Open Enrollment

Each year there is an annual election period when you can switch your Medicare Insurance options. That period begins October 15th and ends December 7th of each year. This means that during this period you can switch MA plans, switch prescription and Medigap plans. If you miss enrolling for Medicare when first eligible, there is another general enrollment period from January 1st through March 2st1 each year. During this period, you may have to pay a late-enrollment penalty (unless you qualify for an exception such as having your employer’s insurance end).

What if I am still working?

If you are sixty-five (65) years old and still working, you will likely have options between Medicare coverage and employer insurance. You can either keep your employer insurance and incorporate Medicare coverage as well or you can drop your employer insurance and obtain solely Medicare coverage. You decide when to leave your employer’s health insurance to join Medicare. It is illegal for your employer to force you to choose Medicare versus remaining on the employer’s health insurance coverage.

If you work for an employer with 20 or more employees, your employer insurance will be primary and Medicare will be secondary coverage. Part A is free if you worked 10-plus years Therefore, there would be no reason not to enroll in Part A upon turning age sixty-five (65). Part B has a premium of around $134 a month, so it may make sense to contact CMS and delay enrolling in Part B if your employer insurance coverage is sufficient for outpatient services. Part D also has a premium, and therefore, if your employer insurance has suitable prescription drug coverage, you may wish to delay enrolling in Part D. Once you retire and are sixty-five (65) and older, your employer’s insurance plan will mail you a credible coverage letter allowing you to enroll in Parts B and D without any penalty.

If you work for an employer with less than 20 employees, Medicare is your primary insurance coverage when you become eligible to apply you will need to enroll in Medicare Parts A and B and your employer coverage will become secondary coverage. In this case, people often decide to drop their employer coverage (if it is not paid for by the employer) and have Medicare only. If you elect to keep your employer coverage, however, you need to consider whether your employer’s insurance offers suitable drug coverage. If so, you may wish to delay enrolling in Part D until you retire as you are required to only enroll in Parts A and B in this scenario.

Kevin Albaum is an attorney in the Elder Law Practice at Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to thelaw@cclmlaw.com.

The Basics Surrounding Homeowners Association Turnovers.

By: Dan Rich, Esq.
Clark, Campbell, Lancaster & Munson, P.A.

One of the most important events a homeowners association will face is its “turnover” or “transition” from the developer of the community to the unit owners. Despite the importance of a turnover, what I’ve found is that many unit owners are unaware of the basics surrounding a homeowners association’s transition. This article is intended to serve as an overview of the transition process for homeowners associations and developers that may be undergoing the process, are on the verge of a transition, or who just want to educate themselves on what a proper turnover entails.

“Transition” or “turnover” of any homeowners association means that the unit owners of the association, as opposed to the developer, are now entitled to elect at least a majority of the members of the association’s board of directors. This is a huge step for any association, as the board of directors, or board, serve as the voice of all unit owners while also conducting the day-to-day affairs of the association. For homeowners associations, the turnover process is governed by Section 720.307, Florida Statutes. Section 720.307 provides that a turnover is triggered upon any one of the following six events occurring:

  1. Ninety percent (90%) of the parcels in all phases of the association have been purchased, in which case turnover must occur within three (3) months of the developer reaching the 90% sale threshold;
  2. Some other percentage of parcels have been purchased, a certain “triggering” event has occurred, or a specified date has been reached, as particularly specified in the association’s governing documents;
  3. The developer abandons its responsibilities to maintain and complete the amenities or infrastructure as disclosed in the association’s governing documents;
  4. The developer files for Chapter 7 bankruptcy;
  5. The developer loses title to the association property via foreclosure or a deed in lieu of foreclosure, unless the subsequent owner has accepted an assignment of the developer’s rights and responsibilities; and
  6. A receiver is appointed by a circuit court judge for longer than thirty (30) days, unless the court determines that the transfer of control would be detrimental to the homeowners association;

Upon the occurrence of any of the above triggering events, unit owners, other than the developer, are legally entitled to elect at least a majority of the association’s board. However, so long as the developer is still holding for sale at least five percent (5%) of the association’s parcels, the developer remains entitled to elect at least one member onto the association’s board.

Section 720.307 goes on to provide that once unit owners have had the association turned over to them, the developer must also “turnover” all of the association’s documents to the association. These documents include, but are not limited to, the original recorded declaration of covenants, a certified copy of the association’s articles of incorporation, a copy of the bylaws, the minute books, financial records (more on this below), bank accounts and statements, personal property of the association (i.e. indoor and outdoor furniture, office equipment, computers), and all of the construction plans and specifications, which must include a list of the names, addresses and telephone numbers of all contractors, sub-contractors, or others in the current employ of the association. The developer is also required to provide unit owners with copies of all insurance policies, certificates of occupancy, permits, warranties, unit owner roster, and all of the contracts that the developer controlled association may have executed for services such as cable, telephone, security and other services.

Importantly, for all homeowners associations incorporated after December 31, 2007, the financial records that the developer must provide to the unit owner controlled association must be audited by a certified public accountant. Additionally, the audit must cover the time from incorporation up and until turnover, or the time span from the most recent audit to turnover, if an audit has been performed for each year since inception. The purpose of these stringent audit requirements is to allow the unit owner controlled association to determine whether all expenditures were made for association purposes, and to also determine if the billings, cash receipts and related records reflect whether the developer was charged, and in turn paid, the proper amount of assessments.

Hopefully this step-by-step analysis will help prepare developers and unit owners facing a “transition” or “turnover” of their association. However, if the procedures – as outlined above – are not followed properly, it can result in expensive legal exposure that ultimately could have adverse effects for the association, its finances, and its unit owners. This is why you, as a developer or interested unit owner, or your association, should strongly consider consulting an attorney who is knowledgeable in Florida community association law for guidance on the appropriate turnover procedure for your specific association.

Dan Rich is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to thelaw@cclmlaw.com.