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If you are a Medicare beneficiary, then you have probably heard that Medicare supplement (Medigap) Plan F is going away. Where is it going? I’d like to add a little flavor to that story.
CMS, the Center for Medicare and Medicaid Services, is implementing the changes dictated by the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. One of the items addressed in that law was Medicare supplement plans that provide “first dollar” coverage. This actually impacts both plans F and C. So what does it mean? Effective January 1, 2020 these two Medicare supplement plans will no longer be available to Medicare beneficiaries whose Medicare part A effective date is January 2020 or later. So, for those aging into Medicare January 2020 and after, you won’t have the option to enroll in plan F or C. So…..if your Medicare Part A effective date is prior to January 2020 you will still have access to plans F and C. The question is: should you purchase one of them? We think not! You see, as the average age of insureds covered by a particular plan increases, then the claims experience on these plans increases and the premiums must follow suit. Please understand, the premiums for nearly every Medicare supplement plan will increase as you age. However, because people “aging in to Medicare” after 2019 will no longer be able to enroll in Plan F or C, then the average age of people on these plans will rise every year. This will likely lead to rates that increase more than for the rates of plans that are still available to all Medicare beneficiaries. BUMMER! Well, maybe not. First, if you are currently enrolled in Medicare supplement plan F or C, you will be able to keep your plan. However, it may be in your best interest to switch to a different plan that is still offered to all beneficiaries, assuming you can medically qualify. So, which one and why? The answer to which one, is: either plan G or plan N. For most of our clients we find that plan G offers very competitive premiums and with little difference when compared to plan F. In fact the only difference in coverage is, with Plan G your are responsible for satisfying the Medicare part B annual deductible each year (currently $185). Once that is satisfied, then plan G combined with Medicare covers 100% of Medicare approved medical charges for the balance of the year. Here’s the part you will really like! For most people, the annual premiums savings for plan G vs. plan F is significantly more than the $185 deductible!! This simply equates to a better value. Plan N can be an even greater value, but it does carry a little more risk. Let me explain. Plan N subjects you to the same Medicare part B deductible, plus you are responsible for doctors office copay of $20 for each visit. But, the risk is this: Plan N doesn’t cover Medicare part B excess charges. What are excess charges you ask? Doctors who treat Medicare beneficiaries have two options for billing. They can either accept Medicare assignment (the Medicare fee schedule), or they can charge an extra amount called excess charges. A doctor can legally charge 15% more than the Medicare fee schedule for his/her services. Most Medicare supplement plan cover those charges, but plan N does not. This means if you are enrolled in Plan N, you are responsible if a doctor charges for excess charges. Why is the government moving away from supplement plans that provide first dollar coverage? Well, it is human nature that if a product or service doesn’t cost anything, then that product or service gets used more than if it did cost something. Your government wants all of us to have “skin in the game” when it comes to spending healthcare dollars. And remember, if you are enrolled in original Medicare vs. a Medicare advantage plan, then in general, Medicare pays 80% of your medical expenses. If this plan change reduces the number of doctor office visits by one for every ten beneficiaries per year, they will have saved hundreds of millions annually. So, while the government doesn’t always manage our tax dollars wisely, I’ll give them a solid A for this one. Yes I know if you are accustomed to plan F or C, you enjoy not having the meet the part B deductible. But, times are changing and the government taking this small step to slow the rate of medical inflation for Medicare beneficiaries.
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Hands down, when clients visit with us about their Medicare plan options, the question we are asked most often is: Should I get a Medicare supplement plan or Medicare advantage plan? Which is the better option?
Allow me to suggest, the better question is: Which plan is a better fit? Medicare supplement plans and Medicare advantage plans both have pros and cons. So, the real issue is, which will work better for your particular situation. Let’s take a look at some general things that might get you headed in the right direction. The good news about Medicare supplement plans is they have no networks of medical providers to worry about. Any medical provider that accepts Medicare, will accept your Medicare supplement plan. Also, Medicare supplement plans can keep your medical out-of-pocket expenses at a very reasonable level. For instance, a very popular Medicare supplement plan is plan G. Enrolling in plan G means you are responsible for satisfying the Medicare part B annual deductible. The 2019 part B deductible is only $185. Once you satisfy that deductible, all other medical expenses are covered by Medicare part A & B, and your supplement plan. Monthly premiums for supplement plan G range from about $95 - $250 per month depending on zip code, marital status, tobacco use, and age. Be aware, if you need prescription drug coverage, then you will need to enroll in a Medicare prescription drug plan, in addition to your Medicare supplement plan. Premiums for these plans range from about $11 - $100 per month, again depending on zip code. The selection of the drug plan that best fits your needs is most often dictated by the prescriptions you take on a regular basis. Now let’s consider Medicare advantage plans. All Medicare advantage plans in the north Texas market have one thing in common: They have a network of medical providers. So, before enrolling in a plan, it is important to determine whether the doctor(s) you want to see are in-network for the plan. If not, then you need to be prepared to change doctors. One great benefit of Medicare advantage plans is the monthly premium is almost always less than a Medicare supplement plan, and in some cases is even $0. In a few cases, enrollment in an advantage plan will actually reduce your Medicare part B monthly premium. (It’s like getting paid to enroll). Another benefit is, most advantage plans include part D (prescription coverage) as part of the plan. If there is a downside to advantage plans, other than what we’ve already addressed, it’s this: By their design, these plans work more like commercial health insurance. There are copays and in some cases co-insurance you are responsible for when you use medical services. So, the potential for your medical out-of-pocket expenses to exceed what you might experience with a supplement plan is greater. Now, all advantage plans have an annual out-of-pocket maximum. This provides protection against catastrophic medical expenses. Annual out-of-pocket maximums range from about $3400 - $6700, assuming you are using in-network medical providers. So, let’s sum this up: If you are looking for the greatest level of convenience, don’t want to be concerned with provider networks, and don’t mind paying a monthly premium for your supplement and Rx plans, then a Medicare supplement plan might be the better choice for you. On the other hand, if you want to keep your monthly premium payments to a minimum (maybe zero) depending on where you live, your doctor is in-network for a plan in your area, and you can handle paying up to the plan’s out-of-pocket maximum – if something catastrophic should happen, then an advantage plan might be a good choice. At Sargent Insurance we’d be honored to help you with either. The question is often asked, “How does Medicare work?” Let’s start where it all began.
Medicare was passed into law July 30, 1965. The first beneficiaries were signed up July 1, 1966. At the time, the only persons eligible to enroll were those who were 65 and older. Now Medicare is available to those under the age of 65 who have been approved for disability benefits through the social security system and with certain medical conditions. In its original form, Medicare had just two parts, A & B. Medicare part A is hospital coverage. It provides coverage only when a beneficiary is an in-patient in a hospital, skilled nursing care, home health care, and for hospice care. Upon turning 65 most US citizens are automatically enrolled in Medicare part A. Medicare part B (medical insurance) covers all other medical expenses, not covered by part A. This includes doctor visits, medical tests, treatment, durable medical equipment, and preventive care. What about Medicare premiums? Most Americans are not required to pay a monthly premium for part A, however, most are required to pay a premium for part B. In 2019, the standard premium is $135.50 per beneficiary. (If you’re married and both spouses are enrolled in Medicare, you both pay the part B premium). Over the years Medicare deductibles and copays have changed. Currently Medicare part A has a $1364 deductible, per benefit period. This deductible covers a beneficiary for up to 60 days in a hospital. If a hospital stay lasts longer than 60 days, a daily copay begins. For days 61 – 90 the copay is $341. Beginning on day 91 the daily copay increases to $682. Medicare part B works much differently. Part B has an annual deductible of $185. Once the deductible is satisfied, then co-insurance of 20% is charged. The big challenge for many beneficiaries is the 20% co-insurance has no cap. This means if you experience $100,000 in medical bills covered by part B, your share is $20,000 (after the $185 deductible). These part A and part B deductibles and co-insurance are the reason most Medicare beneficiaries choose to add a Medicare supplement plan or enroll in a Medicare advantage plan (Covered in a different article). For decades these were the only two parts of Medicare. In fact from 1965 until 2003, many Medicare beneficiaries didn’t have access to prescription drug coverage. Those who did usually received it from a former employer. In 2003 George W. Bush signed into law, the Medicare Prescription Drug Improvement and Modernization Act. Among other things, it introduced Medicare part D, prescription drug plans. Medicare part D plans became available January 1, 2006. Part D plans are not provided by the government, like part A & B. Instead part D plans are offered by private insurance companies, with the plans being strictly regulated by Medicare. Monthly premiums for drug plans range from about $11 per month to well over $100 per month. So why enroll in a higher premium plan? Well the plan that provides the lowest out-of-pocket costs for the prescriptions you take regularly is usually the right option. Higher premium plans often times offer much lower copays for expensive medications that more than offset the higher premium. Medicare offers a very useful tool found at www.medicare.gov to help beneficiaries find the plan that works best for their situation. Some who are enrolled in part D have become painfully aware of the “coverage gap”, also known as the donut hole. This came about as one side of the political isle argued for more comprehensive coverage for initial Rx expenses, as the other side argued for better coverage as the total price of drugs increased for a beneficiary. So the design was by committee and compromise, which often leads to a less than effective outcome. The good news for those taking expensive drugs, Medicare has begun “closing” the coverage gap. The end result will be in 2020 and beyond, those who reach the coverage gap will pay 20% of the full cost of prescriptions, providing huge relief to many. Now, if we can just get the price of drugs lower. But wait! We skipped over Medicare part C. What’s up with that? Well I saved the discussion about Medicare part C for last, because it’s a little different animal. Medicare part C began January 2006, just like part D. Some have referred to Medicare part C (Medicare advantage) plans as Medicare replacement. Well, that’s not exactly accurate. Here’s the real story! Enrolling in Medicare part C, means that you will be receiving your Medicare part A & B benefits from the plan (insurance company) you’re enrolled with, instead of getting those benefits directly from Medicare. In addition, if you want part D, drug coverage, most plans include it. It’s also important to know that every part C plan has a unique benefit grid. While all part C plans must cover the same things as original Medicare, the copays and co-insurance for that coverage will vary from plan to plan. Also be aware, the part A and part B deductibles, etc. don’t apply when one is enrolled in part C. Another important consideration: Part C plans are typically structured as HMOs or PPOs. Without getting into the distinction between the two, let’s talk about what they have in common. They both have a network of medical providers that you must use, to keep your out-of-pocket costs as low as possible. So, before enrolling in a Part C plan, it’s important to confirm your doctor(s) accept that plan. In addition, if prescription coverage is important to you, you will want to make sure your selected plan provides good coverage for the prescriptions you take. So why would anyone want to enroll in part C. Well, in many cases, part C plans can reduce one’s out-of-pocket risk, when compared to original Medicare. Also, many plans offer coverage that Medicare doesn’t. Some examples: vision, dental, fitness club membership, and hearing. In conclusion, when enrolling in Medicare and picking your plan options, there is a lot to consider and we can help! That’s a great question and the answer is, “it depends”.
Original Medicare has two components, Part A and Part B. Once upon a time Medicare and Social Security both started around the time you turned 65. However, now that the social security full retirement age has been extended beyond the age of 65, Medicare enrollment dates are a little more complicated. Most Americans are still enrolled in Medicare Part A on the first day of the month they turn 65. That is, unless your birthday actually falls on the first of the month, then your Part A enrollment will happen the first of the prior month. Part A enrollment is automatic. You should receive a letter from the social security administration about 90 days prior to your enrollment, confirming your enrollment date. You will also receive a red, white, and blue Medicare ID card showing your Part A effective date. Medicare Part B enrollment is the part that has changed with the delay of Social Security full retirement age. If you are receiving Social Security retirement (or Railroad Retirement) benefits when you turn 65, then Medicare Part B will happen on the same date as Medicare Part A. Your Medicare card will show the effective date for both parts. On the other hand, if you have not begun receiving your Social Security or Railroad Retirement on your 65th birthday, then you will not be enrolled in Medicare Part B, unless you apply for it. The Social Security Administration has made the assumption that since you have not applied for retirement benefits, then you are probably still receiving health insurance from your employer or your spouses’ employer. What if that assumption is wrong? You can apply for Medicare Part B prior to the month your turn 65, and have it become effective at the same time as Medicare Part A. Many people can apply online for Medicare Part B using this link: https://www.ssa.gov/benefits/medicare/ If you prefer to handle the application over the phone, the national Social Security number is 800-772-1213. For those located in Hood and surrounding counties, the number for the Cleburne Social Security office is 866-227-1616. By the way, the Social Security Administration administers all Medicare enrollments. Some Americans are enrolled in Medicare due to a disability. If that is your situation, your Medicare enrollment usually happens on the first of the 25th month after your Social Security disability start date. For those who have End Stage Renal Disease there are a number of differing start dates, depending on your particular situation. For detailed information, please go to this link: https://www.medicare.gov/information-for-my-situation/signing-up-for-medicare-if-you-have-esrd Medicare Premiums: Finally, let’s talk about Medicare premiums. Most Americans are not required to pay a premium for Medicare Part A (assuming you or a qualified spouse, ex-spouse) has at least 40 quarters of earned income. If you are required to pay for Part A, the monthly premium is $437, if you had less than 30 quarters of earnings. Your premium is $240 per month if you had 30-39 quarters of earnings. Medicare Part B premiums are charged differently. Most Americans are required to pay a premium for Part B. The standard premium in 2019 is $135.50 per month. If you are single or filing separately, with an income below $85,000 or married filing jointly with an income below $170,000, then you will likely be charged the standard premium for Part B. On the other hand, if you income exceeds these amounts, you will pay a higher premium. Please select this link for detailed information: https://www.medicare.gov/your-medicare-costs/part-b-costs We trust this answers most of your questions about Medicare enrollment dates. If you need further assistance, please call us at 817-573-0380, we’ll be happy to answer any questions you have. The 2018 Annual Enrollment Period(AEP) is almost here! AEP is from October 15-December 7 . This is a great time to review your Medicare plan(s) since plans, premiums, and formularies change. Some of these changes can impact how much you pay for medical and prescription costs. We would love to talk with you about any changes happening and to make sure you are on the best plan that suits you!
Lonnie In a previous post I referred to the part D plan changes for 2016. For instance, we found more plans included a deductible, premiums are higher, and perhaps most importantly, out-of-pocket costs for prescriptions are higher.
Most of these changes are being driven by higher Rx costs and higher Rx utilization. Today, I ran across an article that explains everything you ever wanted to know about Medicare part D – and then some. For any who are interested in the details, that article is posted below. NOTE: Charts and graphs that are part of this article didn't wouldn't paste here. To see the original article, follow the link: http://kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefit-fact-sheet/ (Pasted from kff.org) The Medicare Part D Prescription Drug Benefit Oct 13, 2015 The Medicare Modernization Act of 2003 (MMA) established a voluntary outpatient prescription drug benefit for people on Medicare known as Part D, which went into effect in 2006. All 55 million people on Medicare, including those ages 65 and older and those under age 65 with permanent disabilities, have access to the Medicare drug benefit through private plans approved by the federal government. During the Medicare Part D open enrollment period, which runs from October 15 to December 7 each year, beneficiaries can choose to enroll in either stand-alone prescription drug plans (PDPs) to supplement traditional Medicare or Medicare Advantage prescription drug (MA-PD) plans (mainly HMOs and PPOs) that cover all Medicare benefits including drugs. Beneficiaries with low incomes and modest assets are eligible for assistance with Part D plan premiums and cost sharing. This fact sheet provides an overview of the Medicare Part D program and information about 2016 plan offerings, based on data from the Centers for Medicare & Medicaid Services (CMS) and other sources. Medicare Prescription Drug Plan Availability in 2016 In 2016, 886 PDPs will be offered across the 34 PDP regions nationwide (excluding the territories). This represents a decrease of 115 PDPs, or 11%, since 2015, a 24% drop since 2014, and the smallest number of PDPs available since Part D started in 2006 (Figure 1). Figure 1: Number of Medicare Part D Stand-Alone Prescription Drug Plans, 2006-2016 Despite a reduction in overall PDP availability, beneficiaries in each state will continue to have a choice of multiple stand-alone PDPs in 2016, ranging from 19 PDPs in Alaska to 29 PDPs in Pennsylvania/West Virginia (in addition to multiple MA-PD plans offered at the local level) (Figure 2). Figure 2: Number of Medicare Part D Stand-Alone Prescription Drug Plans, by Region, 2016 Low-Income Subsidy Plan Availability in 2016 Part D includes premium and cost-sharing assistance for beneficiaries with low incomes (less than 150% of poverty, or $17,655 for individuals in 2015) and modest assets (less than $13,640 for individuals in 2015).1 In 2016, 226 plans will be available for enrollment of Low-Income Subsidy (LIS) recipients for $0 premium, a 20% decrease in zero-premium (“benchmark”) plans from 2015, a 36% decrease since 2014, and the lowest number of such plans since the program’s start in 2006 (Figure 3). The share of benchmark plans as a share of all PDPs is 26% in 2016, but this has varied over time, from a high of 34% in 2007 to a low of 18% in 2009. Figure 3: Number of Medicare Part D Stand-Alone Prescription Drug Plans Available Without a Premium to Low-Income Subsidy Recipients, 2006-2016 Benchmark plan availability varies widely at the state level. The number of premium-free plans in 2016 ranges from a low of 2 plans in Hawaii and 3 plans in Florida to 10 plans in Nevada, Idaho/Utah, and Pennsylvania/West Virginia (Figure 4). Hawaii will experience the largest reduction in premium-free plan availability between 2015 and 2016—from 9 benchmark plans in 2015 to 2 in 2016; the next largest reduction will occur in Alabama/Tennessee, Louisiana, and Oklahoma, each of which is losing 3 benchmark plans between 2015 and 2016. Figure 4: Number of Medicare Part D Benchmark Plans, by Region, 2016 Part D Plan Premiums and Benefits in 2016 According to CMS, the 2016 Part D base beneficiary premium is $34.10, a 3% increase from 2015.2 Actual PDP monthly premiums in 2016 will vary across plans and regions, ranging from a low of $11.40 for a PDP in Arkansas to a high of $174.70 for a PDP in Florida. Part D enrollees with higher incomes ($85,000/individual; $170,000/couple) pay an income-related monthly premium surcharge, ranging from $12.70 to $72.90 in 2016, in addition to the monthly premium for their specific plan.3 According to CMS, an estimated 2.5 million Part D enrollees (6%) are expected to pay income-related Part D premiums in 2016. Plans must offer either a defined standard benefit or an alternative equal in value (“actuarially equivalent”), and can also provide enhanced benefits. But plans can (and do) vary in terms of their specific benefit design, cost-sharing amounts, utilization management tools (i.e., prior authorization, quantity limits, and step therapy), and formularies (i.e., covered drugs). According to CMS guidelines, plan formularies must include drug classes covering all disease states, and a minimum of two chemically distinct drugs in each class. Plans are required to cover all drugs in six so-called ‘protected’ classes: immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics. The standard benefit in 2016 has a $360 deductible and 25% coinsurance up to an initial coverage limit of $3,310 in total drug costs, followed by a coverage gap. During the gap, enrollees are responsible for a larger share of their total drug costs than in the initial coverage period, until their total out-of-pocket spending in 2016 reaches $4,850 (Figure 5). After enrollees reach the catastrophic coverage limit, Medicare and plans together pay for most, but not all, of their drug costs. In the catastrophic coverage period, enrollees pay either 5% of total drug costs or $2.95/$7.40 for each generic and brand-name drug, respectively. The standard benefit amounts are indexed to change annually by rate of Part D per capita spending growth, and with the exception of 2014, have increased each year since 2006 (Figure 6). Figure 5: Standard Medicare Prescription Drug Benefit, 2016 Figure 6: Medicare Part D Standard Benefit Parameters, 2006-2016 In 2016, almost half (49%) of plans will offer basic Part D benefits (although no plans will offer the defined standard benefit), while 51% will offer enhanced benefits. The majority of PDPs (67%) will charge a deductible, with 53% of PDPs charging the full amount ($360). Most plans will charge tiered copayments for covered drugs rather than 25% coinsurance and a substantial majority of PDPs will use specialty tiers for high-cost medications. And most PDPs (78%) will not offer additional gap coverage in 2016 beyond what is required under the standard benefit. Additional gap coverage, when offered, has been typically limited to generic drugs only (not brands). The 2010 Affordable Care Act gradually lowers out-of-pocket costs in the coverage gap. In 2016, enrollees in plans with no additional gap coverage will pay 45% of the total cost of brands and 58% of the total cost of generics in the gap until they reach the catastrophic coverage limit. Medicare will phase in additional subsidies for brands and generic drugs, ultimately reducing the beneficiary coinsurance rate in the gap to 25% by 2020. Part D and Low-Income Subsidy Enrollment Enrollment in Medicare drug plans is voluntary, with the exception of beneficiaries who are dually eligible for both Medicare and Medicaid and certain other low-income beneficiaries who are automatically enrolled in a PDP if they do not choose a plan on their own. Unless beneficiaries have drug coverage from another source that is at least as good as standard Part D coverage (“creditable coverage”), they face a penalty equal to 1% of the national average premium for each month they delay enrollment. In 2015, more than 39 million Medicare beneficiaries are enrolled in Medicare Part D plans, including employer-only group plans.4 Of this total, just over 6 in 10 (61%) are enrolled in stand-alone PDPs and nearly 4 in 10 (39%) are enrolled in Medicare Advantage drug plans. The Medicare Trustees estimate that around 2 million other beneficiaries in 2015 have drug coverage through employer-sponsored retiree plans where the employer receives subsidies equal to 28% of drug expenses between $360 and $7,400 per retiree in 2016 (up from $320 and $6,600 in 2015).5 Several million beneficiaries are estimated to have other sources of drug coverage, including employer plans for active workers, FEHBP, TRICARE, and Veterans Affairs (VA). Yet an estimated 12% of the Medicare population lacks creditable drug coverage, according to MedPAC.6 Twelve million beneficiaries are currently receiving the Low-Income Subsidy, according to the Medicare Trustees. CMS has estimated that many other low-income beneficiaries are eligible for but not receiving these subsidies. Beneficiaries who are dually eligible, QMBs, SLMBs, QIs, and SSI-onlys automatically qualify for the additional assistance, and Medicare automatically enrolls them into PDPs with premiums at or below the regional average (the Low-Income Subsidy benchmark) if they do not choose a plan on their own. Other beneficiaries are subject to both an income and asset test and need to apply for the Low-Income Subsidy through either the Social Security Administration or Medicaid. Part D Spending And Financing in 2016 The Congressional Budget Office (CBO) estimates that Part D spending will total $88 billion in 2016, representing 15.5% of net Medicare outlays in 2016 (net of offsetting receipts from premiums and state transfers).7 Part D spending depends on several factors, including the number of Part D enrollees, their health status and drug use, the number of Low-Income Subsidy enrollees, and plans’ ability to negotiate discounts and rebates with drug companies and preferred pricing arrangements with pharmacies, and manage use (e.g., promoting use of generic drugs, prior authorization, step therapy, quantity limits, and mail order). The MMA prohibits the Secretary of Health and Human Services from interfering in drug price negotiations between Part D plan sponsors and drug manufacturers.8 Financing for Part D comes from general revenues (74%), beneficiary premiums (15%), and state contributions (11%).9 The monthly premium paid by enrollees is set to cover 25.5% of the cost of standard drug coverage. Medicare subsidizes the remaining 74.5%, based on bids submitted by plans for their expected benefit payments. Part D enrollees with higher incomes ($85,000/individual; $170,000/couple) pay a greater share of standard Part D costs, ranging from 35% to 80%, depending on income. In 2016, private plans are projected to receive average annual direct subsidy payments of $471 per enrollee overall and $2,141 for LIS enrollees; employers are expected to receive, on average, $659 for retirees in employer-subsidy plans (these amounts are up slightly from their 2015 levels).10 Part D plans’ potential total losses or gains are limited by risk-sharing arrangements with the federal government (“risk corridors”). Plans also receive additional risk-adjusted payments based on the health status of their enrollees and reinsurance payments for very high-cost enrollees. Under reinsurance, Medicare subsidizes 80% of drug spending incurred by enrollees above the catastrophic threshold. In 2016, average reinsurance payments per enrollee are estimated to be $862; this represents a 9% increase from 2015. Medicare’s reinsurance payments to plans have represented a growing share of total Part D spending, increasing from 14% in 2007 to an estimated 37% in 2015.11 Analysis from MedPAC suggests that in recent years, plans have underestimated their enrollees’ expected costs above the catastrophic threshold, resulting in higher reinsurance payments from Medicare to plans over time.12 Future Challenges The average annual rate of growth in Part D costs per beneficiary was 3.2% between 2006 and 2014, but is projected to rise at a more rapid rate (5.7%) between 2014 and 2024.13 Over this time period, spending on Part D benefits is projected to rise from 12.7% to 16.8% of total Medicare spending (net of offsetting receipts).14 The Medicare Trustees expect a comparatively higher per capita growth rate in the coming years for Part D than for the other parts of the program due to higher costs associated with expensive specialty drugs, which is expected to be reflected in higher reinsurance payments to plans. Monitoring the degree to which private plans are able to negotiate price discounts and rebates as more expensive biologics and other specialty drugs become available will be an important part of ongoing efforts to assess how well plans are able to control costs. The Medicare drug benefit has helped reduce out-of-pocket drug spending for enrollees, which is especially important to those with modest incomes or catastrophic drug costs. Closing the coverage gap by 2020 will bring additional relief to millions of enrollees. Research shows, however, that relatively few people on Medicare have used the annual opportunity to switch Part D plans voluntarily—even though those who do switch often lower their out-of-pocket costs as a result of changing plans.15 Understanding how well Part D is working and how well it is meeting the needs of people on Medicare will be informed by ongoing monitoring of the Part D plan marketplace and plan enrollment; exploring the relationship between Part D spending and spending on other Medicare-covered services; and evaluating the impact of the drug benefit on Medicare beneficiaries’ out-of-pocket spending and health outcomes. According to the Center for Medicare and Medicaid Services (CMS) 32% of Medicare beneficiaries are enrolled in a Medicare advantage plan – that’s more than 17 million people. And enrollment has increased 50% since 2009.
Plan quality has been improving, with 71 percent of Medicare advantage enrollees now enrolled in a plan rated at either four or five stars out of five. Average plan premiums today are lower, dropping about 10 percent between 2010 and 2016. On a personal note – we have observed that copays are generally higher today than they were in 2010. Example: We remember daily hospital copays in the $150-$200 range, but today they are more like $250-$350. I’m not suggesting these plans are not a good value, but I am suggesting they have changed. The above information provides evidence that Medicare advantage plans are providing good value to millions of a Americans with premiums remaining relatively stable and plan benefits remaining competitive – especially when compared to “under-age” health plans. According to the Kaiser Family Foundation the average advantage premium in 2016 is $37 per month, similar to premiums for the past five years. Premiums are lower for HMOs and regional PPO, but do vary significantly from one county to the next. However, there is some cause for concern: Approximately 55% of plans are offered by just four insurance companies: Aetna, Humana, United Healthcare, and Kaiser Permanente. Aetna’s announced intention to acquire Humana – should it happen – will mean 55% of plan members will be enrolled with just three companies. Less competition may lead to less value for consumers. Time will tell Part D The 2016 standard part D deductible is $360. In addition, significantly more plans have a deductible in 2016 than in previous years. CMS recently announced the 2017 standard deductible will increase by $40 to an even $400. The initial coverage level limit will increase from $3310 to $3700 and the out-of-pocket threshold will go from $4850 to $4950. In 2017 part D enrollees will enjoy a 60% discount on brand name drugs and 50% discount on generic drugs, while in the donut hole. If you have question about how this impacts you, give us a call. Lonnie A recent Yahoo news article prompted me to conduct a little research. The article spoke to the popularity of Medicare supplement plan F vs other Medicare supplement plans. The good news about plan F is the simplicity and comprehensive coverage. But....how much are you paying for that convenience?
Over the last month we've received phone calls from clients expressing concerns they are paying significantly more money for prescriptions this year than they have in the past.
As we researched these questions we found these clients are being impacted by two big trends in the Medicare prescription drug world. Namely: More prescription drug plans now have an annual deductible in 2016 than in the past. This means our clients are now paying the full costs of their medications at the beginning of the year, instead of paying a modest copay. In fact according to an October 2015 article found at kff.org tow thirds of all PDPs now have deductibles. To see the entire article select this link: http://kff.org/medicare/issue-brief/medicare-part-d-a-first-look-at-plan-offerings-in-2016/ The other trend : Rising drug prices. The following was copied from a Wall Street Journal article October 5, 2015: The moderating price effect from generics now is tapering off. Pharmacy-benefits manager CVS Health Corp. said drug spending by its customers jumped 12.7% last year, more than triple the prior year’s rise. Price boosts represented more than 80% of this increase, CVS said. Similarly, Medicare’s spending on its prescription-drug benefit rose 8% last year on a per capita basis, after several years of averaging less than 1%. A leading reason for the surge was “price increases for both brand-name and generic drugs,” Medicare’s board of trustees said in a recent report. The Journal examined 30 of last year’s top drugs by revenue that are sold by U.S. pharmacies, looking at data from the start of 2010 through the end of 2014. The analysis used corporate financial statements, prescription figures from IMS Health Holdings Inc.and wholesale-pricing data provided by Truven Health Analytics. It excluded drugs that weren’t yet on the market in 2010 or for which full data weren’t available. For 18 of these 30 drugs, both revenue and the number of dispensed prescriptions for them rose. But revenue rose twice as fast as prescriptions. However, one thing has remained constant since the introduction of Medicare prescription drug plans (PDPs). Everyone can and should take advantage of the annual enrollment period to review all available plans to find the one that provides the right coverage for your prescriptions. Thanks for visiting, Lonnie Join Melanie and I, congratulating Tammy for winning a top producer award from CSI Life Insurance . During the last annual enrollment period, Tammy helped scores of people save money on their Medicare supplement plans with coverage from CSI. (Shown below with her trophy) Congratulations! Keep up the great work! Lonnie and Melanie  |
AuthorLonnie Thibodeaux is the owner of Sargent Insurance and Financial Services. He specializes in Medicare health plans and prescription drug plans. Archives
June 2019
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