AH Insurance Services

Obamacare Program Update for Plan Year 2026 – Change is Coming!

2025-07-17T23:56:00.000-04:00

Background

The Obamacare health care reform law, formally known as the Affordable Care Act (ACA), was created in 2010 by the federal government to extend health insurance coverage and reduce the financial burden of medical expenses for millions of uninsured adults. ACA plans were first issued effective January 1, 2014; and the enrollment process that started the prior October through the Health Insurance Marketplace was chaotic that first year, if it worked at all.

Obamacare expanded Medicaid services, created federal and state Marketplaces (currently about 20 states operate their own state-based enrollment platforms), prevented denial of medical coverage due to pre-existing conditions, and required plans to cover 10 Essential Health Benefits (EHBs) with a cap on maximum out-of-pocket expenses. Two types of federal subsidies were introduced based on projected household income and size: the Advance Premium Tax Credit (APTC), or monthly premium subsidy, and Cost Sharing Reductions (CSRs), which make plans more affordable by lowering the amount eligible enrollees must pay for deductibles and other out-of-pocket costs. CSRs apply only to applicants up to 250% of the Federal Poverty Level (FPL) enrolling into a Silver-level ACA plan.

Initially, the ACA faced legal challenges, and the program’s popularity was divided along political party lines. The ACA prevailed at the U.S. Supreme Court, which struck down the argument that the ACA was unconstitutional. However, Medicaid expansion was left up to the states.

Perhaps the most unpopular aspect of the ACA was a tax ‘penalty’ imposed on anyone without an exemption from the mandate to be covered by a health care plan (an ACA plan, commercial group health, Medicare, or other qualifying coverage). In late 2017, President Trump signed a tax bill zeroing out the tax penalty for coverage issued in 2018 and thereafter.

With the ACA tax penalty gone, Obamacare gained popularity across both political parties, despite some national insurers exiting (but later re-entering) sales of ACA plans. Democrats remained the main proponents, and then on March 11, 2021, Obamacare was given a major overhaul when President Biden signed the sweeping “American Rescue Plan Act” into law.

The American Rescue Plan created temporary enhanced subsidies that later were extended through the end of 2025 by the Inflation Reduction Act (signed by President Biden in 2022). Higher-income people over 400% FPL could receive a subsidy for the first time; plus, the subsidy amount was increased for lower-income people already eligible. Further, maximal subsidies were given to those who received unemployment benefits (for 2021), and the law forgave individuals from having to repay excess ACA premium subsidies at tax time (for 2020). Finally, subsidized COBRA coverage was made available for laid-off workers (from April to September of 2021), and the 14 states that had not yet expanded Medicaid were given new financial incentives to do so.

Higher income individuals and families went from being ineligible for any federal premium subsidy to potentially qualifying for substantially reduced premium (possibly half, or even less, of the total plan premium). The applicable threshold is if benchmark premiums exceed 8.5% of household income.

Under the American Rescue Plan, individuals and families under 400% FPL (already eligible for PTCs) gained access to higher subsidies. Notably, those with incomes between 100%-150% of the Federal Poverty Level could qualify for zero-premium coverage when electing a Silver-level benchmark plan (under prior law, they had to contribute premium up to approximately 2% of income).

ACA Provisions Set to Sunset on 12/31/2025

The enhanced premium subsidies detailed above are set to expire on 12/31/2025; and without an unforeseen extension, subsidized ACA coverage is about to become a lot more expensive. As noted, individuals and families projecting over 400% FPL will lose subsidy eligibility entirely.

A recent report published by the Center on Budget and Policy Priorities estimated that a family of four making $85,000 would pay an additional $313 in monthly premiums for coverage in 2026, as well as face a $900 increase in their cap on total out-of-pocket medical expenses.

For reference, the 2025 Federal Poverty Level guidelines (applicable for 2026 ACA plans) are shown below (figures are for the 48 contiguous states).

2025 FPL:

Family Size of 1: $15,650

Family Size of 2: $21,150

Family Size of 3: $26,650

Family Size of 4: $32,150

For example, a family of four projecting $140,000 total annual household income in 2026 is at the 435% FPL level, rendering them ineligible for any premium subsidy next year. Currently, if this family were enrolled in my home zip code, they would be eligible for a monthly premium subsidy of $554 ($6,648 for the full calendar year). So, absent any change in the current landscape, this family is facing an increase of more than $6,600 in total 2026 premiums – not including premium rate increases due to yearly inflation that are extremely likely to be implemented.

ACA Program “Pause” of Year-Round Enrollment SEP

In 2021, the U.S. Department of Health and Human Services (HHS) finalized a new special enrollment period (SEP) in states that use HealthCare.gov (optional for states that operate a state-based exchange), granting Year-Round enrollment in ACA plans for household income up to 150% FPL. That Year-Round enrollment provision was extended through 2025 under the 2022 Inflation Reduction Act and became permanent under a rule change HHS made in 2024.

Under this SEP, eligible applicants can enroll in an ACA plan through the Marketplace at any time during the year. Coverage takes effect on the first of the following month (this is true even in state-run exchanges as of 2025; prior to 2025, state-run exchanges could set mid-month enrollment deadlines for coverage to take effect the first of the following month).

In states that have expanded Medicaid, due to the very narrow range between 138% of the current year’s FPL (for Medicaid eligibility) and 150% of the prior year’s FPL, a small segment of the population is helped by this year-round enrollment SEP. In states not expanding Medicaid, more people are impacted (those qualifying for a federal subsidy and within 100%-150% FPL).

So, is this special Year-Round enrollment period truly permanent? No, of course not!

The Trump administration’s “Marketplace Integrity and Affordability” rule (effective August 25, 2025, for some provisions, and for other provisions, Plan Year 2026 or Plan Year 2027) has paused the Year-Round SEP for ACA enrollees at or below 150% FPL. HHS clarified the low-income SEP will once again be available, at the option of each exchange, for Plan Year 2027.

The rationale for this HHS rule is that the low-income SEP played a significant role in allowing fraudulent enrollments, and that it is potentially resulting in adverse selection, with people waiting until they need medical services to enroll in coverage.

Other ACA Program Changes

A host of other changes are approaching:

Deferred Action for Childhood Arrivals (DACA) recipients lose eligibility for coverage because of the Marketplace Integrity and Affordability rule. HHS estimates that 10,000 DACA recipients will lose Marketplace coverage, and 1,000 people will lose Basic Health Program (BHP) coverage. While DACA recipients became eligible for Marketplace coverage in November 2024, access to enroll in Marketplace plans was soon revoked in 19 states that sued to prevent DACA recipients from enrolling (DACA recipients in the rest of the country have continued to be eligible, but that will end in August 2025).

While the Marketplace currently requires income verification for some applications with income mismatches or missing IRS data, we should expect all Marketplace applicants to be required to provide proof of household income when attesting to household income that does not match information the exchange gets from its trusted data sources (such as the applicant's most recent year’s tax return).

The final rule also permanently removes the current automatic 60-day extension to the regular 90-day window that applicants are given to provide requested income documentation.

Like the low-income SEP rule change, the income verification change is temporary and applies only through the end of 2026.

Another change is directed towards ACA enrollees who take advantage of grace period provisions and, for example, look for ways to ‘skip’ a premium payment. Under the new rules, ACA plan enrollees who owe past-due premium to an insurer and apply for a new policy with that insurer must pay the past-due premium to effectuate the new policy (unless contrary to state laws and regulations). If the applicant does not remit the past-due premium, the insurer will be allowed to refuse to effectuate the new policy.

A technical change has been made, impacting maximum out-of-pocket limits. Starting in 2026, the new rule finalizes a methodology change for how maximum out-of-pocket limits are calculated, and the result is that the highest allowable out-of-pocket limit for a single individual will be $10,600 in 2026. Under the previous methodology, the Biden administration had finalized a 2026 maximum out-of-pocket limit of $10,150, but that has now been replaced.

The impact on ACA plan enrollees will be higher out-of-pocket costs and less generous premium subsidies. Since the IRS uses the same premium indexing methodology to determine the percentage of income that Marketplace enrollees pay in after-subsidy premiums, the new methodology will also have the effect of reducing premium subsidies (this is because it will increase the percentage of income that people pay in after-subsidy premiums).

A new administrative rule will impact enrollees in $0 (after-subsidy) premium plans who let their plans auto-renew in 2026. Auto-renewal of ACA plans is widely used, as evidenced by the enrollment period for 2025 coverage, in which more than half of the approximately 20 million people who renewed Marketplace coverage utilized auto-renewal.

Under the new rules, if ACA enrollees with a 2025 $0 premium plan rely on auto-renewal for their 2026 coverage, they cannot be approved for $0 premium coverage until they reconfirm basic eligibility information in their Health Insurance Marketplace account. Until doing so, these enrollees will incur a minimum of $5 premium due each month.

Like some of the rules noted above, the auto-renewal change is temporary and applies only for the 2026 Plan Year (and it does not apply to state-run exchanges).

But wait, that’s not all! The budget bill enacted on July 4, 2025 (known as the One Big Beautiful Bill Act) calls for Marketplace auto-renewal to end altogether, starting with the 2028 Plan Year. Marketplace enrollees will have to verify their ongoing eligibility for coverage to ensure receipt of premium subsidies each year (Marketplaces will have the option to rely on automatic verification protocols for confirming information, when available from trusted data sources).

The final rule permanently removes “Bronze-to-Silver” auto-renewal, a protocol that Healthcare.gov adopted in 2024, allowing the Marketplace to switch a consumer from a Bronze plan to a Silver plan in some circumstances. Under this process, if an applicant is eligible for CSRs, enrolled in a Bronze plan, and a Silver plan is available in the same product category with the same provider network, and with equal or lesser after-subsidy premiums, the exchange can auto-renew the enrollee into the Silver plan (allowing the enrollee to take advantage of CSRs).

The final rule prohibits this protocol, starting with the 2026 Plan Year. Instead, the auto-renewal will keep the enrollee in their existing plan if it continues to be available. State-run exchanges can retain flexibility regarding their re-enrollment protocols, but only at the discretion of HHS.

Pre-enrollment SEP eligibility verification will be stricter for the 2026 Plan Year. In recent years, HealthCare.gov applicants enrolling under a SEP have only been required to provide proof of their SEP eligibility if the qualifying life event was the loss of other qualifying coverage. The final rule removes that limitation, allowing pre-enrollment verification for any qualifying life event.

The exchange will be required to conduct pre-enrollment SEP eligibility verification for at least 75% of new SEP enrollments. Originally, the proposed rule called for this to apply nationwide, but it was only finalized for states that use HealthCare.gov (state-run exchanges will continue to have the option to verify applicants’ SEP eligibility or not).

A shorter open enrollment period is on the way, but not until Plan Year 2027. HHS had initially proposed a shorter open enrollment period starting in the fall of 2025, but the final rule pushes this out until the fall of 2026. So, the open enrollment period for Plan Year 2026 is slated to begin on November 1, 2025, and continue through January 15, 2026, in most states. State-run exchanges will have the option to extend it even later than that, which several have historically done.

But starting in the fall of 2026, and for future years, open enrollment will be shorter:

In states that using healthcare.gov, it will run from November 1 to December 15.

State-run exchanges will have the option to extend open enrollment, but only within certain parameters:

It must begin no later than November 1
It can’t continue past December 31
It can’t last longer than nine weeks.
All policies selected during open enrollment will take effect January 1

The open enrollment period will continue to apply both “on-exchange” and “off-exchange” (ACA-compliant health insurance, without availability of federal subsidies, sold outside of the Marketplaces).

Already this year, at least one large national insurer has decided to fold its hand and exit the Health Insurance Marketplaces for Plan Year 2026. CVS Health, owner of Aetna, recently announced that Aetna will withdraw all ACA individual and family plans at the end of 2025 (Aetna has cited persistent underperformance in its ACA exchange business, including substantial financial losses).

This isn’t Aetna’s first time pulling back from sales of ACA plans. After exiting in 2018 and coming back in 2022, the company is shifting gears once again. While it’s not possible to know for sure, it would seem Aetna is keenly interested in its profit margin, more so than serving the American public.

As an editorial comment, people who earn too much to receive federal subsidies have seen individual market health insurance premiums rise steeply, in some cases ten-fold, compared to a dozen years ago. That’s in addition to the continuing trend of higher deductibles, out-of-pocket caps, etc. Proponents of Obamacare tout the value of APTCs, CSRs, coverage of pre-existing conditions, children allowed on their parents’ plan until age 26, and other components of the program, which clearly have helped many people… but at what overall cost? Administrative and regulatory burdens under Obamacare are enormous, and arguably those expenses would be much better directed toward actual medical care.

To conclude, I shall share a remark posted last month on a popular financial website by a commenter who is unknown to me, but apparently has more common sense than many of our government leaders:

The Bronze Plan is complete rubbish. 60/40, high deductible, covers nothing really, unless you are hit by a bus. Let's put Congress on the Bronze Plan. They have a Mercedes Benz Plan right now. Time for them to feel the pain of the average citizen. That should cut some 'government waste.'

Until next time,

Andrew Herman, President

AH Insurance Services, Inc.

Medicare Advantage Trial Periods – What Are They and How Do They Help Medicare Beneficiaries?

2025-02-23T08:20:00.002-05:00

Over half of current Medicare Beneficiaries receive benefits through Medicare Part C, an alternative to the Original Medicare program. Under Medicare Part C, Beneficiaries enroll in health and drug plans offered by private insurance companies contracted with the federal government to provide Medicare benefits on a year-to-year basis. Part C plans (known as Medicare Advantage) are governed by enrollment period rules that dictate when initial sign-up, plan changes, and disenrollments can be made.

Medicare Advantage plans sometimes are confused with Medicare Supplement policies widely available to Medicare Beneficiaries. Medicare Supplement also is known as Medigap, as it serves to fill in gaps in medical benefits under the Original Medicare program design. Beneficiaries on Original Medicare (with or without Medigap) optionally can obtain drug coverage via a Standalone Medicare Part D Prescription Drug Plan. Federal rules govern enrollment timeframes for Medicare Part D, like Medicare Advantage.

A major difference between Medicare Advantage and Medigap is that in most locations, Medicare Advantage plans with rich benefits often come with a $0 plan premium (i.e., no additional premium beyond the Medicare Part B monthly premium), unlike Medicare Supplement policies that always have a monthly premium (and for those choosing to add a Standalone Medicare Part D plan, that premium is in addition).

With Medicare Advantage including Part D benefits and many extras not covered by Medicare such as dental, vision, hearing, fitness benefits, transportation to the doctor, over-the-counter allowances, and sometimes an allowance for food and utilities, it can be surprising to learn that so many plans have a $0 premium. Some Medicare Advantage plans even refund a portion of the Medicare Part B premium to the Beneficiary. Finally, there is no medical underwriting and pre-existing medical conditions are covered. This has led some people to conclude that “Medicare Advantage must be too good to be true.”

For those who are skeptical (often people who already have Medigap or plan to buy it at Age 65), there is some good news, namely, Medicare Beneficiaries are provided special protection to try out Medicare Advantage on a trial basis. There are two Federal Trial Periods, both of which provide Guaranteed Issue Rights to buy a Medigap policy if dissatisfied with Medicare Advantage during the first year.

These trial rights are meaningful, as Medigap applicants generally face medical underwriting once the open enrollment period (six months following sign-up for Medicare Part B) has ended. Medigap underwriting assesses medical history and can impose higher premiums or deny coverage completely.

State laws, such as in Maine and Wisconsin, provide additional protection for Medicare Beneficiaries wishing to try Medicare Advantage for the first time. These rights are described below following the Federal Trial Periods.

Medicare Advantage Trial Periods: Returning to Original Medicare

Medicare Advantage trial periods are types of Special Enrollment Periods (SEPs) that allow Medicare Beneficiaries to disenroll from a Medicare Advantage plan outside of the Annual Election Period (AEP) that runs each year from October 15th to December 7th (disenrollments during AEP normally take effect the first day of the following year). If disenrolling from a Medicare Advantage plan that includes prescription drug coverage, a SEP is granted to enroll in a Standalone Medicare Part D drug plan.

Along with allowing disenrollment from Medicare Advantage outside of standard election periods, the Federal Trial Periods grant Guaranteed Issue Rights for the Beneficiary to purchase a Medigap policy. The government currently specifies two distinct SEPs for this purpose.

I. Medicare Advantage Special Enrollment Period at Age 65 – “SEP 65” (Federal Trial Period)

The “SEP 65” is for Beneficiaries who enrolled in a Medicare Advantage plan for the first time at Age 65 during their Medicare Initial Enrollment Period (IEP). Those who qualify can disenroll from Medicare Advantage and return to Original Medicare within the first 12 months of coverage. If the Medicare Advantage plan included Part D coverage, a Part D SEP may be used to enroll in a Standalone Part D plan. Medicare Advantage disenrollment takes effect on the 1st of the month following receipt of the request by the plan. Beneficiaries using this SEP 65 have a Guaranteed Issue Right to purchase any Medigap plan available to them, regardless of their current health status or any adverse medical history. This means insurers cannot deny coverage or increase premiums based upon medical history. Medigap coverage must be purchased within 63 days after leaving Medicare Advantage (Beneficiaries also can purchase the Medigap plan starting 60 days before Medicare Advantage coverage ends).

II. Medicare Advantage Special Enrollment Period – “Trial Period SEP” (Federal Trial Period)

The “Trial Period SEP” allows Beneficiaries of any age enrolling in a Medicare Advantage plan for the first time when dropping a Medigap policy, the right to disenroll from Medicare Advantage and return to Original Medicare within the first 12 months of coverage. If the Medicare Advantage plan included drug coverage, a Part D SEP may be used to enroll in a Standalone Part D plan. Medicare Advantage disenrollment takes effect on the 1st of the month following receipt of the request by the plan. Beneficiaries using this Trial Period SEP have a Guaranteed Issue Right to purchase their prior Medigap plan, regardless of current health status or medical history. If the prior plan is no longer available for sale, any available Medigap Plan A, B, C, D, F, G, K, or L may be selected (except that Plans C and F are available only to Medicare Beneficiaries who turned age 65 or became first eligible for Medicare because of age, disability or end-stage renal sickness prior to January 1, 2020).

III. Maine “State Trial Period” (specific to Maine, extends period to three years)

Maine mandates that Beneficiaries who enroll in Medicare Advantage starting at the same time as initial enrollment into Medicare Part B and then switch back to Original Medicare within three years, are given a Guaranteed Issue Right to buy any available Medicare Supplement plan during the 90-day period after Medicare Advantage coverage ends. Without this Guaranteed Issue right, Beneficiaries must health-qualify for Medigap coverage once their Medicare Part B has been effective for more than six months.

While Maine’s Trial Period SEP provides additional rights to buy Medigap without health underwriting, it does not change Federal rules that allow a return to the Original Medicare program only at certain times.

Additionally, Maine mandates that Beneficiaries with an existing Medicare Supplement policy who terminate that plan to enroll in Medicare Advantage for the first time, and then return to the Original Medicare program within three years, use their Guaranteed Issue Right to buy an equivalent or less comprehensive Medicare Supplement policy available to them (Beneficiaries must apply within 90 days).

IV. Wisconsin “State Trial Period” (Guaranteed Issue Right – Dropping Employer Coverage)

Wisconsin offers yet another protection for Medicare Beneficiaries. If a Beneficiary drops an employer-sponsored group health plan to enroll in a Medicare Advantage plan for the first time, the Beneficiary is given a Guaranteed Issue Right to purchase a Medicare Supplement policy when the Beneficiary disenrolls from Medicare Advantage during the first 12 months (this is the Wisconsin Trial Period right). To disenroll from Medicare Advantage, Beneficiaries must follow Federal enrollment period rules to switch back to Original Medicare and optionally enroll in a Standalone Part D plan.

Summary

The Federal government has two Trial Periods for Medicare Beneficiaries wishing to try a Medicare Advantage plan for the first time without losing eligibility for Guaranteed Issue Medigap coverage. Beneficiaries can use a Trial Period once, for up to one year, to determine if a Medicare Advantage plan is suitable. Maine has adopted rules extending the one-year trial period to three years, and Wisconsin grants Medicare Beneficiaries an additional Guaranteed Issue Right to buy a Medigap plan when terminating an employer-sponsored group health plan to enroll in Medicare Advantage for the first time.

Until next time,

Andrew Herman
President of AH Insurance Services, Inc.

Medicare 2025 - New Premiums and Deductibles, Changes to Part D Program

2024-12-13T22:18:00.000-05:00

CMS Updates Medicare Premiums, Deductibles, and Coinsurance Amounts

Last month, the Centers for Medicare & Medicaid Services (CMS) released 2025 premiums, deductibles and coinsurance amounts for the Medicare Part A and Part B programs, and the new 2025 Medicare Part D income-related monthly adjustment amounts.

Part A (Hospital Insurance) Monthly Premium

About 99% of Medicare beneficiaries do not pay a monthly Part A premium (it is required that the Medicare beneficiary or a spouse has 40+ quarters of Medicare-covered employment).

The 2025 Part A premium is $518 per month for people who are not otherwise eligible for premium-free Hospital Insurance and have less than 30 quarters of Medicare-covered employment. With 30-39 quarters of Medicare-covered employment, the 2025 Part A premium is $285 per month. Higher income consumers may pay more.

Part B (Medical Insurance) Monthly Premium

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. General tax revenues, along with premiums paid by Medicare beneficiaries, fund the Part B program.

There is a special rule for Social Security recipients, called the “hold harmless rule,” ensuring that Social Security benefits will not decline from one year to the next because of an increase in the Medicare Part B premium. Whether this rule comes into play in any year depends on the amount of Cost of Living Adjustment (COLA) and the Medicare Part B premium increase. Medicare beneficiaries who have been protected by the hold harmless rule pay less than the standard Part B premium. All others pay monthly 2025 Part B premiums based on the Modified Adjusted Gross Income (MAGI) as reported two years prior (i.e., 2023 federal tax return).

The standard 2025 monthly premium for Medicare Part B enrollees is $185.00, an increase of $10.30 from $174.70 in 2024. Medicare Part B enrollees will pay the standard $185.00 Part B premium amount in 2025 unless:

You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount.)
Your modified adjusted gross income as reported on your IRS tax return from two years ago is above a certain amount. If so, you’ll pay the standard premium amount plus an Income Related Monthly Adjustment Amount (IRMAA).
You have been protected by the "hold harmless" rule discussed above.

Since 2007, a beneficiary’s Part B monthly premium is based on income. These income-related monthly adjustment amounts affect approximately 8% of people with Medicare Part B. 2025 Part B premiums for Full Part B coverage (as opposed to Part B Immunosuppressive Drug Coverage only) based on MAGI from the 2023 tax return are shown in the following table:

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	2025 Part B premium not held harmless	Premium level
Less than or equal to $106,000	Less than or equal to $212,000	$185.00	Standard
Greater than $106,000 and less than or equal to $133,000	Greater than $212,000 and less than or equal to $266,000	$259.00	1.4 x standard
Greater than $133,000 and less than or equal to $167,000	Greater than $266,000 and less than or equal to $334,000	$370.00	2.0 x standard
Greater than $167,000 and less than or equal to $200,000	Greater than $334,000 and less than or equal to $400,000	$480.90	2.6 x standard
Greater than $200,000 and less than $500,000	Greater than $400,000 and less than $750,000	$591.90	3.2 x standard
Greater than or equal to $500,000	Greater than or equal to $750,000	$628.90	3.4 x standard

For tables for married beneficiaries who file separate returns, and for Part B Immunosuppressive Drug Coverage only, click here: https://ahinsuranceservices.com/medicarepremiums.html.

Part D (Prescription Drug Coverage) Monthly Premium

Since 2011, Medicare beneficiaries’ Part D premiums have been based on income. In addition to any Part D plan premium, there is an income-related monthly adjustment amount (IRMAA) impacting higher income earners. Part D plan premiums vary from plan to plan (when Part D benefits are included in a Part C Medicare Advantage plan, premiums often are zero). Beneficiaries may pay Part D premiums directly to the plan or have them deducted from Social Security benefits; however, any IRMAA must be deducted from Social Security benefits or otherwise paid directly to Medicare. 2025 Part D IRMAA figures are shown in the following table:

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	2025 Part D base premium*	IRMAA
Less than or equal to $106,000	Less than or equal to $212,000	Plan premium	$0
Greater than $106,000 and less than or equal to $133,000	Greater than $212,000 and less than or equal to $266,000	Plan premium	$13.70
Greater than $133,000 and less than or equal to $167,000	Greater than $266,000 and less than or equal to $334,000	Plan premium	$35.30
Greater than $167,000 and less than or equal to $200,000	Greater than $334,000 and less than or equal to $400,000	Plan premium	$57.00
Greater than $200,000 and less than $500,000	Greater than $400,000 and less than $750,000	Plan premium	$78.60
Greater than or equal to $500,000	Greater than or equal to $750,000	Plan premium	$85.80

For married beneficiaries who file separately, click here:

https://ahinsuranceservices.com/medicarepremiums.html.

Part A (Hospital Insurance) Deductible and Coinsurance Amounts

In 2025, the Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital will be $1,676, an increase of $44 from $1,632 in 2024. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2025, beneficiaries must pay a coinsurance amount of $419 per day for the 61st through 90th day of a hospitalization ($408 in 2024) in a benefit period and $838 per day for lifetime reserve days ($816 in 2024). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $209.50 in 2025 ($204.00 in 2024).

Part B (Medical Insurance) Deductible

The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.

2025 Changes to Medicare Part D (Prescription Drug Coverage)

Medicare Part D coverage, whether on a Stand-alone basis or included within a Part C Medicare Advantage plan, can include a yearly deductible up to $590 in 2025. This is an increase of $45 from $545 in 2024. Many Part D plans that have a deductible apply it only to higher cost prescriptions such as those classified in Drug Tier 3 and higher.

Notable Part D Program changes coming in 2025 are as follows:

The Coverage Gap (also known as the "Donut Hole") will be completely eliminated.

Under the original Part D program, Part D enrollees faced up to 100% of total drug costs during a Coverage Gap stage. Years later, the 100% amount was reduced to 25%. In 2025, Part D enrollees will no longer face any increase in cost sharing due to hitting the cost threshold that would trigger the dreaded Donut Hole, as it has been eliminated.

Part D enrollees' out-of-pocket drug costs will be capped at $2,000 in 2025. This amount will be indexed to rise each year at the rate of growth in per capita Part D costs (this cap does not apply to out-of-pocket spending on prescription drugs covered under Medicare Part B).

You might spend even less if you are one of the roughly 75% of Part D members with an “enhanced” Part D plan, which may provide extra credit toward the out-of-pocket cap. When enhanced plans have benefits that reduce out-of-pocket spending, the value of those benefits can count toward your $2,000 cap.) As a result, many Medicare beneficiaries will hit the cap before actually spending $2,000 in out-of-pocket costs.

It is important to keep in mind that only medicines listed in your plan's Part D formulary count toward the $2,000 out-of-pocket cap. There may be certain exceptions, such as when a plan agrees to cover a non-formulary drug due to individual circumstances (this typically requires the prescribing physician to document medical need).

Part D plans and drug manufacturers will pay a larger share of costs for Catastrophic Coverage beyond the $2,000 cap, and Medicare will pay a smaller share. Medicare's share of total costs will decrease from 80% to 20% for brand-name drugs and from 80% to 40% for generic drugs beginning in 2025. Medicare Part D plans' share of costs will increase from 15% to 60% for both brands and generics above the cap, and drug manufacturers will be required to provide a 20% price discount on brand-name drugs.

Part D plans and manufacturers will face changes to their share of total drug costs paid in the Initial Coverage stage. In this stage (i.e. after any plan deductible has been met and before Catastrophic coverage), drug manufacturers will be required to provide a 10% discount on brand-name drugs (this replaces the 70% discount in the Coverage Gap stage under the current design). Part D plans will pay 65% of brand-name drug costs.

One additional change coming in 2025 is the Medicare Prescription Payment Plan, which is a new, optional way to pay out-of-pocket costs over time. It works like a “buy now, pay later option” for Medicare Part D deductibles, copays and/or coinsurance.

The payment plan is a potential budgeting tool, not something that will save you money. Total costs remain the same, and plans cannot charge fees or interest because you participate. The Medicare Prescription Payment Plan could be helpful if you have expensive medications and incur high out-of-pocket costs early in the year, for example.

All 2025 Medicare Part D plans will offer the Medicare Prescription Payment Plan, and plans will be required to reach out to you if they identify you as likely to benefit from the program. Enrollment in this optional program is done through your Part D plan.

Until next time,

Andrew Herman

Medicare Part D Enrollees to Benefit from Program Changes in 2024 and 2025

2023-09-13T23:30:00.001-04:00

With nearly two decades having passed since Medicare Part D became operational, notable program improvements are on the horizon for 2024 and 2025.

For background, Medicare Part D is prescription drug coverage available to Medicare Beneficiaries enrolled in Part A and/or Part B. Beneficiaries access this voluntary program through private insurance carriers and can obtain coverage through a standalone Prescription Drug Plan (PDP) or a Medicare Advantage Prescription Drug (MA-PD) plan (must have both Medicare Parts A and B to enroll in MA-PD).

Medicare Part D plans run on a calendar year basis (subject to change each year) in distinct stages:

• Deductible – enrollees are responsible for a plan deductible up to a maximum ($505 in calendar year 2023). Some PDPs do not have any deductible (this feature may come with a higher plan premium).

• Initial Coverage – after the Deductible is reached, enrollees have a copay ($) or coinsurance (%) based on each drug’s “Tier Level” as shown in the plan formulary. The standard Part D design allows plans to charge up to 25% coinsurance, but actual costs will vary and often are lower. Medicines must be on the plan formulary, or they will not be covered at all (unless an exception applies). This stage continues until the consumer’s out-of-pocket costs PLUS the amount the plan pays reaches $4,660 (in 2023).

• Coverage Gap (“Donut Hole”) – in this stage, under the original standard design of the Part D program, enrollees bore the full cost of their medicines. Prior to 2023, the program was gradually liberalized so that in this stage, enrollees pay only 25% of drug costs (with the remainder covered by manufacturer discounts). During each year, enrollees exit the Donut Hole once their True Out-of-Pocket (TrOOP) costs reach a threshold level ($7,400 in 2023). It should be noted that TrOOP includes what the manufacturers pay, in addition to costs paid by the enrollee (it does not include what the plan pays during Initial Coverage).

• Catastrophic Coverage – the final stage in a calendar year once an enrollee has hit the Part D TrOOP. In this stage, in calendar year 2023, enrollees pay the greater of 5% of drug costs, or $4.15 for generics and $10.35 for brand names. For very costly medicines, the 5% enrollee portion can add up quickly.

To illustrate actual 2023 out-of-pocket drug costs on a standalone PDP, let's review a hypothetical example for a Medicare beneficiary living in Tampa, Florida and taking one costly medicine -- Pomalyst 3mg capsule. Then, we will see how much the enrollee's out-of-pocket costs will be reduced in 2024 and 2025.

The monthly premium is ignored, but it should be noted that the Plan Sponsor selected in this example provides the lowest standalone Part D 2023 calendar year costs including premiums and drug copays.

According to the Medicare plan finder, this consumer travels through both Initial Coverage and the Coverage Gap in January. The $7,400 TrOOP is reached, with the enrollee’s out-of-pocket drug cost equal to $3,080. For the rest of the year, the enrollee is in Catastrophic Coverage paying $1,188 monthly (5% of $23,762 pharmacy retail cost). Over the whole calendar year, the enrollee’s out-of-pocket drug costs exceed $16,000 (based on the specific 2023 PDP and retail pharmacy).

So, what will change in 2024 and how will this enrollee be impacted?

In 2024, costs in the Catastrophic stage change so that the 5% coinsurance requirement is eliminated (Part D plans will pay 20% of total drug costs in this phase instead of 15%). Once Part D enrollees (without low-income subsidies, called LIS), have drug spending high enough to qualify for Catastrophic Coverage, they are no longer required to pay 5% of their drug costs, which in effect caps their expenses.

In 2024, the Catastrophic stage threshold will be set at $8,000. As noted above, this amount includes what Part D enrollees spend out of pocket plus the value of manufacturer discounts in the Coverage Gap. Under this construct, Part D enrollees who take only brand-name drugs in 2024 will spend approximately $3,300 out of pocket and then have no further cost for covered medicines. So, in the example cited, the enrollee reduces out-of-pocket medicine costs from over $16,000 in 2023 to about $3,300 in 2024.

So, what is changing in 2025 and how will this enrollee be further impacted?

Out-of-pocket drug spending will be capped at $2,000.

Beginning in 2025, Part D enrollees’ out-of-pocket drug costs will be capped at $2,000. This amount will be indexed to rise each year after 2025 at the rate of growth in per capita Part D costs. (This cap does not apply to out-of-pocket spending on prescription drugs covered under Medicare Part B.)

For Part D enrollees who take only brand name drugs, annual out-of-pocket costs at the Catastrophic threshold will fall from around $3,300 in 2024 to $2,000 in 2025. In other words, Part D enrollees who take only brand name drugs with costs high enough to reach the Catastrophic stage should expect to realize savings of about $1,300 in 2025 as compared to 2024 spending.

The Coverage Gap will be completely eliminated.

The Coverage Gap stage, where Part D enrollees had faced 100% of total drug costs under the original Part D design and currently face 25% of costs, will be eliminated in 2025. This means that Part D enrollees will no longer face an increase in cost sharing at the end of the Initial Coverage stage, which is the case in most Part D plans, since today's plans usually vary the cost-sharing amounts instead of charging the standard 25% coinsurance during Initial Coverage.

Part D plans and drug manufacturers will pay a larger share of costs for Catastrophic Coverage, and Medicare will pay a smaller share.

Medicare’s share of total costs in the Catastrophic stage (reinsurance) will decrease from 80% to 20% for brand-name drugs and from 80% to 40% for generic drugs beginning in 2025. This reduction will help address concerns about the substantial increase in Medicare’s reinsurance payments to Part D plans over time, which accounted for close to half (48%) of total Part D spending in 2022, up from 14% in 2006, based on data from the Medicare Trustees 2023 annual report. Medicare Part D plans’ share of costs will increase from 15% to 60% for both brands and generics above the cap, and drug manufacturers will be required to provide a 20% price discount on brand-name drugs.

Part D plans and manufacturers will face changes to their share of total drug costs paid in the Initial Coverage stage.

Drug manufacturers will be required to provide a 10% discount on brand-name drugs in the Initial Coverage state beginning in 2025, replacing the 70% price discount in the Coverage Gap stage under the current design. Part D plans will pay 65% of brand-name drug costs.

For further information and graphics that illustrate upcoming Part D changes in greater detail, please refer to this informative article from the Kaiser Family Foundation:

https://www.kff.org/medicare/issue-brief/changes-to-medicare-part-d-in-2024-and-2025-under-the-inflation-reduction-act-and-how-enrollees-will-benefit/.

Until next time,

Andrew Herman

Highlights of the 2023 Medicare Trustees Report

2023-05-31T18:48:00.000-04:00

The 2023 Medicare Trustees Report spelled good news for the program’s short-term viability but should not delay Congress from seeking a long-term solution that protects the health care of older Americans, experts agreed.

As part of a webinar this month sponsored by the American Academy of Actuaries, the Centers for Medicare & Medicaid Services’ (CMS) Chief Actuary Paul Spitalnik reported on the program’s finances as detailed in the report. Three other panelists shared insights on how Medicare’s Hospital Insurance trust fund might remain solvent beyond the currently projected exhaustion date, and more generally how to make the program more sustainable in the long-term.

For background, the Medicare Program consists of multiple parts:

Part A - Covers inpatient hospital and skilled nursing care, post-institutional home health care, and hospice care.

Part A has about 65 million enrollees and is funded primarily by Medicare payroll taxes (1.45% paid by employees and employers, each; 2.90% paid by self-employed; additional .90% paid by high-income earners; and no cap on annual taxable earnings as is the case with the Social Security payroll tax). Calendar year 2022 expenditures were $342.7 billion.

Part B - Covers physician services, outpatient hospital, diagnostic testing, durable medical equipment, ambulance, some additional services such as general home health care, and physician-administered drugs.

Part B has about 60 million enrollees and is funded approximately 30% by monthly premiums paid by Medicare beneficiaries ($164.90 standard premium for 2023 plus additional premiums charged to high-income earners) and 70% by government contributions coming from general taxation. A small portion of revenue stems from fees imposed on drug manufacturers. Calendar year 2022 expenditures were $436.7 billion.

Part D - Covers prescription drugs.

Part D has slightly over 50 million enrollees and is funded by premiums paid by Medicare beneficiaries (average monthly premium is about $32, funding about 15% of total revenues), additional premiums charged to high-income earners, general federal revenues, and state transfers. Calendar year 2022 expenditures were $125.7 billion.

Part C - Medicare Advantage program.

The Part C (Medicare Advantage) program is an option for Medicare beneficiaries that are enrolled in both Part A and Part B and live in the service area where the private plan of choice is offered. These plans are provided on a calendar-year basis by plan sponsors contracted with Medicare. Medicare Advantage plans, which typically include Part D coverage, now cover close to half of Medicare beneficiaries nationwide.

The Medicare program has grown dramatically in both enrollment and paid benefits over the past four decades. In 1982, Medicare benefits totaled $46.6 billion, or 1.4% of the nation’s gross domestic product (GDP). The 2023 report found that had grown to $911.2 billion overall, or 3.6% of GDP.

Key highlights of the 2023 Medicare Trustees report are as follows:

The Part A Hospital Insurance trust fund (a long term reserve that has been set aside to cover future costs) is projected to be depleted by the year 2031, three years later than forecast in last year's report. This is great news for the program's short-term viability, yet the eventual financial shortfall will need to be addressed to avoid reduction in program benefits.

The Inflation Reduction Act of 2022, intended to tamp down inflation and reduce the federal budget deficit, will impact Medicare in several ways:

• Reduces government expenditures for physician and outpatient services covered under Part B

• Increases expenditures for Part D through 2030

• Decreases Part D expenditures beginning in 2031

In the long-term, experts expect the Inflation Reduction Act of 2022 will be beneficial to the financial health of the Medicare program.

While the COVID-19 pandemic caused higher costs for acute treatment, those costs have been more than offset by deaths of seriously ill Medicare beneficiaries as well as reduced spending for non-COVID care.

The growing number of members portends long-term challenges. James Mathews, executive director of the Medicare Payment Advisory Commission (MedPAC), noted that the number of program beneficiaries is expected to increase from the current 65 million to 80 million in the next decade. At the same time, the number of workers supporting those on Medicare is projected to decrease from 4 per enrollee to 2.5 per enrollee.

To control costs, MedPAC is advising cuts to post-acute care payments in 2024 as well as reducing Medicare Advantage plan payments in excess of payments made to Original Medicare. MedPAC also continues to advocate for reductions in Part D plans’ reliance on cost-based reinsurance and improved incentives to manage benefits. However, Mathews said a hike in hospital payment rates is necessary to cover rising hospital costs.

Marilyn Serafini, executive director of the Bipartisan Policy Center’s Health Program, said it is essential that Congress seek out a bipartisan solution that will keep Medicare fully functioning. Her group is currently in the midst of crafting recommendations to improve the program in the long-term.

It is developing a set of principles to guide policymakers, including improving the enrollment process, simplifying and improving the traditional Medicare benefit, promoting price competition in both Original Medicare and Medicare Advantage, and re-evaluating the trust fund structure and accountability mechanisms.

It is extremely likely additional funds will be needed to support growing Medicare enrollment. Bowen Garrett, senior health fellow at the Urban Institute, noted that Congress in the past has always acted when the program neared fund exhaustion—as is happening now. That’s for good reason, as doing nothing “would be a significant stressor on providers.”

The Urban Institute has examined 12 different options to raise revenues, ranging from an across-the-board increase in payroll or income taxes, to taxing health care benefits, or targeting solutions that would only impact more wealthy Americans or businesses.

Regardless of the path taken, there was broad agreement for congressional action in the near future to save Medicare for future generations. “Demographics are pretty clear,” CMS Chief Actuary Spitalnic said. “It is a question of when it will be depleted.”

Until next time,

Andrew Herman, President

AH Insurance Services, Inc.

2023 Medicare – New Expanded Enrollment Access, Update to Premiums and Deductibles, and New Immunosuppressive Drug Benefit

2023-01-16T18:21:00.001-05:00

CMS Updates Medicare Enrollment and Eligibility Rules

On October 28, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a final rule effective on January 1, 2023, updating Medicare enrollment and eligibility rules to expand coverage for people with Medicare and advance health equity. Among the changes, Medicare coverage now becomes effective the month after enrollment for individuals signing up in the last three months of their Initial Election Period, or in the General Election Period, thereby reducing potential gaps in coverage.

The rule also expands access through Medicare special enrollment periods (SEPs) and allows eligible beneficiaries to receive Medicare Part B coverage without a late enrollment penalty. Examples of new SEPs created by this rule are SEPs for eligible individuals who miss an enrollment opportunity because:

They were impacted by a disaster or government-declared emergency;
Their employer or health plan materially misrepresented information related to timely enrollment in Medicare Part B;
They were incarcerated; and
Their Medicaid coverage was terminated after the COVID-19 Public Health Emergency (PHE)s ends or on or after January 1, 2023 (whichever is earlier).

These changes are related to Original Medicare A/B eligibility only. They do not apply to Medicare Advantage. The effective dates and SEPs for Medicare Advantage remain unchanged.

The final rule also establishes a new immunosuppressive drug benefit that extends vital Medicare immunosuppressive drug coverage to individuals who have had a kidney transplant and otherwise would lose Medicare coverage.

To view the final rule, refer to this link:

https://www.federalregister.gov/documents/2022/11/03/2022-23407/medicare-program-implementing-certain-provisions-of-the-consolidated-appropriations-act-2021-and.

2023 Medicare Part A Premium, Deductible, and Coinsurance Amounts

Medicare Part A covers inpatient hospital, skilled nursing facility, and some home health care services. About 99 percent of Medicare beneficiaries qualify for premium-free Part A due to having at least 40 quarters of their own Medicare-covered employment (or the work history of a spouse), or two years having passed from initial eligibility for Social Security Disability benefits.

Enrollees aged 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities must pay premium for Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate of $278 in 2023 (increase of $4 from 2022). Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium of $506 a month in 2023 (up $7 from 2022).

The Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital is $1,600 in 2023 (increase of $44 from 2022). The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2023, beneficiaries must pay a coinsurance amount of $400 per day for the 61^st through 90^th day of a hospitalization (increase of $11 from 2022) in a benefit period and $800 per day for lifetime reserve days (increase of $22 from 2022). For skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period is $200.00 in 2023 (up $5.50 from 2022).

2023 Medicare Part B Premium and Deductible Amounts

There is a special rule for Social Security recipients, called the “hold harmless rule,” that ensures that Social Security benefits will not decline from one year to the next because of an increase in the Medicare Part B premium. Whether this rule comes into play in any year depends on the amount of Cost of Living Adjustment (COLA) and the Medicare Part B premium increase. The hold harmless rule applies in 2023 for those people who had been paying the standard Part B premium, and their Medicare Part B premium increased but the Social Security COLA amount was not large enough to cover the increase. Those who are subject to the 2023 hold harmless rule pay less than the $164.90 standard Part B premium. All others pay the 2023 not held harmless premium, which is determined based on the Modified Adjusted Gross Income (MAGI) as reported on the individual’s 2021 tax return.

The standard monthly premium for Medicare Part B enrollees is $164.90 for 2023, a decrease of $5.20 from $170.10 in 2022. In most years (unlike 2023), the Medicare Part B premium rises. Medicare Part B enrollees will pay the standard $164.90 Part B premium amount in 2023 unless:

You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount.)
Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount. If so, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
You are protected by the "hold harmless" rule discussed above.

Since 2007, a beneficiary’s Part B monthly premium is based on his or her income. These income-related monthly adjustment amounts affect less than 10 percent of people with Medicare Part B. The 2023 Part B premiums based on MAGI from the 2021 tax return are shown in the following table:

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	2023 Part B premium not held harmless	Premium level
Less than or equal to $97,000	Less than or equal to $194,000	$164.90	Standard
Greater than $97,000 and less than or equal to $123,000	Greater than $194,000 and less than or equal to $246,000	$230.80	1.4 x standard
Greater than $123,000 and less than or equal to $153,000	Greater than $246,000 and less than or equal to $306,000	$329.70	2.0 x standard
Greater than $153,000 and less than or equal to $183,000	Greater than $306,000 and less than or equal to $366,000	$428.60	2.6 x standard
Greater than $183,000 and less than $500,000	Greater than $366,000 and less than $750,000	$527.50	3.2 x standard
Greater than or equal to $500,000	Greater than or equal to $750,000	$560.50	3.4 x standard

Medicare Part B has an annual deductible of $226 in 2023 (down $7 from 2022), then Medicare beneficiaries are responsible for 20% of the Medicare-approved amount for services.

2023 Medicare Part D Premiums

Since 2011, Medicare beneficiaries’ Part D premiums have been based on income. In addition to any Part D plan premium, there is an income-related monthly adjustment amount (IRMAA) impacting less than 10% percent of people with Medicare Part D. Part D premiums vary from plan to plan (note when Part D benefits are included in a Part C Medicare Advantage plan, there may not be any premium). Roughly two-thirds of beneficiaries pay premiums directly to the plan, while the remaining beneficiaries have their premiums deducted from their Social Security benefit checks. Regardless of how a beneficiary pays their Part D premium, the Part D income-related monthly adjustment amounts are deducted from Social Security benefit checks or paid directly to Medicare. The 2023 Part D income-related monthly adjustment amounts for high-income beneficiaries are shown in the following table:

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	2023 Part D base premium*	IRMAA
Less than or equal to $97,000	Less than or equal to $194,000	Plan premium	$0
Greater than $97,000 and less than or equal to $123,000	Greater than $194,000 and less than or equal to $246,000	Plan premium	$12.20
Greater than $123,000 and less than or equal to $153,000	Greater than $246,000 and less than or equal to $306,000	Plan premium	$31.50
Greater than $153,000 and less than or equal to $183,000	Greater than $306,000 and less than or equal to $366,000	Plan premium	$50.70
Greater than $183,000 and less than $500,000	Greater than $366,000 and less than $750,000	Plan premium	$70.00
Greater than or equal to $500,000	Greater than or equal to $750,000	Plan premium	$76.40

* Hold harmless rule does not apply to Medicare Part D premiums for prescription drugs.

New for 2023 -- Immunosuppressive drug benefit

If you only have Medicare because of End Stage Renal Disease (ESRD), your Medicare coverage, including immunosuppressive drug coverage, ends 36 months after a successful kidney transplant. Medicare offers a benefit that helps you pay for your immunosuppressive drugs if you don't have certain types of other health coverage (like a group health plan, TRICARE, or Medicaid that covers immunosuppressive drugs). This new benefit only covers your immunosuppressive drugs and no other items or services. It isn’t a substitute for full health coverage. You can sign up for this benefit anytime as long as you had Medicare because of ESRD at the time of your kidney transplant. To sign up, call Social Security at 1-800-772-1213. TTY users can call 1-800-325-0788.

Note: You’ll pay a monthly premium of $97.10 (or higher based on your income) and $226 deductible for this benefit in 2023. Once you've met the deductible, you'll pay 20% of the Medicare-approved amount for immunosuppressive drugs. If you have limited income and resources, you may be able to get help from your state to pay for this benefit.

Until next time,

Andrew Herman

Medicare Annual Enrollment Period (AEP) Starts Today With Some Impact From Inflation Reduction Act

2022-10-15T15:46:00.004-04:00

Medicare Annual Enrollment Period explained

The Medicare Annual Enrollment Period – AEP for short – is a set time each year during which Medicare beneficiaries can make new coverage choices. AEP runs from October 15th - December 7th, with new coverage effective on January 1st.

The actions you can take during AEP depend on your current coverage:

I. If you currently have Original Medicare (Parts A & B), you can:

• Join a Medicare Advantage plan (Part C) with or without built-in drug coverage. You may be charged a late enrollment penalty if you do not currently have other creditable drug coverage.

• Join a stand-alone Medicare prescription drug plan (Part D). A penalty may apply here as well if you do not currently have other creditable drug coverage.

• Make no changes and your current coverage will renew as is (unless there is a Plan Termination, which does not occur frequently).

II. If you currently have Original Medicare (Part A and/or Part B) and a stand-alone Medicare prescription drug plan (Part D), you can:

• Join a Medicare Advantage plan (Part C) with or without built-in drug coverage.

• Switch from your current Medicare prescription drug plan to another Medicare prescription drug plan.

• Drop Medicare prescription drug coverage completely. You may be charged a penalty if you decide to re-enroll in drug coverage later.

• Make no changes and your current coverage will renew as is.

III. If you currently have a Medicare Advantage plan (Part C) with built-in drug coverage, you can:

• Switch from your current Medicare Advantage plan to another Medicare Advantage plan with or without built-in drug coverage.

• Drop your Medicare Advantage plan and go back to Original Medicare.

• Join a stand-alone Medicare prescription drug plan if you go back to Original Medicare or if you switch to a Medicare Advantage plan that does not include drug coverage.

• Drop Medicare prescription drug coverage completely. You may be charged a penalty if you decide to re-enroll in drug coverage later.

• Make no changes and your current coverage will renew as is.

IV. If you currently have a Medicare Advantage plan (Part C) and a stand-alone Medicare prescription drug plan (Part D), you can:

• Switch from your current Medicare Advantage plan to another Medicare Advantage plan with or without built-in drug coverage.

• Switch from your current Medicare prescription drug plan to another Medicare prescription drug plan.

• Drop your Medicare Advantage plan and go back to Original Medicare.

• Drop Medicare prescription drug coverage completely. You may be charged a penalty if you decide to re-enroll in drug coverage later.

• Make no changes and your current coverage will renew as is.

Inflation Reduction Act Impacts - Part D Cost-Sharing Updates and New SEP

Effective January 1, 2023, the Inflation Reduction Act (IRA) will be in effect for all Medicare beneficiaries. The IRA was introduced in October this year and provides cost-share reductions to assist Medicare beneficiaries with their Part D drug expenses. The following updates will be reflected for Plan Year 2023:

Covered insulins will be capped at $35 per fill for a 30-day supply.
Part D vaccines (flu, shingles, pneumonia, COVID-19 etc.) will be $0.

Cost-Share Reduction Information on the Medicare Plan Finder

Prior to October 1, 2022, the Medicare Plan Finder reflected insulin and vaccine benefits as they were submitted in the 2023 bids made by Plan Sponsors. Since the formulary submissions to CMS prior to the IRA being instated did not reflect the requirements highlighted above, some Part D coverage may not be accurately reflected on the Medicare Plan Finder. CMS is in the process of making updates to include new insulin and vaccine drug footnotes and other help features to explain the benefit changes resulting from the IRA.

New Special Enrollment Period (SEP)

Due to the inaccuracies in the Medicare Plan Finder, CMS is granting a Special Enrollment Period (SEP) for Exceptional Circumstances to allow members to add, drop, or change their Part D coverage if they find a better option after the 2022 Annual Enrollment Period (AEP) through the end of 2023. This SEP will be available for all beneficiaries who use a covered insulin product and begins on December 8, 2022 and ends on December 31, 2023. Beneficiaries may use this SEP one time during this period. To utilize this SEP, beneficiaries must call 1-800-MEDICARE so a customer service representative can process the enrollment change.

Until next time,

Andrew Herman

Affordability of Employer Coverage for Family Members of Employees

2022-10-14T20:03:00.000-04:00

Earlier this week, the Internal Revenue Service released a final rule changing the way health insurance affordability is determined for members of an employee’s family under Affordable Care Act (ACA) regulations.

As discussed in the prior post, need-based calculations to determine eligibility for the federal ACA program and its subsidies consider only the employee, ignoring the spouse and children. In many cases, an employer pays all or a portion of the employee's premium but nothing towards other members of the household. In this case, ACA calculations determine that subsidized insurance is not available since the employer's health insurance is deemed "affordable" for the employee; but in fact, the family premium is prohibitively expensive and would be deemed unaffordable if the ACA need-based calculations included family members.

Under the new rules that begin in 2023, if a consumer has an offer of employer-sponsored coverage that extends to the employee’s family, the affordability of that offer of coverage for the family members will be based on the family premium amount, not the amount the employee must pay for self-only coverage.

This is a long-awaited solution to the "family glitch", which has been an issue since the ACA program's inception. The change will be reflected in the online application through the HealthCare.gov enrollment platform and Enhanced Direct Enrollment certified partner applications during this year’s Open enrollment period that starts on November 1, 2022. State-based Marketplaces not using the HealthCare.gov enrollment platform are also working to implement this change, but may have different implementation timelines.

To view the final rule, please visit:

"https://www.federalregister.gov/documents/2022/10/13/2022-22184/affordability-of-employer-coverage-for-family-members-of-employees"

A Proposed Solution for the Affordable Care Act (ACA) Family Glitch

2022-06-04T12:07:00.000-04:00

In April, the Biden administration proposed a solution to the ACA's "family glitch", a technical issue that has impacted family health premium subsidies since the program's inception.

Currently, people who are without access to "affordable" health insurance through a job may qualify for a premium tax credit to be applied towards a plan on the ACA’s health insurance marketplaces. However, regulations that determine if employer-based insurance is affordable give consideration only to the employee, without any need-based calculations allowed for spouse or children.

In the current situation, family members of the employee may have access to coverage through the employer, but the cost is often prohibitively expensive and out of reach for the household budget. The so-called "family glitch" affects about five million people and has made it impossible for many families to use the premium tax credit to purchase an affordable ACA marketplace plan.

Should the proposed rule be finalized, family members of workers with affordable self-only coverage but unaffordable family coverage may qualify for premium tax credits to buy an ACA plan, according to a statement from the White House. The proposed rule would extend marketplace tax credits to only the family members of workers who are not offered affordable job-based family coverage.

"Most people thought it would be up to Congress to remedy the family glitch. But since getting modifications through Congress has proved nearly impossible, advocates have pushed for executive action,” said Julie Rovner of Kaiser Health News. “That is not as foolproof as passing a law and is subject to a challenge through lawsuits."

It is not uncommon where employee-only coverage is affordable but family coverage is not. Most employers offer family coverage, but many do not subsidize the cost for family members of the employee. The Kaiser Family Foundation’s 2021 Employer Health Benefits Survey shows premiums and employee contributions have increased significantly. In 2021, average premiums for employee-only coverage were $7,739, compared to $22,221 for family coverage. That's nearly $2,000/month!

The IRS will hold a hearing on the proposed rule on June 27. Assuming the rule is finalized as proposed, the family glitch would no longer exist, and dependents offered unaffordable job-based family coverage could be eligible for more affordable marketplace coverage beginning in 2023.

Click here for the Fact Sheet distributed by the Biden Administration.

Until next time,

Andrew Herman

CMS Announces 2022 Medicare Parts A & B Premiums and Deductibles

2021-11-15T19:35:00.001-05:00

On November 12, the Centers for Medicare & Medicaid Services (CMS) released the 2022 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs, as well as the 2022 Medicare Part D income-related monthly adjustment amounts.

Medicare Part B Deductible Increase

The annual Medicare Part B deductible increases to $233 in 2022, an increase of $30 from the $203 deductible level applicable in 2021. Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.

Medicare Part B Premium Increase

Each year the Medicare Part B premium is set according to the Social Security Act. The standard monthly premium for most Medicare Part B enrollees will be $170.10 for 2022, an increase of $21.60 from the $148.50 monthly premium applicable in 2021.

According to CMS the nearly 15% increase to the Medicare Part B premium and deductible levels are due to the following factors:

Rising prices and utilization across the health care system that drive higher premiums year-over-year alongside anticipated increases in the intensity of care provided.

Congressional action to significantly lower the increase in the 2021 Medicare Part B premium, which resulted in the $3.00 per beneficiary per month increase in the Medicare Part B premium (that would have ended in 2021) being continued through 2025.

Additional contingency reserves due to the uncertainty regarding the potential use of the Alzheimer’s drug, Aduhelm™, by people with Medicare. In July 2021, CMS began a National Coverage Determination analysis process to determine whether and how Medicare will cover Aduhelm™ and similar drugs used to treat Alzheimer’s disease. As that process is still underway, there is uncertainty regarding the coverage and use of such drugs by Medicare beneficiaries in 2022. While the outcome of the coverage determination is unknown, our projection in no way implies what the coverage determination will be, however, we must plan for the possibility of coverage for this high cost Alzheimer’s drug which could, if covered, result in significantly higher expenditures for the Medicare program.

CMS said the rise in Social Security benefits, which most of the 62 million people on Medicare, who are mostly 65 and older, collect will cover the expenses, as there is expected to be a 5.9% bump in 2022 monthly payments due to cost-of-living adjustment the agency said, the largest in 30 years.

"This significant COLA increase will more than cover the increase in the Medicare Part B monthly premium," CMS said. "Most people with Medicare will see a significant net increase in Social Security benefits. For example, a retired worker who currently receives $1,565 per month from Social Security can expect to receive a net increase of $70.40 more per month after the Medicare Part B premium is deducted."

The cost-of-living adjustment goes into effect in January and is estimated to average $71.40 per recipient.

Click here for the November 12th Fact Sheet published by CMS.

Until next time,

Andrew Herman

2021 Guide to choosing a Medigap policy has been published by CMS

2021-07-14T17:40:00.000-04:00

The official 2021 Guide to choosing a Medigap Policy has been published by the Centers for Medicare and Medicaid Services (CMS). This important guide covers topics such as:

What is a Medicare Supplement Insurance (Medigap) policy
What Medigap policies cover
Your rights to buy a Medigap policy
How to buy a Medigap policy

A Medigap policy is private health insurance that wraps around the Original Medicare Program (Parts A and B) by filling in gaps that otherwise would result in out-of-pocket costs. This means Medigap will pay some of the costs that Original Medicare doesn't cover, such as copayments, coinsurance and deductibles. During the six months that follows a Medicare Beneficiary's enrollment in Medicare Part B, Medigap can be purchased on a guaranteed issue basis regardless of health status. After the six months pass, insurance companies are allowed by law to decline or rate applicants due to health status.

Medigap plans, or Medicare Supplements, are known by their "plan letter name" such as Plan G or Plan N. Consumers who purchase Medigap typically also buy a Stand-alone Medicare Part D Prescription Drug Plan (PDP), since Medigap policies do not include any drug coverage.

Medigap is entirely different from Medicare Advantage (also known as Medicare Part C), which is a program that delivers both Medicare health and drug benefits through a private insurance company on a year-to-year basis. Medicare Advantage plans, such as HMOs and PPOs, utilize insurance company networks and often require additional authorization for care access that is not required under Medigap policies. There is an Annual Election Period (AEP) for Medicare Advantage that runs from October 15th to December 7th; during this period a plan change can be made for the next January 1st. Medicare Beneficiaries also can disenroll from their Medicare Advantage plan during the AEP, and purchase a Medigap policy (as long as they meet the health eligibility requirements to buy a policy).

Click Here To Download the 2021 Choosing a Medigap Policy Guide

Until next time,

Andrew Herman
AH Insurance Services, Inc.

Federal Long-Term Care WISH Act Introduced in U.S. House of Representatives

2021-07-01T21:15:00.000-04:00

Earlier this week, U.S. Representative Thomas Suozzi introduced the WISH Act (H.R. 4289) to create a public catastrophic Long-Term Care Insurance program funded by a new payroll tax. The acronym stands for "Well-Being Insurance for Seniors to be at Home Act" (click here to read H.R. 4289).

The program is to be financed by a payroll tax of 0.3 percent for workers and 0.3 percent for employers; and it would pay out a monthly cash benefit of about $3,600 (indexed to inflation). This amount is estimated to pay for about six hours of in-home care daily. Family members would not be eligible to receive payment; and the individual entitled to the benefit must comply with State and Federal laws relating to minimum wage and withholding of payroll taxes and other employment-related taxes.

The following chart shows how 2021 payroll taxes would be increased by this new program:

Including the proposed Long-Term Care (LTC) Tax, W-2 employees would pay total payroll taxes of 7.95% with self-employed workers paying 15.9% (employee plus employer portion).

The WISH Act conditions benefit eligibility on reaching full Social Security retirement age, and having a severe cognitive impairment or needing assistance in at least two activities of daily living (ADLs). Full benefits would be paid to those who contributed to the program for at least 10 years (people would be eligible for partial benefits once they paid into the system for six quarters).

The program proposes to pay benefits after an enrollee required a high level of care for a varying amount of time based on a beneficiary’s average indexed earnings. Those with the lowest incomes could receive benefits after one year; a median income worker would be eligible after twenty months; and the highest income workers would begin to receive benefits after five years.

Funding for the WISH Act is not limited to the LTC Tax noted above. In addition, there is appropriated to the Federal Long-Term Care Trust Fund out of moneys in the Treasury: $12,000,000 for program establishment in each of Fiscal Years 2022-2024; and another $50,000,000 for educating the public.

An immediate question that comes to mind is whether it would be allowed to opt out of the federal program, for instance if a taxpayer already owns private Long-Term Care Insurance. It should be noted that an opt out provision was included in a Washington State program passed into law earlier this year.

The new Washington State Long-Term Care program mandates public Long-Term Care benefits for Washington residents. The Long-Term Care Act was created to reduce pressure on the Medicaid system and is paid for by 0.58% tax on employee wages. Under current law, residents have one opportunity to opt out of this tax by having private Long-Term Care Insurance in place by November 1st, 2021.

The WISH Act's sponsor said he is hopeful the program also will have an effect on the private Long-Term Care Insurance market, increasing opportunities for insurance companies and their agents to offer Long-Term Care Insurance to supplement the federal program. That just may be WISH-ful thinking.

Until next time,

Andrew Herman, President

U.S. Supreme Court Upholds Affordable Care Act in 7-2 Ruling

2021-06-17T18:04:00.014-04:00

Once again, the nation's highest court has upheld the Affordable Care Act (ACA) in a 7-2 ruling dismissing a challenge made to the ACA in the suit Texas v. United States. That suit, which had the potential to invalidate the entire law, was turned away by today's majority ruling in California v. Texas. This marks the third time the U.S. Supreme Court has ruled in favor of the ACA.

Today's ruling found that the plaintiffs did not have a legal right to bring the case before the Court. The opinion held that plaintiffs in the challenge “failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional.” The opinion did not speak to the underlying issue of the mandate’s constitutionality.

Justice Stephen Breyer delivered the court’s opinion, with Justices Samuel Alito and Neil Gorsuch dissenting. Writing for the court, Justice Stephen Breyer said the states and people who filed the latest suit lacked legal standing to go to court. Breyer said they could not show they were injured by the now-toothless mandate, as required under the Constitution.

The prior mandate, arguably the most controversial aspect of the ACA law, was a federally imposed tax penalty for not being enrolled in health insurance. It was eliminated in 2019 by actions taken under the Trump Administration. The penalty amount for not having health insurance in 2018 was $695 for adults and $347.50 for children, or 2% of yearly income, whichever amount is more.

Breyer noted, “To find standing here to attack an unenforceable statutory provision would allow a federal court to issue what would amount to an advisory opinion without the possibility of any judicial relief."

Justices Samuel Alito and Neil Gorsuch dissented, indicating they would have let the suit go forward and continue to support dismantling most of the ACA.

In his dissent, Alito wrote “No one can fail to be impressed by the lengths to which this court has been willing to go to defend the ACA against all threats." Alito was in dissent in both previous ACA cases.

In a concurring opinion, Justice Clarence Thomas said he agreed with Alito’s analysis of the previous cases, but agreed with the majority that the latest challengers lacked the right to sue. “Although this court has erred twice before in cases involving the Affordable Care Act, it does not err today,” Thomas wrote.

Today’s ruling leaves the entire ACA intact. The case is California v. Texas, 19-840.

Until next time,

Andrew Herman

Investing in Fixed Annuities for Safety, Accumulation, and Tax Advantages

2021-06-14T13:24:00.000-04:00

While they are best known for providing guaranteed income during retirement, Fixed Annuities can be purposed for tax deferred accumulation. They are designed to protect your principal from downside loss and can be funded from after-tax money or pre-tax accounts such as IRAs and 401Ks. Additionally, distributions made for Qualified Long-Term Care expenses are entirely tax-free.

Are Annuity products a safe investment?

Not all Annuities are equal when it comes to protecting your principal from investment loss.

Variable Annuities are the least safe, as contract funds typically are invested directly into equities and other assets that can fluctuate widely in value. Variable Annuities offer a potentially rewarding upside, but their suitability is limited to investors who can tolerate the risk of losing their invested principal.

Investors seeking growth and safety of principal have better options with Fixed Deferred Annuities. Two popular products are Multi-Year Guaranteed Annuities (MYGAs) and Fixed Indexed Annuities (FIAs).

MYGAs offer a contractually guaranteed interest rate for a fixed period, such as three years or five years. Interest earnings grow fully tax-deferred when no distributions are made (when money is withdrawn, gains are taxed first prior to return of principal). “Surrender Charges”, or fees, generally apply for early termination; however, most MYGAs allow penalty-free withdrawals during the guarantee period. Such withdrawals may be limited to certain thresholds such as: 10% of account value each year, accumulated interest earned, Required Minimum Distributions (RMDs on Qualified Annuities), or other terms as specified in the Annuity contract.

When choosing a MYGA product, it is important to review all contract guarantees and terms including how funds are disbursed if the Annuitant (person insured by the Annuity) dies before the end of the accumulation period. Some MYGAs pay a death benefit equal to the full account value without any surrender penalty.

When the guarantee period ends, consumer-friendly tax laws allow accumulated funds to be rolled over without tax consequence into a new Annuity contract (this is known as a 1035 exchange). The customer has other options as well, such as annuitizing the payout over a specified number of years (or for lifetime) or receiving a lump sum payment. As noted above, distributions are taxed first on gains. In the case of a Qualified Annuity, or IRA-type account, the entire distribution is taxable since none of the contract funds had been taxed previously.

FIAs, like MYGAs, are Fixed Annuity contracts that accumulate interest on a tax-deferred basis; and they often are designed for a longer time horizon compared to MYGAs. The main difference, though, is that FIA contracts base investment returns on the performance of a selected Index such as S&P 500. Unlike direct investment in equity or bond markets, FIAs generally are protected against investment losses. In exchange, only a portion of Index growth is credited to the Annuity contract when the Index increases in value. Index measurement for interest crediting purposes often is on a one-year point-to-point basis with an annual reset for the next year.

When purchasing an FIA, it is important to review all terms including contractual surrender charges, availability of penalty-free withdrawals, the portion of Index gain credited to the contract, guarantees regarding annuitization (payout) of funds in the future, and how the death benefit is calculated.

FIAs are especially attractive in times of a mature bull market, since history shows market corrections occur and the downward trend usually is short-lived. For example, consider an investor with $100,000 who purchases an FIA contract participating in a stock Index, and with downside protection, rather than investing directly in the Index itself. If the underlying Index were to drop 20% in the following year, the FIA contract value is still $100,000 and has not suffered any of the 20% market loss which could take years to recoup.

Investing in a MYGA vs. FIA Contract

Purchasing a MYGA contract makes the most sense when there is a shorter timeline for needing access to funds and/or the investor wants to know exactly how the investment will grow. MYGAs can be compared to Bank Certificates of Deposit (CDs), which operate similarly in that an interest rate is guaranteed for a specified period. Currently, MYGAs are available with much higher credited rates compared to Bank CDs; and, as noted earlier, Annuity contracts grow on a tax deferred basis unlike most investments including Bank CDs.

Purchasing an FIA contract is most suitable when the investor has a longer time horizon and would like some exposure to market upside but without risk of losing principal. The long-run return on FIAs tends to be higher than investments in MYGAs; and there is no need to worry about a steep market loss during the contract period.

Annuity Tax Advantages

Annuities can be purchased with non-qualified or tax-qualified funds. With Non-Qualified Annuities, the amount invested comes from after-tax money; and only investment gains are taxed when money is withdrawn. With Qualified Annuities -- like traditional IRAs -- the entire amount of money withdrawn is subject to taxation as the investment was funded initially with pre-tax dollars.

Tax deferral inherent in both Non-Qualified and Qualified Annuity products helps to accelerate asset accumulation through “Triple-Compounding”, which includes earning interest on the principal, interest on the interest, and interest on what would have been paid to taxes.

Distributions from an Annuity during the accumulation phase are taxed on what is known as a last in, first out (LIFO) basis. This means withdrawals from an Annuity are made on earnings (gains) first, and the owner is taxed at regular income rates on the payments until all earnings have been distributed.

It should be noted that for people under the age 59 ½, withdrawals from an Annuity may be assessed a 10% penalty applicable to the taxable portion of the withdrawal.

Annuity Tax Advantages for Qualified Long Term Care Expenses

Fixed Annuities also can be purposed to protect against the high cost of Long-Term Care services. One well-known product is a “Hybrid” Annuity/Long-Term Care Insurance policy, which can be funded with a single premium that buys a base policy plus a continuation of benefits rider to pay Long-Term Care expenses for additional time if the base funds are exhausted. Limited health underwriting applies, so applicants who are not in good health may not be eligible to purchase a Hybrid product.

With Hybrid Annuities, distributions for Long-Term Care services are not subjected to a surrender penalty and are income tax free. This would not be the case if paying for these costs from IRA or 401(K) assets.

Non-Underwritten Fixed Indexed Annuities with a “Boost” benefit for Long-Term Care

Insurance carriers also have begun offering non-underwritten Fixed Indexed Annuities featuring a “Boost” to income payout amounts when the annuitant cannot perform Activities of Daily Living (ADLs) or has cognitive impairment. Here is an example of one company’s product design:

Wellness Withdrawals can be triggered if you or your spouse cannot perform at least two of six Activities of Daily Living. These withdrawals serve to double your guaranteed monthly payout and are available for up to five 5 consecutive policy years.
Investment performance with the Annuity can be tied to the Barclays Atlas global diversified index, as well as S&P 500 (funds can be allocated in any proportion between the two).
Penalty-free withdrawals can be taken for any reason up to 5% of the account value each year beginning on the first policy anniversary.

Summary

All Fixed Annuities offer safety of principal, tax-deferred growth, and innovative product designs not available with most other investments. With Fixed Indexed Annuities, investors can participate in the upside of equity markets while avoiding the risk of losing invested principal.

SECURE Act Impact on U.S. Retirement System

2021-04-05T20:26:00.001-04:00

The Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect on January 1, 2020 and makes a notable impact on our nation's retirement system. Three important changes are outlined below:

1) The new age for RMDs is now 72

Under the SECURE Act, the "begin date" to start taking RMDs from your pretax retirement plan accounts and IRAs is the year you turn 72 (the previous age was 70½).

2) Age limits for contributing to traditional IRAs are eliminated

For tax year 2020 and beyond, the law removes the age limit at which you can contribute to a traditional IRA. Prior to this change, you could not make a traditional IRA contribution after age 70½ (although you can contribute to a Roth IRA if you meet the income limitations). The new law allows anyone who is working and has earned income to contribute to a traditional IRA regardless of age.

3) Non-Spouse beneficiaries who inherit a retirement account must withdraw the entire balance within 10 years

Under prior rules, beneficiaries could elect a "stretch IRA" planning strategy which allowed non-spouse heirs inheriting a pretax retirement plan or IRA to stretch withdrawals over their life expectancy. That meant younger heirs could potentially leave much of that money growing tax-deferred for decades.

Now, non-spouse heirs must empty inherited accounts within 10 years following the year of the owner's death. Heirs who remain under the old rules include spouses; the disabled or chronically ill; minor children (not grandchildren) generally until the age of 18, and beneficiaries who are not more than 10 years younger than the deceased. The prior rules apply if you inherited an account before 2020.

Until next time,

Andrew Herman

Shedding Light on Medicare Part D – Why pharmacy copays may not match to published plan copays; and why actual out-of-pocket differs from the Medicare TrOOP (True Out-Of-Pocket)

2020-12-05T12:06:00.002-05:00

Medicare’s prescription drug benefit is known as Part D and is provided by private insurers. Medicare Part D was signed into law as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003; and it can be purchased stand-alone or integrated with a Medicare Advantage plan (also known as Medicare Part C). Medicare Part D has distinct coverage phases, including a Coverage Gap (or “Donut Hole”) that has been vastly improved for consumers under more recent legislation.

As of 2020, enrollees with Standard Part D coverage and in the Donut Hole pay 25% of the cost of their drugs until they reach the Catastrophic Coverage phase (as opposed to paying the full cost while in the Donut Hole, which had been the case before the Affordable Care Act started closing the gap).

For background, Medicare Part D plans may impose an Initial Deductible up to $445 in 2021 (an increase of $10 from 2020). The deductible is the amount you must pay before the plan begins to share in costs. Some plans (generally with higher monthly premiums) do not impose any deductible; and it is common for Part D plans to feature a plan deductible, but only apply it to medicines classified in the plan’s higher Drug Tiers (Part D plan sponsors typically assign medicines into five Tier levels).

Once the Initial Deductible is met, consumers are charged copays or coinsurance as published in each Part D plan’s Summary of Benefits. Copay amounts may vary based on the plan’s pharmacy network (preferred vs. standard, or mail order service), as well as Drug Tier level. Consumers sometimes inquire, why doesn’t my copay at the pharmacy match to the amount shown in my plan’s Summary of Benefits document? Answer: If the pharmacy drug cost is lower, you pay the lower amount.

The standard Medicare Part D plan structure also includes an element called the Initial Coverage Limit, or ICL, which is $4,130 in 2021 (an increase of $110 from the 2020 ICL of $4,020). The ICL marks the point where you enter the Donut Hole. More specifically, you enter the Donut Hole when the total negotiated retail value of your covered annual prescription drugs exceeds your plan’s ICL. At the inception of the Medicare Part D program, consumers generally bore all costs in the Donut Hole.

So, will you enter the 2021 Donut Hole?

If your prescribed medications for 2021 have a retail value exceeding $350/month, you are likely to enter the Donut Hole during 2021. Generally, less than one-quarter of Medicare beneficiaries with Part D coverage enter the Donut Hole each year. Consumers sometimes avoid entering it by seeking out lower cost options (such as pharmacy coupons) instead of using their plan for certain drugs.

If you reach the Donut Hole phase of your 2021 Part D coverage, the drug discount is 75%.

While in the Donut Hole, generic formulary drug costs are 25% of your plan's negotiated retail prices. For example, if you are in the 2021 Donut Hole and your generic medication has a retail cost of $100, the Standard Part D plan benefit requires you to pay $25 for a refill. And the $25 that you spend for a covered formulary drug counts toward your 2021 out-of-pocket limit (or TrOOP, explained below).

While in the Donut Hole, the 2021 brand-name drug discount also is 75%, meaning that you pay 25% of your plan’s negotiated brand drug retail costs. The pharmaceutical industry pays for 70% of the cost of these medications in the Donut Hole; and you receive credit for 95% of the retail drug cost toward meeting your 2021 TrOOP (the 25% of retail costs you pay plus the 70% drug manufacturer discount).

For example, if you reach the 2021 Donut Hole and purchase a brand name medication with a retail cost of $100, you will pay $25 for the formulary medication, and receive $95 credit toward meeting your 2021 TrOOP (which is the Donut Hole exit point).

So, what exactly is “TrOOP” and is it the same as my actual out-of-pocket drug costs?

There is not a short answer to this question, so please read on!

TrOOP is the Medicare Part D program’s annual "Total out-of-pocket costs" and is known as "True out-of-pocket costs".

In general, TrOOP includes all payments for medications listed on your Part D plan's formulary and purchased through a preferred or standard network pharmacy. Both the payments you make, and payments that Pharma companies make on your behalf, count towards TrOOP. If you switch Medicare Part D plans during a plan year, your TrOOP will be transferred to your new plan (it travels with you).

TrOOP is important because after it reaches $6,550 in 2021 (an increase of $200 from the 2020 level), you move to the final state of your Medicare Part D coverage, known as Catastrophic Coverage. In the Catastrophic Coverage stage, your medication costs are reduced to $3.70 for generics or $9.20 for brand-name drugs (or 5% of the drug cost - whichever is greater).

The components of TrOOP are as follows: it includes the amount of your Initial Deductible (if any) and your co-payments or co-insurance during the ICL phase; and as noted above it includes what you pay and a portion of what the Pharma companies pay while you are in the Donut Hole (of the 75% Donut Hole discount on brand-name drugs, 70% of that counts towards TrOOP as that portion is paid by the drug manufacturer). The additional 5% Donut Hole discount on brand-name drugs and the 75% Donut Hole discount on generics do not count toward TrOOP, as they are paid by your Medicare Part D plan.

TrOOP also includes payments made for your drugs by any of the following programs or organizations: "Extra Help" from Medicare; Indian Health Service; AIDS drug assistance programs; most charities; and most State Pharmaceutical Assistance Programs (SPAPs).

TrOOP does not include monthly premiums or non-formulary drug purchases.

Because TrOOP includes the lion’s share of what drug manufacturer’s pay on your behalf for brand-name drugs while in the Donut Hole, your actual out-of-pocket costs at time of Donut Hole exit likely will be much lower.

Will you exit the Donut Hole and enter the 2021 Catastrophic Coverage phase?

Based on CMS drug cost estimates, if your monthly retail formulary drug costs approach $850, you are likely to exit the 2021 Donut Hole and enter Catastrophic Coverage.

Medicare Part D plan sponsors can offer the Standard Part D plan design, or a design under which the measured actuarial value equals or exceeds the actuarial value of Standard Part D coverage. Actuarial equivalence is a required test to confirm that expected paid claims under the plan sponsor's prescription drug coverage are at least as much as expected paid claims under the standard design. Plans sponsors with multiple benefit options must apply the actuarial value test for each option.

Until next time,

Andrew Herman

2021 Medicare Part B Premiums Increase by $3.90/Month

2020-11-08T18:36:00.002-05:00

On November 6th, The Centers for Medicare & Medicaid Services (CMS) announced the 2021 monthly Medicare Parts A and B premiums, deductibles, and coinsurance amounts.

Medicare Part B Premiums/Deductibles

The standard monthly premium for Medicare Part B enrollees will increase from $144.60 in 2020 to $148.50 in 2021, an increase of $3.90 per month. Recent legislation signed by President Donald Trump significantly dampens the 2021 Medicare Part B premium increase that would have occurred given the estimated growth in Medicare spending next year. According to CMS, Medicare spending is estimated to grow due to people seeking care they may have delayed during the COVID-19 public health emergency, availability of more COVID-19 treatments, and availability of COVID-19 vaccines.

CMS also announced that the annual deductible for Medicare Part B enrollees will increase from $198 in 2020 to $203 in 2021, an increase of $5. The additional $5 in 2021 will be borne by enrollees as an out-of-pocket expense under all Medicare Supplement Insurance plans (also known as 'Medigap') available to newly eligible Medicare beneficiaries.

Medicare Part A Premiums/Deductibles

Medicare Part A covers inpatient hospital, skilled nursing facility, and some home health care services. About 99 percent of Medicare beneficiaries do not pay a Part A premium since they have at least 40 quarters of Medicare-covered employment.

The Medicare Part A inpatient deductible that beneficiaries will pay when admitted to the hospital is $1,484 in 2021, an increase of $76 from $1,408 in 2020. Medigap plans automatically adjust benefits in 2021 so that the higher inpatient deductible is covered.

Medicare Annual Election Period (10/15 - 12/7)

Medicare beneficiaries can choose to enroll in fee-for-service Original Medicare (Parts A and B) or can select a private Medicare Advantage plan to receive their Medicare benefits. Premiums and deductibles for Medicare Advantage and Medicare Prescription Drug plans (Medicare Part D) are already finalized and are unaffected by this announcement.

During the ongoing Medicare Annual Election Period, which began on October 15th and ends on December 7th, Medicare beneficiaries can compare coverage options like Original Medicare (Part A and Part B) and Medicare Advantage, and choose health and prescription drug plans for 2021. Medicare health and drug plan costs and covered benefits can change from year-to-year. Over the past three years, CMS has redesigned its useful Medicare Plan Finder so that Medicare beneficiaries may:

Compare pricing between Original Medicare, Medicare Advantage plans, Medicare prescription drug plans (Medicare Part D), and Medigap policies;
Compare coverage options on their smartphones and tablets;
Compare up to three Medicare Part D drug plans or three Medicare Advantage plans side-by-side;
Get plan costs and benefits, including which Medicare Advantage plans offer extra benefits;
Build a personal drug list and find Medicare Part D prescription drug coverage that best meets their needs.

Highlights for 2021 Open Enrollment include:

A 34 percent decrease in average monthly premiums for Medicare Advantage plans since 2017.
More than 4,800 Medicare Advantage plans are offered for 2021, nearly double the offerings in 2017. Similarly, more Medicare Part D plans are available, and the average basic Part D premium has dropped 12 percent since 2017.
Medicare beneficiaries can join a prescription drug plan that will offer many types of insulin at a maximum copayment of $35 for a 30-day supply. More than 1,600 Medicare Advantage and Part D prescription drug plans are participating in the Part D Senior Savings Model for 2021. People who enroll in a participating plan could save up to an estimated $446 a year in out-of-pocket costs on insulin. CMS has added a new “Insulin Savings” filter on Medicare Plan Finder to display plans that will offer the capped out-of-pocket costs for insulin. Beneficiaries can use the Medicare Plan Finder to view plan options and look for a participating plan in their area that covers their insulin at no more than a $35 monthly copay.

At AH Insurance Services Inc., we are available to make it easy for Medicare Beneficiaries to learn more about 2021 plan options. We can help you determine whether a Medicare Advantage plan -- or a Medigap policy plus a Part D plan -- will be most suitable to meet your medical needs. Additionally, we can assist in projecting your 2021 out-of-pocket drug costs based on your current medicine list and preferred pharmacy. There is no obligation to buy.

Contact us at (850) 450-3622 or info@ahinsuranceservices.com.

Until next time,

Andrew Herman

President, AH Insurance Services, Inc.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

2019-12-27T12:58:00.001-05:00

Changes to Medicare Supplement policies (also known as Medigap) go into effect on January 1, 2020, nearly five years after the bipartisan legislation known as MACRA was signed into law.

In addition to creating a Quality Payment Program and removing Social Security numbers from government-issued Medicare cards, MACRA authorized the following changes to Medigap:

Medigap plans are prohibited from providing first dollar coverage of the Medicare Part B deductible for newly eligible Medicare beneficiaries on or after January 1, 2020. Since Medigap Plans C and F traditionally have included coverage for 100% of the Medicare Part B deductible, these two plans no longer will be available to newly eligible beneficiaries.

Newly eligible beneficiaries who will not be able to purchase Medigap Plans C and F include those turning age 65 on or after January 1, 2020 and anyone gaining eligibility for Medicare benefits due to disability or End-Stage Renal Disease on or after January 1, 2020.

Plans C and F are NOT being discontinued. Medicare beneficiaries currently enrolled in either Plan C or Plan F will retain access to their plan; additionally, all beneficiaries who became eligible for Medicare prior to January 1, 2020 still have the option to purchase either plan.

For newly eligible beneficiaries, Plans D and G are available and feature similar health benefits to Plans C and F except for 100% payment of the Medicare Part B Deductible.

Medigap Plan G will now have a “High Deductible” option, since Medigap Plan F has a High Deductible coverage option and can no longer be purchased by newly eligible Medicare beneficiaries. Under the new Plan G High Deductible option, the Medicare Part B deductible is paid by the Medicare beneficiary and counts toward the plan's deductible amount.

Until next time,

Andrew Herman, President

AH Insurance Services, Inc.

2020 Medicare Part B Premium and Deductible Amounts

2019-11-22T21:50:00.004-05:00

The 2020 premium levels and deductible for Medicare Part B, which covers medically-necessary services including doctors' services and tests, outpatient care, home health services and durable medical equipment, have been published by the Centers for Medicare and Medicaid Services (CMS).

Medicare Part B Premium Levels

For most Medicare Beneficiaries, the premium due for Medicare Part B in 2020 will be $144.60 per month. This amount is up $9.10 per month from 2019's $135.50 standard amount.

Beneficiaries with higher than standard annual income have to pay more for their monthly Part B premiums. The table below illustrates how some Beneficiaries will owe as much as $491.60 in monthly premiums in 2020, based on income as reported on their federal tax return for 2018:

For individuals with this income:	Or joint filers with this income:		Monthly premium:
$87,000 to $109,000		$174,000 to $218,000	$202.40
$109,000 to $136,000		$218,000 to $272,000	$289.20
$136,000 to $163,000		$272,000 to $326,000	$376.00
$163,000 to $500,000		$326,000 to $750,000	$462.70
Over $500,000		Over $750,000	$491.60

Medicare Part B Deductible

The Medicare Part B deductible is subject to change each year, and reflects the up-front amount that must be paid in a calendar year under the Original Medicare program before 80/20 co-insurance applies. In 2020, the Medicare Part B deductible will be $198, an increase of $13 from this year's $185 Part B deductible. Medicare Beneficiaries enrolled in Medicare Advantage HMOs and PPOs (Part C of Medicare) typically do not pay the Medicare Part B deductible directly; rather Part C plan members pay co-pays and other out-of-pocket costs according to the specific terms of the plan.

Until next time,

Andrew Herman
President, AH Insurance Services Inc.

Pineapple Placements – Gulf Coast Business Providing FREE Senior Living Referrals

2019-04-25T20:55:00.001-04:00

We are pleased to recommend Pineapple Placements, a trusted local Senior Living Referral Company for Independent Living, Assisted Living, Alzheimer’s/Dementia Care, Rehab Services, Skilled Nursing Care, Home Health, Hospice and much more. Complimentary services available include:

- Comprehensive Assessment
- Educational meetings to explore senior living options
- Guided tours of local communities
- Helping family members implement the best senior living arrangement for their loved ones

I’ve had the pleasure of meeting with Amber Geier, Senior Living Specialist and President of Pineapple Placements, LLC. She shared her experience of having to place her own loved ones, and how that helped her understand how changing care needs can burden seniors and their family members. In 2018, Amber opened Pineapple Placements with the goal of helping people with effortless transitions. While many clients contact Amber in crisis-management mode, there is no need to wait for that as she is happy to advise families as they plan ahead for future living needs.

If you need senior living advice or placement, help is on the way! Call Amber at 727.360.3715, email to info@pineappleplacements.com or visit https://www.pineappleplacements.com.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

CMS Releases National Health Expenditures Projections for 2018-2027

2019-03-14T12:48:00.000-04:00

Health spending to GDP is expected to increase from 17.9% in 2017 to 19.4% in 2027, as recently announced by the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary. Actual ratios likely are higher than reported since official National Health Expenditures (NHEs) may not include all health spending such as non-prescription vitamins, supplements, Yoga classes, and other health-related expenditures generally not covered under government or private insurance programs.

According to CMS, from 2018 to 2027:

• Total national health spending is projected to grow at an average annual rate of 5.5 percent,
reaching nearly $6.0 trillion by 2027.

• Health spending is projected to grow at a rate of 0.8 percent faster than Gross Domestic
Product (GDP) per year, and the health share of GDP is expected to increase from 17.9 percent
in 2017 to 19.4 percent by 2027.

• Prices for health care goods and services are projected to increase at a rate of 2.5 percent,
compared to 1.1 percent for 2014-2017.

• Average annual spending in Medicare is expected to grow 7.4 percent due to projected
enrollment growth. In comparison, average annual spending in Medicaid is expected to grow at
a rate of 5.5 percent, and in private health insurance at a rate of 4.8 percent.

• The share of health care spending sponsored by federal, state, and local governments is
expected to increase by 2 percent, reaching 47 percent by 2027. This projected increase is
primarily due to expected growth in Medicare enrollment.

• The share of individuals with health insurance coverage is expected to remain stable, at around
90 percent.

The Office of the Actuary in the Centers for Medicare & Medicaid Services annually produces projections of health care spending for categories within the National Health Expenditure Accounts, which track health spending by source of funds (for example, private health insurance, Medicare, Medicaid), by type of service (hospital, physician, prescription drugs, etc.), and by sponsor (businesses, households, governments).

Click on this web page to retrieve the official 2018-2027 NHE Projections.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

U.S. District Court Rules ACA Unconstitutional

2018-12-17T21:00:00.001-05:00

A federal judge for the U.S. District Court for the Northern District of Texas has ruled in favor of a lawsuit filed by his state and 19 others which claimed that Congress’ recent repeal of the ACA’s tax penalty has undone the rationale of the Supreme Court’s 2012 decision that the law is constitutional.

U.S. District Court Judge Reed O'Connor issued a decision on December 14 in Texas v. Azar declaring the individual mandate for health insurance coverage unconstitutional and ruling further that the mandate cannot be severed from the rest of the ACA, rendering the entire law invalid.

The original lawsuit by the states was filed against the U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS). Its claim against the ACA’s constitutionality rests upon the U.S. Supreme Court ruling that the individual mandate was constitutional under the powers of taxation held by Congress; however, elimination of the individual mandate’s enforcement mechanism in last year's Tax Cuts and Jobs Act did not actually eliminate the mandate. Rather, it simply dropped the tax penalty for not having qualifying health insurance to $0 beginning in 2019.

Therefore, the lawsuit argued that the individual mandate has been retained and rendered unconstitutional, as it no longer exercises Congress’ powers of taxation. Judge O'Connor agreed with the lawsuit’s plaintiffs and issued partial summary judgement in their favor; although he did not order an injunction against the ACA as requested in the lawsuit.

Following the December 14 ruling, HHS stated it “will continue administering and enforcing all aspects of the ACA as it had before the court issued its decision.” The ruling is expected to be appealed by various state attorneys general and possibly will end up back at the Supreme Court.

2019 Medicare Parts A & B Premiums and Deductibles

2018-10-13T18:54:00.000-04:00

Source for this blog post is the CMS.gov website:

https://www.cms.gov/newsroom/fact-sheets/2019-medicare-parts-b-premiums-and-deductibles

Yesterday, the Centers for Medicare & Medicaid Services (CMS) released the 2019 premiums, deductibles, and coinsurance amounts for the Medicare Part A and B programs.

Medicare Part B Premiums/Deductibles

The standard monthly premium for Medicare Part B enrollees will be $135.50 for 2019, an increase of $1.50 from $134 in 2018. An estimated 2 million Medicare beneficiaries (about 3.5%) will pay less than the full Part B standard monthly premium amount in 2019 due to the statutory hold harmless provision, which limits certain beneficiaries’ increase in their Part B premium to be no greater than the increase in their Social Security benefits. The annual deductible for all Medicare Part B beneficiaries is $185 in 2019, an increase of $2 from the annual deductible $183 in 2018. Premiums and deductibles for Medicare Advantage and Medicare Prescription Drug plans are already finalized and are unaffected by this announcement.

Since 2007, a beneficiary’s Part B monthly premium is based on his or her income. These income-related monthly adjustment amounts (IRMAA) affect roughly 5 percent of people with Medicare Part B. The total premiums for high income beneficiaries for 2019 are shown in the following table:

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	Income-related monthly adjustment amount	Total monthly premium amount
Less than or equal to $85,000	Less than or equal to $170,000	$0.00	$135.50
Greater than $85,000 and less than or equal to $107,000	Greater than $170,000 and less than or equal to $214,000	$54.10	$189.60
Greater than $107,000 and less than or equal to $133,500	Greater than $214,000 and less than or equal to $267,000	$135.40	$270.90
Greater than $133,500 and less than or equal to $160,000	Greater than $267,000 and less than or equal to $320,000	$216.70	$352.20
Greater than $160,000 and less than $500,000	Greater than $320,000 and less than $750,000	$297.90	$433.40
Greater than or equal to $500,000	Greater than or equal to $750,000	$325.00	$460.50

Premiums for high-income beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate return, are as follows:

Beneficiaries who are married and lived with their spouses at any time during the year, but who file separate tax returns from their spouses:	Income-related monthly adjustment amount	Total monthly premium amount
Less than or equal to $85,000	$0.00	$135.50
Greater than $85,000 and less than $415,000	$297.90	$433.40
Greater than or equal to $415,000	$325.00	$460.50

Medicare Part A Premiums/Deductibles

Medicare Part A covers inpatient hospital, skilled nursing facility, and some home health care services. About 99 percent of Medicare beneficiaries do not have a Part A premium since they have at least 40 quarters of Medicare-covered employment.

The Medicare Part A inpatient hospital deductible that beneficiaries will pay when admitted to the hospital will be $1,364 in 2019, an increase of $24 from $1,340 in 2018. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2019, beneficiaries must pay a coinsurance amount of $341 per day for the 61stthrough 90th day of a hospitalization ($335 in 2018) in a benefit period and $682 per day for lifetime reserve days ($670 in 2018). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $170.50 in 2019 ($167.50 in 2018).

Part A Deductible and Coinsurance Amounts for Calendar Years 2018 and 2019 by Type of Cost Sharing
	2018	2019
Inpatient hospital deductible	$1,340	$1,364
Daily coinsurance for 61st-90th Day	335	341
Daily coinsurance for lifetime reserve days	670	682
Skilled Nursing Facility coinsurance	167.50	170.50

Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities pay a monthly premium in order to voluntarily enroll in Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate, which will be $240 in 2019, an $8 increase from 2018. Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $437 a month, a $15 increase from 2018.

Until next time,

Andrew Herman, President

2018 Medicare Update

2018-01-11T12:33:00.000-05:00

The chart below provides a summary of 2018 Medicare premiums, deductibles and co-insurance, along with average increase to monthly Social Security benefits in 2018:

Medicare Part A Premium		Most people do not have to pay a monthly premium for Part A. If you buy Part A, you will pay up to $422 each month ($422/month if you paid Medicare taxes for less than 30 quarters or $232/month if you paid Medicare taxes for 30-39 quarters)
Medicare Part A Inpatient Hospital Deductible and Co-Insurance		$1,340 deductible and no coinsurance for days 1-60 of each benefit period
		Days 1 - 60 co-insurance for each benefit period: $0
		Days 61 - 90 co-insurance per day for each benefit period: $335
		Days 91 and beyond: $670 co-insurance per each "lifetime reserve day" (up to 60 days over your lifetime)

Skilled Nursing Facility		$0 for Days 1 - 20 of each benefit period; then $167.50 per day for Days 21-100 (after Day 100 Medicare beneficiary pays all costs)
Medicare Part B Premium*		Standard Part B premium will be $134 (or higher based on your income). However, some people who receive Social Security benefits will pay less ($130/average)
Medicare Part B Deductible		$183.00
Medicare Part D Benefits		Initial deductible: $405
		Initial coverage limit: $3,750
		Out of pocket threshold (or TrOOP): $5,000
		Coverage gap: begins once you reach your Medicare Part D plan's initial coverage limit ($3,750 in 2018) and ends when you spend a total of $5,000 in 2018.
		In 2018, Part D enrollees will receive a 65% discount on the total cost of their brand-name drugs purchased while in the donut hole. The 50% discount paid by the brand-name drug manufacturer will apply to getting out of the donut hole, however the additional 15% paid by your Medicare Part D plan will not count toward your TrOOP.
		Minimum cost sharing in Catastrophic portion: 5% or $3.35 for generic or preferred drug that is multi-source drug and the greater of 5% or $8.35 for all other drugs.
Average Monthly Social Security Increase		All Retired Workers - 2.0% increase to $1,404 (from $1,377 in 2017) All Disabled Workers - 2.0% increase to $1,197 (from $1,173 in 2017)

* From CMS: "The standard monthly premium for Medicare Part B enrollees will be $134 for 2018, the same amount as in 2017. However, a statutory 'hold harmless' provision applies each year to about 70% of enrollees. For these enrollees, any increase in Part B premiums must be lower than the increase in their Social Security benefits. After several years of no or very small increases, Social Security benefits will increase by 2% percent in 2018 due to the cost-of-living adjustment (COLA). Therefore, some beneficiaries who were held harmless against Part B premiums increases in prior years will have a premium increase in 2018."

According to CMS, Part B enrollees who are not subject to the hold-harmless provision will pay the full premium of $134 per month in 2018 while Part B enrollees who were held harmless in 2016 and 2017 will see an increase in the monthly Part B premium from the roughly $109, on average, they paid in 2017.

CMS estimates that 42% of all Part B enrollees are subject to the hold-harmless provision in 2018 and will pay the standard monthly premium of $134 (an increase of about $25), because the increase in their Social Security benefit will be greater than or equal to an increase in their Part B premiums up to the full 2018 amount. Additionally, CMS estimates 28% of all Part B enrollees are subject to the hold-harmless provision in 2018 and will pay less than the full monthly premium of $134, because the increase in their Social Security benefit will not be large enough to cover the full Part B premium increase.

Medicare Part B enrollees will pay the standard $134 Part B premium amount in 2018 (or higher depending on income) if:

You enroll in Part B for the first time in 2018.
You don't get Social Security benefits.
You're directly billed for your Part B premiums (meaning they aren't taken out of your Social Security benefits).
You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount of $134.)
Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount. If so, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

If you're in 1 of these 5 groups, here's what you'll pay:

If your yearly income in 2016 (for what you pay in 2018) was			You pay each month (in 2018)
File individual tax return	File joint tax return	File married & separate tax return	You pay each month (in 2018)
$85,000 or less	$170,000 or less	$85,000 or less	$134
above $85,000 up to $107,000	above $170,000 up to $214,000	Not applicable	$187.50
above $107,000 up to $133,500	above $214,000 up to $267,000	Not applicable	$267.90
above $133,500 up to $160,000	above $267,000 up to $320,000	Not applicable	$348.30
above $160,000	above $320,000	above $85,000	$428.60

Click on the following link for additional information on Medicare Part B costs:

https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html

Or for further information on 2018 Social Security benefits click this link:

https://www.ssa.gov/news/press/factsheets/colafacts2018.pdf

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

2018 Medicare ID Card Changes

2017-08-09T09:25:00.000-04:00

New Medicare ID Cards To Be Issued Next Year

Beginning in April 2018, new Medicare cards without Social Security numbers will be sent to beneficiaries. Instead of the Social Security-based Health Insurance Claim Number (HICN), the new cards will use a unique, randomly assigned combination of letters and digits that will be known as the Medicare Beneficiary Identifier (MBI).

How Will The MBI Look?

The MBI will be:

Clearly different from the HICN number
11-characters in length
Made up only of numbers and uppercase letters (no special characters)

The Centers for Medicare and Medicaid Services (CMS) has promised an easy transition for Medicare providers. Through December 2019, providers will be allowed to use either the MBI or the old HICN.

How Will The Process Work?

Currently there are nearly 60 million people enrolled in the Medicare program, so it is no small task to develop a new Medicare identifier and issue new cards to all Medicare beneficiaries; but a 2015 law passed by Congress (The Medicare Access and CHIP Reauthorization Act) gave CMS four years to accomplish it.

The first step will be to implement the new identification number and new Medicare card with the non-Social Security number identifier for new enrollees. From there, CMS must issue a new Medicare card to every current enrollee by April 2019.

The new Medicare card will work exactly like the old one, but will safeguard private information of interest to identity thieves. If you are currently enrolled in Medicare, you’ll receive information directly from CMS about when to expect your new Medicare card.

For more information about the new Medicare ID card, please see:

https://www.cms.gov/Medicare/New-Medicare-Card/index.html

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.