Medicare Costs to Rise for Wealthy
New tier of beneficiaries to pay 85% of parts B and D benefits
A new tier of high-income Medicare recipients next year will have to pay a greater percentage of their medical costs, the latest move to shift more of the federal program’s tab onto the wealthiest beneficiaries.
Starting in 2019, individuals with incomes of $500,000 or more and couples earning $750,000 or more will be broken out of the current top bracket and required to pay 85% of the cost of their Medicare parts B and D benefits, up from 80% now. (In contrast, Medicare beneficiaries with incomes of $85,000 or less—or $170,000 or less for couples—pay only 25% of the cost of their benefits.)
For higher-income beneficiaries, this increased premium surcharge comes on the heels of a separate increase that went into effect on Jan. 1. Under that increase, Medicare beneficiaries with incomes of $133,501 to $160,000 (or $267,001 to $320,000 for couples) now must pay 65% of the cost of their parts B and D benefits, up from 50% before Jan 1. And beneficiaries with incomes between $160,001 and $214,000 (or $320,001 and $428,000 for couples) were shifted from a 65% surcharge into the highest income group that currently pays 80% of the cost of their benefits.
Taken together the moves—the latest of which was included within a two-year budget deal signed earlier this month—accentuate a trend to require those with the highest incomes to bear a greater share of Medicare costs, said Juliette Cubanski, an associate director of the Henry J. Kaiser Family Foundation’s program on Medicare policy.
Because the income thresholds at which higher premiums surcharges kick in haven’t been adjusted for inflation since 2011, they are also catching more people, Ms. Cubanski said.
In 2015, Kaiser estimated that 5.7% of Medicare recipients paid more than the standard premium amount for Part B, which pays for doctor visits and other types of outpatient care - a number the nonprofit group said would reach 8.3% by 2019. While Kaiser hasn’t updated those projections, Ms. Cubanski said she believes they are still accurate.
Starting in 2020, the income thresholds are slated to be adjusted for inflation.
If the new 85% cost-sharing requirement were in effect this year, those who qualify would pay $321 on top of the standard Part B premium, which is currently $134 per person, according to Michael Kitces, director of wealth management at Pinnacle Advisory Group Inc. in Columbia, Md. In contrast, the extra cost for those paying 80% of the share of the costs today is currently $294.60, on top of the standard Part B premium of $134. The numbers for next year are likely to be slightly higher due to factors including an inflation adjustment, Mr. Kitces said.
Under Medicare Part D, which covers prescription-drug plans, premium surcharges currently range from $13 to $74.80 a month and are imposed on top of each plan’s regular monthly charge, which varies from plan to plan, said Ms. Cubanski. (The income ranges at which the higher surcharges apply for parts B and D are the same.)
The law also closes the Medicare Part D coverage gap, known as the doughnut hole, in 2019—one year sooner than planned. Part D prescription drug plans typically cover 75% of the cost of medication, leaving the participant to pick up 25%. But after the total cost of a participant’s drugs reaches a set amount per year—$3,750 in 2018—he or she falls into the doughnut hole. Once there, the participant is currently on the hook for 35% of the cost of his or her brand-name medications, up to $5,000 in total out-of-pocket costs, said Ms. Cubanski. At that point, catastrophic coverage kicks in, limiting participants’ outlays, typically to 5%.
Next year, when the doughnut hole disappears, Part D beneficiaries will pay 25% of their total costs until the catastrophic coverage kicks-in.
An estimated 30% of Medicare Part D participants fell into the doughnut hole in 2015, the most recent data available, said Ms. Cubanski.
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The Social Security Retirement Age Increases in 2018
Most baby boomers are eligible to claim their full Social Security benefit at age 66. However, Americans who will turn 62 in 2018 need to delay claiming Social Security for an additional four months in order to claim their full benefit. Here is how the Social Security full retirement age is changing and what it means for your retirement payout:
Read: Social Security Changes Coming in 2018
An older retirement age. Americans who will turn 62 in 2018 (born in 1956) will need to wait until age 66 and four months to claim their full Social Security retirement benefit. That's two months longer than those who turned 66 in 2017 and four months longer than older baby boomers born between 1943 and 1954 who have a full retirement age of 66.
The full retirement age will continue to increase in two-month increments each year until it hits 67 for everyone born in 1960 or later. "Those born in 1956 will get less per month at any age that they start Social Security than people one and two years older than them," says John Shoven, an economics professor at Stanford University. "If you start benefits before the full retirement age, you have to accept a permanent discount in your monthly benefits, and if you start benefits after the full retirement age you get more."
Bigger reductions for claiming early. If your full retirement age is 66 and you start your Social Security benefit at age 62, you get 25 percent smaller payments. "Raising the full retirement age by two months means you get about 1.1 percent less at 62," says Andy Landis, author of "Social Security: The Inside Story". "To counteract that, consider delaying your Social Security by a few months, or even later for higher payments." For example, a worker eligible for $1,000 per month from Social Security at his full retirement age of 66 would get only $750 per month if he starts payments at age 62. Those with the slightly older full retirement age of 66 and 4 months will get about 27 percent smaller payments if they sign up at age 62, which would reduce a $1,000 Social Security payment to about $730. Once the full retirement age increases to 67, those who start payments at age 62 will get 30 percent smaller payments.
Read: How to Undo Claiming Social Security Early
A smaller incentive to delay claiming. Workers who delay claiming Social Security between their full retirement age and age 70 have an opportunity to increase their monthly payments. "No one should claim without analyzing the options," says Anna Rappaport, chairwoman of the Society of Actuaries Committee on Post-Retirement Needs and Risks. "People who live long will have a benefit of greater value if they claim at higher ages."
However, those with an older retirement age have slightly less to gain by waiting. Baby boomers with a full retirement age of 66 can increase their monthly payments by as much as 32 percent by waiting until age 70 to start payments, which would boost a $1,000 benefit to $1,320 per month. Those with a full retirement age of 67 will only get 24 percent more if they delay claiming Social Security payments until age 70.
Compare your options. Retirees who claim Social Security early get smaller payments over a longer period of time. Those who delay claiming get bigger payments later on in retirement. The optimal age to sign up for Social Security ultimately depends on how long you and your spouse will live. People who live the longest have the most to gain by delaying claiming Social Security. You can get a personalized estimate of how much you will receive from Social Security at various claiming ages by creating a My Social Security account. "Everyone should have a My Social Security account so you have online access anytime, just like at your bank," Landis says. "You'll get not just your full retirement age, but a record of your earnings, a way to correct the record, if wrong, and you'll get estimates of your future payments."
Read: What is the Maximum Possible Social Security Benefit?
Medicare eligibility remains the same. While the Social Security full retirement age is increasing, the age for Medicare eligibility is unchanged. Workers who wait until 66 or later to sign up for Social Security still need to take care to sign up for Medicare at age 65 or maintain other health insurance based on current employment to avoid Medicare late enrollment penalties. "Be sure to contact Social Security a few months before 65 to learn your Medicare options," Landis says. "You don't want to pay late fees because you waited too long."
Tags: Social Security, medicare updates
Summary of Recent and Proposed Changes to Medicare Part D
On February 9, 2018 the President signed into law the Bipartisan Budget Act of 2018 (BBA of 2018), which included some provisions related to Medicare Part D prescription drug coverage. Just days later, on February 12, the Office of Management and Budget (OMB) released the President’s fiscal year (FY) 2019 budget, which also included several proposals related to Medicare Part D drug coverage and Part B drug reimbursement.
This brief summarizes these recent and proposed changes. Budget estimates for provisions in the BBA of 2018 reflect the 10-year (2018-2027) effects as estimated by the Congressional Budget Office. Budget estimates for proposals in the President’s FY2019 budget reflect the 10-year (2019-2028) effects as estimated by OMB.1
Summary of Changes in the BBA of 2018
Summary of Proposed Changes in the President’s FY2019 Budget
PART B DRUG REIMBURSEMENT
Tags: Part D Premiums, Medicare Part D, Part D
Build a Customer Referral Program With These 5 Tips
This is a great summary from a recent Hubspot article on how to create an effective customer referral program. 1 in 3 people come to a brand through a recommendation, and customers who were referred by loyal customers have a 37% higher retention rate. (Deloitte)
Word of mouth is the primary factor behind 20-50% of all purchasing decisions, especially when considering a first time buy or something relatively expensive. (McKinsey)
But what does all of this mean for you? Well, although purchasing decisions for your product or service are as complex as ever, a leading factor in your prospect's decision-making process is advocacy from their trusted sources. The question is, are you harnessing the power of your brand advocates to get these quality referrals?
There are a few quick steps you can take to building a customer referral program so you can start reaping the benefits of referral leads that, on average, are 4-10x more valuable than regular leads, resulting in shorter sales cycles, increased win rates, and larger order sizes (Influitive).
1. Find Your Advocates
Advocates, by definition, are consumers and business buyers who frequently recommend brands and products without being paid to do so (Zuberance). Those advocates should be highly trusted by your brand and/or have a substantial amount of influence over the market that you're selling to. But where do you actually get them?
2. Set a Goal
It's important to set goals for your program, even if it's brand new and you have no historical data to base it off of. A useful factor to consider could be the amount of referrals your business is getting organically. You might figure out this number by reviewing sales notes or talking to your marketing team to see how often someone mentions a referral or that they've been referred. Referrals might even be happening outside of the business all together, such as customers talking to prospects over coffee or through social media messages. If this number is non-existent or too difficult to figure out, set a relatively reasonable goal based on how many advocates you're planning to engage in the program and a conversion rate around 10% (Friendbuy).
3. Choose the Right Incentive(s)
It's common knowledge that trying to buy your brand advocates is bad news for your business. Paying advocates to promote your brand can get pricey and extremely inefficient in the long run. On top of the price tag and it's inefficiency, there's minimal trust in a paid to perform relationship where trust should really be a key factor. Instead, consider rewarding your advocates for their organic promotion of your brand.
4. Find Your Promotional Mediums
Now that you've got your advocates, your goals and your incentives all set up, it's time to decide where and how you're going to promote your program. Just like advocates are found in many different locations, so should your customer referral program. An email campaign is a great start but unless you're constantly reminding your customers (in a way that doesn't annoy them enough to stop opening your emails), then you're going to have to find a few more places to stay top of mind. Get creative and find out where your customers spend the most time or even pages they frequent for short periods of time.
5. Keep Your Tech in Check
The tech behind your program is easily overlooked or taken for granted, but it's going to make or break how you approach and manage referrals. Some key information and metrics that you should easily be able to keep track of include:
Building a customer referral program can be time consuming but if done well, the benefits are likely to far outweigh the costs. Just don't be afraid to try something new. Take charge and harness the power of your advocate community, today.
Tags: Referrals, sales advice, sales
New Medicare Cards Finally Get Roll-Out
CMS has revealed which states will be the first in the nation to receive new Medicare identification cards that don't contain Social Security numbers.
Medicare beneficiaries in Delaware, the District of Columbia, Maryland, Pennsylvania, Virginia and West Virginia are among the states that will be first to get the cards starting in April.
Beneficiaries in Alaska, American Samoa, California, Guam, Hawaii, the Northern Mariana Islands and Oregon are also expected to get the cards starting that month.
Since the beginning of the Medicare program, Social Security numbers have been used as the beneficiary identifier for administering services. The Medicare Access and CHIP Reauthorization Act required the CMS to remove the numbers from Medicare cards because of identity theft and fraud risks.
Starting this April, the CMS will begin to issue Medicare cards with new ID numbers. Approximately 60 million beneficiaries will receive the new cards by April 2019.
Providers have been worried because they haven't received the guidance they've needed on the change.
Without clear instructions on how to prepare for the change, physicians risk losing their ability to bill Medicare. Claims with the old numbers won't be accepted starting in 2020. Practices also need to update their electronic health record systems to accept the new ID numbers.
Providers had been pushing the CMS to make the change via a rulemaking process, giving the agency a chance to lay out a substantive rollout plan and letting clinicians weigh in.
While dealing with ICD-10, the rollout of the Merit-based Incentive Payment System and alternative payment models under MACRA, as well as ongoing EHR meaningful-use activities, vendors may not be able to address this latest change in a timely way, according to Robert Tennant, director of health information technology policy at the Medical Group Management Association.