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Medicare Costs to Rise for Wealthy

Posted by www.psmbrokerage.com Admin on Tue, Feb 27, 2018 @ 01:52 PM

Medicare Costs to Rise for WealthyMedicare 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.

BN-XO865_2SCDF_OR_20180222111607.jpgPhoto:  Jacquelyn Martin/Associated Press

An estimated 30% of Medicare Part D participants fell into the doughnut hole in 2015, the most recent data available, said Ms. Cubanski.

Source: https://www.wsj.com/articles/medicare-surcharges-to-increase-for-top-earners-in-2019-1519316589

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Tags: medicare changes, Medicare Premiums, medicare updates

How the ACA is Changing Medicare

Posted by www.psmbrokerage.com Admin on Thu, Jun 11, 2015 @ 03:01 PM

blog pic The aims of the Affordable Care Act (ACA) were to increase health insurance coverage for those under age 65, improve the performance of the health care delivery system, and slow cost growth. Less recognized are the provisions of the law that seek to strengthen the Medicare program.

The ACA addresses gaps in Medicare preventive and prescription drug benefits. It initiates ambitious testing of new payment methods to improve the value of care received by beneficiaries and, indirectly, all Americans. And it substantially extends the solvency of the Medicare Health Insurance Trust Fund by slowing the growth of future Medicare outlays.

By moving Medicare away from fee-for-service payment and by holding health care providers accountable for both the quality and total cost of care, certain ACA reforms have the potential to reshape not just the Medicare program but the entire U.S. health care system. For example, the law’s creation of the Center for Medicare and Medicaid Innovation (CMMI) will enable Medicare to test innovative models of provider payment and service delivery and expand those that demonstrate promise to improve beneficiary outcomes and patient experiences of care or lower cost. The projects initiated by the CMMI are just now beginning to produce results; significant work remains to identify and spread successful payment innovations.

The ACA also makes important changes to the Medicare Advantage (MA) program, through which enrollees can choose to receive their Medicare benefits from private plans. Payment rates to MA plans are to be constrained until those plans are on a par with traditional Medicare, though financial rewards are available for plans achieving high performance ratings. These changes are intended to provide incentives for MA plans to improve quality and patients’ health care experiences and encourage beneficiaries to choose plans with higher quality and lower cost.

While these new policies strengthen Medicare, they were not intended to address some of the serious challenges facing Medicare in the future. Without additional changes, the retirement of the post–World War II generation will cause total Medicare outlays to outpace growth in the economy, claim an increasing share of the federal budget, and exceed the revenues currently dedicated to the Medicare program.

As currently configured, Medicare benefits do not adequately address the financial and health care needs of future beneficiaries—particularly the poorest and sickest among them. Traditional Medicare’s benefit design reflects the fragmented nature of health care delivery, with separate hospital, physician, and prescription drug benefits adding to the complexity, administrative cost, and difficulty of coordinating care. The predominantly fee-for-service provider payment system used by traditional Medicare, and by most MA plans, provides no incentive to eliminate duplicative or ineffective care, coordinate care, or substitute lower-cost care alternatives—and in effect penalizes providers who do so. This mismatch between benefits and needs will be an increasing source of concern as families struggle with out-of-pocket costs, serious health conditions, and inadequate options for caring for family members with physical and cognitive functional impairments.

While the ACA’s reforms hold significant potential to make Medicare more viable and successful in the future, Medicare’s long-term fiscal solvency, complexity, and gaps in coverage remain unaddressed. As millions of Americans age into Medicare, federal budgetary pressures will inevitably focus attention on more fundamental reform of the program.

Read the full document here





http://www.commonwealthfund.org/publications/fund-reports/2015/jun/medicare...

Source: commonwealthfund.com

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Tags: Obamacare, Affordable Care Act, medicare changes

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