On April 5, 2023, the Centers for Medicare & Medicaid Services (CMS) issued long-awaited rules pertaining to, among other matters, the marketing of Medicare Advantage (MA) plans. YourMedicare and its partners had been anticipating these changes and have activated a task force to study the newly published rules in detail and clarify their implications for our affiliated agents’ businesses.
The FAQ is the culmination of that effort. Here you will find answers to a number of questions we have received since April 5, as well as clarification on the new rules our team is proactively providing.
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Tags: Medicare Advantage, CMS, medicare changes, medicare marketing guidelines
Tags: Medicare Part A, Medicare Part B, medicare changes, deductibles
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.
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.