Medicare Rights Testifies to Congress About the BENES Act
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If you accept the automatic enrollment in Medicare Part B, or if you enroll during the first three months of your initial enrollment period, your coverage will start with the month you are first eligible. If you enroll during the last four months of your initial enrollment period, your coverage will start from one to three months after you enroll.
The following chart shows when your Medicare Part B becomes effective:
For more information, you may click on the link below to see a reference document found within the Social Security website: Social Security Website. Scroll down to the section on signing up for Medicare.
2019 Medicare Parts A&B
Medicare's Income-Related Premiums Under Current Law and Proposed Changes
The U.S. House of Representatives is considering legislation (H.R. 3922) to extend funding for the Children’s Health Insurance Program that includes a provision to increase Medicare premiums for some higher-income beneficiaries to help offset the cost of the legislation. The Congressional Budget Office (CBO) has estimated that this provision would increase Medicare's premium revenues (and thereby reduce program spending) by $5.8 billion between 2018 and 2027. This issue brief describes current requirements with respect to Medicare's Part B and Part D income-related premiums and proposed changes under the House legislation.
OVERVIEW OF CURRENT LAW RELATED TO MEDICARE PREMIUMS
Today, most Medicare beneficiaries pay the standard monthly premium, which is set to cover 25 percent of Part B and Part D program costs, but a relatively small share of beneficiaries (around 6 percent in 2015) with incomes above $85,000 for single people and $170,000 for married couples are required to pay higher premiums for Medicare Part B and Part D—ranging from 35 percent to 80 percent of program costs, depending on their incomes (Figure 1).
Part B and Part D Standard Premiums
Monthly premiums for most people on Medicare equal 25 percent of average per capita Part B expenditures for Part B enrollees and 25.5 percent of average per capita Part D expenditures for drug plan enrollees. In 2017, the Part B standard monthly premium is $134; for Part D, the national average monthly premium, according to CMS, is $35.63. Actual monthly premiums for stand-alone Part D drug plans vary across plans and regions from a low of $14.60 to a high of $179 in 2017.
Income-Related Premiums for Part B and Part D
People on Medicare with incomes above $85,000 for individuals and $170,000 for couples are required to pay higher premiums for Medicare Part B and Part D. The Part B income-related premium was established by the Medicare Modernization Act of 2003 and took effect in 2007. The Part D income-related premium was established by the Affordable Care Act (ACA) and took effect in 2011. Under these provisions, beneficiaries with higher incomes pay a larger share of Part B and Part D program costs than 25 percent, ranging from 35 percent to 80 percent of per capita costs, depending on their income
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) made changes to Medicare's income-related premiums that will affect beneficiaries with incomes above $133,500 ($267,000 for married couples) by requiring them to pay a larger share of Part B and Part D program costs beginning in 2018 (Figure 2):
The income thresholds that determine the income-related premium payments are frozen through 2019, but will increase by about 2 percent in 2020 and will be indexed after that for general price inflation.
HOW MUCH ARE BENEFICIARIES CURRENTLY PAYING FOR PART B AND PART D
In 2017, Part B premiums for higher-income beneficiaries range from $188 per month for individuals with annual incomes above $85,000 up to $107,000, to $429 per month for individuals with incomes above $214,000. For Part D, higher-income beneficiaries pay a monthly premium surcharge in addition to the premium for their specific Part D plan; in 2017, the monthly premium surcharge ranges from around $13 for individuals with annual income above $85,000 up to $107,000, to an additional $76 for individuals with incomes above $214,000. When combined with the national average premium amount, higher-income Part D enrollees pay between $49 and $112 per month in 2017.
For beneficiaries enrolled in both Part B and Part D, the combined income-related monthly premiums range from $236 (35 percent of program costs) for single beneficiaries with incomes above $85,000 up to $107,000, to $540 (80 percent of program costs) for beneficiaries with incomes above $214,000 (Figure 3). Monthly income-related premiums for married couples who are both enrolled in Part B and Part D are twice these amounts, ranging from $473 for those with incomes up from above $170,000 up to $214,000, to $1,081 for couples with incomes above $428,000.
HOW WOULD THE PROPOSED LEGISLATION CHANGE MEDICARE S INCOME-RELATED PREMIUMS?
The proposed legislation would modify the income thresholds that determine which beneficiaries pay 80 percent of Part B and Part D program costs, and would create an additional category requiring certain higherincome beneficiaries to pay 100 percent of program costs, beginning in 2018 (Figure 4):
The proposal would also change the inflation adjustment applied to the highest incomerelated premium category beginning in 2027.
Increasing premiums for some beneficiaries who are already subject to income-related premiums will affect a relatively small share of the Medicare population. Part of the appeal of requiring higher-income beneficiaries to pay a greater share of Medicare costs is that these higher costs are imposed on only a relatively small share of beneficiaries who arguably have greater financial means to bear the additional expenses, thereby protecting the majority of people on Medicare with relatively modest incomes.
At the same time, there is some concern that the income thresholds used to trigger the payment of higher premiums by Medicare beneficiaries ($85,000 for individuals and $170,000 for couples) are lower than the thresholds used to define higher-income people in other policy discussions. There is also concern that imposing higher premiums could discourage higher-income people from enrolling in Part B and Part D, which could further erode Medicare’s financial status in the future. Adopting the House proposal would also mean that for the first time, some beneficiaries would not receive any federal subsidy for their Medicare Part B and Part D coverage and would be required to pay these costs in full. Another concern is that the Medicare savings associated with this proposal are not dedicated to Medicare but instead used to fund other priorities.
On Tuesday, the Centers for Medicare & Medicaid Services (CMS) announced the 2016 premiums and deductibles for the Medicare inpatient hospital (Part A) and physician and outpatient hospital services (Part B) programs.
Lucky for you, Precision Senior Marketing has taken the time to put together the following infographic summarizing what your senior clients can expect in result from the adjustments made via the Bipartisan Budget Act singed into law by President Obama last week.
P.S. Don't be too shy to share this infographic with your clients by positing it to your Facebook page :)
Medicare Part B Premium and Deductible
Medicare Part A Deductible
Premiums for Medicare Advantage and MAPD plans already finalized are unaffected by this announcement.
Find the original press release from CMS here!
To get more information about state-by-state savings, visit the CMS website at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-11-10.html .
For more information on the 2016 Medicare Parts A and B premiums and deductibles (CMS-8059-N, CMS-8060-N, and CMS-8061-N), visit: https://www.federalregister.gov/public-inspection
On Monday, November 2, 2015, President Obama signed into law a two-year budget deal that diverts a spike in Medicare Part B premiums, but conversely wipes out billions in potential future Social Security Disability Insurance (SSDI) program benefits for Baby Boomers.
While the Bipartisan Budget Act of 2015 has certainly granted much needed relief to nearly 15 million Medicare beneficiaries by lessening premium and deductible Part B increases, its approval has triggered an undesirable response to upcoming SSDI program changes.
Whether or not your clients will be negatively affected by the budget deal all comes down to one very important criterion: While the reforms within the budget deal are projected to save the SSDI program $168 billion over 75 years, seniors who rely upon implementing certain strategies to increase the amount they’ll get from SSDI will ultimately lose if they fail to rethink their retirement plans.
So, what are those strategies to disappear in just six short months and how can your clients get through this?
Saying “goodbye” to the “file and suspend” strategy
One strategy, commonly referred to as “file and suspend”, has meant an extra $10,000 to $60,000 in SSDI benefits for some married couples age 66 to 70. Under current law this strategy allows you to sign up for benefits at age 66, but not claim them. For four years those unclaimed benefits will grow at the rate of 8% per year through delayed retirement credits. In the meantime your spouse may immediately begin collecting half of your check starting at age 66. (Divorced persons may utilize the strategy if they were once married for 10 years and are currently single.)
Restricting a restricted claim of spousal benefits
Author of A Social Security Owner’s Manual, Jim Blankenship, believes divorced people “will be the big losers” due to the dismissal of the “restricted application” strategy. Under current law this strategy allows you or your spouse to file just for spousal benefits at Full Retirement Age and then let his or her own retirement benefits continue to grow.
The end to the lump sum
Senior policy analyst Web Phillips of the National Committee to Preserve Social Security and Medicare (NCPSSM) says the end of the lump sum SSDI benefits is another “good deal that goes away” in 2016.
Under current law if you are diagnosed with a terminal illness at age 68 you may collect a lump sum SSDI check for the benefits you had suspended over the past two years. Under the new law this would not be the case – you could certainly begin getting retirement checks immediately, but you sure wouldn’t get a check for those back payments.
What should senior couples do regarding the change?
David Leland, a managing director of Merrill Lynch in Beverly, Massachusetts advises seniors to refrain from panicking. In the future spouses will have a choice of the larger of either their own benefit or the spousal benefit when applying for SSDI benefits. Any benefit they choose they “are stuck with”, said Leland.
While your clients may have already seen headlines disclosing relief to their Medicare Part B premium and deductible (to rise by 15% opposed to the projected 52%), it is important to inform them of the above information regarding the vanishing of strategies to SSDI benefits to come. Checking up on and reaching out to your current clients to share news of this political and economic reform could be a wonderful platform for you to display your appreciation for their business. By doing so you’re essentially dropping by to say, “Hey, Mrs. Smith! I thought of you when you read this and how it could affect your and Mr. Smith’s financials.”
A.K.A. “Hey, I really care about you!”
Want to keep up-to-date with more stories like these? Give Precision Senior Marketing's Facebook page a “Like”, follow us on Twitter and request to join our LinkedIn group, titled "Senior Insurance Agents", providing a central exchange for information among insurance agents. to stay informed! :)
Sources: www.californiahealthline.com, www.forbes.com
The Senate voted early Friday morning to approve a two-year budget deal intended to spook years of gridlock and frequent scares of government shutdowns.
President Barack Obama is expected to sign the agreement [pumpkin] patched by the White House and congressional leaders.
The Bipartisan Budget Act of 2015 extends the nation's debt limit through 2017 and mummifies spending levels through September of that year to keep things under wraps. It also lifts the spirits of ghostly spending caps set in place in 2011, providing for $80 billion in sequester relief.
The agreement includes long-term entitlement comebacks to the Social Security Disability Insurance (SSDI) program — the first major boo-merang to Social Security since 1983 — and frightens a spike in Medicare B premiums for millions of seniors.
Once signed, 15 million older Americans will face a Part B premium increase of roughly 17 percent opposed to the projected 52 percent, easing pain in the neck for beneficiaries.
It's all grave-y for “held harmless” Medicare beneficiaries, as they will not see an increase in their Medicare Part B premiums due to a provision of federal law that draws blood for premiums from Social Security benefits.
The Part B deductible, which covers costs if Medicare beneficiaries are coffin and need to see a doctor, will rise to $167 rather than the $223 proposed.
To cover the cost of moderating the Medicare Part B premium increase, the U.S. Treasury will lend money to the Medicare blood bank.
To repay the loan, beneficiaries will pay a premium surcharge of three bones each month over about five years until 2021.
On behalf of the PSM staff, we wish everyone a safe and happy Halloween filled with unlimited amounts of candy corn and other delicious treats. In the case that you over-indulge on sweets, have no fear: We've got the perfect dental and vision product for you with no waiting periods on all services!
Sources: www.nbcnews.com, www.washingtonpost.com
In hopes of a TKO in projected Medicare Part B premium increases for the coming year, congressional leaders and the White House have wrapped up their hands, thrown on their gloves, and forged a tentative budget agreement to go toe-to-toe with the pressing issue.
Under current law nearly 15 million Medicare beneficiaries, who do not collect Social Security and will be enrolling in Medicare’s Part B next year for the first time, either have incomes great enough that they are charged higher premiums, or are poor enough that they also qualify for Medicaid, are about to be sucker punched with an increase of more than 50 percent in their standard monthly Medicare Part B premiums.
If Congress throws in the towel at the main event and agrees on the tentative budget agreement, those 15 million older Americans will face a Part B premium increase of roughly 17 percent opposed to the projected 52 percent.
“Held harmless” Medicare beneficiaries will not see an increase in their Medicare Part B premiums due to a provision of federal law that links premiums to Social Security benefits.
Also, the Part B deductible, which affects all Medicare beneficiaries, will rise to $167 rather than the $223 proposed.
To cover the cost of moderating the Medicare Part B premium increase, the U.S. Treasury will lend money to the Medicare trust fund.
To repay the loan beneficiaries will pay a $3 premium surcharge each month over about five years until 2021.
On Tuesday AARP praised the agreement and urged Congress to adopt it rather than face the brawl.
We'll keep you up-to-date with coverage on Congress’s response to the open invitation.
For seven in 10 Medicare beneficiaries 2016 will be much like 2015. They will pay $104.90 per month for their Medicare Part B premium just as they did in 2015.
But 2016 might not be anything like 2015 for some 30% of Medicare beneficiaries — roughly 7 million or so Americans. That’s because premiums for individuals could increase a jaw-dropping 52% to $159.30 per month ($318.60 for married couples). And for individuals whose incomes exceed certain thresholds, premiums could rise to anywhere from $223.00 per month up to $509.80 (or $446 to $1,019.60 for married couples), depending on their incomes.
What gives? Blame the “hold harmless” provision in the law that addresses cost-of-living adjustments (COLA) for Social Security benefits.
That law limits the dollar increase in the premium to the dollar increase in an individual’s Social Security benefit, according to a report by Alicia Munnell of the Center for Retirement Research at Boston College.
At the moment, the consumer price index (CPI) is not expected to increase in the period used to determine the COLA for 2016.
And that means it’s very likely that Social Security recipients — for just the third time since automatic adjustments were adopted in 1975 — will not receive an increase in their benefit next year, according to Munnell’s report.
No COLA means no increase in Medicare Part B premiums. Or at least that's the case for 70% of Medicare beneficiaries who are collecting Social Security and don’t pay an income-related higher Medicare Part B premium, says Mark Lumia, founder and CEO of True Wealth Group in Lady Lake, Fla., and author of Thinking Outside the Money Box.
As for the remaining 30% of beneficiaries, they have to cover the difference. “Under current law, Part B premiums for other beneficiaries must be raised enough to offset premiums forgone due to the hold harmless provision,” says Lumia.
Medicare Part B covers services such as lab tests, surgeries and doctor visits, and supplies such as wheelchairs and walkers that are considered medically necessary.
Who must pay the higher Medicare Part B premium? This group includes individuals who enroll in Part B for the first time in 2016; enrollees who do not receive a Social Security benefit; beneficiaries who are directly billed for their Part B premium; current enrollees who pay an income-related higher premium; and dual Medicare-Medicaid beneficiaries, whose full premiums are paid by state Medicaid programs, according to this year’s Medicare Trustee’s report.
What might you do or consider if you’re among those who have to pay the higher “not held harmless” Medicare Part B premium?
Individuals who enroll in Part B for the first time in 2016. “Enroll earlier if you’re already 65 and otherwise eligible,” says Michael Kitces, publisher of The Kitces Report and author of the Nerd's Eye View blog. “If you’re not eligible now, I’m afraid you’re stuck.”
Enrollees who do not receive a Social Security benefit. Those who are already on Medicare now, or could apply immediately, and who were going to start Social Security benefits in the next year or so might consider applying right now instead, Kitces says.
“Those who file in the coming weeks should be able to get both Social Security benefits and Medicare in November and December, which are the two months used for measuring, and therefore make themselves eligible,” he says.
If you are among those who are currently considering different Social Security claiming strategies — such as file-and-suspend, restricted application and delay to age 70 — there’s no getting around it. You’ll have to do cost-benefit analysis to determine if the benefit of the strategy is greater than the cost of the increased Medicare Part B premium.
In the long run, though, Kitces says those who anticipate living a long time and who will benefit from delaying Social Security by several years should still delay. “The value of delaying Social Security is far more beneficial than the squeeze from hold harmless,” he says. Read Social Security And Medicare Claiming Strategies To Navigate The Looming 52% Medicare Part B Premium Spike and How The Medicare “Hold Harmless” Rules May Spike Part B Premiums By 52% In 2016.
Beneficiaries who are directly billed for their Part B premium. If you’re already getting Social Security benefits, request to have your Part B premium deducted from your Social Security check ASAP, and you should still have time to be eligible for hold harmless, says Kitces.
Current enrollees who pay an income-related higher premium. “It is critically important for folks to review the Social Security notice of 2016 Medicare B premiums that will be in mailboxes later this fall,” says Katy Votava, president of Goodcare.com in Rochester, N.Y. “It's not uncommon for people to qualify for a decrease because their income drops to a lower bracket as a result of specific life changing events.” The problem, says Votava, is that Social Security doesn't know about those life changing events unless the person notifies the agency.
For those whose incomes are still above the thresholds: “Unfortunately you’re stuck here,” says Kitces. The Income-Related Medicare Adjustment Amount (IRMAA) was already locked in based on 2014 income. “If possible, get your 2015 income below the line, so that at least if hold harmless kicks in again ... you can benefit slightly from the second time it flows through,” says Kitces.
Dual Medicare-Medicaid beneficiaries, whose full premiums are paid by state Medicaid programs. “Since your Medicare premiums are being paid by the state at this point, it doesn’t effectively matter whether hold harmless applies for you or not, as to the extent higher premiums occur, they will be paid by the state anyway,” says Kitces. “Not surprisingly, I believe there are some states who are not so happy about this.”
Back to normal. It’s also worth noting that in a few years, says Kitces, that when CPI presumably does increase again and Social Security benefits rise, the excess premiums on the 30% essentially unwind themselves.
“That’s why Medicare premiums dropped in 2013, after being up in 2011 and 2012 the last time this hold harmless scenario played out,” he says. “Which means, again, if you weren’t going to start Social Security and/or Medicare for several years anyway, this is a non-issue. It’s just those who would have started both, and soon, who may wish to accelerate claiming to try to get in under the wire.”
Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Email Bob at email@example.com.