If you’re on Medicare or about to enroll for the first time, hold on to your wallet. It’s likely some of you will be paying more for coverage — in some cases, a lot more if you’re among the participants who fall into certain categories.
"2016 looks like a year where deductibles and premiums will go up for some but not all," said Tricia Neuman, director of the Kaiser Family Foundation’s program on Medicare policy. "In addition, plans do change and some changes are not always obvious, so this is a good time to assess your options."
Millions of recipients may see their Part B premium go up from $104.90 to $159.30 in 2016.
With the open-enrollment period closing on Dec. 7, the increase receiving the most attention affects about 30 percent of the 55 million Medicare participants who participate in Traditional, or Original Medicare. This 30 percent includes new signees to traditional Medicare, higher-income beneficiaries, those who have deferred claiming Social Security, federal retirees covered by the Civil Service Retirement System, and low-income seniors who participate in both Medicare and Medicaid programs.
These groups will see a 52 percent increase in their Part B medical insurance premiums. (Part B, also known the Supplementary Medical Insurance program, pays most of the costs for physician, outpatient, some home health, and preventive services.)
Millions of enrollees will pay $159.30 in 2016, up from $104.90 monthly. (A premium is the monthly amount you pay for your Medicare coverage or Medicare insurance plan.) Higher-income participants who now pay 2015 premiums ranging from $146.90 to $335.70 a month could end up paying anywhere from $223 to $509.80 in 2016. For the remaining 36 million Traditional Medicare Part B participants, the Part B monthly premium would hold steady.
However, this doesn’t mean those beneficiaries are out of the woods. The annual Part B deductible — the amount you must pay out-of-pocket each year before your Medicare plan begins sharing costs with you — is going up from $147 to $223. Only Original Medicare enrollees would be affected by this. This projected deductible hike won’t affect Medicare Advantage plans, which are Medicare-approved plans from private insurers that cover the services in Part A and Part B of Traditional Medicare.
In addition, many participants in Part D supplemental drug plan will see increases in their out-of pocket costs, as insurers charge consumers as much as 30 to 50 percent more for the cost of specialty drugs and for drugs in the non-preferred and preferred brand-name drug categories.
However, some Medicare Advantage participants can also expect a hike in their monthly premium. While most Medicare Advantage HMOs don’t collect a premium in South Florida, most of the private insurance PPOs do. And most are increasing those premiums, by as little as 6 percent and as much as 40 percent.
In late summer and early fall, senior advocates lobbied Congress to pass a one-time fix that would hold off the premium increases for the 30 percent in Traditional Medicare who will see the biggest hit.
"There are a number of different proposals on the table," said David Certner, AARP’s legislative policy director for government affairs. "But for now that’s the current law and there’s some discussion whether or not we can offer some relief. I think people [affected] should prepare for this hike unless Congress makes a change."
State budgets may also take a hit because they pay Part B premiums for low-income seniors who receive both Medicare and Medicaid.
So should states. They pay the premium for low-income dual-eligible seniors — that is, seniors on Social Security who have both Medicare and state-run Medicaid. Various groups are worried how this could affect already stressed Medicaid programs.
But many say it’s unlikely that Congress will provide stopgap funding. When a similar situation occurred in 2009, a measure to provide relief did not even come up for a vote in the Senate. What’s more, advocates privately admit that elected officials won’t want to be seen as rescuing a small group of well-to-do seniors, who will be paying some of the expected price increase.
The reason why a few Traditional Medicare participants are expected to shoulder the entire premium increase for all Traditional Medicare recipients has to do with a "hold harmless" clause that prevents hikes in Medicare if they are greater than the annual cost of living adjustment (COLA) to Social Security. This summer Social Security trustees announced there would be no COLA because of low inflation. No COLA means no hike in Medicare premiums for most.
But somebody has to pay rising Part B costs, which are based on how much the program needs to run itself, including a safety cushion for the unexpected. In this case, those who aren’t protected by the hold-harmless clause will be expected to pay up.
When this last happened seven years ago, Certner said, the premium increase wasn’t as steep. Stimulus checks sent out by the federal government to pump up spending during The Great Recession also helped offset some of the sting.
But Traditional Medicare recipients who are expected to fork over more money for healthcare shouldn’t panic, advocates add. Cost of living adjustments to Social Security will likely resume for 2017, which will mean those protected in 2016 by the hold harmless clause will see their premium go up while the premium for the other 30 percent clobbered in 2016 will likely drop.
PART B HIKES
Those who will be affected by the projected 52 percent hike to the Traditional Medicare Part B premium include participants in these categories:
▪ New enrollees to Medicare in 2016.
▪ Participants with modified adjusted gross incomes (MAGI) above $85,000 for those filing as individuals in 2015 and $170,000 for those filing as couples. (These high-income earners are already subjected to premium surcharges ranging from 42 percent to more than 200 percent, based on a graduated scale.)
▪ Low-income seniors whose premiums are paid by their state.
▪ Participants who pay their Medicare premiums directly instead of having it deducted from their Social Security check because they have not yet started receiving Social Security checks.
▪ Federal retirees covered by the Civil Service Retirement System. (Usually workers who were hired by the federal government before 1987 and did not participate in Social Security.)
▪ State government employees who participated in defined-benefit pension plans and were not covered by Social Security during their tenure with the state.
WHAT YOU NEED TO KNOW
▪ The 7 1/2-week Open Enrollment period began Oct. 15.
▪ Insurance plans as options vary from year to year, so it is important to reevaluate annually.
“This is your chance to look at how your medical situation has changed and if your plan still meets your needs," said Kathy Sarmiento, SHINE Program Manager at Alliance for Aging in Miami-Dade, the state health insurance assistance program that provides free health insurance information, counseling and assistance to Medicare recipients and their caregivers. "Too many people pick a plan once and then never change again, even as their needs change."
In addition to Traditional or Original Medicare, there are 38 Medicare Advantage Plans from 20 health insurance providers in Miami-Dade alone, according to medicarehelp.org. There are also 33 Special Needs Plans available, while 26 Advantage plans offer additional gap coverage.
In Broward, 36 Medicare Advantage Plans from 18 health insurance providers are offered, along with 26 Special Needs Plans. Twenty-one Advantage plans offer additional gap coverage.
In both counties, out of pocket expenses can vary widely from about $3,000 (slightly more in Broward) to $6,700. The highest-rated plan available received a 5 overall star rating from the federal Centers for Medicare & Medicaid Services, and the lowest rated plan is 2 stars.
It’s important, Sarmiento added, to look beyond the premium and add up what your out-of-pocket costs will actually be for the year. While one Advantage plan may charge a lower premium, it might expect you to pay more for a maintenance drug you take, for example. To compare costs for plans in your area, use the Medicare Plan Finder on www.medicare.gov. You can also get guidance about the best values on MedicareNewsWatch.com
Here’s what you need to consider:
▪ Traditional Medicare: If you want freedom to visit any physician who accepts Medicare, Traditional Medicare is probably for you. However, you have to pay 20 percent of any cost for a doctor or health service, unless you opt to buy a Medigap plan, a supplemental insurance that covers co-pays, deductibles and other costs. In addition if you’re in Traditional Medicare, Medicare beneficiaries can buy Part D plans, standalone private insurance plans for prescription drugs. These plans have their own premiums and deductibles.
▪ Medicare Advantage. These plans are offered by private insurances and include Traditional Medicare Part A (inpatient care at hospitals and skilled nursing facilities) and Part B (doctors, lab tests and other services). Many Medicare Advantage plans also include the Part D drug prescription plan. Medicare Advantage plans are either HMOs or PPOs, so visiting a doctor out of network will cost you big.
Before signing up or re-enrolling in your current plan, check with your doctor to make sure he or she is on the list of preferred providers, as plan materials are not always up to date, and physicians sometimes drop out of the preferred network midyear.
“This can be very frustrating, especially for people who have been with a doctor a long time or have been receiving treatment from that doctor for a while,” Sarmiento of SHINE said. “They’re essentially stuck until the next enrollment period to change plans.”
Several Medicare Advantage plans are raising their premiums for 2016, so compare what you’re paying this year with what you will pay next year if you plan to stay on the same plan. But Sarmineto urges beneficiaries to look beyond the premium and judge a plan on more than its price. The total out-of-pocket costs can be more important than the premium. Ask: Has your physician co-pay increased? Has it increased for the hospital or skilled nursing portion? Are your doctors still included in the provider list? Is your favorite (or closest) hospital part of the provider list? What are your out-of-pocket expenses? Does it include vision and dental benefits as well? Small changes can add up to big expenses.
Medicare Part D. The drug plan that helps you pay for the prescription drugs you take at home must be bought separately under Traditional Medicare. During the enrollment period, check if the prescriptions you take are covered. Have any of your maintenance meds dropped out of a preferred tier? This would mean you would pay more for them. Has the premium gone up? Is the pharmacy you usually use a preferred pharmacy in the plan?
Medigap Plans. These supplemental plans fill in many of Traditional Medicare’s gaps, thus the name. They come in 10 standardized benefit designs, labeled from A through N. But premiums can vary from company to company, though each letter plan offers the same coverage. The most popular is Plan F because of its coverage and cost. To compare plans, go to www.medicare.gov and click “Choosing a Medigap Policy
Selecting a Medicare plan depends a lot on your lifestyle, too. If you travel or spend parts of your time in another town, you need to get insurance that will cover you outside your coverage area. Advocates usually recommend buying a Medigap policy for that. Some supplemental insurance, but not all Medigaps, also cover emergencies overseas if you travel abroad.
Beneficiaries should also calculate what their costs for eyeglasses, hearing aids and dental care will be for the year. Traditional Medicare does not cover these, nor do Medigap plans. But some Medicare Advantage plans do, for an additional premium.
▪ Alliance for Aging Helpline, 800-963-5337; press 2 for Miami-Dade or Monroe counties.
▪ In Broward, Aging & Disability Resource Center Helpline, 954-745-9779.
▪ Florida Department of Elder Affairs' SHINE Program, www.floridashine.org.
▪ Medicare, 800-633-4227, www.Medicare.gov.
ABCs of Medicare
Part A or the Hospital Insurance program, covers inpatient hospital, skilled nursing facility, some home health visits, and hospice care. It is funded by a 2.9 percent tax paid by employers and workers as well as an added tax paid by higher-income taxpayers. About 55 million are enrolled in Part A.
Part B, also known the Supplementary Medical Insurance (SMI) program, acts as an insurance to help pay for physician, outpatient, some home health, and preventive services. High-income beneficiaries pay a higher premium. About 51 million people are enrolled in Part B in 2015. With traditional Medicare, you can go to almost any doctor or hospital in the U.S., but you are still responsible for 20 percent of most outpatient care. Many buy supplemental Medigap private plans to make up those costs.
Part C, the Medicare Advantage program, is a private plan that serves as an alternative to traditional Medicare. It can be a health maintenance organization (HMO) or preferred provider organization (PPO) and pays for all Medicare-covered benefits, including hospital and physician services, and in most cases, prescription drug benefits. Almost 16 million beneficiaries were enrolled in Medicare Advantage plans. While Medicare Advantage provides the same coverage as traditional Medicare, you must receive care from the network’s providers.
Part D, the outpatient prescription drug benefit, is voluntary and delivered through private plans that contract with Medicare either through stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug (MA-PD) plans. There is usually a monthly premium and a cost sharing for prescriptions. About 42 million people are enrolled in Part D.