Part B 2012 Medicare Premiums Announced

The Department of Health and Human Services (HHS) has announced that Part B premiums for Medicare beneficiaries will rise to $99.90 in 2012, an increase of $3.50 over the 2011 cost. This was far lower than the anticipated increase of $106.00 per month.

Part B pays for physician visits, hospital outpatient costs and certain other services.

Officials attributed the lower than expected premium increase to several factors, including lower-than-expected use of medical care and slower cost growth.

For more information please visit www.medicare.gov.

 

Part D Prescription Drug Plan Premiums to Increase for Wealthy Seniors

As reported yesterday,  Medicare Part B premiums are tied to a seniior’s income history.  The most affluent seniors have been paying higher income threshold Medicare Part B premiums (doctor visits and outpatient services) since 2007. The surcharge was put in place by the Medicare Modernization Act of 2003

 This premium increase also  extends the income threshold formulas to Part D prescription drug enrollees for the first time. This will affect just 5% of Medicare enrollees this year, although that figure will rise to 14% by 2019 according to the Kaiser Family Foundation.

High-income seniors who pay both Part B and Part D premiums could see their combined premiums rise anywhere from $300 to $700 per month by the end of the decade, according to Juliette Cubanski, associate director of Kaiser’s Medicare Policy Project.

The new income thresholds also affect people who choose a Medicare Advantage plan (Part C), which often covers prescription drugs. Advantage enrollees typically pay the monthly Part B premium plus a supplemental premium to the Medicare Advantage plan; now, these premiums are being adjusted to factor in the higher-income amounts for Part B and Part D coverage, where applicable.

The policy aims to help offset the cost of health-care reform by reducing taxpayer subsidies on Medicare services for seniors who don’t really need the help.  Kaiser estimates that the higher premiums will save taxpayers $25 billion for Part B from 2010 to 2019, and $10.7 billion for Part D.

These changes will provide important new benefits to retirees that should at least take the edge off the higher expenses over time.

The Medicare D prescription drug doughnut hole will be closed. That’s the coverage gap that starts when a beneficiary’s annual drug spending hits $2,830, and resumes at the catastrophic level ($4,550). This year, pharmaceutical companies are providing a discount of 50% on brand-name drugs to low- and middle-income beneficiaries who find themselves in the gap. Then, the doughnut hole itself will shrink a bit every year, ultimately disappearing entirely in 2020.

These will also be important improvements to traditional Medicare aimed at boosting preventive care. Medicare patients now receive an annual wellness visit–with no co-payment or deductible–that includes a comprehensive health risk assessment and a long-term personalized prevention plan. Deductibles and co-payments also were eliminated for most preventive care services.

2011 Part B Premium Amounts for Persons with Higher Income Levels

Most Medicare beneficiaries continue to pay the same $96.40 or $110.50 Part B premium amount in 2011. Beneficiaries who currently have the Social Security Administration (SSA) withhold their Part B premium and have incomes of $85,000 or less ($170,000 or less for joint filers) did not have an increase in their Part B premium for 2011.  For all others, the standard Medicare Part B monthly premium is $115.40 in 2011, which is a 4.4% increase over the 2010 premium. The Medicare Part B premium increased in 2011 due to increases in Part B costs.  

If your income is above $85,000 (single) or $170,000 (married couple), then your Medicare Part B premium may be higher than $115.40 per month.  Social Security will use the income reported two years ago on your IRS income tax return to determine your premium (if unavailable, SSA will use income from three years ago).  For example, the income reported on your 2009 tax return will be used to determine your monthly Part B premium in 2011. If your income has decreased since 2009, you can ask that the income from a more recent tax year be used to determine your premium, but you must meet certain criteria.

The chart below shows the Part B monthly premium amounts based on income. These amounts change each year. There may be a late-enrollment penalty.

Table 1: Part B Monthly Premium
   Beneficiaries who file an individual tax return with income   Beneficiaries who file a joint tax return with income
Your 2011 Part B Monthly Premium Is If Your Yearly Income Is
$96.40 if beneficiary had SSA withhold in 2009 

$110.50 if beneficiary was new in 2010 and had SSA withhold

$115.40 for all others

 $85,000 or less $170,000 or less
 $161.50

(increased by $46.10 due to IRMAA)

 $85,001-$107,000 $170,001-$214,000
 $230.70

(increased by $115.30 due to IRMAA)

 $107,001-$160,000 $214,001-$320,000
 $299.90

(increased by $184.50 due to IRMAA)

 $160,001-$214,000 $320,001-$428,000
 $369.10

(increased by $253.70 due to IRMAA)

 Above $214,000 Above $428,000
Table 2: Part B Monthly Premium
Beneficiaries who are married, but file a separate tax return from their spouse and lived with his or her spouse at some time during the taxable year
Your 2010 Monthly Premium is Beneficiaries who are married but file a separate tax return from his or her spouse
 $96.40 if beneficiary had SSA withhold in 2009

$110.50 if beneficiary was new in 2010 and had SSA withhold

$115.40 for all others

 $85,000 or less
 $299.90

(increased by $184.50 due to IRMAA)

 $85,001-$129,000
 $369.10

(increased by $253.70 due to IRMAA)

Above $129,000

If you are having trouble paying your premiums, you should call your State Medical Assistance (Medicaid) office to see if you qualify for some help. Some states refer to the Medicaid office as the Public Aid office, the Public Assistance office, or the State Medical Assistance office.

INCOME RELATED MONTHLY ADJUSTMENT AMOUNT (IRMAA)

The Internal Revenue Service supplies your tax filing status, your adjusted gross income, and your tax-exempt interest income to the Social Security Administration to determine if you have an income related monthly adjustment amount (IRMAA). The Social Security Administration will add your adjusted gross income together with your tax-exempt interest income to get an amount called the modified adjusted gross income (MAGI).

The income-related monthly adjustment amount is effective from January 1 through December 31 each calendar year. The Social Security Administration will refigure your Medicare Part B premium amount again next year when the Internal Revenue Service updates the information.

For more information, please refer to the Medicare website at www.medicare.gov.

Wellness & Healthcare Mandates Part of Health Reform

Wellness & Healthcare Mandates Part of Health Reform

Health experts agree that one of the most difficult trends in the American health care system is the development of health conditions that could have been prevented or managed at the beginning, resulting in more costly methods of treatment.

 In order to promote wellness and decrease the costs associated with preventable illness, Congress has enacted the following legislation as part of the Health Reform Legislation: 

  • Starting in September of 2010, Medicare, employer‐sponsored (and other) group health  plans and  health insurance issuers are prohibited from requiring co‐pays for certain  preventive services, such as cancer and mental health screenings and immunizations; 
  • Beginning in 2014, certain most individual, employer and health insurance Exchange plans must cover “essential heath benefits”.  The Secretary of Health and Human Services (HHS) is to define the essential health benefits, however such benefits are required to include certain general categories, including: emergency services, hospitalization, maternity and newborn care, prescription drugs, laboratory services, mental health services, preventive and wellness services and chronic disease management(PPACA, Sec. 1302) 
  • Previous legislation allowed employers to reward workers who maintained a healthy lifestyle via participation in wellness programs, such as smoking cessation and fitness programs, with reductions in premium.    Starting January 1, 2014, group health plans may give reductions of up to 30% of the cost of premiums to employees who voluntarily participate in wellness programs. This may be expanded to 50% subject to the discretion of the Secretary of Health and Human Services

  For additional information on this legislation,  please refer to the Democratic Policy Committee Senate website at http://dpc.senate.gov/healthreformbill/healthbill75.pdf

Future Part D Medicare Donut Hole to take less of a bite out of savings

Future Part D Medicare Donut Hole to take less of a bite out of savings
Some of the current Medicare Part D Drug plans will offer coverage for the “Donut Hole” or gap in coverage beginning after $2700 is costs are incurred. Coverage will once again resume after $6154 in costs are reached.  These plans typically cost more as they offer more coverage.  The recently passed health reform legislation provides that an enrollee will receive a $250 rebate once they reach $2700 in costs.  Beginning in 2011 enrollees will receive a 50% discount on brand name drugs while in this “donut hole”.  We can assist enrollees in selecting plans for the 2011 year keeping these reduced costs in mind so future expenses will “take less of a bite” out of their savings.