The Truth About Those Medicare Advantage TV Commercials
Why the ‘Friends Talk Money’ podcast hosts say the ‘free’ policy come-ons can be misleading
Now that it’s Medicare Open Enrollment season through Dec. 7, if you’re 65 or older and eligible for Medicare, or a loved one is, you’ll want to know the answer.
“We’re going to give you a Turkey on Thanksgiving! They promise so much.”
My “Friends Talk Money” podcast co-hosts and I just looked into the popular Medicare Advantage plans (also called Medicare Part C plans) for our latest episode, speaking with Medicare maven Diane Omdahl, of the 65Incorporated.com site. These plans, now chosen by 42% of Medicare beneficiaries, are sold by private health insurers, as opposed to the alternative Original Medicare program offered by the federal government.
The commercials, said “Friends Talk Money” co-host Terry Savage, a syndicated personal finance columnist and author and Medicare expert, promote their one-stop shopping and potential money savings.
What the Medicare Advantage Commercials Say
Savage noted the ads often say: “Let us do everything! And we’re going to give you hearing [coverage] and we’re going to give you dental and we’re going to pick you up and drive you to your doctor’s appointments. We’re going to give you a turkey on Thanksgiving! They promise so much.”
Omdahl told listeners: “Based on the commercials that are on television every day, people see something they think is going to be more cost effective and then they opt for that [Medicare Advantage] coverage without really knowing what they’re getting into.”
She’s right. A recent survey by the Kaiser Family Foundation found that seven in 10 Medicare beneficiaries didn’t compare coverage options during the most recent Open Enrollment period. And in a MedicareAdvantage.com survey of over 1,000 beneficiaries, three out of four called Medicare “confusing and difficult to understand.”
According to the Kaiser Family Foundation, the average Medicare beneficiary has a choice of 54 Medicare plans, there are 766 Medicare Part D prescription drug plans and a record 3,834 Medicare Advantage plans will be available in 2022 (up 8% from 2021).
Here’s the bottom line from Omdahl and the “Friends Talk Money” hosts: Some of what you hear on those Medicare Advantage TV ads is true, but the fine print shows that “free” isn’t really “free.” When the commercials say “zero premium, zero deductible and zero co-pay,” that’s not the whole story.
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Before I explain the truth about Medicare Advantage’s costs and coverage, it may help to provide a little context about Open Enrollment and Medicare Advantage plans. (Buckle up: Medicare Open Enrollment rules are complicated.)
During annual Open Enrollment, Medicare enrollees can switch from Original Medicare to Medicare Advantage or the other way around; switch from one Medicare Advantage plan to another and enroll in a Medicare Part D prescription drug plan in certain instances.
There’s also a Medicare Advantage Open Enrollment period, from Jan. 1 through March 31, when you can switch your Advantage plan to a different one or switch back to Original Medicare and sign up for a Part D plan.
The Fine Print of Medicare Advantage Plans
Medicare Advantage plans, usually bundled with prescription drug coverage, typically require you to use health care providers in their network. The policies limit your annual out-of-pocket costs for covered services.
“They think ‘zero premium’ means it’s free, which it’s not.”
“People need to go beyond the commercials” to understand the fine print of Medicare Advantage plans, Omdahl said. “There are indeed zero-premium Advantage plans and many of the plans do not have any [annual out-of-pocket] deductibles. But the zero co-pay is misleading. Zero co-pay is for your primary doctor; depending on where you live, co-pays may apply in other situations.”
In addition, noted Omdahl, “start digging into the evidence of coverage and you will see that Medicare Advantage is pay-as-you go: fifty dollars to see a specialist, four hundred dollars a day for five or six days of hospitalization. So you are writing checks, and that’s what people don’t realize. They think ‘zero premium’ means it’s free, which it’s not.”
Savage said that due to the Medicare program’s rules, Medicare Advantage enrollees could wind up paying out of pocket as much as $7,500 a year; more than $11,000 a year if you use out-of-network health care providers.
“These plans work best if you don’t get sick,” she said. “Once you need to see a lot of specialists, then you start paying.”
Omdahl said that before signing up for a Medicare Advantage plan, understand that anytime you want care other than an emergency, the plan has to approve it.
“If you need physical therapy, for instance, the plan has to approve the request for the service and then they’ll usually say the person gets three visits or five visits or whatever. So, they are controlling the utilization of services of the members,” she explained.
Savage said if you’re in a Medicare Advantage plan and want to switch back to traditional Medicare for 2022, you could run into a problem. “If you have become ill, there’s a medical underwriting [a health care provider must check you out before you’re granted coverage] and in most states they can turn you down for the most comprehensive Medicare supplement [Medigap] plan.”
Think Before You Switch
So, Savage advised, “think very carefully before you switch out of traditional Medicare, which lets you see just about any doctor or go to any hospital.”
I noted a recent study by the nonprofit health care research group The Commonwealth Fund that looked at Medicare Advantage plans and traditional Medicare. Overwhelming majorities of Medicare beneficiaries in both traditional Medicare and Medicare Advantage were satisfied with their care.
The researchers discovered that the Advantage plans didn’t substantially improve beneficiaries’ health care experiences compared to traditional Medicare, but did offer somewhat more care management. That means of those with a health condition, a larger share of Medicare Advantage enrollees in the study said that a health care professional had given them clear instructions about symptoms to monitor and had discussed their priorities in caring for the condition.
Indian pharmaceutical company Marksans Pharma Limited is recalling metformin hydrochloride extended-release tablets because their levels of NDMA, a “probable human carcinogen,” were higher than the acceptable daily intake limit of 96 nanograms per day, according to a recall published this week by the US Food and Drug Administration (FDA).
Metformin tablets are used to treat type 2 diabetes and are designed to lower glucose levels.
The recall applies to metformin tablets between 500 mg and 750 mg, sold under the brand name Time-Cap Labs, Inc.
The recall expands an earlier recall of the same product from this summer. But it’s just one of several metformin products that have been found to contain NDMA in the last year. Seven other pharmaceutical companies have issued recalls for metformin hydrochloride extended-release tablets due to their carcinogenic contents.
The FDA is still investigating where NDMA comes from and how it ends up in metformin products. Most levels found in medications are generally low and fall within the FDA’s accepted daily intake, but recently recalled medications exceed that. Marksans Pharma Limited, India, however, did not reveal how much NDMA its recalled products contained.
The recall applies to the following products, which can be identified by their National Drug Code numbers listed below (National Drug Codes can be used to search and identify products online through the FDA). The tablets are either embossed with 101 or 102 on one side and are plain on the other.
Metformin Hydrochloride Extended-Release Tablets, USP 500mg:
90 counts: 49483-623-09
100 counts: 49483-623-01
500 counts: 49483-623-50
1000 counts: 49483-623-10
Metformin Hydrochloride Extended-Release Tablets, USP 750mg:
100 counts: 49483-624-01
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The American Association for Medicare Supplement Insurance just completed its 2020 Medigap Cost Comparison for those turning 65, and it reveals an important finding that has real significance for insurance agents marketing Med Supps.
“With Medigap Plan F no longer available for new enrollees, we compared Plan G that we expect will become 2020’s No. 1-selling option,” says AAMSI Director Jesse Slome.
Here’s what they found: A 65-year-old man in Manhattan buying Medicare Supplement insurance (Plan G) could pay as little as $268 a month or as much as $476 a month. A 65-year-old woman shopping for Medigap Plan G in Dallas could find coverage for $99 or $381 (monthly).
The Association’s 2020 Price Comparison examined costs for Medicare Plan G costs for Top 10 U.S. Metro Areas. The chart shows the increase in costs for both men and women who will be first applying at age 65. No one Medicare insurance company was consistently the lowest cost for Plan G. No one company was the highest. In fact, for the 20 Zip Codes, the survey found 13 different Medicare insurance companies had either the lowest or the highest prices.
To get the most competitive rate in your area click this link for a free quote: https://medicareic.com/get-a-quote
- Certain costs are adjusted yearly by the government and can affect premiums, deductibles and other cost-sharing aspects of Medicare.
- Even though each change doesn’t necessarily involve huge dollar amounts, they can add up and should be factored into your monthly health-care spending.
- Beneficiaries with limited income might qualify for Medicaid or other programs that cover Medicare expenses, while higher-income beneficiaries pay more for some parts of coverage.
The maze that is Medicare includes some higher costs for 2020 that beneficiaries might want to factor into their health-care budgets.
For the program’s 61 million beneficiaries — most of whom are 65 or older — certain costs are adjusted by the government from year to year and can affect premiums, deductibles and other cost-sharing aspects of Medicare. While each of the changes don’t necessarily involve huge dollar amounts, experts say it’s important to plan for how any increases will affect your household spending.
“For someone on a fixed income, all of those little changes really add up,” said Elizabeth Gavino, founder of Lewin & Gavino in New York and an independent broker and general agent for Medicare plans.
Basic Medicare consists of Part A (hospital coverage) and Part B (outpatient care). About a third of beneficiaries choose to get those benefits delivered through an Advantage Plan, which are offered by private insurers.
Those plans typically also include Part D prescription drug coverage, as well as extras such as dental or vision. They also limit what you pay out of pocket for Parts A and B services.
Other beneficiaries stick with basic Medicare and pair it with a standalone Part D prescription drug plan. About 30% of them also purchase a supplement plan — aka “Medigap” — which picks up some of the costs that come with basic Medicare, such as coinsurance or copays
And then, there are those in-between.
“We’ve got a subset of people who aren’t eligible for Medicaid or other types of assistance, but they fall into a category where every penny counts,” Gavino said.
Here are costs that have changed for 2020.
Parts A & B
Most Medicare beneficiaries pay no premium for Part A because they (or their spouse) have enough of a work history — at least 10 years — of paying into the system through payroll taxes to qualify for it premium-free.
If you don’t meet the minimum requirement, though, monthly premiums could be as much as $458 a month, depending on whether you’ve paid any taxes into the Medicare system at all. That maximum is up from $437 in 2019.
And, regardless of whether you pay a premium, there are cost-sharing aspects that go with Part A.
For those who don’t have additional coverage beyond basic Medicare, the amount you’d pay when admitted to the hospital will be $1,408 next year, up from $1,364 in 2019. That covers the first 60 days of Medicare-covered inpatient hospital care in a benefit period.
For the 61st through 90th days of a hospitalization, beneficiaries will pay $352 per day, up from $341 in 2019, and then $704 per day for 60 “lifetime reserve” days, up from $682 this year.
Meanwhile, for Part B, the standard premium in 2020 will be $144.60 monthly, up $9.10 from $135.50 in 2019.
Some recipients won’t pay the full standard premium due to a “hold harmless” provision that prevents their Part B premiums from rising more than their Social Security cost-of-living adjustment, or COLA.
Others, however, will pay more than the standard due to income-adjusted surcharges (see tables below).
Keep in mind that the government uses your tax return from two years earlier to determine whether you’ll pay those monthly adjustments. So for 2020, it would be your 2018 return. To request a reduction in that income-related amount due to a life-changing event such as retirement, the Social Security Administration has a form you can fill out.
The annual deductible for Part B will rise to $198, up from $185 in 2019. Once you meet that deductible, you typically pay 20% of covered services. Keep in mind that beneficiaries in Advantage Plans might pay a different amount through copays, and Medigap policies either fully or partially cover that coinsurance.
Also, while Advantage Plan premiums vary among plans — the average for 2020 is $23, down from about $27 this year — any monthly charge would be on top of your Part B premium. And, some of those options either have no monthly charge or will pay your Part B premium.
(If you don’t like your Advantage Plan, you can switch or drop it in the first three months of the year.)
How much you pay for drug coverage depends partly on the plan you choose, along with your income.
The average monthly premium for a standalone drug plan in 2020 will be $30, according to the Centers for Medicare and Medicaid Services, down from $32.50 in 2019. As with Part B premiums, higher earners pay extra (see chart below).
Those surcharges were adjusted slightly downward: for example, individuals with income above $500,000 (again, based on 2018 tax returns) will pay $76.40 extra each month, vs. $77.40 in 2019.
Be aware that those charges are not tacked on to your plan premium — they either come out of your Social Security check or you get a bill.
Also, while not everyone pays a deductible for Part D coverage — some plans don’t have one — the maximum it can be is $435 in 2020, up from $415 in 2019.
For people with high prescription costs, be aware that the amount that Part D enrollees pay out of pocket before qualifying for “catastrophic coverage” will jump to $6,350 in 2020 from $5,100 this year. In that phase of coverage, your share of prescription costs drops.
Remember, though, there are no out-of-pocket limits when it comes to Part D coverage. Sometimes, you can find medicines at a cheaper cost than through your plan, such as with a free drug-discount card or program, such as GoodRx or Blink Health, Gavino said.
However, she said, if you go this route instead of through your insurance, your plan won’t count the medicine’s cost and your copay toward your deductible or other calculations it uses to determine your share.
Medicare’s Fall Open Enrollment Period (OEP) is a busy time for beneficiaries and those who help them evaluate their health care and prescription drug coverage options. From October 15 to December 7 each year, people with Medicare can make changes to their coverage, such as switching Part D prescription drug plans, or switching between Original Medicare and Medicare Advantage. This annual decision-making process can be complex, and several changes this year are making it even more so.
First, people with Medicare must compare more plans than ever before. A new analysis from the Kaiser Family Foundation (KFF) finds the average Medicare beneficiary will have a choice of 28 prescription drug plans (PDPs) in 2020, a 29% increase from just three years ago. And these decisions aren’t getting any easier, as plan premiums continue to vary widely. Among the 20 PDPs available nationwide, average premiums range from $13 to $83 per month.
Second, an unprecedented number of beneficiaries are facing premium increases if they don’t change plans by December 7. According to KFF, two-thirds of Part D enrollees without low-income subsidies—9 million enrollees—will see their monthly premium increase in 2020 if they maintain current coverage. This is largely due to plan changes and consolidations. For example, Humana recently consolidated two of its PDPs (Humana Walmart Rx and Humana Enhanced) into one new plan, Humana Premier Rx, which will carry a $57 monthly premium in 2020. As a result, unless they switch plans, 1.9 million enrollees without low-income subsidies in the Humana Walmart Rx Plan—the third most popular PDP in 2019—will see their monthly premium double in 2020, from $28 to $57.
Third, for this year’s OEP, the Centers for Medicare & Medicaid Services (CMS) redesigned the Medicare Plan Finder (MPF) tool on which millions rely for accurate plan information. Medicare Rights appreciates CMS’s work to modernize MPF; many of the changes are significant improvements. However, we remain concerned that this well-intended revamp may further complicate the plan comparison process for some looking to make plan changes this fall. Specifically, that issues with the new tool’s roll out, content, and functionality could cause beneficiaries to make sub-optimal coverage decisions for 2020, errors they may not discover until well into next year. A recent Health Affairs article underscores this concern, noting that many of the MPF revisions will make the tool more user-friendly—while others may undermine plan selection efforts, including by steering beneficiaries away from lower-cost options.
To mitigate these potential hardships and improve MPF ongoingly, Medicare Rights is working with CMS and other stakeholders to address problems with the tool; we applaud the agency’s responsiveness in quickly adopting many of our initial recommendations. We are also urging CMS to take steps to prevent beneficiaries from experiencing any MPF-related enrollment complications in 2020. We look forward to continuing to work to strengthen this important resource in ways that empower people with Medicare to make informed decisions about their care.
Additionally, amid these trends and changes, Medicare Rights is helping people with Medicare weigh their options. Read more about the services and resources we provide during Fall Open Enrollment, including Medicare Plan Finder appointments, and call our National Consumer Helpline (800-333-4114) today with any questions. We also offer a free, downloadable Fall Open Enrollment guide to connect beneficiaries with accurate, unbiased Medicare information, as well as this online resource to help people get started with the new MPF.
Trump to Unveil Order Aiming to Boost Medicare Health Program
Thursday, 03 October 2019
President Donald Trump will unveil an executive order on Thursday aimed at strengthening the Medicare health program for seniors by seeking to improve its fiscal position and offer more affordable plan options, administration officials told Reuters.
The order, which Trump will discuss during a visit to a retirement community in Florida known as the Villages, is the Republican president’s answer to some Democrats who are arguing for a broad and expensive expansion of Medicare to cover all Americans, plans that Republicans reject.
It follows measures rolled out in recent months by the administration designed to curtail drug prices and correct other perceived problems with the U.S. healthcare system, though policy experts say those efforts are unlikely to slow the tide of rising drug prices in a meaningful way.
Seniors are a key constituency for Republicans and Democrats, and Florida is a political swing state that both parties woo in presidential elections.
The order is designed to show Trump’s commitment to keeping Medicare focused on seniors, said one administration official who described its contents ahead of the announcement.
The order pushes for Medicare to use more medical telehealth services, which is care delivered by phone or digital means.
The official said that would reduce costs by cutting down on the number of expensive emergency room visits by patients; lower costs would help strengthen the program’s finances.
The order directs the government to work to allow private insurers who operate Medicare Advantage plans to use new plan pricing methods, such as allowing beneficiaries to share in the savings when they choose lower-cost health services.
It also aims to bring payments for the traditional Medicare fee-for-service program in line with payments for Medicare Advantage.
Trump’s plans contrast with the Medicare for All program promoted by Bernie Sanders, a Democratic socialist who is running to become the Democratic Party’s nominee against Trump in the 2020 presidential election.
Sanders’ proposal, backed by left-leaning Democrats but opposed by moderates such as former Vice President Joe Biden, would create a single-payer system, effectively eliminating private insurance by providing government coverage to everyone, using the Medicare model.
The senior Trump administration official said Democrats advancing such ideas were “trying to steal the brand of Medicare and the good reputation it has in order to mask what would be a disastrous healthcare plan.”
He said Trump’s plan sought to modernize the program and preserve it for senior citizens going forward.
The White House is eager to show Trump making progress on healthcare, an issue Democrats successfully used to garner support and take control of the House of Representatives in the 2018 midterm elections. Trump campaigned in 2016 on a promise to repeal and replace the Affordable Care Act, his predecessor President Barack Obama’s signature healthcare law also known as “Obamacare,” but was not successful.
In July, the U.S. Department of Health and Human Services (HHS) said it would propose a rule for imports of cheaper drugs from Canada into the United States. A formal rule has not yet been unveiled.
The administration also issued an executive order in June demanding that hospitals and insurers make the prices they charge patients more transparent, as well as another in July encouraging novel treatments for kidney disease.
Trump considered other proposals that did not reach fruition.
A federal judge in July shot down an executive order that would have forced drugmakers to display their list prices in advertisements, and Trump scrapped another planned order that would have banned some of the rebate payments drugmakers make to payers.
The administration is also mulling a plan to tie some Medicare reimbursement rates for drugs to the price paid for those drugs by foreign governments, Reuters reported.
There are a few changes coming to Medicare in 2020. Here is a great article by Louise Norris that highlights some of the changes.
- The standard Part B premium is projected to increase to $144.30/month.
- The Part B deductible is projected to increase to $197 for 2020.
- Part A premiums, deductible, and coinsurance are projected to be higher in 2020.
- Medigap Plans C and F will no longer be available for purchase by newly-eligible Medicare beneficiaries.
- The Medicare Plan Finder tool has been upgraded for the first time in a decade.
- The income brackets are high-income premium adjustments for Medicare Part B and D will be inflation-adjusted for the first time in 2020; “high-income” will start at $87,000 for a single person, instead of $85,000.
- Medicare Advantage enrollment is expected to continue to increase.
- Part D donut hole will no longer exist after the end of 2019, but a standard plan’s maximum deductible will increase to $435, and the threshold for entering the catastrophic coverage phase (where out-of-pocket spending decreases significantly) will increase to $6,350.
Q: What are the changes to Medicare benefits for 2020?
A: There are several changes for Medicare enrollees in 2020:
Part B premiums
The standard premium for Medicare Part B is $135.50/month for 2019, but it’s projected to increase to $144.30/month in 2020 (this won’t be finalized until the fall of 2020, and as discussed below, higher premiums apply to enrollees with high incomes).
The Social Security cost of living adjustment (COLA) is expected to be about 1.6 percent for 2020, which will increase the average retiree’s total benefit by about $23/month. That’s more than enough to cover the roughly $9 increase in premiums for Part B, which means that the premium increase is likely to apply to nearly all Part B enrollees.
[If a Social Security recipient’s COLA isn’t enough to cover the full premium increase for Part B, that person’s Part B premium can only increase by the amount of the COLA, as Part B premiums are withheld from Social Security checks, and the net check can’t decline from one year to the next.]
Part B deductible
The Part B deductible was $183 in 2017 and it remained at that level in 2018. For 2019, however, it increased to $185. And for 2020, it’s projected to increase to $197, although the exact amount won’t be finalized until the fall of 2019.
Some enrollees have supplemental coverage that pays their Part B deductible. This includes Medicaid, employer-sponsored plans, and Medigap plans C and F. Medigap plans that cover the Part B deductible can only be sold to newly-eligible enrollees through 2019 — after that, people can keep Plans C and F if they already have them, newly-eligible Medicare beneficiaries will no longer be able to buy Medigap plans that cover the Part B deductible. (The impending ban on the sale of Medigap plans that cover the Part B deductible was part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), in an effort to curb utilization by ensuring that enrollees would incur some out-of-pocket costs during the year.)
Many Medicare Advantage plans have low copays and deductibles that don’t necessarily increase in lockstep with the Part B deductible, so their benefits designs have had different fluctuations over the last few years. (Medicare Advantage enrollees pay the Part B premium, but their Medicare Advantage plan wraps Part A, Part B, and various supplemental coverage together into one plan, with out-of-pocket costs that are different from Original Medicare).
Part A premiums, deductible, and coinsurance
Medicare Part A covers hospitalization costs. For most enrollees, there’s no premium for Part A. But people who don’t have 40 quarters of work history (or a spouse with 40 quarters of work history) must pay premiums for Part A coverage.
Those premiums have trended upwards over time, although they’re lower in 2019 than they were in 2010. They’re projected to increase in 2020, however: The premium for people with 30+ (but less than 40) quarters of work history is projected to be $253/month in 2020, up from $240/month in 2019. And for people with fewer than 30 quarters of work history, the premium for Part A is projected to be $460/month in 2020, up from $437/month in 2019 (these numbers are from the Medicare Trustees’ 2019 report, the exact amounts will be published by CMS in the fall of 2019).
Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans), and it generally increases each year. In 2019 it is $1,364, but it’s projected to increase to $1,420 in 2020. The increase in the Part A deductible will apply to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.
The Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the enrollee needs additional inpatient coverage during that same benefit period, there’s a daily coinsurance charge. In 2019, it’s $341 per day for the 61st through 90th day of inpatient care, and that’s projected to increase to $355 in 2020. The coinsurance for lifetime reserve days is $682 per day in 2019, and that’s projected to increase to $710 in 2020.
For care received in skilled nursing facilities, the first 20 days are covered with the Part A deductible that was paid for the inpatient hospital stay that preceded the stay in the skilled nursing facility (Medicare only covers skilled nursing facility care if the patient had an inpatient hospital stay of at least three days before being transferred to a skilled nursing facility). But there’s a coinsurance that applies to days 21 through 100 in a skilled nursing facility. In 2019, it’s $170.50 per day, and that’s projected to increase to $177.50 per day in 2020.
[All of these projections are on page 188 of the 2019 Medicare Trustees’ Report; CMS will confirm the official amounts in the fall of 2019.]
Medigap Plans C and F will not be available to newly-eligible enrollees
As a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Medigap plans C and F (including the high-deductible Plan F) will no longer be available for purchase by people who become newly-eligible for Medicare on or after January 1, 2020. People who become Medicare-eligible prior to 2020 can keep Plan C or F if they already have it, or apply for those plans at a later date (medical underwriting applies in most states if you’re switching from one Medigap plan to another after your initial enrollment window ends).
Medigap Plans C and F cover the Part B deductible ($185 in 2019; projected to be $197 in 2020) in full, whereas other Medigap plans require enrollees to pay the Part B deductible themselves. The idea behind the change is to discourage overutilization of services by ensuring that enrollees have to pay at least something when they receive outpatient care, as opposed to having all costs covered by a combination of Medicare Part B and a Medigap plan.
Because the high-deductible Plan F is being discontinued for newly-eligible enrollees, there will be a new high-deductible Plan G available instead.
Upgraded Medicare plan finder tool
CMS announced in August 2019 that the Medicare Plan Finder tool had been upgraded for the first time in a decade. Both the old and new plan finder tool are available through the end of September 2019; after that, only the new tool will be available. The new tool includes a wide range of improvements and automation, and keeps up with the increasing tech-savviness of new Medicare enrollees.
But some brokers and enrollment assisters have concerns about the new tool and the fact that it’s being rolled out right before open enrollment — this letter from a Medicare broker has more details. In order to have the new system save the medication information you enter (so that you can come back to it later without having to enter it all again), you have to log into your MyMedicare account; this is causing concerns about privacy in situations where a beneficiary needs assistance with the plan comparison and enrollment process, and will make it more difficult for people who are approaching Medicare eligibility to accurately compare their plan options before enrolling in Medicare.
Although the new tool has more capabilities than the old one, it will also take time for people to get used to it if they were already accustomed to the old tool. It’s a good idea to carefully compare your plan options during open enrollment, and Medicare’s plan finder tool is an excellent resource. But beneficiaries will want to allow a little extra time this year to acclimate themselves to the new tool in order to take full advantage of all that it has to offer.Inflation adjustments for the high-income brackets
Medicare beneficiaries with high incomes pay more for Part B and Part D. But what exactly does “high income” mean? Since the income brackets were introduced (in 2007 for Part B, and in 2011 for Part D), the threshold has been set at $85,000 ($170,000 for a married couple). But starting in 2020, the income brackets will be adjusted for inflation. A high-income premium surcharge will apply to Medicare beneficiaries who earn at least $87,000/year as of 2020 ($174,000 for a married couple).
For high-income Part B enrollees (income over $85,000 for a single individual, or $170,000 for a married couple), premiums in 2019 range from $189.60/month to $460.50/month, depending on income. For 2020, these amounts are projected to range from $202/month to $490.50/month, and will apply to people earning at least $87,000 for an individual, or $174,000 for a married couple.
As part of the Medicare payment solution that Congress enacted in 2015 to solve the “doc fix” problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees, and they took effect in 2018, bumping some high-income enrollees into higher premium brackets.
And for 2019, a new income bracket was added on the high end, further increasing Part B premiums for enrollees with very high incomes. Rather than lumping everyone with income above $160,000 ($320,000 for a married couple) into one bracket at the top of the scale, there’s now a new bracket for enrollees with income of $500,000 or more ($750,000 or more for a married couple). People in this category pay $460.50/month for Part B in 2019, and their estimated premium will be $490.50/month in 2020. That top bracket — income of $500,000+ for a single individual or $750,000 for a couple — will remain unchanged in 2020, but the thresholds for each of the other brackets will increase slightly (starting with the lowest bracket increasing from $85,000 to $87,000, and so on; a similar adjustment applies at each level except the highest one).
Medicare Advantage enrollment expected to continue to increase
CMS has not yet announced average Medicare Advantage (Medicare Part C) premiums for 2020, although average premiums have been declining for the last several years. (Note that Medicare Advantage premiums are in addition to Part B premiums; people who enroll in Medicare Advantage pay their Part B premium and whatever the premium is for their Medicare Advantage plan, and the private insurer wraps all of the coverage into one plan.)
For perspective, a Kaiser Family Foundation analysis found that across Medicare Advantage plans with integrated Part D prescription coverage (MA-PDs), the average premium in 2019 is about $29/month, but that includes the fact that more than half of Medicare Advantage enrollees are in plans that have no premium at all. Among people who do pay a premium for their Advantage plan in 2019, the average monthly premium is $65.
About 22 million people have Medicare Advantage plans in 2019; enrollment in these plans has been steadily growing for the last 15 years. The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth. In 2004, just 13 percent of Medicare beneficiaries had Medicare Advantage plans. That had grown to 34 percent by 2019, and the new Medicare Plan Finder tool is designed in a way that could accelerate the growth in Advantage enrollment.
Part D donut hole will be fully closed as of 2020 (enrollees in standard plans will pay 25% of costs)
For stand-alone Part D prescription drug plans, the maximum allowable deductible for standard Part D plans will increase to $435 in 2020, up from $415 in 2019. And the out-of-pocket threshold (where catastrophic coverage begins) will increase significantly, from $5,100 in 2019 to $6,350 in 2020 (the copay amounts for people who reach the catastrophic coverage level will also increase slightly in 2020).
The good news is that the Affordable Care Act has been gradually closing the donut hole in Medicare Part D. As of 2020, there will no longer be a “hole” for brand-name or generic drugs: Enrollees in standard Part D plans will pay 25 percent of the cost (after meeting their deductible) until they reach the catastrophic coverage threshold. Prior to 2010, enrollees paid their deductible, then 25 percent of the costs until they reached the donut hole, then they were responsible for 100 percent of the costs until they reached the catastrophic coverage threshold.
That amount has been gradually declining over the last several years, and the donut hole closed one year early — in 2019, instead of 2020 — for brand-name drugs (so enrollees in standard plans paid 25 percent of the cost of brand-name drugs from the time they met their deductible until they reached the catastrophic coverage threshold). Enrollees pay 37 percent of the cost of generic drugs while in the donut hole in 2019, but that will also drop to 25 percent in 2020.