Healthcare reform legislation made vast changes to Medicare. Although new benefits have been widely touted in the media, there are also new costs and other caveats to watch for. Here’s a closer look:
• Changes in Medicare Advantage: To help pay for health reform, Congress is cutting payments to Medicare Advantage plans beginning next year. The Centers for Medicare and Medicaid Services (CMS) says that they are protecting beneficiaries from “excessive increases in premiums and cost sharing” and setting limits on out-of-pocket expenses. Beneficiaries won’t lose any of their basic Medicare benefits, but they may very well lose other valuable benefits, like coverage for eyeglasses or dental exams. In addition, independent health policy researchers estimate that premiums will increase by double digits in the plans with the highest enrollment. Tip: Carefully review mailings from your insurer this fall for changes in coverage and cost increases. Compare other plans and switch if you find a better one.
• Changes to Part D plans: In Medicare’s effort to make it “simpler” for beneficiaries to pick drug coverage, an estimated three million seniors may need to switch drug plans this fall whether they want to or not. A new rule requires insurers to eliminate duplicative plans and consolidate. Seniors will not lose coverage but they could see changes in their premiums and co-payments. Insurers may automatically reassign you to a comparable plan offered by their insurance company. Tip: Consolidation should mean more members and less administrative costs for insurers. Make sure that insurers reward you for staying in their plans by keeping premiums and co-payments similar or even better than you paid in 2011. Double check to make sure the drugs you take are still covered.
• Doughnut hole discounts: Next year seniors who hit the doughnut hole coverage gap of their drug plan will receive 50% off the price of their brand-name drugs at the expense of pharmaceutical companies. But any smart shopper wants to know exactly the retail price on which they are getting a discount. Tip: Contact your drug plan and check the full retail price that your drug plan charges of any brand name drugs that you take. Find out the estimated price if you hit the coverage gap. There’s a concern that manufacturers will steeply increase the price of brand name drugs to offset the cost of the discount.
• Free preventive care: In 2011 seniors will not have to pay any cost-sharing for covered preventive services. However, healthcare reform required that in order to waive the cost-sharing, recommended services must be rated A or B by the U.S. Preventive Services Task Force (USPSTF). That could mean some seniors still wind up with co-pays for services they thought would be provided at no charge. For example, the USPSTF recommends screening for colorectal cancer beginning at age 50 and continuing until 75. Seniors over 75 may have to pay co-insurance. Tip: Medicare beneficiaries should confirm with insurers whether scheduled preventive services will be provided at no co-pay. Your doctor may not know.
• Income based Part D premiums — Seniors with incomes of $85,000 and higher pay a larger portion of the Medicare Part B premium. Starting in 2011 those seniors will also pay higher Part D premiums as well. Although the national average Part D premium in 2011 is about $32, the Medicare Trustees estimate that seniors with incomes of $85,000 or more will pay from $45.90 to $104.80 for their Part D coverage in 2011 depending on income. Tip: Watch for notices from the Social Security Administration that provide information about your 2011 Medicare premiums. If your financial situation has changed and you don’t think Social Security’s determination of your higher Medicare premiums are correct, it’s essential to follow the directions in your letter to ask for a re-determination or appeal by the deadline.
Sources: “Medicare Advantage Premiums Fall,” Centers for Medicare & Medicaid Services, September 21, 2010. “More Than 3M Seniors May Have To Switch Drug Plans,” Ricardo Alonso-Zaldivar, The Associated Press, August 25, 2010. “Medicare Doughnut Hole Relief Could Be Offset By Higher Prescription Drug Prices,” David Hilzenrath, The Washington Post, September 21, 2010.