Medicare Annual Enrollment Period (AEP) Starts Today With Some Impact From Inflation Reduction Act

Medicare Annual Enrollment Period explained

The Medicare Annual Enrollment Period – AEP for short – is a set time each year during which Medicare beneficiaries can make new coverage choices.  AEP runs from October 15th - December 7th, with new coverage effective on January 1st.

The actions you can take during AEP depend on your current coverage:

I.  If you currently have Original Medicare (Parts A & B), you can:

• Join a Medicare Advantage plan (Part C) with or without built-in drug coverage.  You may be charged a late enrollment penalty if you do not currently have other creditable drug coverage.

• Join a stand-alone Medicare prescription drug plan (Part D).  A penalty may apply here as well if you do not currently have other creditable drug coverage.

• Make no changes and your current coverage will renew as is (unless there is a Plan Termination, which does not occur frequently).

II.  If you currently have Original Medicare (Part A and/or Part B) and a stand-alone Medicare prescription drug plan (Part D), you can:

• Join a Medicare Advantage plan (Part C) with or without built-in drug coverage.

• Switch from your current Medicare prescription drug plan to another Medicare prescription drug plan.

• Drop Medicare prescription drug coverage completely.  You may be charged a penalty if you decide to re-enroll in drug coverage later.

• Make no changes and your current coverage will renew as is.

III.  If you currently have a Medicare Advantage plan (Part C) with built-in drug coverage, you can:

• Switch from your current Medicare Advantage plan to another Medicare Advantage plan with or without built-in drug coverage.

• Drop your Medicare Advantage plan and go back to Original Medicare.

• Join a stand-alone Medicare prescription drug plan if you go back to Original Medicare or if you switch to a Medicare Advantage plan that does not include drug coverage.

• Drop Medicare prescription drug coverage completely.  You may be charged a penalty if you decide to re-enroll in drug coverage later.

• Make no changes and your current coverage will renew as is.

IV.  If you currently have a Medicare Advantage plan (Part C) and a stand-alone Medicare prescription drug plan (Part D), you can:

• Switch from your current Medicare Advantage plan to another Medicare Advantage plan with or without built-in drug coverage.

• Switch from your current Medicare prescription drug plan to another Medicare prescription drug plan.

• Drop your Medicare Advantage plan and go back to Original Medicare.

• Drop Medicare prescription drug coverage completely.  You may be charged a penalty if you decide to re-enroll in drug coverage later.

• Make no changes and your current coverage will renew as is.

Inflation Reduction Act Impacts - Part D Cost-Sharing Updates and New SEP

Effective January 1, 2023, the Inflation Reduction Act (IRA) will be in effect for all Medicare beneficiaries.  The IRA was introduced in October this year and provides cost-share reductions to assist Medicare beneficiaries with their Part D drug expenses.  The following updates will be reflected for Plan Year 2023:

• Covered insulins will be capped at $35 per fill for a 30-day supply.
• Part D vaccines (flu, shingles, pneumonia, COVID-19 etc.) will be $0.

Cost-Share Reduction Information on the Medicare Plan Finder

Prior to October 1, 2022, the Medicare Plan Finder reflected insulin and vaccine benefits as they were submitted in the 2023 bids made by Plan Sponsors.  Since the formulary submissions to CMS prior to the IRA being instated did not reflect the requirements highlighted above, some Part D coverage may not be accurately reflected on the Medicare Plan Finder.  CMS is in the process of making updates to include new insulin and vaccine drug footnotes and other help features to explain the benefit changes resulting from the IRA.

New Special Enrollment Period (SEP)

Due to the inaccuracies in the Medicare Plan Finder, CMS is granting a Special Enrollment Period (SEP) for Exceptional Circumstances to allow members to add, drop, or change their Part D coverage if they find a better option after the 2022 Annual Enrollment Period (AEP) through the end of 2023.  This SEP will be available for all beneficiaries who use a covered insulin product and begins on December 8, 2022 and ends on December 31, 2023.  Beneficiaries may use this SEP one time during this period.  To utilize this SEP, beneficiaries must call 1-800-MEDICARE so a customer service representative can process the enrollment change.

Until next time,

Andrew Herman

Affordability of Employer Coverage for Family Members of Employees

Earlier this week, the Internal Revenue Service released a final rule changing the way health insurance affordability is determined for members of an employee’s family under Affordable Care Act (ACA) regulations.

As discussed in the prior post, need-based calculations to determine eligibility for the federal ACA program and its subsidies consider only the employee, ignoring the spouse and children.  In many cases, an employer pays all or a portion of the employee's premium but nothing towards other members of the household.  In this case, ACA calculations determine that subsidized insurance is not available since the employer's health insurance is deemed "affordable" for the employee; but in fact, the family premium is prohibitively expensive and would be deemed unaffordable if the ACA need-based calculations included family members.

Under the new rules that begin in 2023, if a consumer has an offer of employer-sponsored coverage that extends to the employee’s family, the affordability of that offer of coverage for the family members will be based on the family premium amount, not the amount the employee must pay for self-only coverage.

This is a long-awaited solution to the "family glitch", which has been an issue since the ACA program's inception.  The change will be reflected in the online application through the HealthCare.gov enrollment platform and Enhanced Direct Enrollment certified partner applications during this year’s Open enrollment period that starts on November 1, 2022.  State-based Marketplaces not using the HealthCare.gov enrollment platform are also working to implement this change, but may have different implementation timelines. 

To view the final rule, please visit:

"https://www.federalregister.gov/documents/2022/10/13/2022-22184/affordability-of-employer-coverage-for-family-members-of-employees"

A Proposed Solution for the Affordable Care Act (ACA) Family Glitch

In April, the Biden administration proposed a solution to the ACA's "family glitch", a technical issue that has impacted family health premium subsidies since the program's inception.

Currently, people who are without access to "affordable" health insurance through a job may qualify for a premium tax credit to be applied towards a plan on the ACA’s health insurance marketplaces.  However, regulations that determine if employer-based insurance is affordable give consideration only to the employee, without any need-based calculations allowed for spouse or children.  

In the current situation, family members of the employee may have access to coverage through the employer, but the cost is often prohibitively expensive and out of reach for the household budget.  The so-called "family glitch" affects about five million people and has made it impossible for many families to use the premium tax credit to purchase an affordable ACA marketplace plan.

Should the proposed rule be finalized, family members of workers with affordable self-only coverage but unaffordable family coverage may qualify for premium tax credits to buy an ACA plan, according to a statement from the White House.  The proposed rule would extend marketplace tax credits to only the family members of workers who are not offered affordable job-based family coverage.

"Most people thought it would be up to Congress to remedy the family glitch.  But since getting modifications through Congress has proved nearly impossible, advocates have pushed for executive action,” said Julie Rovner of Kaiser Health News. “That is not as foolproof as passing a law and is subject to a challenge through lawsuits."

It is not uncommon where employee-only coverage is affordable but family coverage is not.  Most employers offer family coverage, but many do not subsidize the cost for family members of the employee.  The Kaiser Family Foundation’s 2021 Employer Health Benefits Survey shows premiums and employee contributions have increased significantly.  In 2021, average premiums for employee-only coverage were $7,739, compared to $22,221 for family coverage.  That's nearly $2,000/month!

The IRS will hold a hearing on the proposed rule on June 27.  Assuming the rule is finalized as proposed, the family glitch would no longer exist, and dependents offered unaffordable job-based family coverage could be eligible for more affordable marketplace coverage beginning in 2023.

Click here for the Fact Sheet distributed by the Biden Administration.

Until next time,

Andrew Herman