Medicare Advantage Trial Periods – What Are They and How Do They Help Medicare Beneficiaries?

Over half of current Medicare Beneficiaries receive benefits through Medicare Part C, an alternative to the Original Medicare program.  Under Medicare Part C, Beneficiaries enroll in health and drug plans offered by private insurance companies contracted with the federal government to provide Medicare benefits on a year-to-year basis.  Part C plans (known as Medicare Advantage) are governed by enrollment period rules that dictate when initial sign-up, plan changes, and disenrollments can be made.

Medicare Advantage plans sometimes are confused with Medicare Supplement policies widely available to Medicare Beneficiaries.  Medicare Supplement also is known as Medigap, as it serves to fill in gaps in medical benefits under the Original Medicare program design.  Beneficiaries on Original Medicare (with or without Medigap) optionally can obtain drug coverage via a Standalone Medicare Part D Prescription Drug Plan.  Federal rules govern enrollment timeframes for Medicare Part D, like Medicare Advantage.

A major difference between Medicare Advantage and Medigap is that in most locations, Medicare Advantage plans with rich benefits often come with a $0 plan premium (i.e., no additional premium beyond the Medicare Part B monthly premium), unlike Medicare Supplement policies that always have a monthly premium (and for those choosing to add a Standalone Medicare Part D plan, that premium is in addition).

With Medicare Advantage including Part D benefits and many extras not covered by Medicare such as dental, vision, hearing, fitness benefits, transportation to the doctor, over-the-counter allowances, and sometimes an allowance for food and utilities, it can be surprising to learn that so many plans have a $0 premium.  Some Medicare Advantage plans even refund a portion of the Medicare Part B premium to the Beneficiary.  Finally, there is no medical underwriting and pre-existing medical conditions are covered.  This has led some people to conclude that “Medicare Advantage must be too good to be true.”

For those who are skeptical (often people who already have Medigap or plan to buy it at Age 65), there is some good news, namely, Medicare Beneficiaries are provided special protection to try out Medicare Advantage on a trial basis.  There are two Federal Trial Periods, both of which provide Guaranteed Issue Rights to buy a Medigap policy if dissatisfied with Medicare Advantage during the first year.

These trial rights are meaningful, as Medigap applicants generally face medical underwriting once the open enrollment period (six months following sign-up for Medicare Part B) has ended.  Medigap underwriting assesses medical history and can impose higher premiums or deny coverage completely.

State laws, such as in Maine and Wisconsin, provide additional protection for Medicare Beneficiaries wishing to try Medicare Advantage for the first time.  These rights are described below following the Federal Trial Periods.

Medicare Advantage Trial Periods: Returning to Original Medicare

Medicare Advantage trial periods are types of Special Enrollment Periods (SEPs) that allow Medicare Beneficiaries to disenroll from a Medicare Advantage plan outside of the Annual Election Period (AEP) that runs each year from October 15th to December 7th (disenrollments during AEP normally take effect the first day of the following year).  If disenrolling from a Medicare Advantage plan that includes prescription drug coverage, a SEP is granted to enroll in a Standalone Medicare Part D drug plan.

Along with allowing disenrollment from Medicare Advantage outside of standard election periods, the Federal Trial Periods grant Guaranteed Issue Rights for the Beneficiary to purchase a Medigap policy.  The government currently specifies two distinct SEPs for this purpose.

I.  Medicare Advantage Special Enrollment Period at Age 65 – “SEP 65” (Federal Trial Period)

The “SEP 65” is for Beneficiaries who enrolled in a Medicare Advantage plan for the first time at Age 65 during their Medicare Initial Enrollment Period (IEP).  Those who qualify can disenroll from Medicare Advantage and return to Original Medicare within the first 12 months of coverage.  If the Medicare Advantage plan included Part D coverage, a Part D SEP may be used to enroll in a Standalone Part D plan.  Medicare Advantage disenrollment takes effect on the 1st of the month following receipt of the request by the plan.  Beneficiaries using this SEP 65 have a Guaranteed Issue Right to purchase any Medigap plan available to them, regardless of their current health status or any adverse medical history.  This means insurers cannot deny coverage or increase premiums based upon medical history.  Medigap coverage must be purchased within 63 days after leaving Medicare Advantage (Beneficiaries also can purchase the Medigap plan starting 60 days before Medicare Advantage coverage ends).

II.   Medicare Advantage Special Enrollment Period – “Trial Period SEP” (Federal Trial Period)

The “Trial Period SEP” allows Beneficiaries of any age enrolling in a Medicare Advantage plan for the first time when dropping a Medigap policy, the right to disenroll from Medicare Advantage and return to Original Medicare within the first 12 months of coverage.  If the Medicare Advantage plan included drug coverage, a Part D SEP may be used to enroll in a Standalone Part D plan.  Medicare Advantage disenrollment takes effect on the 1st of the month following receipt of the request by the plan.  Beneficiaries using this Trial Period SEP have a Guaranteed Issue Right to purchase their prior Medigap plan, regardless of current health status or medical history.  If the prior plan is no longer available for sale, any available Medigap Plan A, B, C, D, F, G, K, or L may be selected (except that Plans C and F are available only to Medicare Beneficiaries who turned age 65 or became first eligible for Medicare because of age, disability or end-stage renal sickness prior to January 1, 2020).

III.  Maine “State Trial Period” (specific to Maine, extends period to three years)

Maine mandates that Beneficiaries who enroll in Medicare Advantage starting at the same time as initial enrollment into Medicare Part B and then switch back to Original Medicare within three years, are given a Guaranteed Issue Right to buy any available Medicare Supplement plan during the 90-day period after Medicare Advantage coverage ends.  Without this Guaranteed Issue right, Beneficiaries must health-qualify for Medigap coverage once their Medicare Part B has been effective for more than six months.

While Maine’s Trial Period SEP provides additional rights to buy Medigap without health underwriting, it does not change Federal rules that allow a return to the Original Medicare program only at certain times.

Additionally, Maine mandates that Beneficiaries with an existing Medicare Supplement policy who terminate that plan to enroll in Medicare Advantage for the first time, and then return to the Original Medicare program within three years, use their Guaranteed Issue Right to buy an equivalent or less comprehensive Medicare Supplement policy available to them (Beneficiaries must apply within 90 days).

IV.  Wisconsin “State Trial Period” (Guaranteed Issue Right – Dropping Employer Coverage)

Wisconsin offers yet another protection for Medicare Beneficiaries.  If a Beneficiary drops an employer-sponsored group health plan to enroll in a Medicare Advantage plan for the first time, the Beneficiary is given a Guaranteed Issue Right to purchase a Medicare Supplement policy when the Beneficiary disenrolls from Medicare Advantage during the first 12 months (this is the Wisconsin Trial Period right).  To disenroll from Medicare Advantage, Beneficiaries must follow Federal enrollment period rules to switch back to Original Medicare and optionally enroll in a Standalone Part D plan.

Summary

The Federal government has two Trial Periods for Medicare Beneficiaries wishing to try a Medicare Advantage plan for the first time without losing eligibility for Guaranteed Issue Medigap coverage.  Beneficiaries can use a Trial Period once, for up to one year, to determine if a Medicare Advantage plan is suitable.  Maine has adopted rules extending the one-year trial period to three years, and Wisconsin grants Medicare Beneficiaries an additional Guaranteed Issue Right to buy a Medigap plan when terminating an employer-sponsored group health plan to enroll in Medicare Advantage for the first time.

Until next time,

 

Andrew Herman
President of AH Insurance Services, Inc.

Medicare 2025 - New Premiums and Deductibles, Changes to Part D Program

 CMS Updates Medicare Premiums, Deductibles, and Coinsurance Amounts

Last month, the Centers for Medicare & Medicaid Services (CMS) released 2025 premiums, deductibles and coinsurance amounts for the Medicare Part A and Part B programs, and the new 2025 Medicare Part D income-related monthly adjustment amounts.

Part A (Hospital Insurance) Monthly Premium

About 99% of Medicare beneficiaries do not pay a monthly Part A premium (it is required that the Medicare beneficiary or a spouse has 40+ quarters of Medicare-covered employment).

The 2025 Part A premium is $518 per month for people who are not otherwise eligible for premium-free Hospital Insurance and have less than 30 quarters of Medicare-covered employment.  With 30-39 quarters of Medicare-covered employment, the 2025 Part A premium is $285 per month.  Higher income consumers may pay more.

Part B (Medical Insurance) Monthly Premium

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.  General tax revenues, along with premiums paid by Medicare beneficiaries, fund the Part B program.

There is a special rule for Social Security recipients, called the “hold harmless rule,” ensuring that Social Security benefits will not decline from one year to the next because of an increase in the Medicare Part B premium.  Whether this rule comes into play in any year depends on the amount of Cost of Living Adjustment (COLA) and the Medicare Part B premium increase.  Medicare beneficiaries who have been protected by the hold harmless rule pay less than the standard Part B premium.  All others pay monthly 2025 Part B premiums based on the Modified Adjusted Gross Income (MAGI) as reported two years prior (i.e., 2023 federal tax return).

The standard 2025 monthly premium for Medicare Part B enrollees is $185.00, an increase of $10.30 from $174.70 in 2024.  Medicare Part B enrollees will pay the standard $185.00 Part B premium amount in 2025 unless:

• You have Medicare and Medicaid, and Medicaid pays your premiums.  (Your state will pay the standard premium amount.)
• Your modified adjusted gross income as reported on your IRS tax return from two years ago is above a certain amount.  If so, you’ll pay the standard premium amount plus an Income Related Monthly Adjustment Amount (IRMAA).
• You have been protected by the "hold harmless" rule discussed above.

Since 2007, a beneficiary’s Part B monthly premium is based on income.  These income-related monthly adjustment amounts affect approximately 8% of people with Medicare Part B.  2025 Part B premiums for Full Part B coverage (as opposed to Part B Immunosuppressive Drug Coverage only) based on MAGI from the 2023 tax return are shown in the following table:

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	2025 Part B premium not held harmless	Premium level
Less than or equal to $106,000	Less than or equal to $212,000	$185.00	Standard
Greater than $106,000 and less than or equal to $133,000	Greater than $212,000 and less than or equal to $266,000	$259.00	1.4 x standard
Greater than $133,000 and less than or equal to $167,000	Greater than $266,000 and less than or equal to $334,000	$370.00	2.0 x standard
Greater than $167,000 and less than or equal to $200,000	Greater than $334,000 and less than or equal to $400,000	$480.90	2.6 x standard
Greater than $200,000 and less than $500,000	Greater than $400,000 and less than $750,000	$591.90	3.2 x standard
Greater than or equal to $500,000	Greater than or equal to $750,000	$628.90	3.4 x standard

For tables for married beneficiaries who file separate returns, and for Part B Immunosuppressive Drug Coverage only, click here:  https://ahinsuranceservices.com/medicarepremiums.html.

Part D (Prescription Drug Coverage) Monthly Premium

Since 2011, Medicare beneficiaries’ Part D premiums have been based on income.  In addition to any Part D plan premium, there is an income-related monthly adjustment amount (IRMAA) impacting higher income earners.  Part D plan premiums vary from plan to plan (when Part D benefits are included in a Part C Medicare Advantage plan, premiums often are zero).  Beneficiaries may pay Part D premiums directly to the plan or have them deducted from Social Security benefits; however, any IRMAA must be deducted from Social Security benefits or otherwise paid directly to Medicare.  2025 Part D IRMAA figures are shown in the following table: 

Beneficiaries who file individual tax returns with income:	Beneficiaries who file joint tax returns with income:	2025 Part D base premium*	IRMAA
Less than or equal to $106,000	Less than or equal to $212,000	Plan premium	$0
Greater than $106,000 and less than or equal to $133,000	Greater than $212,000 and less than or equal to $266,000	Plan premium	$13.70
Greater than $133,000 and less than or equal to $167,000	Greater than $266,000 and less than or equal to $334,000	Plan premium	$35.30
Greater than $167,000 and less than or equal to $200,000	Greater than $334,000 and less than or equal to $400,000	Plan premium	$57.00
Greater than $200,000 and less than $500,000	Greater than $400,000 and less than $750,000	Plan premium	$78.60
Greater than or equal to $500,000	Greater than or equal to $750,000	Plan premium	$85.80

For married beneficiaries who file separately, click here:

https://ahinsuranceservices.com/medicarepremiums.html.

Part A (Hospital Insurance) Deductible and Coinsurance Amounts

In 2025, the Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital will be $1,676, an increase of $44 from $1,632 in 2024.  The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period.  In 2025, beneficiaries must pay a coinsurance amount of $419 per day for the 61st through 90th day of a hospitalization ($408 in 2024) in a benefit period and $838 per day for lifetime reserve days ($816 in 2024).  For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $209.50 in 2025 ($204.00 in 2024).

Part B (Medical Insurance) Deductible

The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.

2025 Changes to Medicare Part D (Prescription Drug Coverage)

Medicare Part D coverage, whether on a Stand-alone basis or included within a Part C Medicare Advantage plan, can include a yearly deductible up to $590 in 2025.  This is an increase of $45 from $545 in 2024.  Many Part D plans that have a deductible apply it only to higher cost prescriptions such as those classified in Drug Tier 3 and higher.

Notable Part D Program changes coming in 2025 are as follows:

The Coverage Gap (also known as the "Donut Hole") will be completely eliminated.

Under the original Part D program, Part D enrollees faced up to 100% of total drug costs during a Coverage Gap stage.  Years later, the 100% amount was reduced to 25%.  In 2025, Part D enrollees will no longer face any increase in cost sharing due to hitting the cost threshold that would trigger the dreaded Donut Hole, as it has been eliminated.

Part D enrollees' out-of-pocket drug costs will be capped at $2,000 in 2025.  This amount will be indexed to rise each year at the rate of growth in per capita Part D costs (this cap does not apply to out-of-pocket spending on prescription drugs covered under Medicare Part B).

You might spend even less if you are one of the roughly 75% of Part D members with an “enhanced” Part D plan, which may provide extra credit toward the out-of-pocket cap.  When enhanced plans have benefits that reduce out-of-pocket spending, the value of those benefits can count toward your $2,000 cap.)  As a result, many Medicare beneficiaries will hit the cap before actually spending $2,000 in out-of-pocket costs.

It is important to keep in mind that only medicines listed in your plan's Part D formulary count toward the $2,000 out-of-pocket cap.  There may be certain exceptions, such as when a plan agrees to cover a non-formulary drug due to individual circumstances (this typically requires the prescribing physician to document medical need). 

Part D plans and drug manufacturers will pay a larger share of costs for Catastrophic Coverage beyond the $2,000 cap, and Medicare will pay a smaller share.  Medicare's share of total costs will decrease from 80% to 20% for brand-name drugs and from 80% to 40% for generic drugs beginning in 2025.  Medicare Part D plans' share of costs will increase from 15% to 60% for both brands and generics above the cap, and drug manufacturers will be required to provide a 20% price discount on brand-name drugs.

Part D plans and manufacturers will face changes to their share of total drug costs paid in the Initial Coverage stage.  In this stage (i.e. after any plan deductible has been met and before Catastrophic coverage), drug manufacturers will be required to provide a 10% discount on brand-name drugs (this replaces the 70% discount in the Coverage Gap stage under the current design).  Part D plans will pay 65% of brand-name drug costs.

One additional change coming in 2025 is the Medicare Prescription Payment Plan, which is a new, optional way to pay out-of-pocket costs over time.  It works like a “buy now, pay later option” for Medicare Part D deductibles, copays and/or coinsurance.

The payment plan is a potential budgeting tool, not something that will save you money.  Total costs remain the same, and plans cannot charge fees or interest because you participate.  The Medicare Prescription Payment Plan could be helpful if you have expensive medications and incur high out-of-pocket costs early in the year, for example. 

All 2025 Medicare Part D plans will offer the Medicare Prescription Payment Plan, and plans will be required to reach out to you if they identify you as likely to benefit from the program.  Enrollment in this optional program is done through your Part D plan.

Until next time,

Andrew Herman

Medicare Part D Enrollees to Benefit from Program Changes in 2024 and 2025

With nearly two decades having passed since Medicare Part D became operational, notable program improvements are on the horizon for 2024 and 2025.

For background, Medicare Part D is prescription drug coverage available to Medicare Beneficiaries enrolled in Part A and/or Part B.  Beneficiaries access this voluntary program through private insurance carriers and can obtain coverage through a standalone Prescription Drug Plan (PDP) or a Medicare Advantage Prescription Drug (MA-PD) plan (must have both Medicare Parts A and B to enroll in MA-PD).

Medicare Part D plans run on a calendar year basis (subject to change each year) in distinct stages:

• Deductible – enrollees are responsible for a plan deductible up to a maximum ($505 in calendar year 2023).  Some PDPs do not have any deductible (this feature may come with a higher plan premium).

• Initial Coverage – after the Deductible is reached, enrollees have a copay ($) or coinsurance (%) based on each drug’s “Tier Level” as shown in the plan formulary.  The standard Part D design allows plans to charge up to 25% coinsurance, but actual costs will vary and often are lower.  Medicines must be on the plan formulary, or they will not be covered at all (unless an exception applies).  This stage continues until the consumer’s out-of-pocket costs PLUS the amount the plan pays reaches $4,660 (in 2023).

• Coverage Gap (“Donut Hole”) – in this stage, under the original standard design of the Part D program, enrollees bore the full cost of their medicines.  Prior to 2023, the program was gradually liberalized so that in this stage, enrollees pay only 25% of drug costs (with the remainder covered by manufacturer discounts).  During each year, enrollees exit the Donut Hole once their True Out-of-Pocket (TrOOP) costs reach a threshold level ($7,400 in 2023).  It should be noted that TrOOP includes what the manufacturers pay, in addition to costs paid by the enrollee (it does not include what the plan pays during Initial Coverage).

• Catastrophic Coverage – the final stage in a calendar year once an enrollee has hit the Part D TrOOP.  In this stage, in calendar year 2023, enrollees pay the greater of 5% of drug costs, or $4.15 for generics and $10.35 for brand names.  For very costly medicines, the 5% enrollee portion can add up quickly.

To illustrate actual 2023 out-of-pocket drug costs on a standalone PDP, let's review a hypothetical example for a Medicare beneficiary living in Tampa, Florida and taking one costly medicine -- Pomalyst 3mg capsule.  Then, we will see how much the enrollee's out-of-pocket costs will be reduced in 2024 and 2025.

The monthly premium is ignored, but it should be noted that the Plan Sponsor selected in this example provides the lowest standalone Part D 2023 calendar year costs including premiums and drug copays.

According to the Medicare plan finder, this consumer travels through both Initial Coverage and the Coverage Gap in January.  The $7,400 TrOOP is reached, with the enrollee’s out-of-pocket drug cost equal to $3,080.  For the rest of the year, the enrollee is in Catastrophic Coverage paying $1,188 monthly (5% of $23,762 pharmacy retail cost).  Over the whole calendar year, the enrollee’s out-of-pocket drug costs exceed $16,000 (based on the specific 2023 PDP and retail pharmacy).

So, what will change in 2024 and how will this enrollee be impacted?

In 2024, costs in the Catastrophic stage change so that the 5% coinsurance requirement is eliminated (Part D plans will pay 20% of total drug costs in this phase instead of 15%).  Once Part D enrollees (without low-income subsidies, called LIS), have drug spending high enough to qualify for Catastrophic Coverage, they are no longer required to pay 5% of their drug costs, which in effect caps their expenses.

In 2024, the Catastrophic stage threshold will be set at $8,000.  As noted above, this amount includes what Part D enrollees spend out of pocket plus the value of manufacturer discounts in the Coverage Gap.  Under this construct, Part D enrollees who take only brand-name drugs in 2024 will spend approximately $3,300 out of pocket and then have no further cost for covered medicines.  So, in the example cited, the enrollee reduces out-of-pocket medicine costs from over $16,000 in 2023 to about $3,300 in 2024.

So, what is changing in 2025 and how will this enrollee be further impacted?

Out-of-pocket drug spending will be capped at $2,000.

Beginning in 2025, Part D enrollees’ out-of-pocket drug costs will be capped at $2,000.  This amount will be indexed to rise each year after 2025 at the rate of growth in per capita Part D costs.  (This cap does not apply to out-of-pocket spending on prescription drugs covered under Medicare Part B.)

For Part D enrollees who take only brand name drugs, annual out-of-pocket costs at the Catastrophic threshold will fall from around $3,300 in 2024 to $2,000 in 2025.  In other words, Part D enrollees who take only brand name drugs with costs high enough to reach the Catastrophic stage should expect to realize savings of about $1,300 in 2025 as compared to 2024 spending.

The Coverage Gap will be completely eliminated.

The Coverage Gap stage, where Part D enrollees had faced 100% of total drug costs under the original Part D design and currently face 25% of costs, will be eliminated in 2025.  This means that Part D enrollees will no longer face an increase in cost sharing at the end of the Initial Coverage stage, which is the case in most Part D plans, since today's plans usually vary the cost-sharing amounts instead of charging the standard 25% coinsurance during Initial Coverage.

Part D plans and drug manufacturers will pay a larger share of costs for Catastrophic Coverage, and Medicare will pay a smaller share.

Medicare’s share of total costs in the Catastrophic stage (reinsurance) will decrease from 80% to 20% for brand-name drugs and from 80% to 40% for generic drugs beginning in 2025.  This reduction will help address concerns about the substantial increase in Medicare’s reinsurance payments to Part D plans over time, which accounted for close to half (48%) of total Part D spending in 2022, up from 14% in 2006, based on data from the Medicare Trustees 2023 annual report.  Medicare Part D plans’ share of costs will increase from 15% to 60% for both brands and generics above the cap, and drug manufacturers will be required to provide a 20% price discount on brand-name drugs.

Part D plans and manufacturers will face changes to their share of total drug costs paid in the Initial Coverage stage.

Drug manufacturers will be required to provide a 10% discount on brand-name drugs in the Initial Coverage state beginning in 2025, replacing the 70% price discount in the Coverage Gap stage under the current design.  Part D plans will pay 65% of brand-name drug costs.

For further information and graphics that illustrate upcoming Part D changes in greater detail, please refer to this informative article from the Kaiser Family Foundation:

https://www.kff.org/medicare/issue-brief/changes-to-medicare-part-d-in-2024-and-2025-under-the-inflation-reduction-act-and-how-enrollees-will-benefit/.

Until next time,

Andrew Herman

Highlights of the 2023 Medicare Trustees Report

The 2023 Medicare Trustees Report spelled good news for the program’s short-term viability but should not delay Congress from seeking a long-term solution that protects the health care of older Americans, experts agreed.

As part of a webinar this month sponsored by the American Academy of Actuaries, the Centers for Medicare & Medicaid Services’ (CMS) Chief Actuary Paul Spitalnik reported on the program’s finances as detailed in the report.  Three other panelists shared insights on how Medicare’s Hospital Insurance trust fund might remain solvent beyond the currently projected exhaustion date, and more generally how to make the program more sustainable in the long-term.

For background, the Medicare Program consists of multiple parts:

Part A - Covers inpatient hospital and skilled nursing care, post-institutional home health care, and hospice care.

Part A has about 65 million enrollees and is funded primarily by Medicare payroll taxes (1.45% paid by employees and employers, each; 2.90% paid by self-employed; additional .90% paid by high-income earners; and no cap on annual taxable earnings as is the case with the Social Security payroll tax).  Calendar year 2022 expenditures were $342.7 billion.

Part B - Covers physician services, outpatient hospital, diagnostic testing, durable medical equipment, ambulance, some additional services such as general home health care, and physician-administered drugs.

Part B has about 60 million enrollees and is funded approximately 30% by monthly premiums paid by Medicare beneficiaries ($164.90 standard premium for 2023 plus additional premiums charged to high-income earners) and 70% by government contributions coming from general taxation.  A small portion of revenue stems from fees imposed on drug manufacturers.  Calendar year 2022 expenditures were $436.7 billion.

Part D - Covers prescription drugs.

Part D has slightly over 50 million enrollees and is funded by premiums paid by Medicare beneficiaries (average monthly premium is about $32, funding about 15% of total revenues), additional premiums charged to high-income earners, general federal revenues, and state transfers.  Calendar year 2022 expenditures were $125.7 billion.

Part C - Medicare Advantage program.

The Part C (Medicare Advantage) program is an option for Medicare beneficiaries that are enrolled in both Part A and Part B and live in the service area where the private plan of choice is offered.  These plans are provided on a calendar-year basis by plan sponsors contracted with Medicare.  Medicare Advantage plans, which typically include Part D coverage, now cover close to half of Medicare beneficiaries nationwide.

The Medicare program has grown dramatically in both enrollment and paid benefits over the past four decades.  In 1982, Medicare benefits totaled $46.6 billion, or 1.4% of the nation’s gross domestic product (GDP).  The 2023 report found that had grown to $911.2 billion overall, or 3.6% of GDP.

Key highlights of the 2023 Medicare Trustees report are as follows:

The Part A Hospital Insurance trust fund (a long term reserve that has been set aside to cover future costs) is projected to be depleted by the year 2031, three years later than forecast in last year's report.  This is great news for the program's short-term viability, yet the eventual financial shortfall will need to be addressed to avoid reduction in program benefits.

The Inflation Reduction Act of 2022, intended to tamp down inflation and reduce the federal budget deficit, will impact Medicare in several ways:

• Reduces government expenditures for physician and outpatient services covered under Part B

• Increases expenditures for Part D through 2030

• Decreases Part D expenditures beginning in 2031

In the long-term, experts expect the Inflation Reduction Act of 2022 will be beneficial to the financial health of the Medicare program.

While the COVID-19 pandemic caused higher costs for acute treatment, those costs have been more than offset by deaths of seriously ill Medicare beneficiaries as well as reduced spending for non-COVID care.

The growing number of members portends long-term challenges.  James Mathews, executive director of the Medicare Payment Advisory Commission (MedPAC), noted that the number of program beneficiaries is expected to increase from the current 65 million to 80 million in the next decade.  At the same time, the number of workers supporting those on Medicare is projected to decrease from 4 per enrollee to 2.5 per enrollee.

To control costs, MedPAC is advising cuts to post-acute care payments in 2024 as well as reducing Medicare Advantage plan payments in excess of payments made to Original Medicare.  MedPAC also continues to advocate for reductions in Part D plans’ reliance on cost-based reinsurance and improved incentives to manage benefits.  However, Mathews said a hike in hospital payment rates is necessary to cover rising hospital costs.

Marilyn Serafini, executive director of the Bipartisan Policy Center’s Health Program, said it is essential that Congress seek out a bipartisan solution that will keep Medicare fully functioning.  Her group is currently in the midst of crafting recommendations to improve the program in the long-term.

It is developing a set of principles to guide policymakers, including improving the enrollment process, simplifying and improving the traditional Medicare benefit, promoting price competition in both Original Medicare and Medicare Advantage, and re-evaluating the trust fund structure and accountability mechanisms.

It is extremely likely additional funds will be needed to support growing Medicare enrollment.  Bowen Garrett, senior health fellow at the Urban Institute, noted that Congress in the past has always acted when the program neared fund exhaustion—as is happening now.  That’s for good reason, as doing nothing “would be a significant stressor on providers.”

The Urban Institute has examined 12 different options to raise revenues, ranging from an across-the-board increase in payroll or income taxes, to taxing health care benefits, or targeting solutions that would only impact more wealthy Americans or businesses.

Regardless of the path taken, there was broad agreement for congressional action in the near future to save Medicare for future generations.  “Demographics are pretty clear,” CMS Chief Actuary Spitalnic said.  “It is a question of when it will be depleted.”

Until next time,

Andrew Herman, President

AH Insurance Services, Inc.

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

CMS Announces 2022 Medicare Parts A & B Premiums and Deductibles

On November 12, the Centers for Medicare & Medicaid Services (CMS) released the 2022 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs, as well as the 2022 Medicare Part D income-related monthly adjustment amounts.

Medicare Part B Deductible Increase

The annual Medicare Part B deductible increases to $233 in 2022, an increase of $30 from the $203 deductible level applicable in 2021.  Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.

Medicare Part B Premium Increase

Each year the Medicare Part B premium is set according to the Social Security Act.  The standard monthly premium for most Medicare Part B enrollees will be $170.10 for 2022, an increase of $21.60 from the $148.50 monthly premium applicable in 2021.

According to CMS the nearly 15% increase to the Medicare Part B premium and deductible levels are due to the following factors:

• Rising prices and utilization across the health care system that drive higher premiums year-over-year alongside anticipated increases in the intensity of care provided.

• Congressional action to significantly lower the increase in the 2021 Medicare Part B premium, which resulted in the $3.00 per beneficiary per month increase in the Medicare Part B premium (that would have ended in 2021) being continued through 2025.

• Additional contingency reserves due to the uncertainty regarding the potential use of the Alzheimer’s drug, Aduhelm™, by people with Medicare.  In July 2021, CMS began a National Coverage Determination analysis process to determine whether and how Medicare will cover Aduhelm™ and similar drugs used to treat Alzheimer’s disease.  As that process is still underway, there is uncertainty regarding the coverage and use of such drugs by Medicare beneficiaries in 2022.  While the outcome of the coverage determination is unknown, our projection in no way implies what the coverage determination will be, however, we must plan for the possibility of coverage for this high cost Alzheimer’s drug which could, if covered, result in significantly higher expenditures for the Medicare program.

CMS said the rise in Social Security benefits, which most of the 62 million people on Medicare, who are mostly 65 and older, collect will cover the expenses, as there is expected to be a 5.9% bump in 2022 monthly payments due to cost-of-living adjustment the agency said, the largest in 30 years.

"This significant COLA increase will more than cover the increase in the Medicare Part B monthly premium," CMS said.  "Most people with Medicare will see a significant net increase in Social Security benefits.  For example, a retired worker who currently receives $1,565 per month from Social Security can expect to receive a net increase of $70.40 more per month after the Medicare Part B premium is deducted."

The cost-of-living adjustment goes into effect in January and is estimated to average $71.40 per recipient.

Click here for the November 12th Fact Sheet published by CMS.

Until next time,

Andrew Herman

2021 Guide to choosing a Medigap policy has been published by CMS

The official 2021 Guide to choosing a Medigap Policy has been published by the Centers for Medicare and Medicaid Services (CMS).  This important guide covers topics such as:

• What is a Medicare Supplement Insurance (Medigap) policy
• What Medigap policies cover
• Your rights to buy a Medigap policy
• How to buy a Medigap policy

A Medigap policy is private health insurance that wraps around the Original Medicare Program (Parts A and B) by filling in gaps that otherwise would result in out-of-pocket costs.  This means Medigap will pay some of the costs that Original Medicare doesn't cover, such as copayments, coinsurance and deductibles.  During the six months that follows a Medicare Beneficiary's enrollment in Medicare Part B, Medigap can be purchased on a guaranteed issue basis regardless of health status.  After the six months pass, insurance companies are allowed by law to decline or rate applicants due to health status.

Medigap plans, or Medicare Supplements, are known by their "plan letter name" such as Plan G or Plan N.  Consumers who purchase Medigap typically also buy a Stand-alone Medicare Part D Prescription Drug Plan (PDP), since Medigap policies do not include any drug coverage.

Medigap is entirely different from Medicare Advantage (also known as Medicare Part C), which is a program that delivers both Medicare health and drug benefits through a private insurance company on a year-to-year basis.  Medicare Advantage plans, such as HMOs and PPOs, utilize insurance company networks and often require additional authorization for care access that is not required under Medigap policies.  There is an Annual Election Period (AEP) for Medicare Advantage that runs from October 15th to December 7th; during this period a plan change can be made for the next January 1st.  Medicare Beneficiaries also can disenroll from their Medicare Advantage plan during the AEP, and purchase a Medigap policy (as long as they meet the health eligibility requirements to buy a policy).

Click Here To Download the 2021 Choosing a Medigap Policy Guide

Until next time,

Andrew Herman
AH Insurance Services, Inc.

Shedding Light on Medicare Part D – Why pharmacy copays may not match to published plan copays; and why actual out-of-pocket differs from the Medicare TrOOP (True Out-Of-Pocket)

Medicare’s prescription drug benefit is known as Part D and is provided by private insurers.  Medicare Part D was signed into law as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003; and it can be purchased stand-alone or integrated with a Medicare Advantage plan (also known as Medicare Part C).  Medicare Part D has distinct coverage phases, including a Coverage Gap (or “Donut Hole”) that has been vastly improved for consumers under more recent legislation.

As of 2020, enrollees with Standard Part D coverage and in the Donut Hole pay 25% of the cost of their drugs until they reach the Catastrophic Coverage phase (as opposed to paying the full cost while in the Donut Hole, which had been the case before the Affordable Care Act started closing the gap).

For background, Medicare Part D plans may impose an Initial Deductible up to $445 in 2021 (an increase of $10 from 2020).  The deductible is the amount you must pay before the plan begins to share in costs.  Some plans (generally with higher monthly premiums) do not impose any deductible; and it is common for Part D plans to feature a plan deductible, but only apply it to medicines classified in the plan’s higher Drug Tiers (Part D plan sponsors typically assign medicines into five Tier levels).

Once the Initial Deductible is met, consumers are charged copays or coinsurance as published in each Part D plan’s Summary of Benefits.  Copay amounts may vary based on the plan’s pharmacy network (preferred vs. standard, or mail order service), as well as Drug Tier level.  Consumers sometimes inquire, why doesn’t my copay at the pharmacy match to the amount shown in my plan’s Summary of Benefits document?  Answer:  If the pharmacy drug cost is lower, you pay the lower amount.

The standard Medicare Part D plan structure also includes an element called the Initial Coverage Limit, or ICL, which is $4,130 in 2021 (an increase of $110 from the 2020 ICL of $4,020).  The ICL marks the point where you enter the Donut Hole.  More specifically, you enter the Donut Hole when the total negotiated retail value of your covered annual prescription drugs exceeds your plan’s ICL.  At the inception of the Medicare Part D program, consumers generally bore all costs in the Donut Hole.

So, will you enter the 2021 Donut Hole?

If your prescribed medications for 2021 have a retail value exceeding $350/month, you are likely to enter the Donut Hole during 2021.  Generally, less than one-quarter of Medicare beneficiaries with Part D coverage enter the Donut Hole each year.  Consumers sometimes avoid entering it by seeking out lower cost options (such as pharmacy coupons) instead of using their plan for certain drugs.

If you reach the Donut Hole phase of your 2021 Part D coverage, the drug discount is 75%.

While in the Donut Hole, generic formulary drug costs are 25% of your plan's negotiated retail prices.  For example, if you are in the 2021 Donut Hole and your generic medication has a retail cost of $100, the Standard Part D plan benefit requires you to pay $25 for a refill.  And the $25 that you spend for a covered formulary drug counts toward your 2021 out-of-pocket limit (or TrOOP, explained below).

While in the Donut Hole, the 2021 brand-name drug discount also is 75%, meaning that you pay 25% of your plan’s negotiated brand drug retail costs.  The pharmaceutical industry pays for 70% of the cost of these medications in the Donut Hole; and you receive credit for 95% of the retail drug cost toward meeting your 2021 TrOOP (the 25% of retail costs you pay plus the 70% drug manufacturer discount).

For example, if you reach the 2021 Donut Hole and purchase a brand name medication with a retail cost of $100, you will pay $25 for the formulary medication, and receive $95 credit toward meeting your 2021 TrOOP (which is the Donut Hole exit point).

So, what exactly is “TrOOP” and is it the same as my actual out-of-pocket drug costs?

There is not a short answer to this question, so please read on!

TrOOP is the Medicare Part D program’s annual "Total out-of-pocket costs" and is known as "True out-of-pocket costs".

In general, TrOOP includes all payments for medications listed on your Part D plan's formulary and purchased through a preferred or standard network pharmacy.  Both the payments you make, and payments that Pharma companies make on your behalf, count towards TrOOP.  If you switch Medicare Part D plans during a plan year, your TrOOP will be transferred to your new plan (it travels with you).

TrOOP is important because after it reaches $6,550 in 2021 (an increase of $200 from the 2020 level), you move to the final state of your Medicare Part D coverage, known as Catastrophic Coverage.  In the Catastrophic Coverage stage, your medication costs are reduced to $3.70 for generics or $9.20 for brand-name drugs (or 5% of the drug cost - whichever is greater).

The components of TrOOP are as follows:  it includes the amount of your Initial Deductible (if any) and your co-payments or co-insurance during the ICL phase; and as noted above it includes what you pay and a portion of what the Pharma companies pay while you are in the Donut Hole (of the 75% Donut Hole discount on brand-name drugs, 70% of that counts towards TrOOP as that portion is paid by the drug manufacturer). The additional 5% Donut Hole discount on brand-name drugs and the 75% Donut Hole discount on generics do not count toward TrOOP, as they are paid by your Medicare Part D plan.

TrOOP also includes payments made for your drugs by any of the following programs or organizations: "Extra Help" from Medicare; Indian Health Service; AIDS drug assistance programs; most charities; and most State Pharmaceutical Assistance Programs (SPAPs).

TrOOP does not include monthly premiums or non-formulary drug purchases.

Because TrOOP includes the lion’s share of what drug manufacturer’s pay on your behalf for brand-name drugs while in the Donut Hole, your actual out-of-pocket costs at time of Donut Hole exit likely will be much lower.

Will you exit the Donut Hole and enter the 2021 Catastrophic Coverage phase?

Based on CMS drug cost estimates, if your monthly retail formulary drug costs approach $850, you are likely to exit the 2021 Donut Hole and enter Catastrophic Coverage.

Medicare Part D plan sponsors can offer the Standard Part D plan design, or a design under which the measured actuarial value equals or exceeds the actuarial value of Standard Part D coverage.  Actuarial equivalence is a required test to confirm that expected paid claims under the plan sponsor's prescription drug coverage are at least as much as expected paid claims under the standard design.  Plans sponsors with multiple benefit options must apply the actuarial value test for each option.

Until next time,

Andrew Herman

2021 Medicare Part B Premiums Increase by $3.90/Month

On November 6th, The Centers for Medicare & Medicaid Services (CMS) announced the 2021 monthly Medicare Parts A and B premiums, deductibles, and coinsurance amounts.

Medicare Part B Premiums/Deductibles

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.  

The standard monthly premium for Medicare Part B enrollees will increase from $144.60 in 2020 to $148.50 in 2021, an increase of $3.90 per month.  Recent legislation signed by President Donald Trump significantly dampens the 2021 Medicare Part B premium increase that would have occurred given the estimated growth in Medicare spending next year. According to CMS, Medicare spending is estimated to grow due to people seeking care they may have delayed during the COVID-19 public health emergency, availability of more COVID-19 treatments, and availability of COVID-19 vaccines.

CMS also announced that the annual deductible for Medicare Part B enrollees will increase from $198 in 2020 to $203 in 2021, an increase of $5.  The additional $5 in 2021 will be borne by enrollees as an out-of-pocket expense under all Medicare Supplement Insurance plans (also known as 'Medigap') available to newly eligible Medicare beneficiaries.

Medicare Part A Premiums/Deductibles

Medicare Part A covers inpatient hospital, skilled nursing facility, and some home health care services. About 99 percent of Medicare beneficiaries do not pay a Part A premium since they have at least 40 quarters of Medicare-covered employment.

The Medicare Part A inpatient deductible that beneficiaries will pay when admitted to the hospital is $1,484 in 2021, an increase of $76 from $1,408 in 2020. Medigap plans automatically adjust benefits in 2021 so that the higher inpatient deductible is covered.

Medicare Annual Election Period (10/15 - 12/7)

Medicare beneficiaries can choose to enroll in fee-for-service Original Medicare (Parts A and B) or can select a private Medicare Advantage plan to receive their Medicare benefits. Premiums and deductibles for Medicare Advantage and Medicare Prescription Drug plans (Medicare Part D) are already finalized and are unaffected by this announcement.

During the ongoing Medicare Annual Election Period, which began on October 15th and ends on December 7th, Medicare beneficiaries can compare coverage options like Original Medicare (Part A and Part B) and Medicare Advantage, and choose health and prescription drug plans for 2021. Medicare health and drug plan costs and covered benefits can change from year-to-year. Over the past three years, CMS has redesigned its useful Medicare Plan Finder so that Medicare beneficiaries may:

• Compare pricing between Original Medicare, Medicare Advantage plans, Medicare prescription drug plans (Medicare Part D), and Medigap policies;
• Compare coverage options on their smartphones and tablets;
• Compare up to three Medicare Part D drug plans or three Medicare Advantage plans side-by-side;
• Get plan costs and benefits, including which Medicare Advantage plans offer extra benefits;
• Build a personal drug list and find Medicare Part D prescription drug coverage that best meets their needs.

Highlights for 2021 Open Enrollment include:

• A 34 percent decrease in average monthly premiums for Medicare Advantage plans since 2017.
• More than 4,800 Medicare Advantage plans are offered for 2021, nearly double the offerings in 2017. Similarly, more Medicare Part D plans are available, and the average basic Part D premium has dropped 12 percent since 2017. 
• Medicare beneficiaries can join a prescription drug plan that will offer many types of insulin at a maximum copayment of $35 for a 30-day supply. More than 1,600 Medicare Advantage and Part D prescription drug plans are participating in the Part D Senior Savings Model for 2021. People who enroll in a participating plan could save up to an estimated $446 a year in out-of-pocket costs on insulin. CMS has added a new “Insulin Savings” filter on Medicare Plan Finder to display plans that will offer the capped out-of-pocket costs for insulin. Beneficiaries can use the Medicare Plan Finder to view plan options and look for a participating plan in their area that covers their insulin at no more than a $35 monthly copay.

At AH Insurance Services Inc., we are available to make it easy for Medicare Beneficiaries to learn more about 2021 plan options.  We can help you determine whether a Medicare Advantage plan -- or a Medigap policy plus a Part D plan -- will be most suitable to meet your medical needs.  Additionally, we can assist in projecting your 2021 out-of-pocket drug costs based on your current medicine list and preferred pharmacy.  There is no obligation to buy.

Contact us at (850) 450-3622 or info@ahinsuranceservices.com.

Until next time,

Andrew Herman

President, AH Insurance Services, Inc.

2019 Medicare Parts A & B Premiums and Deductibles

Source for this blog post is the CMS.gov website:

  https://www.cms.gov/newsroom/fact-sheets/2019-medicare-parts-b-premiums-and-deductibles

Yesterday, the Centers for Medicare & Medicaid Services (CMS) released the 2019 premiums, deductibles, and coinsurance amounts for the Medicare Part A and B programs.

Medicare Part B Premiums/Deductibles

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.  

The standard monthly premium for Medicare Part B enrollees will be $135.50 for 2019, an increase of $1.50 from $134 in 2018. An estimated 2 million Medicare beneficiaries (about 3.5%) will pay less than the full Part B standard monthly premium amount in 2019 due to the statutory hold harmless provision, which limits certain beneficiaries’ increase in their Part B premium to be no greater than the increase in their Social Security benefits. The annual deductible for all Medicare Part B beneficiaries is $185 in 2019, an increase of $2 from the annual deductible $183 in 2018. Premiums and deductibles for Medicare Advantage and Medicare Prescription Drug plans are already finalized and are unaffected by this announcement.

Since 2007, a beneficiary’s Part B monthly premium is based on his or her income. These income-related monthly adjustment amounts (IRMAA) affect roughly 5 percent of people with Medicare Part B.  The total premiums for high income beneficiaries for 2019 are shown in the following table:

Beneficiaries who file  individual tax returns with income:	Beneficiaries who file joint tax returns with income:	Income-related monthly adjustment amount	Total monthly premium amount
Less than or equal to $85,000	Less than or equal to $170,000	$0.00	$135.50
Greater than $85,000 and less than or equal to $107,000	Greater than $170,000 and less than or equal to $214,000	$54.10	$189.60
Greater than $107,000 and less than or equal to $133,500	Greater than $214,000 and less than or equal to $267,000	$135.40	$270.90
Greater than  $133,500 and less than or equal to $160,000	Greater than $267,000 and less than or equal to $320,000	$216.70	$352.20
Greater than $160,000 and less than $500,000	Greater than $320,000 and less than $750,000	$297.90	$433.40
Greater than or equal to $500,000	Greater than or equal to $750,000	$325.00	$460.50

Premiums for high-income beneficiaries who are married and lived with their spouse at any time during the taxable year, but file a separate return, are as follows:

Beneficiaries who are married and lived with their spouses at any time during the year, but who file separate tax returns from their spouses:	Income-related monthly adjustment amount	Total monthly premium amount
Less than or equal to $85,000	$0.00	$135.50
Greater than $85,000 and less than $415,000	$297.90	$433.40
Greater than or equal to $415,000	$325.00	$460.50

Medicare Part A Premiums/Deductibles

Medicare Part A covers inpatient hospital, skilled nursing facility, and some home health care services. About 99 percent of Medicare beneficiaries do not have a Part A premium since they have at least 40 quarters of Medicare-covered employment.

The Medicare Part A inpatient hospital deductible that beneficiaries will pay when admitted to the hospital will be $1,364 in 2019, an increase of $24 from $1,340 in 2018. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2019, beneficiaries must pay a coinsurance amount of $341 per day for the 61stthrough 90th day of a hospitalization ($335 in 2018) in a benefit period and $682 per day for lifetime reserve days ($670 in 2018). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $170.50 in 2019 ($167.50 in 2018).

Part A Deductible and Coinsurance Amounts for Calendar Years 2018 and 2019 by Type of Cost Sharing
	2018	2019
Inpatient hospital deductible	$1,340	$1,364
Daily coinsurance for 61st-90th Day	335	341
Daily coinsurance for lifetime reserve days	670	682
Skilled Nursing Facility coinsurance	167.50	170.50

Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities pay a monthly premium in order to voluntarily enroll in Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate, which will be $240 in 2019, an $8 increase from 2018. Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $437 a month, a $15 increase from 2018.

Until next time,

Andrew Herman, President