Letting Insurance Benefit Everyone Regardless of Their Youth (LIBERTY Act)

Rep. Dr. Phil Gingrey (R-Ga) Introduced H.R. 544 on February 6, 2013

 

Last month, Rep. Dr. Phil Gingrey (R-Ga) introduced H.R.544 in order to challenge the age rating rules written into the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare.  Dr. Gingrey’s bill would allow the states, not the federal government, to determine their age-rating bands to prevent spiking insurance costs for young, healthy people that could propel them to leave the health insurance market in droves.

 

As called for by PPACA, insurance companies must limit the difference in health premiums due to age to a 3-to-1 ratio.  From an actual cost perspective, it can demonstrated through actuarial studies that the average 64-year old exceeds a 5-to-1 cost ratio, as compared to the average 21-year old.  To make up the difference, the costs will be subsidized by young people in the form of higher premiums, with some increases expected to be in the 30-40% range.

 

The LIBERTY Act allows states to determine the age discount in their insurance market.  Should a state fail to act, the legislation establishes a rating which better reflects the correlation between age and health care costs.  Click here to read Dr. Gingrey's 1/29/2013 Letter to Congress.

The bill’s chances in the Democratic-controlled Senate are uncertain. In today’s times, with younger people burdened at an unprecedented level by student loans, unemployment and under-employment, I can only wish that wisdom will prevail and H.R. 544 will be passed.

Until next time,

Andrew Herman

AH Insurance Services, Inc.

2013 Medicare Costs and Taxes

If you're eligible for Medicare, or will be soon, you likely know that Medicare costs for services and coverage are subject to change every calendar year.  The coming year also brings an increase to Medicare payroll taxes for high-income earners.

 

 

 

 

Below are some of the cost changes for Medicare Beneficiaries in 2013:

 

Part A Premium for those who are not eligible for Premium Free - $441 per month

Part B Premium - $104.90 (Subject to change based on income)

 

Part A Hospital Deductible - $1,184

Part B Deductible - $147

 

 

Part D Drug Program - Initial Coverage, Coverage Gap and Catastrophic Coverage:

 

Initial Coverage Stage - Beneficiary will pay copayments based on the Part D Plan's tier level for each drug (many plans have an initial deductible up to $325)

 

 

Coverage Gap - Once combined costs incurred by the beneficiary and the Plan reach $2,970

 

While in the Coverage Gap the Beneficiary will pay no more than:

• 47.5% of the plan's cost for brand name drugs
• 79% of the plan's cost for generic drugs

 

Catastrophic Coverage - After the Beneficiary's out of pocket costs for generic drugs and the full cost for brand name drugs (including the 52.5% brand name drug discount) = $4,750

 

While in Catastrophic Coverage the Beneficiary will pay:

• 5% coinsurance, or
• $2.65 copy for generics and $6.60 for all other drugs

 

Part D Drug Plan benefits change every January 1st, and the above tallies start fresh.  The Coverage Gap (also known as the infamous "Donut Hole") is being phased out entirely by the year 2020.

 

 

Increased Medicare Payroll Taxes:

Readers who earn (or are aspiring to do so) more than $200,000 will want to know (or maybe not) that the following increased Medicare taxes are to be implemented on January 1, 2013:

Medicare payroll taxes, now set at 1.45% of payrolls, will be increased .9% (to 2.35% total) for high-income individuals and couples.   This increase will be taken into effect for self-employed individuals earning over $200,000 annually, married individuals filing separately earning over $125,000 annually, and couples filing jointly with a combined income of at least $250,000 annually.

Note that these same income limits will be used to trigger a 3.8% annual tax on net investment income (the proceeds of which are to be used to help fund health care reform changes).


For complete details, download the 2013 Medicare & You Guide


Until next time,

Andrew Herman
AH Insurance Services, Inc.

 

Medicare Annual Election Period (AEP) for 2013

Medicare Annual Election Period (AEP) for 2013

 

It's that time of year again for the Annual Election Period (AEP) for Medicare Health and Drug plans.  The AEP runs from 10/15 - 12/7 and is the period when you can change your Medicare Health/Drug plan or return to the original Medicare program.  Any changes made become effective on January 1st, 2013.

 

There's no doubt your mail box is filling up with advertisements from every insurance company with a Medicare Health and Drug Plan.  But please remember that along with those advertisements will also come the Annual Notice of Change and Evidence of Coverage documents from your current Medicare Insurance Plan.  As you know change is inevitable; and this year is no exception.

 

It is important that you review your 2013 plan documentation to see what has changed and how  the changes affect you.  As in past years, we will be contacting all of our Medicare clients between October 1st and October 15th to discuss changes in your plan and help you determine if the same plan, or a different plan will best meet your needs. According to CMS rules, agents can discuss plan benefits beginning on October 1st; and enrollment applications/changes can be processed beginning on October 15th.  So if you have received your Annual Notice of Change and Evidence of Coverage documents, and you have a question or concern about your coverage, feel free to give us a call first!  We don't want you to worry one minute about your Medicare Plan.  The earlier we know your needs have changed or any changes your plan has made that adversely affect you, the more time we have to research alternatives for your Health and Drug Plan needs.

 

Medicare Health and Drug Plans are governed by enrollment guidelines established by the Centers for Medicare and Medicaid Services (CMS).  Please refer to the following chart, courtesy of Universal Health Care Insurance Company:

 

HSAs: Costs Are on the Rise

What is an HSA? What is it used for? Who is qualified to have one?

An HSA is a Health Savings Account; it is a supplement to a high-deductible healthcare plan (HDHP). As a lot of companies, especially with the current economic conditions, are cutting back on health insurance, more and more people are finding themselves having healthcare plans with high deductibles. The HSA does not get rid of the high deductible; but it does serve as a non-taxable security fund in case of medical emergency. As the 401k is established to help squirrel away money for retirement, untouched for other purposes, the HSA is used to set money aside only for medical use. These non-taxable caches are meant to lighten the burden in case the deductible has to be filled in one fell swoop; or simply to pay for routine medical care on a tax-favored basis. The best part, though: whatever money is left over in the HSA at the end of a year will be rolled over into the next year.

So What Is New with HSAs?

The tax-deductible contribution limits have increased slightly: the contribution limit for individual plans has increased from $3,050 in 2011 to $3,100 in 2012; and for family plans from $6,150 in 2011 to $6,250 in 2012. Furthermore, the 10% penalty for using HSA funds for non-approved expenses is being raised to 20%. Finally, under the Patient Protection and Affordable Care Act (PPACA), HSA approved expenses on drugs include only doctor-prescribed medications, with the sole exception of insulin. Before PPACA, there was no requirement for OTC medications to be prescribed by a doctor in order to count as an approved expense.

How About Partial Year Eligibility for People Newly Insured by an HDHP?

A 2006 change in the HSA law allows individuals whose HDHP coverage begins part of the way into the year to make the full annual contribution amount for their first year of HSA eligibility. This change in the law was intended to help people fully fund their HSA accounts, especially since many insurance plans apply the full year deductible amount even though coverage might be in effect less than 12 full months. To take advantage of this rule, the individual’s HDHP coverage must take effect any time after January 1 but no later than December 1. Normally, less than full-year HDHP coverage would require the individual to pro-rate their HSA contribution for the year based on the number of months they had HDHP coverage. However, to avoid having to pay back any of the “extra” contribution amount, the individual must remain covered by an HDHP through December 31 of the following calendar year. If the individual does not remain covered by HDHP during this “testing period,” the extra amount must be included in the individual’s income and will be subject to additional taxation. If you are unsure or know that you’re not going to keep your HDHP coverage through December 31of the following year, you may be better off prorating your contributions for your first year of HSA eligibility.

Are HSA Contributions Tied to the HDHP Deductible?

HSA contributions are not limited by the amount of the HDHP deductible. This means that even if you are covered by an HDHP with the minimum deductible (i.e., $1,200 for individual coverage or $2,400 for family coverage), you may still contribute up to the full amount to your HSA. On the other hand, if you purchase an HDHP with a deductible higher than the annual HSA contribution limit, your 2012 HSA contribution will still be limited to $3,100 for individuals with self-only coverage or $6,250 for individuals with family coverage.

Contribution Deadlines

HSA contributions for a given year must be made on or before the due date (without extensions) for filing tax returns for that year. That means for most years contributions must be made on or before April 15 of the following calendar year.

What Else Should I Know About HSAs?

In addition to the tax favored treatment of qualified medical expenses, HSA account funds can be drawn down without penalty or taxes to pay for the following types of premium:

1)      Qualified Long Term Care Insurance;

2)      Health Insurance while receiving federal or state unemployment compensation;

3)      Continuation of Coverage plans, such as COBRA, required by federal law; and

4)      Medicare premiums.

Qualified medical expenses are defined to include unreimbursed medical expenses of the accountholder, his or her spouse, or dependents. Therefore, the HSA account can be used to pay for medical expenses incurred by family members even if they aren’t covered by the HDHP.

Until next time,

Andrew Herman

Medicare Advantage Disenrollment Period (MADP) ends on February 14th

Attention! The Medicare Advantage Disenrollment Period (MADP) is ending on February 14, 2012! There is still time to review your plan and make sure it is what you want.

The MADP runs from January 1^st through February 14^th, and it replaces the old Open Enrollment Period (OEP) that used to run the first three months of each calendar year.  During the OEP, Medicare beneficiaries previously were allowed to switch from one Medicare Advantage plan into another; however the new MADP is much more limited.  Now, during MADP Medicare beneficiaries can only switch FROM Medicare Advantage to traditional Medicare. There is no Medicare Advantage hopping, nor can traditional Medicare beneficiaries still sign up for a Medicare Advantage plan.

However, people who drop their Medicare Advantage (MA) plan to switch to traditional Medicare will be made eligible for a special enrollment period for a Medicare Prescription Drug (Part D) plan (PDP). This special enrollment period is available regardless of whether or not the MA plan included prescription drug coverage. This is different from the prior rules under OEP, which did not allow someone to pick up new Part D coverage if that person didn't have any form of Part D coverage (either as part of a MA plan or a standalone PDP) at the beginning of the calendar year.

Also new in 2012 is the Medicare Advantage special enrollment period based on Plan Rating.  Any Medicare beneficiary eligible for an MA plan is allowed to enroll in a 5-star MA plan at any point during the calendar year, if a 5-star plan happens to be available in the beneficiary’s service area.  An individual may use this special enrollment period only one time per year.

Until next time,
 

Andrew Herman

2012 Medicare Premiums, Deductibles and Coinsurance Amounts

For those interested in the Medicare program, here are the details on 2012 Medicare premiums, deductible and coinsurance amounts:

Medicare Premiums for 2012

Part A: (Hospital Insurance) Premium


Most people do not pay a monthly Part A premium (Medicare beneficiary or a spouse has 40+ quarters of Medicare-covered employment).

• The Part A premium is $248.00 per month for Medicare beneficiares with 30-39 quarters of Medicare-covered employment.
• The Part A premium is $451.00 per month for people who are not otherwise eligible for premium-free Hospital Insurance and have less than 30 quarters of Medicare-covered employment.

Part B: (Medical Insurance) Premium

The standard Medicare Part B monthly premium in 2012 will be $99.90, which represents a $15.50 decrease from the 2011 premium level of $115.40 applicable to newly eligible Medicare beneficiaries.  For existing Medicare beneficiaries who were exempted from Medicare Part B premium increases in 2010 and 2011, the new 2012 premium level represents a $3.50 increase over the $96.40 monthly amount currently paid.

In 2012, Social Security monthly payments to enrollees will increase by 3.6%.  The dollar increase in benefits checks is expected to be sufficient on average to coverage the $3.50 increase in the Medicare Part B premium that most beneficiaries will experience.  For Medicare beneficiaries who were new to Medicare in 2010 or 2011 and were paying a standard monthly premium in excess of $96.40, their benefit checks will increase in 2012.

In most years, Social Security benefits are increased with a cost-of-living adjustment (COLA) and the Medicare Part B premium is raised at the same time.  In the two year period 2010-2011, however, with no COLA increases applying to Social Security benefits, the increase in the Part B premium applicable to new Medicare beneficiaries would have resulted in most people seeing a decrease in their net benefits (i.e., their monthly Social Security benefit less deduction of the Medicare Part B premium).  Since the Social Security Act protects against such a net decrease (except for those subjected to an income related increase in the Part B premium), the 2009 Part B premium level of $96.40 has continued to apply for most people who were on Medicare prior to January 1, 2010.  Now, their premium will be increasing to $99.90 on January 1, 2012.

As required in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, beginning in 2007 the Part B premium paid by a Medicare beneficiary each month is based on his or her annual income.  If a beneficiary's "modified adjusted gross income" is greater than the legislated threshold amounts, then the beneficiary is responsible for a larger portion of the estimated total cost of Part B benefit coverage.  The income-related amounts were phased in over three years, beginning in 2007; and currently about 4% of Part B enrollees are subject to these higher Medicare Part B premium levels.

For complete details on Medicare Part B premiums for people with higher income levels, please refer to Medicare's FAQ titled:

"2012 Part B Premium Amounts for Persons with Higher Income Levels"


Medicare Deductible and Coinsurance Amounts for 2012

Part A (pays for inpatient hospital, skilled nursing facility, and some home health care).  For each benefit period Medicare pays all covered costs except the Medicare Part A deductible (2012 = $1,156) during the first 60 days and coinsurance amounts for hospital stays that last beyond 60 days and no more than 150 days.

For each benefit period the Medicare beneficiary pays:

• A total of $1,156 for a hospital stay of 1-60 days
• $289 for days 61-90 of a hospital stay
• $578 per day for days 91-150 of a hospital stay (Lifetime Reserve Days)
• All costs for each day beyond 150 days
• For Skilled Nursing Facility, $144.50 per day for days 21-100

Part B (covers Medicare eligible physician services, outpatient hospital services, certain home health services, durable medical equipment).  In 2012 the Medicare beneficiary pays:

• $140.00 deductible per year, then 20% of the Medicare-approved amount for services

The $140 Medicare Part B deductible reflects a $22 decrease from the $162 level applicable in 2011.  While the Medicare Part B deductible level usually is increased each calendar year, in 2012 the deductible amount actually is decreasing in anticipation of a reduced level of Medicare payments to physicians.

For additional details, please refer to Medicare's Fact Sheet titled:

"Medicare Premiums and Deductibles for 2012"


Until next time,

Andrew Herman

Medicare Open Enrollment Period Begins Today

The Medicare Open Enrollment Period -- which begins earlier this year on Saturday, October 15 – has been expanded to last seven weeks and will end on December 7.  The Department of Health and Human Services (HHS) expanded the enrollment period by a week as compared to previous years in which the election period ran from November 15 to December 31.  Medicare beneficiaries will have more time to find a suitable plan, but some still may think they have until New Year's Eve to decide.
HHS Secretary Kathleen Sebelius recently stated, “Thanks to the Affordable Care Act, people with Medicare can get certain preventive services for free and can get more affordable prescription drugs."  She added that “open enrollment is seniors’ chance to review their Medicare choices and pick the plan that works for them, or keep the plan they have today.”

Medicare beneficiaries now can begin reviewing the 2012 quality ratings for Medicare Advantage Health Plans (Part C) and Medicare Prescription Drug Plans (Part D) for the upcoming year.  This year the Centers for Medicare and Medicaid Services (CMS) is highlighting plans that have achieved an overall quality rating of 5 stars with a high performer or “gold star” icon so people with Medicare can easily find high quality plans.  People with Medicare can switch to an available 5-star plan at any time during the year; however there's no guarantee that 5-star plans will be available in all service areas.

Resources for Medicare Beneficiaries

Medicare beneficiaries can review and compare current plan coverage with new plan offerings, using many resources, including:

• Visiting www.medicare.gov, where you can utilize the website's plan finder to compare costs and coverage of the plans available in your area.
• Calling 1-800-MEDICARE (1-800-633-4227) for around-the-clock assistance to find out more about coverage options.  TTY users should call 1-877-486-2048.  Multilingual counseling is available.
• Contact Us if you would like personalized assistance comparing available plans in your area.

Plans for Medicare Expense Cuts

ObamaCare vs. Ryan-House GOP Plan

If you’ve been following national news in recent months, you may have come across mention of the Ryan-House GOP Plan. What is it? How is it different from Obama’s plan per the Patient Protection and Affordable Care Act (PPACA)? How might it affect you?

Drafted by Representative Paul D. Ryan, chairman of the House Budget Committee, and in competition with Obama’s and the Democrats’ plan for reducing governmental health care costs, the Ryan-House GOP Plan has been proposed by the Republicans in Congress for the same goal. It does not necessarily deny that some aspects of the Obama plan are good, but it serves as an alternative and as a potential opportunity for improvement of the governmental cost management of health care reform.

So what are the differences between the Obama plan and the Ryan-House GOP Plan? They both aim to save the government money, but in different manners. Firstly, regarding Medicare, the PPACA plans to reduce costs by granting more power to the Independent Payment Advisory Board, allow the Medicare program to bargain with drug companies for reduced prices, and take measures against fraud. This is estimated to save approximately $200 billion in the next ten years. On the other hand, the Ryan-House GOP Plan plans to reduce government costs by creating vouchers instead of providing full health care to Medicare beneficiaries under the age of 54. Also, premiums for Medicare coverage would be increased to cover approximately 35% of Medicare costs, rather than the 25% proposed under the PPACA, saving $241 billion in the next ten years. In addition, Senator Ryan’s suggestion that the eligibility age of Medicare be raised gradually from 65 to 67 would save approximately $124 billion by itself in the next ten years. Overall, this is projected to save $30 billion above and beyond the PPACA. Regarding Medicaid cost reductions, Obama has not come up with a definite plan, but projects cost decreases of $100 billion over the next ten years. On the other hand the Ryan-House GOP Plan has a plan to make Medicaid a block-grant program, where states are just given a sum of money for Medicaid to distribute as is fit. This plan is supposed to save $771 billion over the next ten years. Furthermore, the Ryan-House GOP Plan calls for the repeal of the PPACA in order to reduce costs.

The Ryan-House GOP Plan might be viewed unfavorably by those who are opposed to a reduction of benefits to Medicare beneficiaries. In any case, it is more clearly outlined in some areas of interest such as Medicaid cost reduction. If the Ryan-House GOP Plan is adopted, it may or may not be adopted in full (especially if the PPACA is not repealed). It does seem to be a worthy plan for consideration, and is being reviewed by the bipartisan panel of Republican Senator Pete Domenici and Democratic budget expert Alice Rivlin.  Most Democrats, including Senator Charles Schumer, rail against the Ryan plan arguing that it is a scheme to destroy Medicare and use that savings to give tax cuts to the wealthy on the backs of seniors. It could just as easily be argued that the Ryan plan is fiscally far-sighted and provides a better framework to maintain solvency of the Medicare program.

Fla. Judge Strikes Down Health Reform Law

BREAKING NEWS... Just today, a federal judge in Florida ruled that the Obama administration's health care overhaul is unconstitutional, siding with 26 states that sued to block it.

Roger Vinson, a judge in the U.S. District Court in Pensacola, Fla., said in a ruling on State of Florida et al. vs. United States Department of Health and Human Services et al. (Case Number 3:2010-cv-00091-RV), that Congress has no authority under the commerce clause of the U.S. Constitution to enforce the “minimum essential coverage provision” in PPACA.


As we mentioned in our December eNewsletter, this debate appears destined to reach the U.S. Supreme Court. While two other federal judges had upheld the requirement that people buy health insurance or face penalties, Henry E. Hudson of the U.S. District Court in Richmond, Virginia ruled that the insurance mandate violates the Constitution.

In today's ruling, Vinson went even further than Judge Hudson and declared the entire health care law unconstitutional.

"This is obviously a very difficult task. Regardless of how laudable its attempts may have been to accomplish these goals in passing the Act, Congress must operate within the bounds established by the Constitution," Vinson wrote in his 78-page ruling.

President Barack Obama's administration had argued that the health care system was part of the interstate commerce system. They said the government can levy a tax penalty on Americans who decide not to purchase health insurance because all Americans are consumers of medical care.

But attorneys for the states said the administration was effectively forcing the states to participate in the health care overhaul by holding billions of Medicaid dollars hostage. The states also said the federal government is violating the Constitution by forcing a mandate on the states without providing money to pay for it.

If the PPACA minimum coverage provision takes effect in 2014 as enacted, it will require many people with incomes above a certain level who do not get health coverage from their employers to buy a minimum level of health coverage or else pay a penalty. The provision provides exceptions for individuals with religious objections to owning health coverage and for some individuals who cannot find affordable health coverage.


Health insurers have argued that they can provide affordable health coverage for all, without basing rates on health status, only if the government requires all people – including relatively young, healthy people – to have health coverage.

PPACA contains many provisions other than the minimum coverage mandate. Vinson says the entire act must be declared void because PPACA is not written in such a way that the coverage mandate can be considered separately from the rest of the act.

There is widespread sentiment for reducing the cost of health care and improving the quality, and the Florida case “is not about whether the Act is wise or unwise legislation,” Vinson says.

“This has been a difficult decision to reach, and I am aware that it will have indeterminable implications,” Vinson says. “At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled ‘The Patient Protection and Affordable Care Act.’”

Judge Vinson made headlines in December 2010 when he asked during oral arguments on the Florida case whether Congress had the authority to impose a PPACA broccoli-eating mandate.

Surely one of our former Presidents was offended by that, you know the one that wouldn't eat his broccoli.

Until next time,

Andrew Herman
AH Insurance Services, Inc.

Changes to Medicare Part D

Medicare Part D Downfalls


The turn of the year always brings changes to Medicare benefits… but this year wealthier people get a special change to their Part D premium to reward them for their high income.

So what’s the change? Starting January 1, 2011, Medicare beneficiaries face a new income related monthly adjustment amount (IRMAA) to their Medicare Part D premiums. Depending on income as filed on the 2009 tax return, an additional sum may be due each month:

How will you know for certain what you will be required to pay? The Social Security Administration will send you a letter in the mail notifying you of the extra amount that must be paid for the IRMAA.

The surcharge on your Medicare Part D premium is NOT to be paid to the provider of your Part D drug plan. Regardless of the method used to submit normal Part D premiums to your insurance provider, the extra monthly cost required by the IRMAA will be collected by the Social Security Administration. Please remember, if you do not have a Medicare Part D drug plan, you will not have to pay any extra money in Medicare premiums.


Until next time,



Andrew Herman

AH Insurance Services, Inc.