Before you get too consumed with pumpkin spice everything and Halloween preparations, I want to remind everyone that one of the most important enrollment periods of the year is set to kick off in a week: The Medicare enrollment period begins on Oct. 15 and continues through Dec. 7.
Next to Social Security, Medicare might be the most important social program for seniors. Without it, many might struggle to pay their medical bills and receive medical care. Since medical care inflation (surgeries, prescription medicines, and even receiving care) has regularly outpaced Social Security's annual cost-of-living adjustment (COLA), it's not out of the question that Medicare could provide more in lifetime benefits to seniors than Social Security within the next couple of decades. Thus, enrolling in Medicare, or an alternative plan known as Medicare Advantage, for those 65 and up, and ensuring that you choose the right plan, is crucial to your financial and physical well-being.
As we head into the 2018 enrollment period, you should be aware of three notable changes to Medicare or the Medicare Advantage market, along with one aspect of Medicare that surprisingly didn't change for some folks.
1. Rejoice! Part D premiums are going down
This past week, the Centers for Medicare and Medicaid Services released copious amounts of prescription drug pricing data via its annual landscape file data release. Normally, this data would take a long time to pore over, but Avalere Health did the grunt work, thankfully. When all is said and done, Avalere's experts found that Part D (prescription drug plan) premiums are set to drop slightly in 2018 as a result of higher-than-predicted rebates. We can also likely attribute this drop to weakness in generic drug pricing.
However, just because Part D premiums are falling doesn't mean you should blindly remain enrolled in the same Part D plan as you had in 2017. Premiums and coverage commonly change from year to year on most plans, meaning what offered the best value in 2017 may not be the best value for you in 2018. You'll want to closely examine the plans available to you to ensure that your prescription medicines are covered for the best possible price. Failing to take this step could wind up costing you big-time.
2. Medicare Advantage members have fewer low out-of-pocket plan options
The aforementioned alternative to Medicare, known as Medicare Advantage (MA), has been an increasingly popular option for eligible enrollees. Between 2005 and 2015, the number of eligible Medicare enrollees who chose an MA plan instead of traditional Medicare rose from 13% to 30%. There's a lot to like about MA plans, including a maximum annual out-of-pocket expense for traditional Part A (hospital insurance) and Part B (outpatient services) coverage, along with the ability to roll dental, hearing, and vision coverage into your plan. Traditional Medicare doesn't offer these coverage options, and there is no maximum annual out-of-pocket expense.
In 2018, MA providers will offer plenty of $0 monthly premium plans to act as a lure to attract seniors, but the number of plans with out-of-pocket expenses capped at $4,000 or less will be significantly lower, according to Avalere. Health benefit providers are finding that an effective way to buffer their profitability is to push more in the way of out-of-pocket expenses back to the consumer.
3. There are new Part B surcharge income brackets for the wealthy
In April 2015, at seemingly the 11th hour, Congress passed legislation that introduced a new reimbursement schedule for physicians who accept Medicare. This new payment schedule removed the possibility of a major cut in pay and replaced it with gradual increases in reimbursements through 2020. But in order to pay for such a move, adjustments needed to be made. Beginning in 2018, the well-to-do could find themselves paying more for Part B premiums.
In 2017, the breakdown for Part B surcharges looked like this:
- $134/month: less than $85,001 (single)/less than $170,001 (married)
- $187.50/month: $85,001-$107,000 (single)/$170,001-$214,000 (married)
- $267.90/month: $107,001-$160,000 (single)/$214,001-$320,000 (married)
- $348.30/month: $160,001-$214,000 (single)/$320,001-$428,000 (married)
- $428.60/month: more than $214,000 (single)/more than $428,000 (married)
In 2018, Part B premiums and surcharges will remain unchanged, by the individual and joint-filer brackets will adjust a bit as follows:
- $134/month: less than $85,001 (single)/less than $170,001 (married)
- $187.50/month: $85,001-$107,000 (single)/$170,001-$214,000 (married)
- $267.90/month: $107,001-$133,500 (single)/$214,001-$267,000 (married)
- $348.30/month: $133,501-$160,000 (single)/$267,001-$320,000 (married)
- $428.60/month: more than $160,000 (single)/more than $320,000 (married)
As you can see, the change happens once an individual hits $133,500 in income, or a couple hits $267,000. If you find yourself eligible for Medicare and earning more than these amounts, prepare to pay a potentially higher Part B surcharge in 2018.
Surprise! Part B premiums aren't changing (for some people)
Lastly, it's worth pointing out what was brushed over above: Part B premiums aren't expected to increase in 2018. While that's great news for newly eligible enrollees, as well as those folks who haven't enrolled for Social Security as of yet, it's not necessarily great news for those protected by the hold harmless clause.
Hold harmless is what protects folks who receive Social Security, and who have their Part B premiums automatically deducted from their monthly benefits check, from experiencing greater inflation from Part B than they received from Social Security's annual COLA. In plainer terms, if Social Security recipients who are already enrolled in Medicare receive a 2% raise, hold harmless prevents Part B premiums for these grandfathered members from rising more than 2% -- even if the actual inflation was much higher. In 2018, even though Part B premiums aren't set to increase, these grandfathered recipients are liable to see their Part B premiums rise by the exact same percentage as their COLA, which is expected to be around 2%.
Make note of these changes, folks, because what you don't know could cost you dearly during the Medicare enrollment period.
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