Changes Coming to Medicare

There are a number of changes coming to Medicare. Individuals who are already enrolled and new enrollees should both be aware of these Medicare changes.

A New Medicare Card

Sometime between April 2018 and April 2019, you will be receiving a new Medicare card that will not have your Social Security number on it. The cards will have Medicare Changesa new Medicare Number on them, which will be unique to you. This change will keep your Social Security number more secure, and help protect your identity.

The Social Security Administration is asking you to make sure that your mailing address is up to date.  If you do need to update your address, you can do so by calling 1-800-772-1213 or at http://www.ssa.gov/myaccount. They are also warning you to be aware of anyone contacting you about your new card.  The Social Security Administration will never call you and ask you for private information to get your card.  And finally, don’t worry if your neighbor gets their card before you do.  It will take some time to mail our cards to every Medicare member.

2018 Medicare Costs

For 2018, the Medicare Part B Deductible will be $183.  The Part B Standard Premium will be $134 or higher, depending on your income (see chart).  However, most people who get Social Security benefits pay less than this amount ($130 on average). You pay the standard premium amount of $134 (or higher based on the chart below) if:

  • You enroll in Part B for the first time in 2018.
  • You don’t get Social Security benefits.
  • You’re directly billed for your Part B premiums.
  • You have Medicare and Medicaid, and Medicaid pays your premiums.
  • Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount.
If your yearly income in 2016 was You pay (in 2018)
File individual tax return File joint tax return File married & separate tax return
$85,000 or less $170,000 or less $85,000 or less Your plan premium
Above $85,000 up to $107,000 Above $170,00 up to $214,00 Not applicable $13 + your plan premium
Above $107,000 up to $133,500 Above $214,000 up to $267,000 Not applicable $33.60 + your plan premium
Above $133,500 up to $160,000 Above $267,000 up to $320,000 Not applicable $54.20 + your plan premium
Above $160,000 Above $320,000 Not applicable $74.00 + your plan premium

 

The 2018 standard Medicare Part D (the prescription drug benefit) Deductible is $405. Once that deductible is met, your costs break out as follows:

Deductible: $0-$405 100% paid by Participant until the deductible is met
Initial Coverage Limit $3,750 in total drug costs 75% Paid by Medicare 25% paid by Participant
 

 

Between $3,750 and $7,508.75 in total drug costs

Brand Name Drugs:

50% Manufacturer Discount

15% Paid by Medicare

 

Generic Drugs:

56% Paid by Medicare

 

35% Paid by Participant

 

 

 

44% Paid by Participant

 

Above $7,508.75 in total drug costs 95% Paid by Medicare 5% Paid by Participant

 

Medigap Plans C and F

One useful way to reduce your out-of-pocket Medicare expenses is to buy a Medigap Plan. These are supplemental Medicare plans that cover some of the costs that Medicare Parts A & B don’t cover, deductibles, and co-insurance amounts.  There are 10 different Medigap plans, each labeled with a different letter, each having a different level of coverage.  One of the most comprehensive plans is Medigap Plan F, which includes coverage of:

  • Part A hospital and coinsurance costs up to an additional 356 days after Medicare benefits are exhausted
  • Medicare Part A hospice care copayment or coinsurance
  • Medicare Part B coinsurance
  • Medicare Part B excess charges
  • Medicare Part A deductible
  • Medicare Part B deductible
  • First three pints of blood used in an approved medical procedure (annually)
  • Skilled nursing facility coinsurance
  • Foreign travel emergency coverage (80%, up to plan limits)

Another popular plan is Medigap Plan C.  Plan C covers almost everything Plan F covers.  The one difference is that Part C doesn’t cover something called “Part B excess charge”.  The www.medicare.gov definition of that is “If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge.”

You can see why these 2 plans are so popular.  In 2015, Congress voted to close these plans to new people in 2020.  Meaning, if you are new to Medicare in 2020, you won’t have the option of choosing these plans or if you are a current Medicare recipient looking to change Medigap plans, these plans won’t be available.

Between now and 2020, seniors and people with disabilities need to think about this carefully.  Right now, people turning 65 or just switching to Medicare from an employer plan can be accepted into any Medigap plan they choose, regardless of their health.  If they want to switch Medigap plans later on, insurance companies can look at their health, and either turn them down for that reason, or charge them a hefty premium for a pre-existing health condition. So, your first choice is important.

That said, should you just jump and buy Plan F while you can?  Maybe not.  Experts expect the premiums on Plan F to rise after they close the plans because there won’t be any new, relatively healthy 65 years olds to offset the costs of the aging people already in Plan F.  So choosing a Medigap Plan F now could lock you into a very expensive plan in the future.

Experts are recommending people look at Plan G.  This is a plan that is almost as comprehensive as Plans F and C, but it does require you to pay the Medicare Part B annual deductible.

Will Medicare Plan F premiums go up too much?  Will you develop a medical condition that makes moving from Plan F to another Medigap plan too expensive? These are things to consider.  Medicare offers a really helpful grid comparison of the different Medigap plans at https://www.medicare.gov/supplement-other-insurance/compare-medigap/compare-medigap.html#1319. Without a crystal ball, these choices are really hard, but know this, the clock is ticking.

Leave a Reply