Mark Miller is a journalist and author who writes about trends in retirement and aging. He has a special focus on how the baby boomer generation is revising its approach to careers, money and lifestyle after age 50. Mark is the author of The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work and Living (John Wiley & Sons/Bloomberg Press, 2010); he writes the syndicated column “Retire Smart” and edits RetirementRevised.com. Mark is the former editor of Crain’s Chicago Business, and former Sunday editor of the Chicago Sun-Times. The opinions expressed here are his own.
Video: Guide to Medicare Part A and Part B
Seniors Get a Break On Medicare Part B Premiums
The 2012 increase in Part B premiums will be the first that Medicare beneficiaries have faced in three years due to a federal law that freezes Part B premiums in years when there is no Social Security cost-of-living adjustment (COLA). Earlier this month federal officials announced a 3.6 percent Social Security COLA for next year, the first since 2008. That amounts to about $43 in additional benefits for the average recipient. It also means that the Part B increase will be spread among all 48 million Medicare beneficiaries rather than just those who enrolled after the freeze, the 4 percent of beneficiaries who pay higher premiums due to income and the roughly 9 million seniors whose premiums are paid by the Medicaid program, the joint federal-state health program for people with low-incomes.
Medicare Part B premium will rise in 2012
For Medicare participants who first enrolled in 2010 and 2011, and have been paying as much as $115.40 monthly, the monthly premium will drop to to $99.90. Because Medicare premiums are adjusted for higher-income retirees, some beneficiaries (fewer than 5 percent of all beneficiaries) will pay higher premiums in 2012, reaching as high as $319.70 monthly for individuals whose adjusted gross income exceeds $428,000 (married couple).
Medicare Part B Eligibility Defined
What does Part B cover? Part B helps cover only the medically necessary services like the following: (a) tests, labs and screenings, (b) preventive services include exams, lab tests, or screening inoculations that will help prevent, manage, or diagnose a medical problem, (c) glaucoma tests which is done once per year if performed by a legally authorized eye examiner, (d) bone mass measurement every two years, (e) diabetic screenings coverage if you have high blood pressure, dyslipidemia, obesity, or high blood sugar, (f) diabetic supplies coverage include monitors, test strips, lancet devices, and therapeutic shoes, (g) diabetic self-management training if prescribed by your doctor, (h) cardiovascular screenings to help prevent heart attack or stroke are covered. A screening consists of testing your triglyceride, lipid, and cholesterol levels every five years.
The Importance of Benefits Education
The original Medicare program has two parts: Part A (Hospital Insurance), and Part B (Medical Insurance). Only a few special cases exist where prescription drugs are covered by original Medicare, but as of January 2006, Medicare Part D provides more comprehensive drug coverage. Medicare Advantage plans, also known as Medicare Part C, are another way for beneficiaries to receive their Part A, B and D benefits. All Medicare benefits are subject to medical necessity. Part A: Hospital Insurance Part A covers inpatient hospital stays (at least overnight), including semiprivate room, food, tests, and doctor’s fees. Part A covers brief stays for convalescence in a skilled nursing facility if certain criteria are met: 1. A preceding hospital stay must be at least three days, three midnights, not counting the discharge date. 2. The nursing home stay must be for something diagnosed during the hospital stay or for the main cause of hospital stay. 3. If the patient is not receiving rehabilitation but has some other ailment that requires skilled nursing supervision then the nursing home stay would be covered. 4. The care being rendered by the nursing home must be skilled. Medicare part A does not pay for custodial, non-skilled, or long-term care activities, including activities of daily living (ADL) such as personal hygiene, cooking, cleaning, etc. The maximum length of stay that Medicare Part A will cover in a skilled nursing facility per ailment is 100 days. The first 20 days would be paid for in full by Medicare with the remaining 80 days requiring a co-payment (as of 2009, $133.50 per day). Many insurance companies have a provision for skilled nursing care in the policies they sell. If a beneficiary uses some portion of their Part A benefit and then goes at least 60 days without receiving facility-based skilled services, the 100-day clock is reset and the person qualifies for a new 100-day benefit period. Part B: Medical Insurance Part B medical insurance helps pay for some services and products not covered by Part A, generally on an outpatient basis. Part B is optional and may be deferred if the beneficiary or their spouse is still actively working. There is a lifetime penalty (10% per year) imposed for not enrolling in Part B unless actively working. Part B coverage includes physician and nursing services, x-rays, laboratory and diagnostic tests, influenza and pneumonia vaccinations, blood transfusions, renal dialysis, outpatient hospital procedures, limited ambulance transportation, immunosuppressive drugs for organ transplant recipients, chemotherapy, hormonal treatments such as Lupron, and other outpatient medical treatments administered in a doctor’s office. Medication administration is covered under Part B only if it is administered by the physician during an office visit. Part B also helps with durable medical equipment (DME), including canes, walkers, wheelchairs, and mobility scooters for those with mobility impairments. Prosthetic devices such as artificial limbs and breast prosthesis following mastectomy, as well as one pair of eyeglasses following cataract surgery, and oxygen for home use is also covered. Complex rules are used to manage the benefit, and advisories are periodically issued which describe coverage criteria. On the national level these advisories are issued by CMS, and are known as National Coverage Determinations (NCD). Local Coverage Determinations (LCD) only apply within the multi-state area managed by a specific regional Medicare Part B contractor, and Local Medical Review Policies (LMRP) were superseded by LCDs in 2003. Coverage information is also located in the CMS Internet-Only Manuals (IOM), the Code of Federal Regulations (CFR), the Social Security Act, and the Federal Register. Part C: Medicare Advantage plans With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). These programs were known as “Medicare+Choice” or “Part C” plans. Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, “Medicare+Choice” plans were made more attractive to Medicare beneficiaries by the addition of prescription drug coverage and became known as “Medicare Advantage” (MA) plans. Traditional or “fee-for-service” Medicare has a standard benefit package that covers medically necessary care members can receive from nearly any hospital or doctor in the country. For people who choose to enroll in a Medicare Advantage health plan, Medicare pays the private health plan a capitated rate, or a set amount, every month for each member. Members typically also pay a monthly premium in addition to the Medicare Part B premium to cover items not covered by traditional Medicare (Parts A & B), such as prescription drugs, dental care, vision care and gym or health club memberships. In exchange for these extra benefits, enrollees may be limited in the providers they can receive services from without paying extra. Typically, the plans have a “network” of providers that patients can use. Going outside that network may require permission or extra fees. Medicare Advantage plans are required to offer coverage that meets or exceeds the standards set by the original Medicare program, but they do not have to cover every benefit in the same way. If a plan chooses to pay less than Medicare for some benefits, like skilled nursing facility care, the savings may be passed along to consumers by offering lower copayments for doctor visits. Medicare Advantage plans use a portion of the payments they receive from the government for each enrollee to offer supplemental benefits. Some plans limit their members’ annual out-of-pocket spending on medical care, providing insurance against catastrophic costs over $5,000, for example. Many plans offer dental coverage, vision coverage and other services not covered by Medicare Parts A or B, which makes them a good value for the health care dollar, if you want to use the provider included in the plan’s network or “panel” of providers. Because the 2003 payment formulas overpay plans by 12 percent or more compared to traditional Medicare, in 2006 enrollees in Medicare Advantage Private Fee-for-Service plans were offered a net extra benefit value (the value of the additional benefits minus any additional premium) of $55.92 a month more than the traditional Medicare benefit package; enrollees in other Medicare Advantage plans were offered a net extra benefit value of $71.22 a month more. However, Medicare Advantage members receive additional coverage and medical benefits not enjoyed by traditional Medicare members, and savings generated by Medicare Advantage plans may be passed on to beneficiaries to lower their overall health care costs. Other important distinctions between Medicare Advantage and traditional Medicare are that Medicare Advantage health plans encourage preventive care and wellness and closely coordinate patient care. Medicare Advantage Plans that also include Part D prescription drug benefits are known as a Medicare Advantage Prescription Drug plan or a MA-PD. Enrollment in Medicare Advantage plans grew from 5.4 million in 2005 to 8.2 million in 2007. Enrollment grew by an additional 800,000 during the first four months of 2008. This represents 19% of Medicare beneficiaries. A third of beneficiaries with Part D coverage are enrolled in a Medicare Advantage plan. Medicare Advantage enrollment is higher in urban areas; the enrollment rate in urban counties is twice that in rural counties (22% vs. 10%). Almost all Medicare beneficiaries have access to at least two Medicare Advantage plans; most have access to three or more. Because of the 2003 law’s overpayments, the number of organizations offering Fee-for-Service plans has increased dramatically, from 11 in 2006 to almost 50 in 2008. Eight out of ten beneficiaries (82%) now have access to six or more Private Fee-for-Service plans. Each year many individuals disenroll from MA plans. A recent study noted that about 20 percent of enrollees report that “their most important reason for leaving was due to problems getting care.” There is some evidence that disabled beneficiaries “are more likely to experience multiple problems in managed care.” Some studies have reported that the older, poorer, and sicker persons have been less satisfied with the care they have received in MA plans. On the other hand, an analysis of the Agency for Healthcare Research and Quality data published by America’s Health Insurance Plans found that Medicare Advantage enrollees spent fewer days in the hospital than Fee-for-Service enrollees, were less likely to have “potentially avoidable” admissions, and had fewer re-admissions. These comparisons adjusted for age, sex and health status using the risk score used in the Medicare Advantage risk adjustment mechanism. In December 2009 the Kaiser Family Foundation published a report that rated Medicare Advantage organizations on a five star scale. The ratings were based on data from CMS, the Consumer Assessment of Healthcare Providers and Systems (CAHPS), Healthcare Effectiveness Data and Information Set (HEDIS) data, and the Health Outcomes Survey (HOS). New plans did not receive ratings, because data were not available. Almost six out of ten (59%) of MA plans did receive ratings, and these plans represented 85% of the enrollment for 2009. The average rating was 3.29 stars. Twenty-three percent of enrollees were in a plan with four or more stars; 20% were in a plan with fewer than three stars. Twenty percent of African-American and 32 percent of Hispanic Medicare Beneficiaries were enrolled in Medicare Advantage plans in 2006. Almost half (48%) of Medicare Advantage enrollees had incomes below $20,000, including 71% of minority enrollees. Others have reported that minority enrollment is not particularly above average. Another study has raised questions about the quality of care received by minorities in MA plans. The Government Accountability Office reported that in 2006, the plans earned profits of 6.6 percent, had overhead (sales, etc.) of 10.1 percent, and provided 83.3 percent of the revenue dollar in medical benefits. These administrative costs are far higher than traditional fee-for-service Medicare.  Part D: Prescription Drug plans Main articles: Medicare Part D and Medicare Part D coverage gap Medicare Part D went into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D. It was made possible by the passage of the Medicare Prescription Drug, Improvement, and Modernization Act. In order to receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD). These plans are approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies. Unlike Original Medicare (Part A and B), Part D coverage is not standardized. Plans choose which drugs (or even classes of drugs) they wish to cover, at what level (or tier) they wish to cover it, and are free to choose not to cover some drugs at all. The exception to this is drugs that Medicare specifically excludes from coverage, including but not limited to benzodiazepines, cough suppressant and barbiturates. Plans that cover excluded drugs are not allowed to pass those costs on to Medicare, and plans are required to repay CMS if they are found to have billed Medicare in these cases. It should be noted again for beneficiaries who are dual-eligible (Medicare and Medicaid eligible) Medicaid may pay for drugs not covered by part D of Medicare, such as benzodiazepines, and other restricted controlled substances.
Medicare Open Enrollment: Medicare Part B Premiums Will Go Up Next Year
While that may not sound good to seniors on limited budgets, it’s still better than the $106.60 a month that Medicare trustees originally estimated for next year. The increase in Medicare Part B premiums will be in the first in three years due to a federal law that freezes Medicare Part B premiums in which there is no Social Security cost of living adjustment (COLA). The federal government announced a Social Security COLA adjustment of 3.6% earlier this month, the first in three years.
Medicare Part B Premiums raised only slightly for 2012
Part B Premiums for Medicare beneficiaries will rise more modestly in 2012 than previous expected, which is good news for Seniors being able to keep affordable health insurance in Brentwood and the rest of the country . Standard Premiums Part B had been projected to increase to $ 106.60 a months, but instead will rise to $ 99.90 next year, a $3.50 increase over 2011; the standard premium is $ 96.40 in 2011. The Premium of $ 96.40 had been frozen for 3 years, due to the fact that the Social Security cost-of living adjustment (COLA) had not been changed. Part B pays for physician visits, hospital outpatient costs and certain other services.
How final numbers on Medicare Part B and Social Security COLA shake out
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2012 Medicare Part B Premium
For the first time in three years Social Security recipients will receive a Cost of Living Raise. Due to this raise many of those on Medicare will also see a raise in their Medicare Part B premium. Some will actually see a decrease. Those who started receiving Medicare in 2009 or before were paying $96.40 for their Medicare Part B premium. This amount had not increased for 3 years. In 2012 they will see an increase of $3.50 to $99.90 for their Medicare Part B premium. Those who began Medicare in 2010 were paying $110.50, they will see a DECREASE of $10.60. Those new to Medicare in 2011 were paying $115.40 for their Medicare Part B, they will also see a DECREASE of $15.50.
Medicare To Take Smaller Bite of Social Security
The high-income premiums are paid by individuals with $85,000 or more in annual income, and joint filers with income over $170,000, and they scale upwards through four income brackets. Currently, the high-income surcharges affect just 5 percent of seniors, but they’re on track to hit 14 percent by 2019 due to the new health care reform law. The income threshold previously was indexed to inflation, but the Affordable Care Act froze the threshold at 2010 levels through 2019, starting this year.
2012 Medicare Part B premiums to be 6 percent lower than projected Money Making
“The payment reforms enacted over the past few years, including those in the Affordable Care Act, in addition to crackdowns on fraud, waste and abuse, are partially responsible for the increased optimism about Medicare’s financial health, the lower-than-predicted Part B premium and an almost unheard-of drop in the Part B deductible,” said Joe Baker, president of New York-based Center for Medicare Rights, in a prepared statement. “These developments help show the promise of the ACA’s delivery system reforms, and why we must let them do their job in the coming years.”