Posts Tagged ‘Part B’

Some Medicare Recipients Will See a Rise in 2010 Premiums

OCTOBER 26, 2009  VOLUME 16, NUMBER 59

The Medicare program has announced its 2010 premium and coinsurance rates. As predicted, an anticipated increase in medical costs will mean a steep rise in Medicare-related premiums, but federal law protects most recipients from having to pay the new rates. One effect of changes in Medicare rate-setting over the last few years will be seen more clearly in 2010. Not long ago, every Medicare beneficiary could expect to pay the same portion of his or her medical costs. Those days are over, and a confusing system of co-payments, deductibles and premiums has now gotten more confusing.

Medicare has set the annual premium increase for Part B insurance at 15%, which translates into a 2010 premium of $110.50 per month. Nearly three-quarters of Medicare beneficiaries, however, will not have to pay that higher amount. Congress limited current Medicare beneficiaries’ premium increases to no more than their Social Security cost-of-living adjustment. Since Social Security announced two months ago that there will not be a COLA increase in 2010, that means that most Medicare beneficiaries will continue to pay $96.40 per month for Part B.

Who will pay the higher figure? Three groups of people:

  1. People who have been receiving Medicare but have not had Part B premiums deducted from their Social Security checks, for whatever reason, are not protected from the increased premiums.
  2. New Medicare beneficiaries are not protected, either. If you start receiving Medicare benefits in 2010 for the first time, you will pay the higher rate.
  3. Wealthy Medicare beneficiaries are not protected from increases. If a single person makes more than $85,000 per year, or a married couple more than $170,000, they will see the increase in their Part B premiums.

Wealthy Medicare beneficiaries actually get a double dose of increased premiums. Not only are they not protected from the 2010 increase, but they may also have to pay higher premiums based on their income levels. For the wealthiest Medicare beneficiaries — those whose individual income is over $214,000, or couples whose income is over $428,000 — the new Part B premium will be $353.60 per month.

Income for these calculations is determined by reference to the beneficiary’s 2008 income tax return. For those whose income has dropped since that year, it is possible to request a revision based on a later year’s tax returns.

Other premiums, co-payments and deductibles are also set to increase in 2010. Among the increases: an anticipated typical rise by about $2 in monthly Part D (drug plan) premiums nationwide.

Social Security Probably Won’t Have a Cost of Living Increase

AUGUST 24, 2009  VOLUME 16, NUMBER 52

According to the Trustees of the Social Security and Medicaid trust funds, it looks like the annual cost-of-living adjustment (COLA) for Social Security next year will be, well, zero. In other words retirees, those on Social Security Disability and even Supplemental Security Income recipients will see no increase in their Social Security checks in 2010.

A summary of the Trustee’s report is available online, and it makes for interesting reading. The Trustees have provided explanations, figures, projections and calculations — and also some calculations of the real-world effect of those projections on individual beneficiaries and the funds as a whole.

If the no-COLA projections are correct, it would be the first year without an increase since COLAs were introduced in 1975 (you can see the history of COLAs since 1975 in a chart maintained by the Social Security Administration). The law mandating COLAs does not allow for reductions in Social Security benefits, so at least no one will see any automatic decreases.

Well, that’s not quite correct. Some recipient’s checks will go down, since their Medicare Part B premiums may increase — though only about one-quarter of Social Security recipients will be affected by that possibility. For the rest, Part B premiums are not permitted to increase by more than the COLA amount. With no COLA projected, that means no increase in Part B premiums. For those whose premiums are indexed for income, however, that may mean large increases in Part B premiums.

In addition, Medicare Part D (the drug benefit) premiums are expected to increase slightly for most Social Security beneficiaries. Since those premiums are automatically deducted from Social Security, the effect for most recipients will be a decrease in their monthly checks.

The culprit, of course, is mostly the recession and the general economic slowdown. Despite the lack of a COLA, most Social Security beneficiaries are actually paying more for their basic needs this year — partly because they pay more for health care, where costs have not held steady or decreased as they have for many consumer goods.

The projections are murkier for next year, of course, but the Trustees predict that there will likely be no COLA in 2011, either. Their planning assumes only a small COLA in 2012.

The final numbers will not be released for another two months, but anyone receiving Social Security benefits should assume that they will not be seeing any increase next year. That will be a significant change from last October, when Social Security announced a 5.8% COLA — the largest since 1982 (see the Social Security chart, which provides year-by-year figures for the COLAs).

What effect does the lack of a COLA have on the Social Security and Medicare trust funds? The Trustees predict that Social Security’s trust fund is adequately funded for the next ten years, but that beginning in 2014 (two years earlier than estimated last year) payouts will begin to exceed the fund’s value. The hospital insurance portion of Medicare’s fund looks even bleaker; it will begin being spent down in 2011 and run out in 2017.

Medicaid Beneficiary’s Alimony Payments Allowed to Continue

FEBRUARY 9, 2004 VOLUME 11, NUMBER 32

When someone in a nursing home qualifies for Medicaid, he or she will usually still have to pay a portion of the nursing home bill. In some cases this can mean that the resident must pay more than his or her income—or risk eviction from the nursing home.

Unmarried Medicaid recipients are expected to turn over nearly all their income to the nursing home. They are permitted to hold back a small amount monthly for personal needs (in Arizona the amount is currently $84.60). Premiums for Medicare Part B and other insurance coverage can also be withheld. Everything else usually must be paid to the nursing home.

Take Ervin Mulder, for example. The South Dakota man was receiving $701 per month from Social Security when he entered the nursing home. Medicaid officials ordered him to pay $671 to the nursing home each month (South Dakota only permits Medicaid beneficiaries to retain $30 for personal needs).

Mr. Mulder had gotten divorced a few years earlier, and his ex-wife had a court order directing him to pay $180 per month in alimony. In fact, that amount was being automatically deducted from his checking account each month as soon as the Social Security check arrived. Mr. Mulder simply could not pay $671 to the nursing home each month—he didn’t have it.

Mr. Mulder appealed the Medicaid agency’s determination, but the agency pointed to federal law and regulations. The federal government simply doesn’t provide for deduction of spousal support, for example, from the amount to be turned over. A trial judge ordered Mr. Mulder to pay the higher amount or face eviction from the nursing home.

South Dakota’s Supreme Court disagreed. In a 3-2 vote, the Justices decided that the Medicaid agency’s application of federal regulations was arbitrary and capricious. Mr. Mulder had no choice but to pay his ex-wife’s alimony, and he could not be required to pay the same money to both his wife and the nursing home.

The two dissenting Justices were unmoved. In their view, Mr. Mulder could go back to the state courts to reduce his alimony—though they did not suggest who might pay for those legal proceedings. If that didn’t work, they said, Mr. Mulder’s daughter should be required to come up with the $180 out of her pocket. Mulder v. South Dakota Department of Social Services, January 28, 2004.

Arizona rules are very similar to those in South Dakota. With no court case like Mr. Mulder’s, Arizona Medicaid (ALTCS) recipients are prevented from paying alimony or other debts. Although the result in Mr. Mulder’s case is (and we recognize the pun) appealing, it should not be relied on as precedent in other states.

It must be noted that the rules are different for married couples. A spouse living in the community can usually retain more of the nursing home resident’s income, with the precise amount varying in each case. The rules are also different—and considerably more complicated—for ALTCS recipients who reside in assisted living facilities, adult care homes or their own homes.

Medicare Changes Will Include Prescription Drug Coverage

DECEMBER 1, 2003 VOLUME 11, NUMBER 22

With the U.S. Senate’s approval of sweeping new Medicare provisions the public discussion has focused on whether the changes will be good for the program, its beneficiaries and the nation as a whole. Much controversy has also centered on the politics of the changes—including whether Republicans or Democrats won or lost, whether drug and insurance companies benefited at the expense of seniors, and whether senior advocacy groups sold out their members for temporary political gain. Not enough attention has been given to the actual provisions of the new law and the many questions raised by its enactment.

Under the new Medicare law, “Part D” coverage will be the primary payor for prescription drugs for seniors and the disabled, but the new law does much more than just adopt a new drug benefit. We answer many of the questions about the prescription drug benefit here, but in a companion issue of his newsletter Elder Law Fax, our friend and colleague Tim Takacs, a Hendersonville, Tennessee, elder law attorney, answers questions about the non-drug related provisions in the new law.

Q: What benefits will be available before Medicare’s full prescription drug program begins in 2006?

A: Starting sometime early in 2004, Medicare recipients will be offered a discount drug card costing $30. The card should entitle them to receive discounts of as much as 15% to 25% on drug costs. Low-income Medicare recipients will pay nothing for the drug discount card, and will receive $600 credit toward the cost of their drugs—though they will have to pay a co-payment of 5% to 10% of each prescription. The drug card program will end when the full prescription drug benefit takes effect in 2006.

Q: Will Medicare beneficiaries automatically receive the new drug benefit when it becomes available in 2006?

A: Apparently not. What is being called Medicare “Part D” will require enrollment and a monthly premium, currently set at $35 (but subject to changes before the 2006 effective date). This payment will be in addition to the Part B premium ($66.60 beginning next month). Medicare recipients with incomes below about $12,000 (or, for married couples, about $16,000) will pay no premiums for Part D.

Q: Once a beneficiary signs up for Part D, what drug savings should he or she expect?

A: Part D beneficiaries will still pay the first $250 of prescription medications out of their own pockets each year. The beneficiary will pay 25% of the next $2,000 of drug costs, and the entire cost of drugs between that level and $5,100.

Q: What does this mean for a real-life beneficiary’s drug benefit?

A: To take one example, a beneficiary with $500 in monthly drug costs today will pay about $335 per month under the new plan—if the premiums do not increase and the cost of drugs remains fairly stable. A beneficiary with current drug expenses of $50 per month will actually pay a little more than $60 per month under the new plan—but will be insured against catastrophic medication costs for the slight increase in payments. Neither of those examples will apply, incidentally, to poorer Medicare recipients, who will pay less for their drugs. Calculating the actual cost of drugs for a given beneficiary can be difficult; the Kaiser Family Foundation has prepared an internet page to give individuals a better idea of their own savings (or costs) under the Part D coverage.

Q: Are there other limitations on Part D coverage?

A: Yes, there are several other ways in which the drug benefit is limited. For example, after reaching the $5100 level in total drug costs, the participant will still have a co-payment for additional drugs of 5% of the drug costs.

Q: Will private insurance plans pay for the uncovered portion of drug costs?

A: Yes and no. Anyone who already has a “Medigap” (supplemental Medicare) policy that provides a drug benefit can continue to receive that benefit–provided that they choose to opt out of the new Medicare drug benefit program. No new Medigap policies with drug coverage can be sold, and no other private insurers will be permitted to sell policies that cover the deductibles and co-payments in the Medicare drug program.

Q: Will low-income seniors and disabled Medicare beneficiaries receive any additional benefits after 2006?

A: Yes. In addition to the waiver of premiums described earlier, there are also reduced co-payments for poorer participants. They will pay $1 to $2 (depending on income levels) for generic and $3 to $5 for brand name and “non-preferred” drugs. The “donut hole” (the uncovered portion of drugs costing between $2,250 and $5,100 each year) does not exist for poorer beneficiaries. Existing Medicaid coverage for drugs, however, will end—except for benzodiazepines and some other drugs that will not be covered by Medicare’s Part D program.

Q: Who will actually provide the Part D drug coverage—Medicare or private insurers?

A: The new law encourages individual insurance companies to enter the marketplace and provide coverage options under government supervision but without direct government management. In areas where no insurance programs are offered, however, Medicare will provide better subsidies to what the new law calls “fallback” insurance plans. The goal is to make sure that every Medicare beneficiary has at least two choices of drug coverage available. Incidentally, no “fallback” plan is permitted to offer drug coverage for the entire country.

Q: What effect will the new drug benefit have on state budgets?

A: The states are now paying a significant portion of drug costs for poorer Medicare beneficiaries who simultaneously qualify for Medicaid coverage—although the federal government does pay about half of Medicaid costs in most states. States will see some savings as those costs are shifted to Medicare, but the law requires the states to pay most of those savings back to Medicare.

Q: How will eligibility be determined for Medicare’s new needs-based benefits?

A: Medicare has never had a financial eligibility test before, though the little-known QMB and SLMB programs have provided premium assistance for poorer Medicare beneficiaries. The new law provides several additional benefits for Medicare recipients with low income and limited assets. In addition, the Medicare Part B premium will for the first time be increased for wealthier participants. State governments will be responsible for determining eligibility and enrolling low-income, low-asset beneficiaries in the new subsidized programs—probably utilizing the same eligibility staffs now employed to make Medicaid determinations.

There is much more to be considered in the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Some of the changes include provisions to reduce the cost of care in rural areas, a rollback of planned cuts in doctors’ reimbursement rates and an expansion of options available for health care coverage for younger citizens. For answers to questions about some of those other provisions, visit colleague Tim Takacs’ companion explanation in his weekly newsletter, Elder Law Fax.

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