Medicare and the Fiscal Cliff

As we ended 2012, the congressional budget talks dominated the political discussion.  The impending "Fiscal Cliff" that we were set to topple off on January 1st, 2013 was on the minds of everyone and even threatened to overshadow New Year's celebrations (say it ain't so!).  But alas, just before the stroke of midnight on December 31st, congress passed the American Tax Relief Act of 2012 and saved the day.  In an instant all our cares were over... right?  But as we awoke to the promise of a new year, the buzz was gone, and people began to wonder, what had actually been done.  Had, in fact, anything really been fixed?  And for those of us interested in all things Medicare, the bigger question was, how does this piece of legislation effect Medicare?

The short answer to the questions above is, not much.  That is, not much is fixed, and Medicare is not affected much by the law.  Not much is fixed because most of the major issues were simply pushed off until March or December of this year.  Medicare is not affected much because most of the law does not even address Medicare-related issues.  There are, however, two items that do effect Medicare recipients.

• Physician Pay Cuts.  The long-anticipated, and often delayed, 26.5% physician pay cut was delayed once again.  Congress will have to deal with this issue again before December 31st of this year, but for now doctors will not see this major drop in reimbursement. 
• Hospital Pay Cuts.  Hospitals, however, were not so lucky.  While the percentages are not nearly as high as the proposed doctor cuts, hospitals will still feel a sting.  While it remains to be seen exactly how this will effect your ability to receive care or be admitted to a hospital, it does hint that some services, like kidney dialysis, may be handed over to outpatient facilities.

On a related side note, the Social Security/Medicare tax break expired at the end of the year was not renewed.  Two years ago, active workers saw a 2% reduction in the amount of tax they paid for Social Security and Medicare.  Beginning the first of this year, that tax break will disappear.  So if you are actively employed, this may explain why your check took a little dip this month.

2013 Medicare Changes

Around this time of year we start hearing questions like, "Are there going to be any changes to Medicare this year?"  That's a great question.  And so, we'll take a quick minute and answer it for you.  The answer is yes.  Each year Medicare premiums, deductibles, and copays change.  Below we have highlighted the major changes.  These changes are universal for all Medicare recipients and thus are the same in our neighboring states as here in Idaho.

Before getting to that, however, we need to remind you that these changes may not necessarily effect your out-of-pocket expense.  If you have a Medicare Supplement, your policy is already set to adjust to pay many of these increased costs for you.  And, if you're on a Medicare Advantage plan, you probably have a totally different set of deductibles and copays to pay.

• The Part B premium increased from $99.90 to $104.90 for most people, however there are income-related increases for people with higher incomes.
• The Part A deductible increased from $1,156/benefit period to $1,184/benefit period.
• The Skilled Nursing Coinsurance increased from $144.50/day to $148/day.
• The Part B deductible increased from $140/year to $147/year.

For a full printable list of all the changes, including the income-related adjustments for the Part B and Part D premiums, click here.

Annual Election Period

Today marks the first day of the Annual Election Period.  What, you may ask, is the Annual Election Period?  The Annual Election Period, or AEP, is a window of time during which you can change the way in which you receive your Medicare benefits and in which you can add or drop prescription drug coverage.  Here are some quick pieces of info. 

• Begins.  The AEP begins on October 15th of each year.
• Ends.  The AEP ends on December 7th of each year.
• Effective Date.  Any changes made during the AEP will be effective January 1st of the following year.
• Medicare Advantage.  During the AEP you can change from Original Medicare to a Medicare Advantage plan (or vice versa), or you may change from one Medicare Advantage plan to another.
• Prescription Drug.  During the AEP you can add, drop, or change prescription drug coverage.
• Applications.  If you apply for a prescription drug plan or Medicare Advantage plan and decide that you would like another plan, you may make another selection.  In fact, there is no limit to the number of applications you can submit during the AEP.  If you do submit more than one application, the last one submitted is the one that sticks. 
• Medicare Supplements.  The AEP does NOT effect Medicare Supplements at all!  A Medicare Supplement does NOT have to renewed each year, nor will it change from year to year.  If you have a Medicare Supplement, October 15th is just another day in October.
• Marketing.  The above explains why you may have noticed a sudden up-tick in the amount of marketing material you've been receiving lately :)  Not to worry.  If you have any questions about making a change to your Medicare Advantage or prescription drug coverage, please feel free to call (800-817-9223) or drop us an email (info@tweedyinsurancegroup.com) anytime.

2013 Baseline Prescription Drug Plan

CMS has recently released the 2013 advised structure for all prescription drug plans.  While each company may design their plan in any way they choose, they must be at least "actuarially equivalent" to this standard design.  That is, they cannot offer coverage that, all things considered, is less than the standard coverage. 

The changes of note from last year are...

• Deductible change from $320 to $325
• Donut Hole threshold change from $2,930 to $2,970
• Generic discount during the Donut Hole increased from 14% to 21%
• Catastrophic Coverage threshold change from $4,700 to $4,750

To see a full breakdown of the 2013 standard plan, click here.

Annual Notice of Change (ANOC)

Hey look - more acronyms!  The federal government loves acronyms, and even when they work together with private industry (as is the case with PDPs and MA Plans) they still abound like they're going out of style.  So what is the Annual Notice of Change (ANOC)?  Do I get one?  Does it even matter?

The Annual Notice of Change is a document that Prescription Drug Plans (PDPs) and Medicare Advantage Plans (MA Plans) send out each fall to inform you of the changes in your plan.  If you don't have a PDP or an MA Plan, then no, you will not get one.  But for everyone else, expect to see this arriving on your doorstep sometime around the first of October.  Now we come to the $64,000 question - does it matter?

Yes.  I know, I know.  You wanted me to say no.  But the truth is, this is a very important document.  Why?  Each year a PDP or MA Plan files a new contract with the federal government.  This contract is totally different from the prior year's and can change items such as copayments, deductibles, monthly premiums, and even covered drug lists.  Because these changes can be so drastic, the plan is required to send you an ANOC to inform you of the differences between the current year and the upcoming year. 

So now you're probably all excited to read through your ANOC, right?  Well that will probably only last until it arrives.  Depending on your plan, your ANOC will weigh between 5 and 6 tons and come with it's own pillow.  Okay not really, but you get the drift.  While the whole publication does have merit, we have some tips to help you use this document efficiently.  So below are some questions that we would suggest you answer before just deciding to toss (or drag) it out.

For PDP plans:

• Did the monthly premium change?
• Did the drug copayments change?
• Are there any significant changes to the list of participating pharmacies?
• Are there any changes to the list of covered drugs that effect you?
• Are there any additional restrictions on the drugs that you're taking?

For MA plans, ask the following questions in addition to the above:

• Did the annual out of pocket maximum change?
• Are there changes to the doctor, hospital, or nursing facility copays?
• Are there any changes to the out-of-network copays?
• Are there any changes to the extra benefits?

Common Insurance Terms

Ha, you think!  The only thing common about insurance terminology is that they're all confusing.  We understand.  After all, insurance terminology is the second cousin to legalese!  Trying to read through a Summary of Benefits, or other health insurance material can be an exercise in frustration if you don't know the lingo.  That's why we've put together the following guide: Insurance Terminology in Plain English. 

Because we love simplicity, this isn't an all-inclusive guide of every insurance word ever used.  But, it will hit many of the most commonly used terms.  If you'd like to dig a little deeper, check out the two links below.

• A Glossary of Medicare Terms (c) Medicare Interactive
• Medicare.gov/Glossary

What The Supreme Court Ruling Means For Medicare

On June 28th, the Supreme Court ruled that the Patient Protection and Affordable Care Act (PPACA) does not violate the US Constitution.  Since then, we've been asked numerous times, "What does this mean for people on Medicare?"  Well, the answer is - surprisingly little.

When the act was passed in 2010, most of the changes that effected Medicare went into effect immediately.  The major components were:

• Many of the copays for preventative care were eliminated,
• A annual wellness visit was added, and
• The phasing out of the prescription drug "Donut Hole" began (this should be completed by 2020).

Because the Supreme Court only upheld the law, as opposed to changing it, the result was that these changes remained in place.  The bulk of what the PPACA addressed was related to insurance for those not yet on Medicare. 

Under PPACA individuals not covered by Medicare, Medicaid, or employer insurance will be required to purchase health care insurance or face a hefty "tax".  Additionally, many employers will now be required to offer health insurance to their employees.  There are exceptions, of course, to these two general statements, but they are the main thrust of the law.

What is an ABN?

These three little letters may save you a lot of money and headache.  ABN stands for Advance Beneficiary Notice.  We often get the following question, "My doctor told me that since Medicare did not cover my procedure I have to pay for it out of my pocket.  Is that true?"  The answer to that question has everything to do with an Advance Beneficiary Notice. 

There are thousands of medical procedures that Medicare covers.  There are also some that they don't.  These might include elective procedures or experimental procedures for example.  When obtaining service from a provider, it is always a good idea to ask if the service is covered by Medicare.  Your doctor or service provider is the best person to ask about what Medicare covers.  Since they depend on getting paid from Medicare, they must know what Medicare will and will not pay for.  However, at times a provider can make a mistake and provide you with a service that, once billed to Medicare, is not covered.  If this happens you are generally not liable for those charges.  There are two exceptions to this rule: 1) if it is a procedure that Medicare never covers, or 2) if you signed an Advance Beneficiary Notice (ABN). 

An ABN says, in short, that you are aware that the procedure you are getting ready to have may not be covered by Medicare but that you want to go ahead with it anyway.  This releases the provider from the liability of the charge in the event that Medicare doesn't approve the service.  However, if you don't sign an ABN and Medicare denies the claim, you are not liable for those charges.

There are some providers out there, however, who try to circumvent this problem by having you sign an ABN upon arriving at their office.  Not so fast...  Here are a few things you need to know about an ABN.

1. The ABN must describe the service.  That is, you cannot sign an all-inclusive ABN that would cover a whole list of services.  The ABN must detail precisely which service may not be covered.  
2. The ABN must include the estimated cost of the service.  Never sign an ABN that doesn't tell you how much you will be liable for if Medicare denies the claim.
3. The ABN must be provided in advance.  If a provider wants you to sign an ABN after you have already received the service, do not sign.

In short, be aware of what you are signing when a provider gives you a stack of paperwork.  If you see an ABN form, read it carefully and don't hesitate to ask questions.  One final note; an ABN only applies to persons covered under Original Medicare (Parts A & B).  If you are covered by a Medicare Advantage Plan, you generally have to pay for services that the plan doesn't approve. 

Click here to see a sample ABN form, or here to read a detailed Medicare publication regarding ABN forms.

What is "Extra Help"?

If you have a Prescription Drug Plan (PDP) or have heard anything about them, perhaps you've heard the phrase "Extra Help".  You might be wondering, what is it, who is it for, and how do I get it?  Good questions! 

Extra Help is a program administered by the Social Security Administration (SSA) that provides assistance to Medicare beneficiaries to help with the cost of their prescription drugs.  If awarded, Extra Help can provide assistance in the following ways.

• Premium.  Extra Help can lower or completely eliminate your premium based on your income level and/or the PDP you're enrolled in.
• Deductible.  If your PDP has a deductible, Extra Help can lower or completely eliminate your annual deductible depending on your income level.
• Drug Copays.  Extra Help can lower your drug copays.  The base benefit lowers your copays to a flat 15%, while the most generous benefit reduces your copays to two fixed amounts - $2.60 for generics and $6.50 for brand name drugs.  The level of benefit depends on your income level.

Extra Help is available to any Medicare beneficiary that meets certain criteria.  The two prime criteria are income level and resources.  To receive benefits, a single person needs to have an annual income of less than $16,755.  For married persons the limit is $22,695.  The resource limit to receive benefits is $13,070 for a single person, or $26,120 for a married couple.  Not all assets, however, count as resources.  For example, the value of your primary residence, your car, or any life insurance you may carry does not count towards the resource total.  Click here for more information on what is classified as a resource.

There are three ways to apply for Extra Help.

• Online.  Click here to be directed to the SSA website to begin an application.
• By Phone.  You can call 800-772-1213 (or 800-325-0778 for TTY users) and submit an application over the phone.
• Social Security Office.  You can also stop by a local Social Security office and apply in person.  To find the office nearest you click here.

For more detailed information on the Extra Help program, you can visit the Extra Help page on SSA's website:  http://ssa.gov/prescriptionhelp/index.htm.  

Social Security Going Paperless in 2013

The growing trend in American business today is for companies to go paperless.  Well, Social Security is catching up and will implement a move in that direction in the spring of 2013.  Beginning March 1, 2013, Social Security will no longer mail paper checks to beneficiaries.  Instead they will offer two options: direct deposit, and a Direct Express debit card.  While this change will not effect most Social Security recipients (about 90% already receive their funds via direct deposit), it will provide some convienences to those currently receiving checks.  Namely it increases security, as checks are no longer able to be intercepted en route, and increases reliability, as funds will no longer be delayed by bad weather (think hurricanes in the southern states). 

So, you might ask, how does this work?  Well, it's really pretty simple.  Social Security will send out a Direct Express debit card, and then load funds onto the card each month.  But, there are some downsides.  For example, there are some hidden fees to watch out for including a charges for each ATM withdrawal after the first one of the month.  Check out the links below for more details on some of these fees and restrictions.

The takeaway from all of this?  If you don't receive benefits via direct deposit, you might want to consider signing up before next March.

Summary Article

Things to Know About the Direct Express Debit Card

Social Security's Info Page