You may have heard stories in the news about cuts to Medicare coming in 2020. It’s true that budget proposals from Congress and the president propose reducing the budget for Medicare by $845 billion over the next 10 years. But before you get alarmed, remember that these are proposals only and that most of the reductions would be in what providers get paid for their services, not the benefits that patients are eligible for.
The truth is that Medicare changes every year, and most of the changes are small enough that you may not notice a difference. But depending on your income and which services you use, it’s a good idea to keep an eye on these changes so you can plan ahead. Even a small increase in your premium or deductible can have an impact on your annual health care costs.
UPCOMING CHANGES TO MEDICARE
Each year, the government makes some changes to Medicare that may affect your premiums, deductibles, coinsurance, and other out-of-pocket costs. Medicare may also roll out new plans, such as new Medicare Supplement Insurance policies, or phase out old ones.
If you have a Medicare Advantage policy, your private insurer may make changes based on new costs and regulations. While some changes might raise your costs, others may improve your benefits, such as expanded enrollment periods and increased services.
Let’s take a look at some upcoming changes to each part of Medicare and see how they may impact your costs and benefits.
The first change to look out for every year is to see whether your premiums and deductibles have gone up. As health care costs rise, it’s only natural that Medicare would make changes that reflect the current costs of services.
Fortunately, most beneficiaries won’t notice a difference to their Part A premium. Around 99% percent of people on Medicare are eligible for premium-free Part A, which means they’ve paid Medicare taxes for at least 10 years through their wages or self-employment income.
If you haven’t worked enough to qualify for premium-free Part A, your premium will go up:
- By $15 if you’ve worked less than 30 quarters
- By $8 if you’ve worked between 30 and 39 quarters
That brings the total to $240 or $437 per month, depending on how much you’ve worked.
For Part B, your premium is based on your income rather than how much you’ve worked. All beneficiaries pay $135.50 per month (an increase of $1.50 from 2018) as a standard premium, although there are adjustments for high- and low-income earners.
If your annual income is below $85,000 (or $170,000 for a couple), then you won’t see any other changes to your premium. Low-income earners (with a monthly income of $1,426 or less) may be able to get assistance through a Medicare Savings Program administered by your state.
If you earn more than $85,000 per year, then you’ll pay an Income Related Monthly Adjustment Amount in addition to your premium, and these amounts have gone up in 2019. Check the chart here to find out what the additional payment is for your income bracket. The total amount for the premium and adjustment ranges from $189.60 and $460.50 depending on your income.
Deductibles & Copays
The deductibles for Part A & B have also changed. The Part A deductible has increased by $24 to $1,364.00 for each benefit period. The coinsurance cost has increased by $6 for days 61-90 and by $12 for your lifetime reserve days. This brings the out-of-pocket costs to:
- $1,364 for the first 60 days of your hospital stay
- $341 per day for days 61-90
- $682 per day for lifetime reserve days
The Part B deductible has increased by $2 to a total of $185 in 2019.
Medicare Supplement Insurance
If you have Medicare Supplement Insurance or have been considering a Medigap policy, you’ll need to be aware of changes coming in 2020. Currently, there are two policies (Plans C and F) that cover the Part B deductible. These plans will no longer be offered after January 1, 2020.
If you already have one of these plans and want to keep it, you’ll be allowed to, and you can still enroll in them until that date. But if you are new to Medicare or decide to enroll in a Medigap plan after January 1, 2020, you’ll have to choose one of the other policies.
Medicare Advantage (Part C)
Since these plans are offered by private insurers and are not standardized, you’ll need to check each year to see whether your insurer has made any changes to your plan. Fortunately, updates to Medicare policies mean that your insurer may be able to offer you more benefits.
The CMS (Centers for Medicare & Medicaid Services) now allows plans to offer supplemental benefits in addition to medical services. These include services such as:
- Nutritional services (such as home meal delivery)
- Ride-shares to medical facilities
- Adult day care
- Home safety devices
- Telehealth services
Whether these services are covered will depend on which policy you have, so ask your insurer directly to find out. Remember, even if you have a Medicare Advantage plan, you’ll still have to pay your Part A & Part B premiums in addition to your Part C premium.
Another change coming to Medicare Advantage is an additional enrollment period, so if you do decide to change your plan, you’ll have more time in which to do so. You’ll be able to switch to a new plan between January 1 – March 31, and again between October 15 – December 7.
Part D (Prescription Drug Plans)
Because Part D plans are also offered by private insurers, the cost for each plan can vary, but Medicare sets certain limits that insurers are required to follow. For 2019, the prescription drug deductible has been capped at $415 (an increase of $10), although some insurers may charge less. The maximum coverage limit is $3,820, which is $70 higher than it was in 2018.
Another change coming to Part D is the closure of the “donut hole,” or coverage gap, in which the coinsurance costs for some drugs go up after you reach the coverage limit. In 2018, you’d be responsible for 44% of the cost of generic drugs while in the coverage gap. These changes will reduce your coinsurance costs to 25% for both brand-name and generic drugs.
WHY THESE CHANGES ARE HAPPENING
Changes to Medicare happen for a variety of reasons. In addition to regulations enacted by the federal government, the Centers for Medicare and Medicaid Policies releases guidelines every year to reflect the changing status of the health care system in the country. Insurers use these guidelines to set their premiums and decide which benefits to offer.
In addition, some changes happen on the state level. Services such as the Medicare Savings Program for low-income earners, as well as Medicaid coverage, are administered differently from state to state, so it’s important to understand how local policies affect your coverage.
HOW WILL THEY AFFECT YOUR MEDICARE?
Most beneficiaries won’t see major changes to their policies in 2019 or 2020. Depending on your income level, you may see an increase in monthly premiums for Parts A & B, as well as higher deductibles for hospital stays and other services. If you have a Medicare Advantage policy, you may have more options for supplemental services, such as nutritional care and ride-shares.
If you have prescription drug coverage (Part D), you may also see a change in your premium and deductibles, but this will vary from insurer to insurer. If you take prescription drugs and fall into the coverage gap, you should see a reduction in out-of-pocket costs due to the closure of the donut hole that will come into effect in 2019 and 2020.
HOW TO OFFSET THESE MEDICARE CHANGES
Since Medicare costs depend on a lot of different factors, it’s important to take a close look at your policy each year and see how any changes will affect you. If you’re on a fixed income, a small increase to your premium or deductible each year can have a big impact.
On the other hand, the growing number of services that Medicare Advantage policies offer can offset those costs and help you save money in other ways. It’s important to review your policy each year and decide whether switching to a new Medigap policy or Medicare Advantage plan will save you money or provide coverage for more services.
WE CAN HELP
Understanding the changes coming to Medicare in 2019 can be a tricky process for anyone to do on their own. Fortunately, we know the system inside and out and can help you prepare for these changes in advance — before they have an impact on your coverage or your budget.
Just fill out our contact form and one of the licensed insurance agents at The Medicare Store will reach out to you to schedule a call or an in-person consultation. We’ll help you figure out whether it’s time for you to change plans, or how to maximize your coverage on your current plan. No matter what your situation, we have the tools to help you out!