Thursday, September 2, 2010

National Association of Health Underwriters - Protecting the Consumer's Future


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Medicare and Health Reform

There are significant changes coming to Medicare. This year, seniors that fall into the so-called doughnut hole will receive a $250 rebate and elimination of cost-sharing for preventive services. Many of the changes are "behind the curtain" so to speak and have to do with administration of the program including improved coordination between Medicare and Medicaid.

NAHU is deeply concerned with the impact repeal of the deductibility of the subsidy for employers who maintain prescription drug land for Medicare Part D eligible retirees. While the provision does not take effect until 2013, employers must immediately report the subsidy as income to their balance sheets and it is very possible that employers may choose to move their retirees directly to the Medicare program and drop their employer programs.

Medicare Advantage

There will be cuts to Medicare Advantage (MA) plans but the impact of the cuts will not be known until the plan bidding period ends. The law lays out a new list of violations and penalties for MA and PDP plans including:

enrollment of individuals in a MA or Part D plan without their consent,
transfer of an individual from one plan to another for the purpose of earning a commission,
failure to comply with marketing restrictions or applicable implementing regulations or guidance, or;
the employment of or contracting with an individual or entity that commits a violation. effective upon enactment.

The following are a few highlights of other provisions affecting Medicare Advantage plans.

In 2011, freezes Medicare Advantage payment rates at 2010 levels. In following years will continue phase-in of Medicare Advantage payment reforms to reduce government payments to insurance companies.

Allows Medicare Advantage enrollees to switch to Original Medicare from January 1 to March 15 but not to another Medicare Advantage plan beginning in 2011.

Prohibits Medicare Advantage plans in 2011 from charging enrollees more than original Medicare for certain medical services, including chemotherapy administration, renal dialysis and skilled nursing care and other services as determined by the HHS Secretary.

In 2012, provides bonus payments to high-performing Medicare Advantage plans but reduce rebates for Medicare Advantage plans.

Creates a single Annual Enrollment Period (AEP) in 2012 for drug and health plan changes, which begins on October 15 and ends on December 7.

Limits Medicare Advantage plan earnings and administrative expenses to 15% of Medicare payments (85% Medical Loss Ratio) beginning in 2014. Such plans that dip below 85% requirement will be suspended from MA program for 3 years.

Other Provisions

To pay for new preventive services and other benefits, the new law will increase the Medicare Part A payroll tax by 0.9% for individuals earning over $200,000 and couples earning over $250,000. In addition there is a new 3.8% tax on certain unearned investment income for individuals earning over $200,000 and couples earning over $250,000.

Raises drug plan premiums for individuals earning over $85,000 and couples earning over $170,000.

Establishes an Independent Payment Advisory Board with mandate to implement Medicare provider payment changes to meet savings targets (hospitals are exempted).

Congress's ability to overturn or amend payment changes will be limited. The proposals do not have to consider the cost-shifting on employer-sponsored plans.
The Board cannot change Medicare eligibility or reduce benefits or premium subsidies, but can make limited changes to how drug plan premium subsidies are calculated.
The Board can make non-binding recommendations on private sector to improve quality and constrain rate of costs growth.

New Medicare Premium, Deductible, and Coinsurance charges for 2010

Part B

Most Medicare beneficiaries will continue to pay the same $96.40 Part B premium amount in 2010. Beneficiaries who currently have the Social Security Administration (SSA) withhold their Part B premium and have incomes of $85,000 or less (or $170,000 or less for joint filers) will not have an increase in their Part B premium for 2010.

For all others, the standard Medicare Part B monthly premium will be $110.50 in 2010, which is a 15% increase over the 2009 premium. The Medicare Part B premium is increasing in 2010 due to possible increases in Part B costs. If your income is above $85,000 (single) or $170,000 (married couple), then your Medicare Part B premium may be higher than $110.50 per month. For additional details, see our FAQ titled: 2010 Part B Premium Amounts for Persons with Higher Income Levels. In 2010:

New Part B beneficiaries will pay $110.50 (because they did not have the premium withheld from their Social Security benefit in the previous year).

Beneficiaries who do not currently have the Part B premium withheld from their Social Security benefit will pay $110.50.

Higher-income beneficiaries pay $110.50 plus an additional amount, based on the income-related monthly adjustment amount (IRMAA).

The 2010 Part B monthly premium rates to be paid by beneficiaries who file an individual tax return (including those who are single, head of household, qualifying widow(er) with dependent child, or married filing separately who lived apart from their spouse for the entire taxable year), or who file a joint tax return are:

Beneficiaries who file an individual tax return with income Beneficiaries who file a joint tax return with income Income-related monthly adjustment amount Total monthly premium amount

Less than or equal to $85,000 Less than or equal to $170,000 $0.00 $110.50

Greater than $85,000 and less than or equal to $107,000 Greater than $170,000 and less than or equal to $214,000 $44.20 $154.70

Greater than $107,000 and less than or equal to $160,000 Greater than $214,000 and less than or equal to $320,000 $110.50 $221.00

Greater than $160,000 and less than or equal to $214,000 Greater than $320,000 and less than or equal to $428,000 $176.80 $287.30

Greater than $214,000 Greater than $428,000 $243.10 $353.60

In addition, the monthly premium rates to be paid by beneficiaries who are married, but file a separate return from their spouse and lived with their spouse at any time during the taxable year are:

Beneficiaries who are married but file a separate tax return from their spouse: Income-related monthly adjustment amount Total monthly premium amount

Less than or equal to $85,000 $0.00 $110.50

Greater than $85,000 and less than or equal to $129,000 $176.80 $287.30

Greater than $129,000 $243.10 $353.60

Part A

Medicare Part A pays for inpatient hospital, skilled nursing facility, hospice, and certain home health care services. The $1,100 deductible for 2010, paid by the beneficiary when admitted as a hospital inpatient, is an increase of $32 from $1,068 in 2009. Beneficiaries must pay an additional $275 per day for days 61 through 90 in 2010, and $550 for lifetime reserve days. The corresponding amounts in 2009 are $267 and $534, respectively. Daily coinsurance for the 21st through 100th day in a skilled nursing facility will be $137.50 in 2010, up from $133.50 in 2009.

Approximately 99% of Medicare beneficiaries do not have to pay a premium for Part A services because they have at least 40 quarters of Medicare-covered employment (or are the spouse or widow(er) of such a person). However, other seniors and certain people under age 65 with disabilities who have fewer than 30 quarters of coverage may obtain Part A coverage by paying a monthly premium set according to a statutory formula. This premium will be $461 per month for 2010, an increase of $18 from 2009. A reduced premium applies in the case of individuals with 30 to 39 quarters of coverage, who will pay a premium of $254 in 2010, compared to $244 in 2009.

For each benefit period you pay:

A total of $1,100 for a hospital stay of 1-60 days.

$275 per day for days 61-90 of a hospital stay.

$550 per day for days 91-150 of a hospital stay (Lifetime Reserve Days).

All costs for each day beyond 150 days.

Skilled Nursing Facility Coinsurance

$137.50 per day for days 21 through 100 each benefit period.

NAHU Issue Summary on Medicare Advantage and Selling Private Medicare Products

This paper outlines NAHU's key talking points as to why American seniors deserve a wide variety of private health plan options.

Health Reform and Medicare

While other issues in health reform received greater fanfare, there were significant changes made to Medicare law. This timeline shows just a few of the changes you can expect.

Resources

Your Discharge Planning Checklist - published by CMS.

The Coalition for Medicare Choices

NAHU is working in conjunction with many coalition partners to preserve access to private Medicare products. Visit our coalition site to share your story about how private Medicare plans have served you and/or your clients. Click here to learn more.

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