Every year in Sept/Oct, we send out reminders to our clients to complete their updated Rx form so we can review their Part D Plans for the following year.
Oct 15 to Dec 7 is the one opportunity each year to review and change the Part D Plan for the following year. This is a very important opportunity because the Part D Plans change every year; so even if your drugs haven't changed, your current Part D Plan may not be the best Part D Plan for the following year.
Since 2018, we have been tracking the Savings Projections for the Part D Recommendations we send our clients each year. If someone's current Part D Plan is still the most cost-effective Plan for the following year, it is not included in the Savings calculation. The Savings calculation just includes Savings Projection for Part D Recommendations that save people money versus keeping their current Part D Plan.
We are very excited that we have saved our clients nearly $10M over the last 5-years with our Annual Part D reviews.
Last week, the state of NJ released their 2023 income levels for State Prescription Assistance Programs. These are very helpful programs for individuals that have lower income and expensive medications.
EFFECTIVE JANUARY 1, 2023
The PAAD income eligibility limits for calendar year 2023 are:
The SENIOR GOLD income eligibility limits for calendar year 2023 are:
Application for both programs can be made via the NJ SAVE paper application, or on-line.
- MORE INFO CAN BE FOUND HERE
- APPLY ONLINE HERE
CMS just announced the updated Part B premiums for 2023.
The main reason for the reduction in the Part B Premiums for 2023 was the very large increase in 2022 due to an Alzheimer's medication, which has since reduced in price and coverage with Medicare.
The Income Related Monthly Adjustment Amounts (IRMAAs) were also updated for 2023. You can find the tables below for individuals with income greater than $97,000 (or joint filers with income greater than $194,000). This income is based on your MAGI (Modified Adjusted Gross Income) from your 2021 Tax Return. These IRMAAs only affect about 7% of people with Medicare Part B.
If you are in one of the higher income brackets for the Part B IRMAAs, there is an additional IRMAA for the Part D Drug Coverage. The updated table for 2023 can be found below.
The table below shows the sum of the Part B Premium, Part B IRMAA, and Part D IRMAA for the higher income brackets for 2023.
The other changes for 2023 that were included in the announcement are below.
If you have a Medicare Supplement Plan F, Plan G, or Plan N, the Part A cost-sharing is fully covered by the Supplement so these changes below will not impact you.
You may have seen in the news there is new legislation that may be passing soon in Washington DC called "Inflation Reduction Act of 2022". The House has already passed the bill (when it was called the Build Back Better Act) and it is close to being passed in the Senate. If it gets passed in the Senate, the President will sign it into law.
You can find the full text of the bill here, and below is a brief summary (link to Source).
The bill would raise revenue from:
- Imposing a 15% corporate minimum tax rate for companies with higher than $1 billion annual revenue – $313 billion
- Prescription drug price reform to lower prices, including Medicare negotiation of drug prices – $288 billion
- Increased tax enforcement – $124 billion
- Imposing a 1% excise tax on stock buybacks - $73 billion
It would spend this revenue on:
- Continuing for three more years the expansion of Affordable Care Act subsidies originally expanded under the American Rescue Plan Act of 2021 – $64 billion
- Addressing domestic energy security and climate change – $369 billion
- Funding for drought relief - $5 billion
- Deficit reduction – $306 billion
Impacts to Medicare Beneficiaries
There are two main impacts to Medicare Beneficiaries in the bill.
My concerns with the Bill are below.
I really hope my pessimism is incorrect. If the bill does get passed, I hope these changes work and generate the additional $600 Billion in Tax revenue (plus the other $200 Billion projected). Otherwise, the additional spending in this bill will continue to drive increased Inflation for many years to come.
Each year, there are changes to the Part D Prescription Drug Coverage of Medicare. We won't have visibility to the actual Part D Plans until October 1, but there are some structural changes that occur each year with Part D. Key updates for 2023 are below.
The government sets a maximum deductible amount for the Part D Plans. In 2022, the maximum deductible was $480. In 2023, this is increasing $25 to $505. On most of the Part D Plans, the deductible only applies to higher tiered drugs (e.g. Tiers 3, 4, 5). Also, some Part D Plans have a $0 deductible, or other amounts lower than the maximum deductible.
Initial Coverage Level
The Initial Coverage Level will increase $230 from $4,430 in 2022 to $4,660 in 2023. This amount is based on the Retail Cost of the Medication for the year (Calendar Year). Most people (about 85%) do not exceed the Initial Coverage Level and thus continue to pay their Copay/Coinsurance amount for the entire year. However, for the people that have very expensive medications that exceed the Initial Coverage Level, they will reach the Part D Coverage Gap, aka Donut Hole where they have to pay 25% the cost of their medications. The increase of $230 to the Initial Coverage level will have a minimal impact on Drug Costs in 2023. Basically, for those 15% of people with expensive medications, there will be a slight delay to reaching the Part D Donut Hole.
True Out of Pocket Limit (Tro-oP)
The True Out of Pocket limit will increase $350 from $7,050 in 2022 to $7,400 in 2023. The Tro-Op is used to determine when someone exits the Part D Coverage Gap, aka Donut Hole, and moves into Catastrophic Coverage where they only have to pay 5% the cost of their medications. The increase of $350 in the Tro-oP only effects about 5% of people (those that would reach Catastrophic Coverage), and it creates a slight delay for when they will reach Catastrophic coverage.
The net impact to these individuals with expensive drugs is likely about $100 cost increase for the year.
Click the link to the video for a more detailed explanation of these changes, including a detailed example for someone who reaches the Part D Donut Hole.
The Office of Inspector General within Health and Human Services (HHS) recently released a report outlining an audit of service denials from Medicare Advantage Organizations. The full report can be found using this link.
Some of the key highlights from the report can be found below (and summarized in the video above).
The Top 3 impacted areas for these denials were:
There were three recommendations that the Inspector General is requesting of CMS (Center for Medicare and Medicaid Services).
CMS has acknowledged and agreed to implement these recommendations.
Hopefully, this improves the overall experience for Medicare Advantage Plans going forward.
This short articles (and video above) covers two Press Releases came out this week from the government. One from the Social Security Administration (SSA) and one from CMS (Center for Medicare and Medicaid Services).
(1) SSA Re-opening offices on Thursday, April 7, 2022
(2) OTC Covid Test Kits available with Medicare Part B
SSA Offices Re-opening on April 7, 2022
Social Security offices were essentially shut down during the beginning of the Public Health Emergency (PHE). They re-opened about a year ago, but were still not taking walk-ins. There were very limited appointment time slots, which sometimes resulted in waiting 6-8 weeks to meet with someone. This press release is positive news because the offices will be re-opening for walk-ins starting on Thursday, April 7, 2022. SSA is still strongly encouraging individuals to use the online tools when possible to find answers and/or to book an appointment with Social Security. The SSA press release also mentions the migration to a new phone system which has resulted in some technical issues for phone calls with SSA. Hopefully, these issues get resolved soon!
Over-the-counter COVID test kits available with Medicare Part B
CMS announced Medicare enrollees (in Medicare Part B) can get up to eight (8) COVID test kits per month as long as the Public Health Emergency continues. You must be enrolled in Medicare Part B to qualify. (Even if you are enrolled in a Medicare Advantage Plan, you can still get the free test kits and the pharmacy will bill Medicare directly.) You just have to go to a participating pharmacy and show them your red, white, and blue Medicare card. You can find participating pharmacies using this link:
We hope you found this information helpful.
Secure Act 2.0 (HR-2954) passed the House of Representatives on March 29, 2022 by an overwhelming majority 414 to 5.
This bill is intended to provide additional opportunities for Americans to save for retirement.
The short video above some of the key highlights of this bill:
Expand Catch-Up Contributions
Delay Required Minimum Distributions (RMDs)
Mandatory/Automatic Enrollment in Retirement Plans for Employees
Authorize Student Loan Matching for Employers
Secure Act 2.0 provides some interesting incentives to improve retirement savings for individuals.
The Senate still needs to pass a companion bill and then it will need to be signed by the President to become law.
We still have some concerns with the lack of focus in Washington on the two large looming financial issues with Medicare (Hospital Trust Fund running out of money to cover expenses by 2026) and Social Security (not able to pay out full benefits by 2034). Hopefully, these important issues are addressed soon in Washington.
Some people are in for a bit of sticker shock when they enroll in Medicare benefits. Specifically, those in a higher income bracket who are responsible for IRMAAs (Income Related Monthly Adjustment Amounts) for Part B and Part D of Medicare. For the top earners, the Part B Premium and IRMAAs can cost over $600/month (per person) to the government, and this is before adding the premium for a Supplement and Part D Prescription plan.
For 2022, the base Part B premium amount is $170.10/month (if your single income is below $91k/year, or joint income is below $182k/year). However, if your income is above the base income amount, you have to pay additional amounts to the government called IRMAAs for both Part B and Part D of Medicare per the tables below.
Table 1. Part B Premiums and Part B IRMAAs
This table outlines the Part B premium and Part B IRMAA amounts each of the six different income tiers.
Table 2. Part D IRMAAs
This table outlines the Part D IRMAA amounts each of the six different income tiers. The Part D IRMAA is an additional amount due to the government on top of the Part D premium you have to pay the insurance company for the Part D Prescription coverage.
Table 3. Total Part B Premium + Part B IRMAAs + Part D IRMAAs
Most of our clients want to know what the total amount they will owe the government will be; so in Table 3 we have just summed the IRMAAs from Table 1 and Table 2 for each of the six income tiers.
FAQ: What income is being used to determine the IRMAA?
The government uses the MAGI (Modified Adjusted Gross Income) from the last tax return they have processed to determine the initial IRMAA. For most people, MAGI will be the same as AGI (Adjusted Gross Income), but it is possible the MAGI is higher than AGI.
For example, for someone enrolling in Medicare for the first time effective June 1, 2022, the government will check the MAGI from the 2020 Tax return (they haven’t fully processed the 2021 tax returns yet) to determine the IRMAAs (if any) for 2022.
Additionally, the government will review tax returns at the end of each year to determine IRMAAs for the following year. For example, in December 2022, the government will send out 2023 IRMAA letters to higher earners based on the MAGI from their 2021 tax returns.
FAQ: What if my income dropped because I retired? Do I still have to pay the IRMAA?
The government is using the best income information they have to determine the IRMAA, but they understand the system is flawed due to the delay in reporting and processing returns. For this reason, the government allows you to appeal IRMAAs if you had a life changing event (e.g. Work Reduction, Work Stoppage, etc.). If you have a life changing event that will result in your income dropping to a lower income tier (see Table 1), you can complete and submit the form SSA-44 to Social Security to request the IRMAAs be reduced / removed.
It is possible you may need to appeal the IRMAA twice (once when you initial enroll and again in December for the following year) due to the delay in tax return timing and processing. In the example mentioned earlier, if you first enroll in Medicare for June 1, 2022 you may need to appeal once for 2022 IRMAAs, and again in December for 2023 IRMAAs (since they will be using the 2021 tax return for 2023 IRMAAs).
FAQ: I received my bills from Medicare and they are very confusing. Can you help clarify?
For people that are receiving a monthly Social Security check, the Part B premiums and IRMAAs are deducted from the monthly Social Security payment.
For those not yet taking Social Security, the government will send quarterly bills for the Part B premiums and IRMAAs. The initial billing for these IRMAAs is incredibly misleading & confusing. Generally, the first quarterly bill only includes the base Part B premium (e.g. $170.10/month in 2022). The second bill is a huge bill because it includes the IRMAAs for the first billing period and the IRMAAs for the second billing period. This second bill sometimes results in confusion and sticker shock. Also the line item detail is not very clear on the bills which creates more confusion.
In this situation, the billed amount is generally correct but you have to do some math to back into the numbers. You can take the total amount of the first two bills and divide it by the number of months for the bill periods. This monthly average should align with the monthly amount the person is responsible for based on their income.
For example, if someone is in the second income Tier in 2022 ($91k-$114k single income), the correct amount they should be billed is $250.50/month ($170.10/month for Part B, $68/month for Part B IRMAA, and $12.40/month for Part D IRMAA). The first bill this person receives will likely be for three months of just the base Part B premium which is $510.30. The second bill this person receives will likely be for $992.70 (base Part B premiums for the second 3 months + IRMAAs for the first bill and IRMAAs for the second bill).
People tend to panic when they see that second bill. In this case, you can add up the total of the two bills ($510.30 + $992.70) = $1,503. Then divide by the number of months billed (in this case 6 months)… to get $250.50/month which matches the correct amount this person should be paying.
By the third bill, the amounts should be billed correctly as $751.50 ($250.50 x 3 months).
We hope you found this information helpful.
If you prefer to watch videos, here is a link to a short video that explains these IRMAAs.
Earlier this week, the Secretary of Health and Human Services (HHS), Xavier Becerra directed the Centers for Medicare and Medicaid Services (CMS) to reassess the recommendation for the 14.5% Part B Premium increase for 2022.
One of the main reasons given for the large Part B premium increase in 2022 was based on the cost of a new drug to treat Alzeimer's (Aduhelm) which recently cut the price by 50%.
A Part B premium change in the middle of the year has never really been done before, so we shall see what comes of this...
See bio here