Every year, the non-partisan Medicare Trustees Group in Washington D.C. issues a report regarding the Financial state of the Medicare Program.
Below are some links to prior years articles we wrote on this topic:
The report is normally released in the Springtime. This year, we anxiously awaited the report to see the impacts of the recent Pandemic.
A few days ago the 2021 Report was released. You can find the full report here.
Some of the key highlights of the report:
This is the same message from the Medicare Trustees from the last several years, and the Medicare Program is essentially a ticking time-bomb that requires significant financial changes ASAP to minimize the impact of this impending issue.
Legislation must be passed to add funding and/or reduce expenditures to sustain the Medicare Program for the long-term.
Unfortunately, our lawmakers continue to be focused on adding expenditures which will only accelerate the financial solvency issues.
Adding Dental, Vision & Hearing?
One of the big focuses in Washington is to add additional benefits to Medicare, specifically Dental, Vision & Hearing benefits. The early indication is that this benefit will likely be passed by end of 2021. We should hear more in the next few weeks about how this would be funded and how the coverage might work.
To be perfectly clear, I think it would be wonderful to have Dental, Vision, Hearing and (also Long-Term Care) included with Medicare.
However, there is a significant cost to add these services to Medicare. Adding additional expenditures to a program that is already faltering financially is like giving a mortgage to someone for a brand new house while they are not able to make payments on their current mortgage. There is a good reason banks wouldn't approve a new mortgage in this case because it wouldn't be good for the individual requesting the loan or the bank providing it.
Reducing Medicare eligibility age to 60?
The other top Medicare priority in Washington is to reduce the Medicare eligibility age from 65 to 60. Here again, is another proposal that would significantly increase expenditures on an already faltering program.
Will Medicare Really Go Under?
There are over 60 million Americans on Medicare. The large majority of Medicare Beneficiaries are voters. It is highly unlikely the program will ever go under. But changes do need to made to sustain the program for the long-term and I really hope Washington starts to shift their focus ASAP on the correct long-term priorities to sustain this important Program.
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 2022 are below.
The government sets a maximum deductible amount for the Part D Plans. In 2021, the maximum deductible was $445. In 2021, this is increasing $35 to $480. 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 $300 from $4,130 in 2021 to $4,430 in 2022. 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 $300 to the Initial Coverage level will have a minimal impact on Drug Costs in 2022. Basically, for those 15% of people with expensive medications, there will be a slight delay to reaching the Part D Donut Hole which could save someone ~$20-$40 for the year.
True Out of Pocket Limit (Tro-oP)
The True Out of Pocket limit will increase $500 from $6,550 in 2021 to $7,050 in 2022. 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 $500 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 this individual is likely about $100 cost increase for the year.
Click the video below for a more detailed explanation of these changes, including a detailed example for someone who reaches the Part D Donut Hole.
When you first enroll in Medicare Part B, Medicare provides an initial "Welcome to "Medicare" visit. This initial "Welcome to "Medicare" visit is different than the Annual "Wellness" visits that Medicare provides. There is some confusion about these two types of visits, so we have provided some highlights of what is included with each of these visits below.
"Welcome to medicare" visit
Per the Medicare website, "This visit includes a review of your medical and social history related to your health and education and counseling about preventive services, including these:
The "Welcome to Medicare" visit must be completed within 12 months of your Medicare Part B effective date. There is no cost to the Medicare Beneficiary for the "Welcome to Medicare" visit, unless the doctor identifies/diagnoses any additional conditions, tests, etc.
Annual "Wellness" Visit
AAfter the first 12 months on Medicare Part B, the Medicare Beneficiary is entitled to an Annual "Wellness" visit.
Per the Medicare website:
"The cognitive impairment assessment is performed to look for signs of Alzheimer's disease or dementia and check for depression and other mood disorders. Your provider may order other tests, if necessary, depending on your general health and medical history.
The personalized prevention plan is designed to help prevent disease and disability based on your current health and risk factors. Your provider will ask you to fill out a questionnaire, called a “Health Risk Assessment,” as part of this visit. Answering these questions can help you and your provider develop a personalized prevention plan to help you stay healthy and get the most out of your visit. It can also include:
We hope this provides some clarity about the differences between the "Welcome to Medicare" versus the Annual "Wellness" Visits. It is also important that Provider billing offices understand these differences. We have had some issues with Provider billing offices attempting to bill the Annual "Wellness" visit codes to Medicare when someone was still in their first 12 months of Medicare. This results in declined claims because the Annual Wellness visit is only available once per year starting 12 months after the Part B effective date.
For several years, the Medicare Advisory Group of NAHU has been working on fixing the delayed effective date that occurs for certain Medicare Beneficiaries who enroll during their last three months of their Initial Enrollment Period, or during the General Election Period (January 1 – March 31).
We are excited that our proposed fixes were finally implemented in the Consolidated Appropriations Act of 2021. The changes begin on line 21 of Page 2168 of the bill.
The new rules will begin on January 1, 2023.
Initial Enrollment Period: The Current Rules require a delay of 2-3 months for the Part B effective date when someone enrolls in the three months following their 65th birthday. The New Rules will remove that delay and provide the Part B effective date of the first of the month following enrollment. The table below summarizes the Current rules versus the New rules for the Initial Enrollment Period.
The table below provides an Example for someone who is turning 65 on September 15.
General Election Period: The General Election Period of January 1 through March 31 is for a Beneficiary who missed their Initial Enrollment Period and does not have credible coverage. These individuals must enroll during the General Election Period of January 1 through March 31, and the effective date is July 1. With the New Rules coming in January 2023, the Beneficiary will get an effective date of the first of the month following enrollment. The table below summarizes the Current rules versus the New rules for the General Election Period.
The table below provides an Example for someone who is enrolling during the General Election Period.
We are excited that we have had such a positive impact on Medicare Beneficiaries enrolling during these two time periods and reduced their delays in getting their Medicare Part B coverage!
We will continue to work in Washington to address our other key initiatives: Medicare COBRA Trap, Observation Status, and more.
According to Social Security, about 21% of married couples, and 45% of unmarried persons rely on Social Security for 90% of their income. This is clearly concerning since Social Security was only intended to provide about a third of your retirement income needs (other two thirds was supposed to be individual savings, and pensions).
For a lot of retirees, this limited income combined with debt can result in some Credit issues. If you happen to have credit issues, there are numerous providers out there that claim to be able to help repair your credit. It can be difficult to filter through the different options, understand the different services & costs involved. There are also numerous Credit Repair Scams to avoid!
Money.com recently published a good article that outlines the 6 best credit repair companies with costs and benefits of each service. The article also does a good job explaining Credit Repair Scams.
We are excited to launch our new web-series, called "Coffee with Justin" which is launching in the next couple of weeks.
Justin will be meeting with guest speakers, from a variety of different backgrounds: Employees of Senior Advisors, Clients of Senior Advisors, Financial Advisors, Insurance Brokers, Doctors, Legislators, and more.
These will be short-videos (~15-25 min) in which Justin has a chat and coffee with the Guest Speaker. We look forward to a day we can do these videos in person, but for now they will be Virtual meetings /recordings.
You can watch the short video below to learn more. If are interested in being one of our Guest speakers on the show, please contact us and let us know.
We work closely with several Financial Planning firms to assist their clients with their Medicare Planning needs.
A few days ago, one of my colleagues, Bob Ruelle, a Financial Advisor from Bleakley Financial (Fairfield NJ) sent me a recent article that was published online in Investment News, titled "Medicare questions spike as boomers work past 65".
I quickly reviewed the article and it was pretty comprehensive, but I did notice a pretty glaring error for people enrolling in COBRA after age 65. I have written extensively on this topic in the past... see Cobra Trap Article and Home Depot wins court case.
I emailed the editor to explain the error. She was very gracious and appreciative and she updated the article with my COBRA comments.
You can find the link to the updated article here.
In February 2021, I had the opportunity to interview Congressman Joe Courtney from Connecticut to discuss a key Medicare issue we have been working on for several years, related to "Observation" status in the hospital.
When you are in the hospital in an "Observation" status (before getting "Admitted"),
(1) your medication costs are still covered under your Part D prescription plan rather than your Part A hospital benefits. If you are administered expensive drugs, this could result in high out-of-pocket costs for the patient;
(2) if you need Skilled Nursing Care after the hospitalization, the Medicare Part A benefits will not cover the costs. You will be required to pay out of pocket for the Skilled Nursing Care.
In the video, Congressman Courtney and I discuss these issues and some legislation that is being worked on to fix these problems for the Medicare Beneficiary.
Thank you for watching.
Subscribe to us on YouTube to get FREE access to our Informational Videos
Each year during the Open Enrollment Period (October 15 - December 7), Medicare Beneficiaries have an opportunity to review their Part D Plans for the following year. For most Beneficiaries, this is the only time throughout the year that they can change their Part D Drug Coverage for the following year.
The Part D Plans change every year, so even if your drug list doesn't change we highly recommend reviewing the Part D Plans each year to make sure you have the right Part D Drug Plan for the following year.
We send out reminders to all of our clients in September/October each year to get their latest Rx information to rerun the Part D analysis for the following year.
In 2019, we started tracking the savings that our Part D Recommendations make for our clients and we were able to save them over $2 Million for their 2020 Part D Plans.
In 2020 (like 2019), our recommendations were able to save our clients over $2 Million for their 2021 Part D Plans.
We look forward to continuing to help our clients get the most robust and cost effective coverage for their Medicare Plans!
Every year during this time, we help Medicare Beneficiaries review their Part D Drug Plans to ensure they have the most cost-effective Part D coverage for the following year.
We save about $2 Million per year for our clients by just finding the most cost-effective Part D Drug Plans. You can read more about our Part D review process here.
In reviewing thousands of client's drug lists each year, we also uncover some of the seemingly unscrupulous Pricing Strategies of Pharmaceutical companies.
A few years ago, we wrote an article about a specific dosage of Metformin (1000mg XR) which costs 1,000 times more than if you just take two pills of the 500mg XR. That's right, the retail cost was about $7,000 per month versus about $7/month for the 500mg of the same exact medication.
This year, I would like to highlight another very common issue we see with Pharmaceutical pricing: Drug Manufacturers taking two less expensive pills, blending them into one pill and charging a huge markup on the price of the medication.
The example I saw today was for "Pioglitazone/Metformin 15mg/850mg". I was reviewing a Part D analysis for one of our clients and noticed that the only Part D Plans that covered this medication were the higher premium Part D Plans (about $75/month vs about $10-$15/month that most people pay for Part D Premiums). With some further digging on GoodRx.com, I found that the retail cost for this blended medication is about $260/month.
This got me thinking... how much would it cost to take the Pioglitazone and Metformin separately. It turns out the retail cost for Metformin is about $16/month and Pioglitazone is about $150/month. So, if we simply add up the cost of these two pills, one might think it should cost about $166/month retail cost for the combined medication. Or perhaps, a slight markup for the convenience of taking one pill instead of two pills.
But no... there is a 57% markup to get the combined pill of Pioglitazone/Metformin 15mg/850mg which has a retail cost of ~$260/month.
Let that sink in.
What other industry can we add such little value (take 1 pill instead of 2 pills) and justify a 57% price markup? This is one of the key reasons the Diabetic Medicine industry is approaching $100 Billion per year.
So, when I hear about Pharmaceutical companies justifying their pricing strategies to account for R&D expenses to "innovate" and create new life-saving treatments, it makes me question if these types of R&D discussions include innovations like blending two pills into one.
See bio here