Bipartisan Budget Act of 2018 - Medicare Impacts

ARTICLE UPDATED ON 3/9/18 BASED ON NEW INTERPRETATION OF JOINT FILING INCOME BRACKETS IN HR1892.

On Friday, February 9, 2018 the government passed H.R.1892 - Bipartisan Budget Act of 2018.  If you need help falling asleep, you can read the entire text of the bill here.  
 
The main reason for the bill was to extend funding for government agencies.
 
However, there were also other provisions inserted in this bill. 
 
Specifically, for Medicare some of the key impacts are summarized below.  This is not an all-inclusive list but intended to capture the key changes.

1. Part D Donut hole reduced to 25% cost in 2019 (not 2020) – the ACA (The Affordable Care Act) introduced a gradual reduction in the drug cost percentage that the individual has to pay for their drugs while in the donut hole by 5% per year for brand name drugs and 7% per year for generic drugs.  For example in 2017, the cost of brand name drugs in the donut hole was 40% and generic drugs was 51%.  In 2018 the cost of brand name drugs in the donut hole is 35% and generic drugs is 44%.   The ACA had a continual progression to 30% brand , 37% generic in 2019, and then plateau in 2020 at 25% for brand name and generics.   With the HR1892 Bill that was passed on Friday, this reduction to 25% has been accelerated to 2019 (rather than 2020).   This is a good thing for those individuals that reach the donut hole since they will pay 25% the cost of their drugs in 2019 rather than 30%.   For a general overview of Part D and the donut hole, you can review these prior articles/videos:

• Video about Part D of Medicare (2016)
• Part D changes in 2018

2. Part B / D Premium Increases for Higher Income earners

• New Top Income Tier: In 2018, the base level Part B premiums are $134/month.  High Income earners , >$85k single, > $170k joint filers, already pay higher premiums to the government, which are called Part B and Part D IRMAs (Income Related Monthly Adjustments).  There are currently (in 2018) four income tiers above the base income level.  The top income tier for 2018 Premiums is currently $160k for a single or $320k for joint filers, and they pay about $503/month per person to the government.  HR 1892 created a new top income tier of $500k+ for single and $750k for joint filers.  This new income tier will pay 6.25% more than the prior top income tier for their Part B/D premiums and IRMAs.  So, in 2019 the new top income tier ($500k+) will likely pay about $400 more per year per person to the government.

​

For more information about the IRMA changes in 2018, you can review this prior article / video.

We don't have actual Premium values for 2019 yet, but Illustrative impacts of HR1892 are below.

---

3. Improved Coordination of Services – per the National Association of Health Underwriters, “The package includes key Medicare provisions that will improve coordination of healthcare services. These provisions include improving home healthcare benefits and expanding supplemental benefits specifically for those with chronic conditions, increasing telemedicine benefits, and extending the value-based design model to all states. NAHU has long supported value-based design initiatives in both the over- and under-65 healthcare markets. Allowing for new options and tools for Medicare beneficiaries and their doctors not only improves seniors' healthcare, but also creates financial incentives that will bring down costs and increase consumer choices. These reforms will help transition from a payment system rooted primarily on the volume of healthcare services provided to a system based on the value of these services, which will help improve the quality of medical care.”