Caused partly by the Health Care Reform bills enacted by Congress early in 2010, and partly by a number of new regulations which went into effect on January 1, 2011, several changes were made to the Medicare program of which beneficiaries and their caregivers should be aware. While none of these changed the structure of the Medicare program, they did enhance several benefits, and also imposed a new tax.
Part B Premium
The monthly Part B premium will increase from $110.50 to $115.40, or only 4.4 percent. However, most people will not pay this much because there will be no increase in Social Security payments in 2011, and the “savings clause” that prevents, when this situation occurs, any rise in Part B premiums for those who have them deducted from their Social Security or Railroad Retirement payments will continue in effect.
For people who are paying $96.40, because this same savings clause prevented an increase to their Part B premium in 2010, they will continue to pay the same $96.40 in 2011. People who began having your Part B premiums deducted from Social Security in 2010, and who are paying $110.50 a month, will continue to pay this same $110.50 in 2011. But those who will be going on Medicare in 2011, and those who do not get a Part B premium deducted from Social Security will pay the $115.40.
The exception is that if a person is subject to the Part B high income premium surcharge, he or she will pay the $115.40 plus the surcharge.
The most significant change will be the introduction of an “annual wellness exam” and the elimination of applying the annual deductible or paying coinsurance for many preventive services. If your health care provider accepts assignment for these services, you will pay nothing for them. But not all preventive services are included.
Annual Wellness Exam
The new Annual Wellness Exam, also called the Annual Wellness Visit (AWV), is a physical exam which includes a “comprehensive health risk assessment” and a “personalized prevention plan.”
The personalized prevention plan (also called Personal Prevention Plan Services or PPPS) takes into account the findings of the health risk assessment and include elements such as:
- a five- to ten-year screening schedule;
- a list of identified risk factors and conditions and a strategy to address them;
- health advice and referral to education; and
- preventive counseling community-based interventions to address modifiable risk factors such as physical activity, smoking, and nutrition.
The exam also includes establishing your medical / family history; routine measurements such as weight, height, blood pressure, and body mass index (BMI); detection of any cognitive impairment; screening for depression; a review of your functional ability; and voluntary advanced care planning, that is, giving you information about advanced directives.
No coinsurance or deductible will apply to this newly covered service. You can get this exam once every 12 months, but not within first 12 months of Part B enrollment (which is the timeframe in which you can get the “Welcome to Medicare” physical exam). And, because is it very similar, you can‘t get it within 12 months of a “Welcome to Medicare” exam.
Unless they meet either of these two exceptions, beneficiaries should immediately schedule one of these exams for 2011 with their physician as the sooner they get it, the sooner they can get it in subsequent years. My experience is that it often takes a good deal of time to schedule a physical, so call now for your first date in 2011.
Remember that if you are in a Medicare Advantage (managed care) plan, it may not cover this the same way; call your plan before you schedule this exam.
“No Cost to You” Preventive Services
These are the preventive services which, beginning in 2011, will not be subject to the Part B deductible or coinsurance:
- “Welcome to Medicare” Physical Exam
- Annual Wellness Exam
- Abdominal Aortic Screening
- Bone Mass Measurement
- Flexible Sigmoidoscopy
- Pelvic Exam and Clinical Breast Exam
- Screening Mammogram
- Hepatitis B Shot
If you have not gotten these and you are otherwise eligible (the criteria for eligibility are spelled out in Chapter 4 of my book, Managing Your Medicare), you should take this opportunity to make an appointment as early as possible in 2011 to get these services. If your provider takes assignment, you will pay nothing for these. Note that these preventive services already had no cost sharing, and if you need them, get them right way, don’t wait.
- Cardiovascular Disease Screening (lab test)
- Fecal Occult Blood Test (lab test)
- Diabetes Screening (lab test)
- HIV Screening (lab test)
- Pap Smear (lab test)
- PSA (lab test)
- Flu Shot (including the “swine” flu (H1N1) shot)
- Pneumococcal Pneumonia Shot
But not all preventive services are covered by this new rule. These preventive services will continue, in 2011 and beyond, to have the deductible and coinsurance apply, as before, so there is no sense in waiting to avail yourself of them:
- Barium Enema
- Glaucoma Screening
- Diabetic Retinopathy Exam
- Digital Rectal Exam
- Tobacco Cessation Services
- Kidney Disease Education (KDE) Services
- Diabetes Self-management Training
- Nutrition Therapy Services
Medicare Competitive Bidding Program on Durable Medical Equipment
The Medicare program is continuing an effort to get better prices on Durable Medical Equipment and allied supplies through a bidding process that competes the prices that Medicare pays for these rather than establishing the prices by the current method of using a fee schedule set by the program.
Note that this competitive bidding program went into effect on January 1, 2011, but ONLY in selected areas of the nation, and it will apply ONLY to certain items of equipment and supplies. You can find out if this affects the area you live in, or if it applies to an item you are thinking of getting, by calling 1-800-MEDICARE or by going to www.Medicare.gov, clicking on “Resource Locator,” and then on “Medical Equipment Suppliers,” and entering your zip.
Basically, beginning on January 1, 2011, anytime you rent or purchase an item or supply on this list while you reside in or visit the areas mentioned, you will have to get it from a supplier which has a contract with Medicare under the competitive bidding program. If you do not, Medicare, with some exceptions, will not pay anything!
Changes in Enrolment Periods
Elimination of the Open Enrollment Period and Inauguration of the Annual Disenrollment Period
In 2011 the Medicare Advantage Open Enrollment Period, which ran from January 1 to March 31 and which allowed you to make a variety of changes to how you get your Medicare, and which Plan you were in, is eliminated. It will no longer be in effect.
In its place is a new Annual Disenrollment Period, which will run only from January 1 to February 14 of 2011 and every year thereafter. It is important to understand that this new period is less than half as long as the previous one, so you will have to act more quickly to make any permissible changes.
The changes you can make during this 45-day period are only these: You may leave Medicare Advantage (Part C) and go to Original (fee-for-service) Medicare. The change will be effective first day of month following the date you disenroll from your Medicare Advantage Plan. And, if you do so, you may join a stand-alone Part D drug plan. You will join this drug plan on first day of month following the date the plan gets your enrollment request. Note that you may enroll in a Part D plan whether or not the Medicare Advantage Plan you were in did or did not have Part D drug coverage. You may NOT join a Medicare Advantage Plan nor switch from one Medicare Advantage Plan to another.
Change in Dates of the Annual Election Period
This is critical: the “Annual Election Period,” which has run from November 15 to December 31 of each year, will change in the fall of 2011 for enrollments to be effective January 1, 2012. IN 2011, THIS PERIOD WILL BEGIN ON OCTOBER 15 AND END ON DECEMBER 7.
So be prepared, earlier next fall than you are used to, to figuring out the best Medicare Advantage Plan or Part D Drug Plan for you.
Dramatic Narrowing of the Part D Prescription Drug Donut Hole
The “donut hole” has been the 100 percent coinsurance band where you pay all of the cost of your Part D prescription drugs, but it is being narrowed rather substantially.
In 2011, once you have satisfied your deductible (never more than $310.) and have gone through the 25 percent coinsurance band, where you pay 25 percent and Medicare pays 75 percent of the next $2,240 in drug costs, you hit the donut hole. In this band you are responsible for an additional $3,607.50, while Medicare’s dollar responsibility varies.
However, in 2011: For brand name drugs, the manufacturer has to give a discount of 50 percent off the price of the drug itself, and you have to pay the remaining 50 percent, plus any dispensing fee. For generic drugs, the government will pay 7 percent of the cost of the drug itself. You pay the other 93 percent, plus the dispensing fee.
You will remain in the donut hole until all your drug expenses total $4,550. This includes your deductible, anything you spent in the 25 percent coinsurance band and in the donut hole, plus whatever the dollar amount of the discounts that drug manufacturers had to give you on brand name drugs while you were in the donut hole. (But not the amount the government paid for generics in the donut hole.)
While it will be different for every beneficiary, it is likely that a typical beneficiary will actually have to spend perhaps $1,900 or $2,000 out-of-pocket while in the donut hole to get out of it, as the 50 percent manufacturers’ discount will count toward their drug spending. And once you have reached $4,550 drug expense total (this is called the “out-of-pocket threshold”) you go into the catastrophic band. Here you are responsible for 5 percent of your drug costs, and Medicare, 95 percent, without any upper limit to the total spending on your drugs. The minimum dollar amount you must pay in the catastrophic phase for a prescription remains the same as 2010: $2.50 for generics and $6.30 for brand name drugs.
New Medicare Tax Part D Premium Surcharge Begins
The Health Care Reform legislation extended high income premium surcharges to Part D, parallel to those in Part B. So those of you who are paying a surcharge on your Part B premium will now, if you have Part D, will pay a surcharge on your premium there as well, beginning in 2011. (For those few of you who do not have Part B, you are subject to this if you have Part D and exceed the income limits we discuss.)
The surcharges range from $12.00 to $69.10 per month. An individual with a “modified adjusted gross income” (MAGI) of over $85,000 in 2009, or a couple filing jointly with such an income of over $170,000 in 2009, will be subject to these. (Page 20 of Managing Your Medicare explains how your MAGI is calculated.) And if both of a couple have Part D, each has to pay this.
The Part D High Income Premium Surcharges for 2011 are:
- If you were single and had a MAGI over $85,000 but less than $107,000, or if you were a couple filing jointly with an MAGI of over $170,000 but less than $214,000, your monthly premium surcharge will be $12.00 a month, or $144.00 a year.
- If you were single and had a MAGI over $107,000 but less than $160,000, or if you were a couple filing jointly with an MAGI of over $214,000 but less than $320,000, your monthly premium surcharge will be $31.10 a month, or $373.20 a year.
- If you were single and had a MAGI over $160,000 but less than $214,000, or if you were a couple filing jointly with an MAGI of over $320,000 but less than $428,000, your monthly premium surcharge will be $50.10 a month, or $601.20 a year.
- If you were single and had a MAGI over $214,000, or if you were a couple filing jointly with an MAGI of over $428,000, your monthly premium surcharge will be $69.10 a month, or $829.20 a year.
- If you were married and living together, but file separately, and had a MAGI of over $85,000 but less than $129,000, your monthly premium surcharge will be $50.10 a month, or $601.20 a year.
- If you were married and living together, but file separately, and had a MAGI of over $129,000, your monthly premium surcharge will be $69.10 a month, or $829.20 a year.
You will not be paying these surcharges to your drug plan (or your Medicare Advantage Plan, if you get your Part D from them) with your monthly Part D premium, if you pay them directly. Rather, for those of you on Social Security or Railroad Retirement, or who receive a federal pension from the Office of Personnel Management, they will be deducted from your monthly payment; all others will be billed directly by Medicare, just like they are for Part B.
Note that the amount of your surcharge does not vary by the size of your plan’s premium; and, for those of you who do not pay any Part D premium (because your Medicare Advantage plan does not charge one) will still have to pay this surcharge.
Managing Your Medicare, the book, explains how to appeal to Social Security if they use the wrong income, or if your circumstances have changed significantly since you filed your 2009 income tax (perhaps you retired, your business burned down, you divorced, or your spouse died, etc.).
Note that the Medicare Compare function, which allows you to find the best drug plan or Medicare Advantage Plan, does not take this surcharge into account. So it will not give you completely accurate information on how much you’ll have to pay for your Part D plan. You will have to add your surcharge in, but it should be able to help you to find the best plan for you.
If you are thinking of forgoing Part D because youare subject to a surcharge, especially a high one, remember, that if you don’t have other creditable coverage, and you do not take Part D, if you later sign up, you will be penalized about $0.32 per month for each month that you could have had Part D but did not. (This amount may change each year.)