There's some good news and some bad news once the new Medicare rules go into effect January 1. The changes will benefit some recipients but it will also make coverage more expensive for people with incomes over $85,000 or $170,000 for couples.
It's all part of the health-care reform and while premiums for most beneficiaries will remain relatively stable in 2011, those who already pay higher premiums for doctor's visits and other "Part B" coverage will also pay more for "Part D" prescription drug coverage starting January 1.
Medicare's annual open-enrollment period starts this week so it's important to know what's in store for you next year. It could impact your decision as to whether to change your current plans or if you're just starting out what to begin with. During the annual open-enrollment period, anyone in the federal health insurance program for people 65 and older " and their caregivers " can make changes to their coverage by December 31.
Moreover, many insurers are eliminating or consolidating hundreds of Medicare-related plans to comply with recent regulations aimed at reducing duplicative plans. As a result, according to the AARP, as many as one million Medicare recipients will have to choose new coverage.
How the changes being instituted might impact you will depend on whether you have plain-vanilla Medicare or a federally subsidized private Medicare Advantage plan. That works like a conventional insurance plan and often includes prescription-drug coverage.
Many who choose the traditional fee-for-service Medicare also buy a "Medigap" policy, as well as a separate prescription-drug policy, to cover gaps in their coverage.
For those with traditional Medicare, the biggest change on the horizon is an expansion of benefits. Starting January 1, Medicare will completely cover the cost of many preventative services, including mammograms, Pap tests and screenings for prostrate and colorectal cancer, as well as one annual physical examination.
Benefits will also grow richer under the Part D prescription-drug program. Currently, privately managed plans cover 75% of a participant's drug costs up to a limit that will rise to $2,840 in 2011. After that, participants fall into a "doughnut hole" gap where they are required to pay 100% of their drug costs until expenditures reach $6,440. Then catastrophic coverage kicks in, capping outlays at 5%.
Under the health-care overhaul, the estimated 14% of Part D participants who fall into this coverage gap will start to receive discounts that will reduce the amount they pay"from 100% in 2010 to 50% for brand-name drugs and 93% for generics in 2011. As a result, those who have "enhanced" Part D plans, which provide some coverage in the doughnut hole, should consider whether it makes sense to pay the extra premiums.
For single participants who have a modified adjusted gross income of more than $85,000 a year"and couples who exceed $170,000"will pay between $12 and $69.10 more in monthly premiums for Part D than other beneficiaries.
Partial solution
According to the Wall Street Journal, there is a way to get around the increase: Move into a Medicare Advantage plan. They offer medical and drug benefits with lower monthly premiums than what's charged for original Medicare plus supplementary policies. But some of these plans change their benefits or fees from year to year, and some restrict where policyholders can seek care.
Participants will also enjoy some new protections. Advantage plans must cap " at $6,700 " recipients' annual out-of-pocket expenditures for Medicare-covered services within their networks. The plans will also be barred from charging higher copayments or coinsurance rates for some services, including chemotherapy, than patients would pay under traditional Medicare " although the plans can charge higher deductibles and copayments for other services.
Starting in 2011, Advantage participants who wish to switch to another Advantage plan will no longer be allowed to do so between January 1 and March 31. Instead, they must make such a move by December 31. From January 1 to February 14, participants can still drop an Advantage plan, but they'll have to switch to traditional Medicare.
