Every year there are changes to Medicare. The changes are usually not as drastic as the television commercials would lead you to believe. The purpose of the advertisements is to stimulate fear, uncertainty, and greed. They hit it hard to motivate you to call the 800-number. They will claim to offer a free objective evaluation. I find their objective evaluation inevitably ends with you changing to their plan. Know about Medicare 2021 changes before they flip you.
Unique One-Time Medicare 2021 Changes
My grandmother used to say, ‘live long enough, and you will see everything.’ The changes this year are unique because of the pandemic. COVID tests will have no co-pays. The vaccine is free. The federal government wants to overcome the virus, so Medicare is reflecting that public health policy.
Many Medicare plans had already offering telehealth options. With the pandemic, insurance companies now hardwire their plans with these options–most with zero co-pays.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) changes began in 2015. CMS implemented the changes slowly over the years so Medicare, the insurance companies, and beneficiaries could more easily adjust. Starting in 2020, those turning 65 did not have the opportunity to purchase the Medigap F or C plan. Medicare fazed out those plans with plan G being the principal plan with the most comprehensive coverage. They grandfathered in those 65 and over before 2020. They can still own and purchase plan Fs and C’s.
The most significant Medicare change to know about in 2021 for most people is the Part B premium. This year it will increase from $145.60 to $148.50 per month per person, which is a $2.90 increase. Each year the premium amount is a hard-fought debate in Congress. Usually, Congress threatens to raise it much more. Constituents call in, and advocacy groups lobby, so the price usually goes down.
Part B Deductible in 2021
Medicare Part B consists of many different services. It has its own deductible, which is separate and distinct from the Part A deductible. The deductible increased from $198 in 2020 to $203 in 2021, only $5. The deductible is a flat amount. The consumer pays the deductible before the 20% coinsurance starts. For plan G, the Part B deductible is the only payment, aside from the monthly premium. The Medigap policy fills the remaining gaps in Part A and Part B coverage.
Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 1.3 percent in 2021. The 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. The Social Security COLA increase should not be less than the Medicare Part B premium increase. There are exceptions around this. If you are receiving Social Security benefits, you will be held harmless on the increase, but those who do not take Social Security benefits will pay the increase.
Medicare 2021 Changes for Part A
Medicare Part A covers inpatient hospitals, skilled nursing facilities, and some home health care services. About 99 percent of Medicare beneficiaries do not pay a Part A premium since they have at least 40 quarters of Medicare-covered employment. The Medicare Part A inpatient deductible that beneficiaries will pay when admitted to the hospital is $1,484 in 2021, increasing $76 from $1,408 in 2020.
The Senior Savings Model is an experiment in modeling that tests the impact of offering beneficiaries an increased choice of enhanced alternative Part D plan options that offer lower out-of-pocket costs for insulin. One in every three Medicare beneficiaries has diabetes, and over 3.3 million Medicare beneficiaries use one or more of the common forms of insulin. For some of these beneficiaries, access to insulin can be a critical component of their medical management, with gaps in access increasing the risk of serious complications, ranging from vision loss to kidney failure to foot ulcers (potentially requiring amputation) to heart attacks.
Unfortunately, sometimes the cost of insulin can be a barrier to appropriate medical management of diabetes. CMS’s designed Senior Savings Model for Part D plans to address President Trump’s promise to lower prescription drug costs. The model provides Medicare patients with new choices of Part D plans that offer insulin at an affordable and predictable cost. A one-month supply of a broad set of plan-formulary insulins costs will be no more than $35 each.
Medicare changes to know in 2021 are your drugs listed in the formulary. Part D premiums for 2021 will probably rise an average of 9%. The average stand-alone Part D premium is $41 in 2021. The premiums range from $7 a month for the SilverScript SmartRx plan to a high of $89 for the AARP MedicareRx Preferred plan.
Part D Deductible 2021
The Part D drug deductible went up from $435 to $445 on most plans. That is the max deductible CMS allows insurance companies to set the deductible. They can set it lower, though few plans did this year, and for those plans with zero deductible or a lower deductible, the cost is offset by either higher monthly premiums or co-pays or both.
Most of the time, that deductible is only applicable to tiers 3, 4 & 5 medications.
The first of the year is the time when I get the distressed phone calls because people must meet their deductibles. Many forget the deductible starts over again in January, and they are shocked when they show up at the pharmacy counter. I have to remind clients they need to meet the deductible first to get to the lower copay.
Medicare Advantage Changes in 2021
In the nine years, I have offered Medicare Advantage plans, I have seen the number and especially the quality of the plans increase significantly. Nationally more Medicare Advantage plans are offered now than ever before. In Nebraska and Iowa, I have seen the number of counties offering quality plans explode.
There are now over 4,800 Medicare Advantage plans, an increase of 76% over 2017. The average person will choose from 33 plans offered by eight different insurance companies, with some areas having as many as 60 different plans.
Besides, the number of Special Needs Plans (SNP) also increased to nearly 1,000 in 2021, a sizable jump. The increase in SNP means more people have access to low-cost plans with extra benefits to manage chronic conditions and diseases.
Medicare Advantage Premiums in 2021
Average Medicare Advantage premiums dropped for the fourth consecutive year to $21 in 2021, down from $25 in 2020. Nearly 90% of all Medicare Advantage plans include Part D prescription drug coverage.
Of note, the Medicare Advantage out-of-pocket maximum will increase to $7,550 in 2021, up significantly from $6,700 in 2020. However, the vast majority of insurance companies set their out-of-pocket max well below the government limit. In 2020, the average Medicare Advantage out-of-pocket maximum was $4,900.
Medicare Advantage and ESRD
The most heartening plan change for Medicare Advantage is ESRD (End-Stage Renal Disease). When I first started, the only pre-existing condition that excluded me from enrolling someone in a Medicare Advantage plan was ESRD. While I didn’t have that situation very often, it was sad when I couldn’t offer Part C to clients.
ESRD is one of the health issues that almost always automatically makes you Medicare eligible. Still, if you are younger than 65 in Nebraska and Iowa, you are not eligible for a Medicare supplement. The dialysis falls under the unlimited 20% coinsurance of Part B. The cost can be incredible. Even for those on Medicare Advantage, beneficiaries can easily hit the maximum out of pocket.
At least now those with ESRD can get on a Medicare Advantage plan and limit their out-of-pocket costs.
There’s good news for people with ESRD in 2021. In the past, those with ESRD could not join Medicare Advantage unless there was an ESRD Special Needs Plan available. However, new rules grant guaranteed issue rights to people with ESRD for any Medicare Advantage plan offered in their service area.
Access to Medicare Advantage when you have ESRD is massive. Long-standing rules allowed Medigap companies to deny coverage to people with ESRD outside their Medigap Open Enrollment Period. Even many states that enacted laws forcing insurers to offer Medigap to people under age 65 failed to extend that protection to people with ESRD.
What this means is that, for the first time, people with ESRD have low-cost options to control their health care expenses with a Medicare Advantage plan. If that applies to you, you could have used the 2020 Annual Election Period to shop for a new Medicare Advantage plan.
Congress made significant changes to the billing process behind Medicare in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA changes how Medicare rewards providers for qualify over volume inpatient care. It streamlines provider reimbursements through the Merit-Based Incentive Payments System (MIPS) and even grants bonuses for participation in alternative payment models (APMs). Still, the change that gets the most attention is the eliminating of Plan F and C in the Medigap lineup. The plans completely covered the Part A deductibles and Part B co-insurance, so beneficiaries did not have to pay anything aside from their monthly premiums. Congress found the lack of co-pays and deductibles was an incentive for waste and abuse of the Medicare system. Starting in 2021, you could no longer purchase Plan F or C when you turned 65. Those who turned 65 before that period were grandfathered into Plan F and C.
The other most obvious change was the Medicare number is no longer your Social Security number, but a unique eleven-digit number combining letters and numbers. Everyone’s card should have been replaced by the end of 2019, though I still have some clients who have their old numbers and card. It is a simple matter of calling Medicare for a replacement card.
Medicare makes slight changes over time. Many times the Medicare changes to know about in 2021 do not apply to you, but you, or your agent, still need to be aware of what is going on to always maximize your benefits and avoid disadvantaging yourself temporarily or permanently.
What is Medicare? A basic question. Or rather, why should anyone care about Medicare? The reason people should care is that most bankruptcies are medical bankruptcies. In other words, if you wish to protect your retirement nest egg from bill collectors, Medicare is important to know about. There are few things that are more disturbing than a pile of medical bills sitting on the kitchen table. The golden years could be tarnished with worrying about actual or potential medical expenses. Medicare–if implemented proper–will protect you from a potential catastrophe. It is critical for people entering into retirement to understand what is Medicare.
What is Medicare?
Medicare is a Federal health insurance program for people who are 65 and older (or on Social Security disability). It began in 1965 when President Johnson signed it into law. It was designed to provide medical covered to the elderly at a reasonable price. In 1965, few people had health coverage once they stopped working. As a result, many seniors fell into poverty because of burdensome medical expenses. Medicare was a solution to a national problem.
Medicare is divided into two parts: Medicare Part A and Medicare Part B. Medicare Part A has everything to do with the hospital. It doesn’t cost anything because you paid for it during your working years. It was one of the deductions in your payroll taxes. Medicare Part A covers a 100% of the medical expenses incurred in the hospital, but there is deductible that many people are not aware of. The Medicare Part A deductible is currently $1,288. This is NOT an annual deductible. It is a deductible per benefit period, and a benefit period is 60 days. So each event has a deductible, and the time for the event is 60 days. In other words, you could have multiple events and pay multiple deductibles because the event is not limited to just a 60 day period. Each new event, even if it overlaps with another event, has its own 60 day timeline. While rare, it could happen, and probably more importantly, you could pay the Part A $1,288 deductible more than once in any given year.
Medicare Part B, however, does cost something. For most people going on Medicare and Social Security in 2016, the Medicare Part B premium is $121.80 per month. It is generally taken out of your Social Security check. Medicare Part B covers doctors’ visits and outpatient procedures, such as X-rays, blood work, emergency room visits, etc. Medicare Part B covers 80% of the cost. Your portion is 20%. The 20% coinsurance, however, is unusual. There is no cap. There is no maximum out-of-pocket. Most group plans you were ever on probably had a maximum out-of-pocket. It may have been $1,000, $2,000, even $10,000, but at some point, you stopped paying and the insurance company covered everything. Medicare Part B does not have that, so 20% of a big number will be a big number. You keep paying your 20% coinsurance as long as the bills come in.
These are the basic building blocks to what is Medicare. You must understand Medicare, Medicare Part A, and Medicare Part B to understand the rest that follows. In the next blogs and videos, we will cover how to get Medicare, how to cover the Part A deductible, and how to fill the unlimited 20% gap in Part B coverage.
Delay Medicare Enrollment
Many people work past 65. They continue on with them employer group coverage. They delay Medicare enrollment. At 66+, they wonder what to do about Medicare.
How to Enroll after 65
Here is what to do. Go to Medicare.gov. Click on “Forms, Help, Resources” on the top right. Then click on “Medicare Forms” on the left middle. You will see the enrollment forms in the middle of the page in PDF form. There are two forms: one to enroll in Medicare Part B and a second for your employer to sign off on your coverage. You fill out the enrollment in Part B. Give the second form to your employer. Your employer will verify that you have had health coverage as good as Medicare since you turned 65. They will sign the form. It is important for you to write in the date that you wish your Medicare Part B to start. Give yourself enough time to find a Medicare plan and prescription drug plan. (There are much shorter and restrictive time limits when you have delayed Medicare Part B enrollment.) Drop the forms in the mail or hand deliver them to the local Social Security office.
Medicare Employer Enrollment Forms
Why do you want to involve your employer with your enrollment in Medicare Part B? If you do not have your employer verify that you had health coverage from the time you could have enrolled in Medicare until the time you did take Part B, Medicare will assume you did not have creditable coverage and will asset a penalty. The penalty is a 10% increase in Part B premium for every year you did not have coverage. That can be significant over time and completely unnecessary. Delay Medicare enrollment at your own risk. Get the form. Your employer is required to verify. The human resource department will know exactly what to do. It is a very simple matter.
At Omaha Insurance Solutions, we help clients who delay Medicare enrollment all the time. We can get this done quickly and easily. Give us a call 402-614-3389. We can email you the forms, walk you through filling them out, and explain what to do.