Q: What were the changes to Medicare benefits for 2018?
A: There are several changes for Medicare enrollees in 2018:
Part B premiums
Premiums for Medicare Part B were higher in 2017 than they were in 2016. For about 70 percent of enrollees, the average premiums in 2017 were about $109/month — about a 4 percent increase over 2016’s premiums (the exact amount people paid in 2017 varied depending on the dollar amount of the cost of living adjustment on their Social Security checks). Medicare costs necessitated a larger increase, but the very small Social Security cost of living adjustment, or COLA (0.3 percent) for 2017 limited the amount of the rate increase for most seniors, since Part B premiums are deducted from Social Security checks, and there’s a provision that prevents those checks from declining from one year to the next (ie, the “held harmless” provision).
For the other 30 percent of enrollees, average standard premiums (before any increase for high-income enrollees) were $134/month in 2017, which was a 10 percent increase from the $121.80/month that this group paid in 2016.
The $134/month premium for Part B in 2017 applied to enrollees who were not receiving a Social Security check (either because they’re covered by a state pension instead of Social Security, or because they’ve elected to delay their Social Security benefits). It also applied to people who were new to Medicare for 2017, and people who pay higher-than-standard premiums due to high income.
For low-income Part B enrollees who are also covered by Medicaid or a Medicare Savings Program, the Part B premium also increased to $134/month, but state Medicaid programs pay the Part B premium for those enrollees. So those enrollees weren’t directly impacted by the higher price in 2017.
So what did all of this mean for 2018 premiums? The Social Security COLA was 2 percent for 2018 (as opposed to 0.3 percent for 2017, and zero percent for 2016). This was almost enough to make Part B premiums level out for everyone in 2018, but not quite enough. The entire COLA was directed to higher Part B premiums for 2018, so people did not see any increase in their Social Security checks. But they also didn’t see a decrease, since the law prevents that.
So while the standard premium for Part B is still $134/month in 2018, more than two-thirds of Medicare enrollees (ie, those “held harmless”) are paying an average of $130/month (the exact amount of their premiums depends on the exact amount of their COLA for 2018).
For high-income Part B enrollees (income over $85,000 for a single individual, or $170,000 for a married couple), premiums in 2017 ranged from $187.50/month to $428.60/month, depending on income. These amounts remained unchanged for 2018. But there was another change that affected some high-income Part B enrollees in 2018. As part of the Medicare payment solution that Congress enacted in 2015 to solve the “doc fix” problem, new income brackets were created to determine Part B premiums for high-income Medicare enrollees, and they took effect in 2018.
The high-income brackets start at $85,001 for a single individual, and $170,001 for a married couple. Enrollees with income between $85,001 and $107,000 ($170,001 and $214,000 for a married couple) didn’t see any changes to their bracket.
But some enrollees with income above those limits were bumped into a higher bracket in 2018, with significantly higher premiums. The highest bracket (ie, with the highest Part B premium) now applies to those with income above $160,000 ($320,000 for a married couple), whereas the highest bracket didn’t apply in 2017 until an enrollee’s income reached $241,000 ($428,000 for a married couple). So slightly less wealthy Medicare enrollees began paying the highest prices for Medicare Part B in 2018.
Part B deductible
Some enrollees have supplemental coverage that pays their Part B deductible. This includes Medicaid, employer-sponsored plans, and Medigap plans C and F. Medigap plans that cover the Part B deductible can only be sold through 2019 — after that, people can keep Plans C and F if they already have them, but new enrollees will no longer be able to buy plans that cover the Part B deductible (the impending ban on the sale of Medigap plans that cover the Part B deductible was part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), in an effort to curb utilization by ensuring that enrollees would incur some out-of-pocket costs during the year).
Many Medicare Advantage plans have low copays and deductibles that don’t necessarily increase in lock step with the Part B deductible, so their benefits designs have had different fluctuations over the last few years. (Medicare Advantage enrollees pay the Part B premium, but their Medicare Advantage plan wraps Part A, Part B, and various supplemental coverage together into one plan, with out-of-pocket costs that are different from Original Medicare).
Part A premiums, deductible and coinsurance
Medicare Part A covers hospitalization costs. For most enrollees, there’s no premium for Part A. But people who don’t have 40 quarters of work history (or a spouse with 40 quarters of work history) must pay premiums for Part A coverage. Those premiums increased very slightly for 2017: The premium for people with 30+ (but less than 40) quarters of work history was $227/month in 2017, up from $226 in 2016. For 2018, it grew to $232/month. And for people with fewer than 30 quarters of work history, the premium for Part A is $422/month in 2018, up from $413/month in 2017 and $411 in 2016.
Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans) In 2015, the deductible was $1,260. In 2016, it was $1,288. For 2017, the Part A deductible increased to $1,316, and for 2018, it grew again, to $1,340. This increase applied to all enrollees, although many enrollees have supplemental coverage that pays all or part of the Part A deductible.
The Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the enrollee needs additional inpatient coverage during that same benefit period, there’s a daily coinsurance charge. In 2018, it’s $335 per day for the 61st through 90th day of inpatient care (up slightly from $329 per day in 2017). The coinsurance for lifetime reserve days is $670 per day in 2018 (up from $658 per day in 2017).
For care received in skilled nursing facilities, the first 20 days are covered with the Part A deductible that was paid for the inpatient hospital stay that preceded the stay in the skilled nursing facility (Medicare only covers skilled nursing facility care if the patient had an inpatient hospital stay of at least three days before being transferred to a skilled nursing facility). But there’s a coinsurance that applies to days 21 through 100 in a skilled nursing facility. In 2018, it is $167.50 per day (up from $164.50 per day in 2017).
CMS announced in September 2017 that the average Medicare Advantage (Medicare Part C) premium would be about $30/month in 2018, a decrease of about $1.91/month from 2017’s rates, which had also been lower (by about 4 percent) than 2016’s average premiums (note that Medicare Advantage premiums are in addition to Part B premiums; people who enroll in Medicare Advantage pay their Part B premium and whatever the premium is for their Medicare Advantage plan, and the private insurer wraps all of the coverage into one plan).
CMS also noted that the total number of Medicare Advantage plans across the country was increasing for 2018, from about 2,700 to about 3,100.
In 2017, about 19 million people had coverage in Medicare Advantage plans. That number has been growing steadily since 2004 (when there were just 5.3 million Medicare Advantage enrollees). The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth. In 2004, just 13 percent of Medicare beneficiaries had Medicare Advantage plans, and that had grown to 33 percent by 2017.
But a Kaiser Family Foundation analysis found that 147 counties in the US — mostly in rural areas in the western half of the country — had no Medicare Advantage plans available at all in 2017, and this increased slightly to 149 counties in 2018 (out of 3,138 counties in the country). However, only about 1 percent of all Medicare beneficiaries live in those counties where there are no Medicare Advantage plans available.
Part D prescription coverage
For stand-alone Part D prescription drug plans, average basic premiums were expected to decline by about $1.20 per month in 2018, dropping to a projected average premium of $33.50/month, down from $34.70/month in 2017. But including premiums for both basic and enhanced plans, average premiums were expected to increase by 9 percent, to an average of $43.48/month. That assumed enrollees kept the same plans they had in 2017, although Part D enrollees had the option to switch plans during open enrollment (October 15 to December 7).
There’s significant variation in the actual premiums people pay, depending on the plan they select. In 2018, premiums for Part D across the country plans range from under $13/month to more than $197/month. And for the ten most popular plans, premiums range from $20.21/month to $83.68/month.
The maximum allowable deductible for Part D plans increased to $405 in 2018, up from $400 in 2017.
The good news is that the Affordable Care Act is gradually closing the donut hole in Medicare Part D. In 2018, enrollees pay just 35 percent of the plan’s cost for brand-name drugs while in the donut hole, and 44 percent of the cost of generic drugs (down from 100 percent before the ACA started to close the donut hole).
Therapy cap repealed, but outpatient therapy claims must still be tracked, justified, and are subject to review
Since the late-1990s, the Medicare therapy cap has been the benefit limit that applies to outpatient therapy, including physical therapy, speech-language pathology, and occupational therapy. It includes the amount that Medicare pays (generally 80%) and the amount the patient pays (the remaining 20%). The idea was that Medicare would only pay for a certain amount of outpatient therapy each year, in an effort to control costs.
The therapy caps have long been opposed by organizations like AARP and the American Occupational Therapy Association, but they were also never actually enforced. In order to ensure that Medicare beneficiaries would always be able to obtain necessary outpatient therapy, a system was put in place to allow for medically necessary therapy benefits up to a higher threshold, and a manual review of therapy services that exceeded even that higher threshold (in other words, people who really needed outpatient therapy were still able to receive it, regardless of how long it needed to continue or the total cost).
Under MACRA (2015), the exceptions process was extended through the end of 2017, but it expired at that point. Confusion ensued in early 2018, when therapists and patients were unsure how much therapy would be covered for Medicare beneficiaries in 2018. But in February 2018, Congress passed legislation that repealed the outpatient therapy caps, retroactive to January 1, 2108.
However, therapists still have to track total claims, and use a KX modifier when claims exceed the limits that would otherwise have been in place as therapy caps. For 2018, those amounts increased by $30:
- Physical therapy (PT) and speech-language pathology (SLP) combined cap is $2,010.
- Occupational therapy (OT) cap is $2,010 in 2018.
Once the caps are reached, there was already an exception process that allowed for medically necessary therapy costs to be covered up to $3,700 (for PT and SLP combined, and also for OT), and a manual review process was available for medically necessary therapy services that exceed $3,700. Under the new rules, therapists have to submit claims with KX modifiers once total claims exceed $2,010, and the manual review process is now triggered when claims reach $3,000 (as opposed to the old limit of $3,700).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.