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How are Medicare benefits changing for 2019?

Q: What are the changes to Medicare benefits for 2019?

A: There are several changes for Medicare enrollees in 2019:

Part B premiums

2019 Medicare premiums, deductibles and out-of-pocket costsThe standard premium for Medicare Part B is $135.50/month for 2019, up from $134/month in 2018. But while the standard premium for Part B was $134/month in 2018, more than two-thirds of Medicare enrollees (ie, those “held harmless” from having a reduction in their Social Security checks) paid an average of $130/month.

The exact amount of their premiums depended on the exact amount of their Social Security cost of living adjustment (COLA) for 2018.

For 2019, the new standard premium ($135.50/month) applies to nearly all enrollees, although CMS estimated that 2 million enrollees (about 3.5 percent of the Medicare population) would pay less than $135.50/month because their Social Security COLA wouldn’t be enough to cover the full increase to $135.50/month.

Since Medicare Part B premiums are deducted from Social Security checks for those receiving Social Security, if the dollar amount of the COLA isn’t as much as the dollar amount of the Part B increase, the Part B increase for that particular enrollee is limited to the amount of the COLA. That ensures that a person’s Social Security check won’t decrease from one year to the next.

For high-income Part B enrollees (income over $85,000 for a single individual, or $170,000 for a married couple), premiums in 2019 range from $189.60/month to $460.50/month, depending on income.

But 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, bumping some high-income enrollees into higher premium brackets.

And for 2019, a new income bracket has been added on the high end, further increasing Part B premiums for enrollees with very high incomes. Rather than lumping everyone with income above $160,000 ($320,000 for a married couple) into one bracket at the top of the scale, there’s now a new bracket for enrollees with income of $500,000 or more ($750,000 or more for a married couple). People in this category pay $460.50/month for Part B in 2019.

Part B deductible

The Part B deductible was $183 in 2017 and it remained at that level in 2018. For 2019, however, it increased to $185.

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 to newly-eligible enrollees through 2019 — after that, people can keep Plans C and F if they already have them, but newly-eligible Medicare beneficiaries 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 lockstep 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 again for 2019: The premium for people with 30+ (but less than 40) quarters of work history is $240/month in 2019, up from $232/month in 2018. And for people with fewer than 30 quarters of work history, the premium for Part A is $437/month in 2019, up from $422/month in 2018.

Part A has a deductible that applies to each benefit period (rather than a calendar year deductible like Part B or private insurance plans), and it generally increases each year. In 2018 it was $1,340, but it increased to $1,364 in 2019. This increase applies 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 2019, it’s $341 per day for the 61st through 90th day of inpatient care (up slightly from $335 per day in 2018). The coinsurance for lifetime reserve days is $682 per day in 2018 (up from $670 per day in 2018).

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 2019, it’s $170.50 per day, up from $167.50 per day in 2018.

Medicare Advantage

CMS announced in September 2018 that the average Medicare Advantage (Medicare Part C) premium would be about $28/month in 2019, a decrease of about $1.81/month from 2018’s rates, continuing a trend of year-over-year premium reductions since 2015. (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.)

A Kaiser Family Foundation analysis found that across Medicare Advantage plans with integrated Part D prescription coverage (MA-PDs), the average premium in 2019 is about $40/month.

CMS also noted that the total number of Medicare Advantage plans across the country was increasing again for 2019, from about 3,100 to 3,700. 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. That had grown to 34 percent by 2018, and CMS has projected that it will reach nearly 37 percent in 2019.

CMS noted that 99 percent of Medicare enrollees would have access to Medicare Advantage plans in 2019, and 91 percent would have access to at least 10 different Medicare Advantage plans. A Kaiser Family Foundation analysis found that in 2018, there were 149 counties – mostly in rural areas in the western half of the country – with no Medicare Advantage plans available at all. That’s out of 3,138 counties in the country, though, and only about 1 percent of all Medicare beneficiaries live in those counties where there are no Medicare Advantage plans available.

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Part D prescription coverage

For stand-alone Part D prescription drug plans, average basic premiums were expected to decline by about $1.09 per month in 2019, dropping to a projected average premium of $32.50/month, down from  $33.59/month in 2018. This was the second year in a row that average basic premiums declined, but it’s important to understand that the average basic premium is less than the average enhanced plan premium, so overall average Part D premiums are higher than the average basic premiums. According to Kaiser Family Foundation data, the average stand-alone Part D plan premium, including both basic and enhanced plans, is $41.21/month in 2019.

And there’s significant variation in the actual premiums people pay, depending on the plan they select. There are plans with premiums under $20/month available in all areas of the country, but there are also plans with premiums that exceed $125/month.

There’s also a significant increase in the number of Part D plans available in 2019, but Kaiser Family Foundation notes that is likely due to the fact that CMS eliminated the meaningful difference requirement for Part D plans, allowing a single insurer to offer more plans than they’ve had in the past.

The maximum allowable deductible for standard Part D plans increased to $415 for 2019, up from $405 in 2018.

The good news is that the Affordable Care Act has been gradually closing the donut hole in Medicare Part D. In 2019, enrollees pay just 37 percent of the plan’s cost for generic drugs while in the donut hole. And the donut hole closed one year early — in 2019, instead of 2020 — for brand-name drugs, which cost enrollees in standard plans just 25 percent of the plan’s cost in 2019 (down from 100 percent before the ACA started to close the donut hole).

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 Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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