Medicare Annual Enrollment Period (AEP)
As you may know, the Annual Enrollment Period for Medicare beneficiaries will be October 15 through December 7. This is the period during which you may make certain changes in the way you want to receive your Medicare benefits in 2016, including the following:
- A beneficiary enrolled in Original Medicare (Parts A and B) may enroll in any Medicare Advantage Plan or stand-alone Part D Prescription Drug Plan offered in the service area – with no medical underwriting.
- A beneficiary enrolled in a Medicare Advantage plan may choose a different plan or return to Original Medicare.
- A beneficiary enrolled in a Medicare Part D Prescription Drug Plan may choose a different plan.
Note: The Annual Enrollment Period does not apply to Medicare Supplement policies, which are usually renewed on the anniversary date of the beginning of coverage. Open enrollment in such coverage applies only when a beneficiary first enrolls in Medicare Part B. Guaranteed issue (without medical underwriting) applies only at that time and when a beneficiary qualifies for a Special Enrollment Period, e.g., upon the loss of employment-based coverage.
Any beneficiary currently enrolled in a Medicare Advantage plan or Part D Prescription Drug Plan should have already received information from the current plan about any changes to be effective January 1. No action is needed if the beneficiary is satisfied with the current plan and the scheduled changes.
Effects of provisions of the Affordable Care Act (ACA) continue to impact health insurers who offer Medicare Advantage and Prescription Drug Plans and, in turn, the Medicare beneficiaries enrolled in such plans. In response to changes in reimbursement from the Centers for Medicare and Medicaid Services (CMS) and benefits costs, most insurers are implementing changes effective January 2016. Such changes may be in the form of premiums, out-of-pocket costs or both.
The purpose of this notice is only to remind you of your annual options and is not a recommendation that you make any changes. However, this is a good time to review alternative plans, particularly if your prescription drugs have changed. If you are affected by Medicare plan changes announced for 2016, you should review them carefully – first of all to ensure you understand them, and then to decide whether you are satisfied with the changes or whether you should consider an alternative plan for 2016.
Even with any changes announced for next year, your current plan may still be the right one for you.
Factors to Consider in Evaluating a Medicare Advantage or Prescription Drug Plan
- Amount of monthly premium
- Out-of-pocket costs for services you anticipate receiving
- Participation of your physicians and other health care providers in plan networks
- Inclusion of your prescription drugs in Part D plans’ formularies and the tiers/copays to which your products are assigned
- Your experience with plan administration and customer service
- CMS Star Rating
Although the Centers for Medicare and Medicaid Services (CMS) has not yet announced changes for 2016, the following might be expected, based on preliminary information released:
Monthly Medicare premium – The standard Part B premium of $104.90, which has not changed the past three years, is likely to increase in January 2016 for many beneficiaries. It is still possible for the Secretary of the U.S Department of Health and Human Services to intervene to temper the increases. If that does not happen, Medicare premiums could look like this, based on current reports:
- Beneficiaries receiving Social Security retirement benefits – $104.90 (no change, since retirement benefits are projected to include no cost-of-living increase).
- Beneficiaries not receiving Social Security retirement benefits and with Modified Adjusted Gross Income (MAGI) below $85,000 for single tax filers and below $170,000 for joint filers – $159.30, a 52% increase.
- Beneficiaries with MAGI above these thresholds – between $233.00 and $509.80, including Income-Related Monthly Adjustment Amount (IRMAA), compared to a range of $146.90 to $335.70 in 2015. There could also be increases in the IRMAA for Part D.
Part B deductible – Also unchanged the past three years, the current deductible of $147 may increase, but no announcement has been made. Of course, beneficiaries enrolled in Medicare Advantage and many Medicare Supplement plans would not be subject to payment of this amount. However, it would undoubtedly be reflected in increased Medicare Supplement premium rates upon renewal.
Part A out-of-pocket costs for inpatient care – These costs – currently $1,260 per stay of 1-60 days, $315 per day for days 61-90, and $630 per day for each of 30 lifetime reserve days – typically rise by modest amounts each year and will likely increase in 2016.
Part D coverage gap – The amount of drug cost that sends a beneficiary into the coverage gap and the amount of out-of-pocket cost at which the beneficiary leaves the gap will both rise in 2016. The percentage of the cost of generics while in the gap will slightly decrease, and the copay amounts paid for both brands and generics once out of the gap will slightly increase.
Most Medicare enrollees can expect to pay the same amount for their Medicare Part B coverage (the portion of Medicare that pays for doctors’ services and outpatient care) in 2016 as they do this year ($104.90), according to estimates from the latest Medicare trustees report. But about 1 in 7 enrollees will face a dramatic increase. In 2016, about 70 percent of Medicare enrollees will be protected from an increase because of a “hold harmless” provision in federal law that says their Medicare premium cannot go up from one year to the next by more than the increase in their Social Security benefit. Government officials currently estimate there will be no cost-of-living increase in Social Security benefits next year because inflation has been so low. For about 30 percent of Medicare enrollees, premiums are expected to rise steeply. About 14 percent of enrollees will pay these premiums themselves. The rest will not be directly affected because they are enrolled in Medicaid or a Medicare Savings Program and their premiums are paid by their state. Three groups will see increases:
• People who newly enroll in Part B in 2016 (about 5 percent of Medicare enrollees);
• Medicare enrollees who do not receive a Social Security check — for example, enrollees who delay claiming Social Security benefits because they continue to work (about 3 percent of Medicare enrollees); and
• Higher-income enrollees (people with income above $85,000 or couples with income above $170,000) who pay higher premiums (about 6 percent of Medicare enrollees)
For these enrollees not protected by the hold harmless provision, the Part B standard monthly premium will be $159.30 in 2016, a 52 percent increase. Higher-income enrollees who pay higher premiums will also see a 52 percent increase; their 2016 monthly premiums will be between $223 and $509.80, depending on income. The rise is especially steep because the total increase in premium revenue required in 2016 will be spread among only the 30 percent of enrollees who are not protected by the hold harmless provision, rather than among all enrollees.