Insurance For Over 65

Serving Georgia, Alabama, and Florida

Greg Nicholaides

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What Kind of Discount Can We Expect in the Medicare Part D Donut Hole or Coverage Gap?

Question:

What kind of discount can we expect in the Medicare Part D Donut Hole or Coverage Gap?

Answer:

Starting back in the 2011 Medicare Part D plan year, a discount or co-insurance (cost-sharing) was introduced to reduce the cost of generic and brand-name prescription drugs purchased by non-LIS Medicare beneficiaries once they entered the Coverage Gap (or Donut Hole / Doughnut Hole) portion of their Medicare Part D prescription drug plan (or Medicare Advantage plan that included prescription drug coverage).

If you reach the Donut Hole phase of your Medicare prescription drug plan andyour medication is on your plan’s formulary andyou are not receiving financial Extra Help (Low Income Subsidy):

  • In 2019, you will receive a 70% discount on brand-name drugs and a 63% discount on generic drugs. (You will pay 25% of your plan’s negotiated retail cost for brand-name prescriptions and 37% of the retail cost for generics.)
  • As a reminder, in 2018, you received a 65% discount on brand-name drugs and a 56% discount on generic drugs. (You paid 35% of your plan’s negotiated retail cost for brand-name prescriptions and 44% of the retail cost for generics.)

See the charts below for Donut Hole discounts 2011 to 2020.

Please note:The Donut Hole discount is not available to anyone receiving financial Extra Help (the Low-Income Subsidy).   Also, the Donut Hole discount is only for Medicare Part D drugs included on your Medicare prescription drug plan’s formulary or drug list.

The generic drug discountwill increase each year until the plan year 2020 when the co-insurance for generics in the Coverage Gap will be 25%.  The following table shows how the annual generic drug discount increases:

 

Generic Drug Discount
Plan

Year

 Beneficiary

Cost-Sharing

 Plan

Cost-Sharing
2011 93% 7%
2012 86% 14%
2013 79% 21%
2014 72% 28%
2015 65% 35%
2016 58% 42%
2017 51% 49%
2018 44% 56%
2019 37% 63%
2020

and beyond

  

25%

  

75%

 

The brand-name drug discountoperates differently from the generic drug discount – but the brand-name drug discount will also be reduced to co-insurance of 25% in 2019.

 

Brand-Name Drug Discount
Plan Year Beneficiary Cost-Sharing Plan Cost-Sharing Manufacturer Cost-Sharing
2011 50% 0% 50%
2012 50% 0% 50%
2013 47.5% 2.5% 50%
2014 47.5% 2.5% 50%
2015 45% 5% 50%
2016 45% 5% 50%
2017 40% 10% 50%
2018 35% 15% 50%
2019 25%* 5% 70%
2020

and beyond

  

25%

  

5%

  

70%

 

* President Trump signed the Bipartisan Budget Act of 2018 on Friday, Feb. 9, 2018 that effectively “closes” the Coverage Gap for brand-name drugs, with the brand-name Donut Hole discount increasing to 75% in 2019.

A key feature to the new law is that the pharmaceutical industry will be responsible for 70% of the cost of medications in the Coverage Gap, therefore you will receive credit for 95% of the retail drug cost toward meeting your 2019 total out-of-pocket maximum or Donut Hole exit point (the 25% of retail costs you pay plusthe 70% drug manufacturer discount.  As a note, since the brand-name drug manufacturer will take on an additional 20% of the retail cost, the Medicare Part D plan’s responsibility will decrease to 5% (from the originally planned 20% in 2019 and 25% in 2020 and beyond), the Medicare beneficiaries portion will decrease to 25% (from the original planned 30% in 2019).

Looking for more?  Related questions can be found here:

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What You Should Know About Traveling Outside the USA With Medicare.

 

Planning to travel abroad soon?  Before you go, remember to look into how your Medicare coverage works outside the United States.

If you have Medicare Part A (Hospital Insurance) and Part B (Medical Insurance), your health care services and supplies are covered when you’re in the U.S.  The 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa are considered part of the U.S.  In general however, health care you get while traveling outside the U.S. isn’t covered.

Medicare may pay for inpatient hospital, doctor, ambulance services, or dialysis services that you get in a foreign country in the following rare cases:

  • You’re in the U.S. when a medical emergency occurs, and a foreign hospital is closer than the nearest U.S. hospital that can treat your medical condition.
  • You’re traveling through Canada without unreasonable delay by the most direct route between Alaska and another state when a medical emergency occurs, and a Canadian hospital is closer than the nearest U.S. hospital that can treat the emergency.
  • You live in the U.S. and a foreign hospital is closer to your home than the nearest U.S. hospital that can treat your medical condition, regardless of whether an emergency exists.

In some cases, Medicare may cover medically necessary health care services you get on board a ship within the territorial waters adjoining the land areas of the U.S. However, Medicare will not pay for health care services you get when a ship is more than 6 hours away from a U.S. port.

Medicare drug plans do not cover prescription drugs you buy outside the U.S.

So, what is your out-of-pocket exposure for health care when travelling outside the U.S. if you have Original Medicare only?

You pay 100% of the costs, in most cases.  In the rare situations described above, you pay 20% of the approved amount, and the Part B deductible applies.

  • Medicare Part A (Hospital Insurance)covers hospital care (care you get when you’ve been formally admitted with a doctor’s order to a foreign hospital as an inpatient).
  • Part B covers emergency and non-emergency ambulance and doctor services you get immediately before and during your covered foreign inpatient hospital stay.
  • You pay the part of the charge you would normally pay for covered services. This includes any medically necessary doctor and ambulance services you get in a foreign country as part of a covered inpatient hospital stay. You also pay the coinsurance, copayments, and deductibles you’d normally pay if you got these same services or supplies inside the U.S.
  • Medicare generally will not pay for services, like ambulance trips to return home, in either of these cases:
    • Medicare didn’t cover your hospital stay.
    • You got ambulance and doctor services outside the hospital after your covered hospital stay ended.

What if, in addition to Original Medicare, you have a Medicare supplement (Medigap) plan?

If you have a Medicare supplement (Medigap) policy, you may have some additional coverage, beyond what Original Medicare provides, for health care services or supplies that you get outside the U.S.  Standard Medigap Plans C, D, F, G, M, and N provide foreign travel emergency health care coverage when you travel outside the U.S. Plans E, H, I, and J are no longer for sale, but if you bought one before June 1, 2010 you may keep it.  All of these plans also provide foreign travel emergency health care coverage when you travel outside the U.S.

If you have a Medigap Plan C, D, E, F, G, H, I, J, M or N, your plan:

  • Covers foreign travel emergency care if it begins during the first 60 days of your trip, and if Medicare doesn’t otherwise cover the care.
  • Pays 80% of the billed charges for certain medically necessary emergency care outside the U.S. after you meet a $250 deductible for the year.
  • Foreign travel emergency coverage with Medigap policies has a lifetime limit of $50,000.

Before you travel outside the U.S., talk with your Medigap plan or insurance agent to get more information about your Medigap coverage while traveling.

Who files Medicare claims when you receive health care services outside the U.S.?

Foreign hospitals are not required to file Medicare claims.  You may need to submit an itemized bill to Medicare for your doctor, inpatient, and ambulance services if both of the following apply:

  • You are admitted to a foreign hospital under one of the situations noted previously.
  • The foreign hospital doesn’t submit a Medicare claim for you.

How can you minimize your out-of-pocket exposure to health care costs when travelling outside of the U.S.?

Because Medicare has limited coverage of health care services received outside the U.S., you may want to consider purchasing a travel insurance policy.  An insurance agent or travel agent can give you more information about travel insurance.  Remember that travel insurance does not necessarily include health care coverage, so it’s important to read the conditions and restrictions of the policy carefully.

Some Medicare Advantage plans include limited health care coverage while travelling out of the U.S. If you have such a plan, check with the company or with your agent for the extent of the coverage as each company’s provisions can be quite different.

The following link will take you to a useful CMS-produced video on the subject of this newsletter: https://www.youtube.com/watch?v=yq2WbpPK-9c

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How Long Will You Live?

Humans have been living longer for decades, and a new study shows there is no ceiling in sight for lifespan.

A study published recently in the Journal of Science found that the death rate of seniors abruptly slows around 80 years old and then plateaus at 105 years old, which they interpreted to mean that humans are not close to a biological limit on how long they can live. The researchers examined records of Italians who had reached 105 years old between 2009 and 2015 (born between 1896 and 1910). Their search resulted in 3,836 people. After verifying their age with their birth certificates, the researchers examined which of those Italians had died during the study period to determine the rate at which different age groups died.  This study comes after a 2016 study by scientists at Albert Einstein College of Medicine which put the maximum human lifespan at about 115 years.

The new study focused on mortality rates, which are relatively high in infancy and decrease during a person’s early years. They then go up in a person’s thirties and drastically increase when people reach their seventies and eighties, according to the Centers for Disease Control and Prevention.

However, Elisabetta Barbi, a demographer at the University of Rome, and her team discovered that among very old Italians, the death rate stops rising around age 80, begins to decelerate and then plateaus after age 105.  “If there’s a fixed biological limit, we aren’t close to it,” Barbi told The New York Times.  Co-author of the study, Kenneth Wachter, a demographer at the University of California, Berkeley echoed Barbi.  “The plateau is sinking over time. We’re not approaching any maximum lifespan for humans yet,” he told the Times.

Although the study doesn’t explain why death rates plateau at 105, one possibility is that some people have genes that make them stronger than others, while some have genes that make them more frail. Weaker people will die off sooner, leaving only the more resilient people behind.

Written by: Alexa Lardieri – US News and World Report – June 29, 2018

 

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Who Pays For Long-Term Care?

Filial laws put kids on the hook for parents’ health-care costs

The laws underscore the need for a long-term-care planning strategy

Nov 22, 2017

By Greg Iacurci

State laws known as filial responsibility laws have the potential to stick unwitting family members with relatives’ hefty long-term-care costs.

One of the best-known examples comes from a court case in Pennsylvania, in which a man was ordered to pay $93,000 to cover his mother’s outstanding debt to a nursing home.

The case, Health Care & Retirement Corp. of America v. Pittas, showed how filial laws, on the books in about 30 states, can wreak financial havoc on families that don’t prepare for long-term-care needs.

Some observers point to a more recent case, though, to demonstrate the breadth of how courts enforce filial laws, which basically establish that children have a duty to care for their parents, and which experts believe will become more relevant as lifespans increase and healthcare costs swell.

The case, Eori v. Eori, broadens the net of financial responsibility — while the Pittas case was an example of an institution recouping money from a patient’s child, the Eori case pits siblings against each other. It determined that each had a financial responsibility to financially support their ailing mother, who required in-home care.

“This should open [financial advisers’] eyes to, even if you don’t have that client that ends up in a nursing-care facility, they’re still going to have end-of-life costs, and if they become indigent or broke and rely on others, that could have a big impact on all the family members,” said Jamie Hopkins, professor of retirement income at The American College of Financial Services.

‘FAIR READING’

While states’ filial laws differ, the Eori case — also from Pennsylvania — is a “fair reading” of what may be expected in other states, Mr. Hopkins said.

While there haven’t been many lawsuits involving filial laws and long-term care in the public eye, Hyman Darling, president of the National Academy of Elder Law Attorneys, believes it’s “just a matter of time before there are more of these cases,” especially because a few have gotten some traction in the courts.

“When it gets out there and people see it, they know there’s an opportunity to hang their hat on it to try to get some money,” said Mr. Darling, who’s also a partner at law firm Bacon Wilson.

The Eori case pitted Joseph Eori, who helped care for his 90-year-old widowed mother Dolly, against his siblings Paulette and Russell (who, after the lawsuit began, changed his name to Joshua). Because they weren’t providing financial assistance to their mother, Joseph sued under the state’s filial laws.

The mother had cancer, dementia and Alzheimer’s disease, and required 24-hour care that came via adult day care as well as three in-home caregivers, the cost of which exceeded her Social Security income, according to a court document.

Ultimately, a Pennsylvania state court mandated in 2014 that the brother, Joshua, pay $400 per month in support — or, $4,800 a year — which was upheld on appeal. The daughter consented, before appeal, to also pay $400 a month.

Interestingly, the court found that the mother wasn’t “destitute,” but needed extra income to help meet her monthly expenses and therefore was considered “indigent.”

Roughly half of Americans turning age 65 today will require long-term care. In 2017, the national median monthly cost for a home health aide was about $4,100, according to Genworth Financial Inc. The monthly cost swells to more than $7,100 for a semi-private room in a nursing home. As life expectancy continues to rise and the cost of care creeps up, there’s a growing need for financial advisers to be knowledgeable about long-term-care funding mechanisms to help clients choose the best one — or combination.

Long-term-care coverage is delivered primarily through “private” means. Roughly 55% of expenditures from age 65 through death are via these private forms of payment, with 2.7% of that from insurance and the remainder from out-of-pocket expenses, according to the U.S. Department of Health…

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“Admitted” or “Under Observation”

Why It’s Important to Know the Difference Between Being “Admitted” to the Hospital and Being “Under Observation”

Medicare patients in a hospital seldom know whether or not they’ve been “admitted” to the hospital, or are under “observation”. Being admitted means that the hospital stay will be coded as a Part A claim. Being “under observation” makes it a Part B claim. In addition to higher cost-sharing responsibilities for the patient, when coded as “under observation”, there are no benefits available to help with the cost of rehab in a Skilled Care Facility following a hospital stay. This can be financially devastating for those requiring rehab after a surgery, heart attack, or stroke.

A patient shouldn’t have to question whether or not they’ve been admitted. It’s reasonable to assume that if you are in the hospital overnight, you’ve been admitted. The last thing in a patient’s mind is their official status in the hospital – as if they would even know to ask about it in the first place. Thankfully, that information will now be available to them within 24 to 36 hours after becoming a patient.

Under the recently enacted Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), hospitals are now required to provide notification to individuals receiving observation services as outpatients for more than 24 hours. This notice informs the patient that being coded as observational means that their stay will result in a Part B Medicare claim, which results in a higher charge to the patient as in a copay and 20% of the Medicare-approved amount for most doctor’s services.

Although this is a good first step, it doesn’t solve the problem of rehab services not being covered by Medicare at all because the original hospital claim was coded as a Part B claim. At least now, however, the patient must be made aware of their official status while in the hospital and the resulting coding of their hospital claim to Medicare.