Question:
There is no question this week because I want to give my assessment of the overall state of Medicare as a whole, what I see coming in 2025 and beyond, as well as some tips to help reduce overall costs associated with premiums and out of pocket medical expenses that are sure to increase in the coming years.
Answer:
Although coverage has never been better for those on Medicare, the financial state of the program isn’t good and according to several reliable sources, the Medicare Hospital Trust Fund will be insolvent as soon as 2031. This is bad news for everyone because those on Original Medicare have most of their hospital bill paid for out of this fund and a sizeable portion of the approximately $12,000 per year that Advantage Plan companies are subsidized by Medicare per enrollee comes from there. The math is pretty simple. To keep Medicare afloat, benefits are going to need to be reduced or revenues, which means taxes and premiums, will need to be raised.
There are a couple other factors exacerbating the financial problem. First, it’s being reported that Medicare Advantage, which was introduced 20 years ago and originally designed to save taxpayers money while providing an alternative choice with better benefits than Original Medicare, is now actually costing taxpayers more, from three to six percent per person enrolled in an Advantage Plan. I’m concerned that subsidies to Advantage Plans could be cut which will negatively impact the overall benefits and value of HMOs and PPOs.
The other fact that has been touted by politicians as a wonderful development is the portion of the Inflation Reduction Act that goes into full effect next year. In 2025 no one who has Part D prescription coverage, be that through Stand Alone Part D or an Advantage Plan HMO or PPO can pay more than $2,000 out of pocket for their prescription drugs. Once that number is reached, all covered medications will be $0 for the remainder of the year. How can this not be a positive event? Because the burden of covering these additional costs is going to fall on the insurance companies, both Stand Alone Part D and Advantage Plans. In order to remain profitable, Stand Alone Part D companies, who have already raised the cost sharing for brand name medications this year, will be forced to significantly increase premiums. In 2024 the majority of our Supplement clients have a Stand Alone drug plan with a monthly premium of 50 cents to $20. I predict we’re going to be looking at $50 to $100 by 2025 or 2026. Advantage Plans will have to do one or a combination of the following to make up for the cost of paying more drug claims: utilize Part D deductibles; raise premiums, co-pays, and/or the MOOP; reduce or eliminate some of what has been the best ancillary benefit packages in the history of the program. The great dental, vision, OTC, and other extras are the reason many choose HMOs and PPOs. It’s going to be a disappointment for people if they lose much of it. The reality is covering 100% of drug costs after the $2,000 threshold has been reached for millions of Medicare beneficiaries has to be paid for. Only those who take more than one expensive brand name medications will save money, while those who don’t are going to be forced to take on most of the financial burden.
So, what can you do? Prepare for the higher Medicare Part B, Supplement, Part D, and Advantage Plan premiums and out of pocket expenses by reducing them elsewhere. For example, if you’re taking a lot of medications that may have $0 or a brand name drug that will likely have higher costs in 2025, make an appointment with your doctor to see if any can be eliminated. Bonnie Bloom, our managing agent at the Forest Hills office, just wrote a piece for our Facebook group on how shocking she finds the number of clients who don’t know what conditions they’re taking certain meds for or their possible side effects. She mentioned a client who she suggested doing a medication review with her PCP and was indeed advised to eliminate a few. Those who are currently on Supplements and have been for four or five years, call us to get a quote on the same or different letter plan. I highly recommend most people leave the more expensive Plan G for N. And anyone who has Plans F or C should 100% make a change. Far too many people remain on these antiquated plans out of fear. There’s very little difference in out-of-pocket expenses between Plans C, F, and G compared to N. However, the reduction in premiums can literally be $100 to $200 per month with no change in what’s covered. People on Supplements can move to another plan any time during the year as long as they can pass underwriting.
For those on Advantage Plans, use all the extra benefits you’re entitled to in 2024 while they’re still available and generous! Get dental work done asap because I predict the excellent coverage for services like root canals, crowns, partials, and dentures are going be significantly reduced or eliminated in 2025 or 2026. Fill up your medicine cabinet by using your Over the Counter (OTC) benefits. Get hearing aids if they’re covered and needed. Make sure you know everything you’re entitled to. Many people get debit cards to use for groceries and co-pays but aren’t using them. Again, these are also benefits that may go away. If your HMO or PPO doesn’t offer most of these benefits or you’re paying more than $50 per month, call us right away because you’re on the wrong plan. Everyone can make a change right now.
I want to make one very important announcement for retired US Postal workers. If you are one of the tens of thousands USPS retirees who were given bad advice to opt out of Part B, a one-time amnesty is being granted to enroll this year without paying the late enrollment penalty. It’s so important to take advantage of this opportunity. Many of the available plans for USPS retirees are less than desirable. You want to get Part B so you have the option of moving to new plans that may be offered by the Feds or a Supplement or Advantage Plan on the open market when that becomes the better option. The “Special Election” for USPS retirees to enroll in Part B penalty free starts April 1st.
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If you would like to make an appointment for a no cost consultation to go over Medicare options, individual ACA marketplace plans, you’re an employer and would like a second opinion on your group policy, or are interested in life insurance, give us a call or email me personally at aaron@getyourbestplan.com. And keep the great column questions coming! Also, I am now licensed in over 20 states and able to help people choose and enroll in Advantage, Supplement, and Part D plans throughout the country.
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Thank you!
If you have any questions or concerns regarding this column topic, or would like to make an appointment for a no-cost consultation, please feel free to give us a call – we would be happy to help. I’d like to remind everyone that I do a live call-in talk show called Medicare A to Z every 1st and 3rd Monday of the month on WMBS Uniontown, 590AM and 101.1FM, from 1 to 3 PM. You can listen in on their website, wmbs590.com.
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