The Centers for Medicare & Medicaid Services (CMS), the federal agency overseeing Medicare, recently released its 2016 payment and policy updates. It’s a great idea to get educated about what kind of costs you’ll face with your Medicare plan next year if will be joining the program, are presently enrolled in an Original Medicare and are thinking about switching to a Medicare Advantage plan or if you’re already enrolled in a Medicare Advantage plan.
These 2016 figures are applicable for Medicare Advantage (also called Medicare Part C or MA Plans), which are private health plans providing managed care options. And, these 2016 figures apply to Medicare Part D, the prescription drug coverage plan.
Medicare Advantage, Part D Trends
Since the Affordable Care Act (ACA) was established in 2010, CMS has ensured that for both Medicare Advantage and Part D, enrollment rates and quality will continue to grow and improve. The agency’s 2016 updates account for the full range of comments received during the public comment period. These sessions allow interested parties to submit general comments concerning Medicare’s national coverage. And if next year’s updates are any indication, 2016’s Medicare trends should be similar to recent years, including:
- The MA and Part D programs have both continued their growth, the quality of participating plans has continued to increase and premiums have remained stable.
- MA plan enrollment has increased by 42 percent since the ACA’s passage. There are more than 16 million beneficiaries (an all-time high); nearly 30 percent of all Medicare beneficiaries are enrolled in MA plans.
- MA plan quality continues to improve. In 2015, 60 percent of MA enrollees will be enrolled in a 4 or 5 star plan, compared to 2009’s estimated 17 percent.
- Premiums remain affordable. Today, average premiums are lower than before the ACA’s passage, dropping 6 percent between 2010 and 2015.
Medicare Advantage beneficiaries, in particular, should benefit from the 2016 updates. “These policies strengthen Medicare Advantage for current and future consumers by encouraging higher quality care,” states Andy Slavitt, acting CMS Administrator. “As the Medicare Advantage marketplace continues to grow, consumers are getting access to better care through more choice and competition. Seniors and people with disabilities, including the dual-eligible population, will continue to have an extensive choice of plans, affordable premiums, and better and more transparent information about provider networks and pharmacies.”
2016 Rates for Medicare Advantage
According to the CMS, Medicare Advantage plan payments will rise about 1.25 percent in 2016. However, the agency said insurers should probably expect their overall revenue to increase by about 3.25 percent, as they deliver and bill for more intensive services. 2015 federal payments for MA plans – not including Part D plans – should total about $155 billion.
You can research specific Part C plan costs on the Medicare website. You can also find a wealth of information relating to both MA and Part D plans in the CMS’s publication, MA Payment Guide for Out of Network Payments.
The monthly premiums, deductibles, copayments and coinsurance prices for MA plans vary. Medicare pays the MA plans a monthly, fixed amount for each beneficiary. The MA plans then charge a monthly premium. Another premium may be necessary for Medicare Part B (medical insurance) coverage, if purchased. Doctors may recommend services more often than what Medicare covers — or not at all. If so, beneficiaries may be liable for some or all costs; be sure to ask what’s covered by Medicare.
2016 CMS Part D Rates
Although much of Medicare Part D has remained stable over the past few years, there are several important changes for 2016. The “CMS Defined Standard Benefit Plan” chart provides a side-by-side look at the changes that have occurred between 2012 and 2016. “Standard Benefit” is defined as the minimum allowable plan payment available to beneficiaries. Here are some important highlights for this first chart, showing payment increases and other differences between 2015 and 2016:
- Initial deductible – For 2016, this will increase by $40 to $360
- Initial coverage limit –In 2015, this was $2,960; in 2016, it increases to $3,310
- Out-of-pocket threshold —In 2015, this was $4,700; in 2016, it increases to $4,850
- Coverage gap – Also known as the “donut hole,” this is the temporary coverage gap common in most Medicare Part D prescription drug plans. It starts once your Part D plan’s initial coverage limit ($3,310 in 2016) is met. It ends when you spend a total of $4,850 in 2016.
- Brand-name drugs — In 2016, Part D enrollees will receive a 55 percent discount on the total cost of their brand-namedrugs purchased while in the donut hole. Brand-name drug manufacturers will pay a 50 percent discount that is applied to getting out of the donut hole. However, while your Part d plan pays an additional 5 percent, this doesn’t count toward your True Out-of-Pocket (TrOOP) costs. TrOOP costs are expenses affecting your Medicare drug plan out-of-pocket expenses.
- Generic drugs – Part D enrollees will pay a maximum of 58 percent on their copay on genericdrugs purchased while in the donut hole; (a 42 percent discount).
- Minimum cost-sharing in the catastrophic coverage portion of the benefit** — This cost will increase to the greater of 5 percent or $2.95 for generic or preferred drugs. These must be multi-source drugs, which are those available in both brand-name and generic varieties. For all other drugs, this cost will increase to the greater of 5 percent or $7.40 in 2016.
- Maximum co-pays below the out-of-pocket threshold for certain low-income, full subsidy eligible enrollees – These costs will increase to $2.95 for generic or preferred drugs considered multi-source drugs. For all other drugs, this increases to $7.40 in 2016.
View 2015 rate comparison details here (PDF download).
Below, you’ll find the “2015 Federal Poverty Level Guidelines: LIS Qualification.” Medicare Part D offers a Low Income Subsidy (LIS) program, known as the “Extra Help program.” The Federal Poverty Level (FPL) guidelines are used to determine potential Part D enrollees’ income level requirements. This LIS subsidy can be used to pay both your monthly plan premiums and drug costs.2015 Federal Poverty Level Guidelines: LIS Qualification
For the remainder of 2015, those people with income levels below 135 percent of the FPL may qualify for the full Low Income Subsidy. However, resource limits do apply; the chart above provides these. Specifically, the FPL is: $15,889.50 for single people; $21,505.50 for married couples. And if you don’t qualify for full LIS benefits, you may still qualify for partial benefits. Your income level must be at or below 150 percent of the FPL. Again, the chart above provides the resource limits.