Information you need to live a happy, worry-free retirement!
May 7, 2015
When President Obama signed the Medicare “doc fix” bill into law April 17, much of the attention centered on the rare feat that landed the bill on his desk — Democrats and Republicans worked together to end years of last-minute fixes to how Medicare pays doctors.
But politics aside, the new law is notable in other ways. Many of the changes won’t affect existing Medicare beneficiaries or won’t go into effect for another three to five years. And other Medicare proposals and budget deals in the works could mean even more changes are yet to come. (We recently told you about President Obama’s proposed Medicare changes in his fiscal year 2016 budget.)
So, even though much is uncertain, what do we know now? Here are some of the main parts of the “doc fix” legislation.
The purpose of the new law
While a 1997 law aimed to slow Medicare’s growth by limiting reimbursement to doctors, it resulted in doctors threatening to leave the Medicare program and Congress repeatedly blocking the payment cuts to doctors. The new law aimed to fix the situation.
Rather than rewarding doctors for quantity of services, it encourages doctors to provide high-quality, cost-effective care — specifically, better care coordination and chronic care management. A technical advisory committee will still need to develop ways to judge quality of care and how physicians are rewarded or penalized based on their performance. But legislators hope that the law will fix problems that many agree have plagued the Medicare program for years.
Wealthier beneficiaries to pay more
Higher-income individuals already pay higher Medicare Part B and Part D premiums. Under the new law, they’ll shoulder a higher share. Starting in 2018, Part B and D beneficiaries with an income between $133,500 and $160,000 — $267,000 to $320,000 for a couple — would pay 65% of their premium instead of the current 50%. For Medicare beneficiaries making between $160,000 and $214,000 — $320,000 to $428,000 for a couple — the percentage increases from the current 65% to 75%.
Kaiser Health News reported that the premium hike for wealthier beneficiaries (those who make more than $133,500) is expected to impact 2% of beneficiaries. House Republicans said in a March press release that asking wealthier seniors to “pay a little more” for their Medicare coverage “would affect a small population” but yield billions of dollars in savings, according to MarketWatch.
Future enrollees with Medigap to pay Part B deductible
Starting in 2020, Medicare Supplement (Medigap) plans will no longer cover the annual Part B deductible for new enrollees. Currently, the only Medigap plans that cover the Part B deductible are C and F, the most popular. (Part B covers physicians’ and other outpatient services.)
The new law means new Medicare enrollees will pay the Part B deductible themselves —currently $147. If you already are enrolled in Medicare with a supplemental Medigap plan, this will not affect you — your Part B deductible should still be covered. If you enroll before 2020, you also should have the Part B deductible covered if you chose a plan that covers the deductible.
Proponents of this piece of the legislation argue that patients are more careful about spending their own money; so making them pay for even these “first-dollar” deductibles keeps costs low.
Part B premiums to experience modest increase over 10 years
The new law will increase overall program costs, so there will be an impact spread across the entire base of Part B enrollees, according to WealthManagement.com. The Congressional Budget Office (CBO) already had projected that the Part B premium would increase from $104.90 this year to $171 in 2025. The new law, the CBO projects, will result in an increase of roughly an additional $10 to that premium, for a total monthly Part B premium in 2025 of $181.
Changes to Medicare cards
While the main purpose of the doc fix law was to overhaul the way doctors are paid for treating Medicare patients, the law also addressed the rising prevalence of identity theft. It will end the use of Social Security numbers on Medicare cards.
Medicare officials have up to four years to start issuing cards with new identifiers, and they have four more years to reissue cards held by current beneficiaries, according to The New York Times. A “randomly generated Medicare beneficiary identifier” will replace the Social Security number, but the details are still being worked out.
Don’t fret. We’re here to help you understand Medicare and find a plan that works best for you and your budget, whatever the government changes bring. Keep an eye on our newsletter, and we’ll keep you informed on the latest Medicare news that impacts you.