August 2024 Newsletter
This year’s Medicare Annual/Open Period will be VERY different.
I cannot stress to you how important it is to confirm that your current Medicare polices are adequate for you going into 2025 during this year's Annual/Open enrollment period beginning in October.
Several carriers have already said that they are anticipating 4x the volume of recent years due to changes that have been implemented as a result of the Inflation Reduction Act and CMS’ “Final Rule” for 2025.
The topics I want to cover are:
-
Medicare Open Enrollment Changes
- New CMS Rules
- Inflation Reduction Act Changes
- My fee structure
-
Lessons learned from my father’s illness
- Long-term Care
- Annuity payments
Before we begin…Annual/Open Enrollment is from October 15th to December 7th!!!
This year there are 2 things impacting your Medicare plans…
-
The Inflation Reduction Act
- Part D Impact
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CMS’ Final Rule for 2025
- Advantage Plan Impact
- Payments Impact
I hope you are not glued to the changes taking place in Medicare, like I am, however these changes will have a huge impact on Medicare beneficiaries, the carriers, and the advisors.
Carriers and wholesalers are expecting a 400% increase in Medicare policy changes during this year’s Annual/Open Enrollment period. What is already a crazy time of year will be even crazier!
Be prepared...early!
- Eliminating the Donut Hole (Coverage Gap)
- Capping out-of-pocket COVERED drug cost at $2,000
- Allowing “smoothing” of co-pays for expensive medications
Sounds great, right?
Well, assuming the best of intentions yes, but…
Goodbye to the Donut Hole
Eliminating the Donut Hole is way overdue.
It was some time ago (George Bush II) that Part D came about and the establishment of a “no coverage” zone in the middle of your Drug Plan was created. It never made sense to me, or those impacted, and everyone is happy to see it go.
Currently (2024) you leave the Donut Hole at $8,000 and enter Catastrophic Coverage. Once there you have no further out-of-pocket for the year. Next year you will hit $0 out-of-pocket at $2000 (plus the deducitble)!
In conjunction with the elimination of the Donut Hole there is now a cap on the cost of COVERED medications…therein lies the problem!
The cap, and the $2,000, ONLY applies to COVERED medications.
Carriers have reacted to this by greatly reducing formularies and eliminating cheap Part D plans.
All Drug Plans are required to cover 1 medication in every category, but beyond that, and what tier they fall on is up to the carrier.
Unfortunately, I am not legally allowed to share details of 2025 plans until October 1st.
However, watch your mail for notifications from YOUR CURRENT carrier. You will be getting your Annual Notice of Change (ANOC) as well as additional information if your plan is being discontinued!
Unfortunately, these important mailings get buried in a sea of solicitations.
Also, be very careful of what you receive in the mail! Some very official looking notices from the Government are really just solicitations from 3rd party marketing firms and brokerages.
Note, Federal Law states that if you are in a Drug Plan that is discontinued, they must put you in the most comprehensive (read: most expensive) plan that carrier offers in your County. That means if you you are now on the most expensive Drug Plan that you may not need or want.
You have until December 7th to change plans!
CMS Final Rule 2025
I wish I could provide definitives here but unfortunately things are still uncertain.
CMS (Centers for Medicare & Medicaid Services) proposed a bunch of changes this year which would have upended the Medicare marketplace and differentiated it from all other types of insurance products.
At present, some of these proposals are being blocked by a court injunction so some may be implemented and some may not. The reductions in payments to carriers are definite.
Most of these changes are directed to the Medicare Advantage Plans (Part C) which, in my humble opinion, Medicare always has in their cost reduction sites.
This is unfortunate as the Advantage plans provide a very attractive alternative to “Traditional Medicare” as evidenced by the fact that they now make up over 50% of the Medicare market!
There are several reasons why they are so popular including Premium, Underwriting, Extra Benefits, etc. but ultimately more than half of Medicare recipients now choose Advantage Plans over Supplements so they must be doing something right!
If you have worked with me, you know I try to remain agnostic. Both models have their place and neither are perfect but I believe that the beneficiary should have a choice and both have their positives as well as their negatives.
Some of the proposed changes by CMS include:
- Elimination of Commissions on Part D products
- Elimination of Override Commissions to the wholesale market
- Elimination of bonuses/marketing dollars
- Reduction in payments to carriers for Advantage plans overall
- Reduction in bonuses paid to carriers on Advantage plans based on stars earned
- Reduction in adjustments to carriers based upon beneficiary health
As mentioned above, I believe, while far from perfect, Medicare Advantage plans provide an attractive alternative to SOME clients in SOME situations.
Consider this, in most states you cannot simply enroll in a Supplement, after your initial enrollment, without medical underwriting. This means that those with an unfavorable health history may not be able to purchase coverage!
Medicare Advantage plans have NO underwriting. No matter how unhealthy you may be, they are required to take you.
Additionally, almost all Advantage plans provide some form of “additional coverage” that includes things such as Dental or Vision as well as Fitness, Over-the-Counter and Hearing Aids. This is a way to get your teeth cleaned without cost or to have some money for glasses without the need to purchase additional coverage.
Again, not perfect but fills a need.
I have long felt that if CMS truly wanted to reduce the number of participants in Advantage plans they simply need to add Dental to Part B and one of the biggest drivers of why people choose Advantage plans goes away and you level the playing field. So far though, no one has asked!
How this impacts you
The reaction from the carriers has been immediate and aggressive.
For those of you currently on an Advantage Plan, pay very close attention to your ANOC this year.
While I have not yet seen details, I have been told many plans will likely reduce benefits, raise co-pays and leave entire counties or even entire states in an effort to reduce costs.
Say goodbye to those free fancy gyms and $300/qtr fitness reimbursements!?
Humana & Wellcare have already announced that they are leaving several states each.
CVS/Aetna has indicated they will do the same.
Back in my college days, I had a Finance Professor who used to talk about "growing the bank down" by reducing the loan portfolio (it was the 80s!). The carriers are doing much the same but shedding unprofitable lines of business or expensive counties.
This may or may not impact you depending upon where you live and what plan you have. Stay tuned!
But please pay attention. Even if your plan isn’t leaving it may still be changed in such a way that it is no longer attractive or makes sense for you!
Keep in mind that the Part D changes above impact your Advantage Plan with drug coverage!
So, in addition to my annual admonition to check your plans for drug formulary and provider network changes you should also be aware of all the other changes taking place that will be impacting your plan.
How this impact me
In some ways it does and in ways it does not.
Several years ago, I became a Licensed Insurance Advisor and have been fee based since that time.
I charge a fee for my analysis and subsequent recommendations that you, as the client, can have me implement, can implement yourselves or disregard entirely. It is your call.
I am providing analysis and advice in the hopes of providing you the most comprehensive coverage at the best possible price. In most cases I can save a client $100s or $1000s of dollars!
Plus, the piece of mind and not 2nd guessing yourself is, I believe, very valuable!
New clients sign an agreement with Senior Benefits Boston LLC outlining the services provided. If you would like a copy of the agreement, please let me know, I will be happy to send you one.
My current fee structure is below.
I feel that the level of expertise, time and advice I provide, as well as the cost savings and piece of mind are well worth the fee. If you disagree, feel free to reach out, I would love to hear your thoughts.
This year, I will NOT be charging exisiting clients for their Annual/Open Enrollment review!!!
Senior Benefits Boston, LLC 2024 Fee Structure (One-time fee)
Individual |
New to Medicare |
$395 |
Couple |
New to Medicare |
$600 |
Individual |
Drug Plan Review |
$195 |
Note: If financial hardship makes the fee a burden to you please reach out to discuss privately. I am committed to helping those in need of professional Medicare help no matter their financial status
Lessons Learned from My Father’s Illness
Lesson #1 Long-term Care
I have written before about the importance of Long-term Care insurance.
The recent conference I was at in St. Louis was made up of some of the leading Long-term Care and Medicare Advisors in the US.
Intellectually, I have seen the need for the coverage and have seen clients go through the agonizing and expensive decisions associated with having a loved one need care.
Whether in the home or in a facility! Long-term care coverage can pay for both! Medicare ONLY pays for medical care NOT custodial care!
When my father declined to the point where mom could no longer handle him alone we discussed his staying in the condo with help. Many people like the idea of staying at home for as long as possible.
3 things to keep in mind:1. Medicare does NOT pay for Assisted Living or Custodial Care!
2. Medicare pays for medical needs!
3. There is no such thing as “self-insuring” when the need arises on “self-funding”
Home care is not cheaper! While it may be desierable. Having an aide in your home 24/7 is as much, or more, than having someone in a dedicated facility.
It also means that someone will be sharing your small 2-bedroom condo with you.
On the other side, the facility where my father was charged around $12,000/mo. This is in addition to the $5,500/mo my mother paid to be in the same CCRC.
No matter your resources, $20,000/mo is a huge drain on a family’s finances and in most cases can only be sustained for so long.
This is where Long-term Care comes in.
One of the presenters said the she likes to remind her clients that there is no such thing as self-insuring, you are simply self-funding. Insurance by definition provides leverage. Writing a check every month is not leverage unless that account is funded with proceeds from policy whose benefits exceeded the premiums!
There are 3 main types of Long-term Care depending on need, health & budget:
1. Traditional Long-term Care
2. Hybrid Long-term Care
3.Short-term Care
I will the details of each for another discussion, or reach out to me if you are interested in exploring how these work. If you were referred to me by your Financial Planner talk to them about it. They may have a plan they favor.
Whoever with, have the discussion! It is too important an option and far to big of an expense to not discuss!
Short-term Care is a fascinating option. If the budget is limited or health history prevents you from qualifying for a Long-term Care policy a Short-term Care policy will provide you a year of coverage in a very affordable package.
My father’s care lasted about 9 months.
While not yet available in all states, it is gaining traction and provides a nice option where available.
One year of care is far better than no care!
Lesson #2 Annuity Payments
Let me start by saying I am not a Financial Planner. If you came to me through your Planner you should always discuss any planning with them.
I am simply sharing my experience.
My father was a Federal Government Employee for most of his career. As a result, he did not participate in the Social Security system but rather the Federal Retirement Program.
Rather than a 401k, that is market driven, he had a pension (annuity) from the Federal Government.
My father took an early retirement in his late 50s at which point he stopped paying into the system. At age 65 he started to draw on his pension (annuity). From that time, until his passing, he received a monthly check, with an annual cost of living adjustment, unimpacted by market forces or interest rates.
It isn’t sexy. It isn’t exciting. However, he was a conservative guy and never had to turn on the news and panic when he saw the stock market dip (like earlier this week) or interest rates plummet.
That same annuity will now pay my mother monthly (at a smaller dollar amount) for the rest of her life.
I am not here to argue whether pensions are good or bad. I am fully aware that many Planners do not like them and can most likely beat their return.
However, my father never worried about his check coming in every month, or taking and RMD from a down portfolio, and now my mother does not need to either. I think that there is tremendous value in that piece of mind as well even if it means having a bit less net worth on paper. Also, the funds cannot be outlived (with certain annuities) eliminating what is a huge concern to many clients…outliving their money!
Again, I am not trying to step on anyone’s toes or steal you away from your Planner.
I do see how this option provided piece of mind to my parents, and now my mother (who just got her letter from OPM), as one less thing to fret about and one less thing for their Planner to deal with!
As an aside, my father years ago asked if he had made the right move. In the early 80s, he was offered, along with his colleauges, the chance to convert their pensions to the shiny new 401k/403b. He had opted out preferring the reliability of the pension option. Many of his colleagues chose the 401k.
I asked how they were doing, he said not so good. The market wasn’t great during the Carter years and they were concerned about their retirements. I asked how he was doing and he said he was getting exactly what was expected making it easy to plan and budget!
That is exactly what insurance is supposed to do...provide piece of mind!
Thank you for reading!! Enjoy the rest of your Summer!!!
Regards,
Scott
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