It’s hard to believe, but it’s that happy time again for those who have Medicare benefits and use Medicare Advantage plans when the open enrollment period begins on October 15th and ends on December 7th 2018 for 2019. You’ll get the hint I am certain when you begin seeing the massive advertising, mail, and phone calls about it starting any second, but this time around there is something to actually celebrate.
The good news just ahead for Medicare recipients are some potentially big savings. The over 60 million people who currently participate in the program (which has been around for over 50 years now) benefit from lower administration costs than private insurers have and that is despite the losses from fraud which it suffers from. But for 2019, things are about to get even better.
It’s rare that I can report to you that there’s such good news, but with very little fanfare and parades, this is the case thanks to the passing of the Bipartisan Budget Act of 2018, signed into law last February. The bill covers a lot of important and even controversial spending changes as it always does, but when it comes to changes that are lowering the cost to our healthcare and affect Medicare then bravo and thank you are in order!
Huge News About the “Donut Hole”
Medicare’s “donut hole” refers to the unpopular part of the coverage gap in the Medicare Part D prescription drug benefit. It’s the point where prescription drug expenses exceed the initial coverage limit of your plan, but have not yet reached the catastrophic coverage level when you pay substantially less for your drugs. During this hole in the coverage, drug costs can be astronomical.
When Medicare Part D was first introduced, patients paid 100% of their drug costs while in the donut hole (as opposed to 25% before the hole and a mere 5% after the hole). The Affordable Care Act included a provision to close the donut hole by the year 2020 and the percentage of costs enrollees pay while in the donut hole has been steadily shrinking since 2011.
This year, 2018, while in the donut hole, enrollees pay 35% of the cost of brand-name drugs and 44% of the cost of generic drugs. By 2020, there will be no donut hole—enrollees will pay just 25% of all drug costs until they reach catastrophic coverage levels.
How You Will Save Money on Brand Name Drugs
The bigger and better news is that beginning in 2019, the new Budget Act will close and eliminate the hole for brand name drugs completely!
While the hole will still exist for generic drugs until 2020 as planned, it means that there will be substantial savings for millions because the cost of the brand name drugs is generally much higher than generics and this savings coming in 2019 means saving money much sooner.
My wife and I, who both take a number of brand name drugs (because there is no generic currently available), spend thousands of dollars a year right now that we won’t have to spend on them in 2019.
To give you just one example, I currently use Januvia, a brand name drug to fight my type 2 diabetic condition. I take the drug twice a day and currently when I am paying for it in the donut hole, my cost is over $150 a month (and that cost begins sometime in May of the year). Under the new costs, I expect my monthly costs on this one drug alone under my current Medicare Advantage plan to save me over $100 a month and total over $800 for the year in 2019. That’s just one drug.
In 2018, the manufacturer’s discount is 50% on brand-name drugs while you’re in the donut hole. You’re paying 35%, the drug plan is paying 15%, and the manufacturer’s discount is 50%. Once you come out the other side of the donut hole and reach the catastrophic coverage level, your plan pays most of your prescription drug expenses through the end of the year, leaving you with minimal copays or coinsurance. At this coverage level, your prescription costs for the rest of 2018 are limited to 5% coinsurance or $8.35 for other brand-name drugs whichever is greatest. Now that rate will take effect much sooner than it is currently.
But Wait, There’s More
Here are some more highlights and the skinny on how this act is going to affect you and your medical costs starting January 1, 2019.
- Therapy Cap elimination – beneficiaries of Original Medicare will no longer have their benefits capped effective in 2019 and that includes therapy for outpatient speech, physical, or occupational therapy as they have been permanently repealed!
- More availability of Telehealth programs – expanded use of the internet and telephone for conferences with doctors and nurses to include stroke patients and end stage renal cancer patients
- In-Home Health Care aide expansion – Medicare Advantage plans will now have an option to include free services from home health aides for personal care like dressing, grooming, and eating
- Expanded life support – Medicare Advantage plans will be able to now offer free services for things such as home delivered meals, transportation to doctor visits, and safety equipment in the home and bathroom including grab bars and wheel chair ramps, as long as they are recommended by a doctor
- New easier to read and understand Medicare Handbooks – both online and in print to include new flow charts and checklists, there will also be access to a new updated “coverage wizard” to help you figure the cost of coverage options and compare all of the available options
- “Test Drive” a new Medicare Advantage Plan for free! – you can try a new plan out for up to 90 days to see if its right for you and then if you want, you can switch to another Advantage plan or even return to Original Medicare if you choose; with the desire to switch people to Advantage plans under the 21st Century Cures Act, this gives everyone the chance to try them out without penalties and may relieve the cost pressures on Original Medicare in the near future
If you’d like to read the text of the actual bill, here’s the link.
Even if you aren’t quite ready for Medicare, this is all very good news. You may be getting near the age (65) or you just quite never really know when you may need to use the plans due to illness or injury even if you are young. I hope that’s not the case, but it is good to know what is available to you.
Pass on this information to your family and friends. Remarkably, there has been little attention drawn to these changes to Medicare benefits as of now, but it will definitely be a huge plus for many people so let’s spread the word!