Medicare 2016 Changes

My blog post as Expert Contributor to Humana-powered website, www.mymedicareanswers.com, is here.

Medicare 2016 Changes

There are some changes to Medicare that are forthcoming, above and beyond the changes announced in the headlines.

Please see an updated grid of original Medicare rates here.

Higher premiums

In 2016, the Part B premium will not increase for 70% of existing Medicare beneficiaries. Originally, an increase of greater than 50% was supposed to occur, but last-moment legislative action prevented this. Therefore, only new Medicare beneficiaries and high-income earners (subject to IRRMA) will face higher Part B premiums. Bottom line: existing Medicare beneficiaries that earn less than $85,000 ($170,000 for married couples) will face no increase in Part B premiums. New enrollees will not be as fortunate: $121.80 a month will be the monthly Part B premium.

Higher Deductible and Copays

In 2016, the Part A deductible will be $1288.00 per benefit period, from $1260.00 in 2015. The Skilled Nursing Facility coinsurance amount will be $161.00 per day, during days 21-100. The Part B deductible will be $166.00 for the year. It is important to note that the “hold harmless” provision that would’ve protected 70% of Medicare beneficiaries (when Social Security benefits do not increase) does NOT protect beneficiaries from Part A or Part B deductibles or copays.

IRMAA

For high-income earners, Medicare Part B and Medicare Part D adjustments will increase. The reality is that the increase is the result of two factors. First, the “permanent doc fix” enacted in April 2015 made an initial increase in the IRRMA. Second, the last-minute budget deal during November 2015 created a second increase. This means that while the second factor may decline, the first reason for an increase in IRMAA will remain intact. Further, you must remember that IRRMA is, in fact, a “rate,” not an “amount.” The “permanent doc fix” has legislated a higher rate, which implies that if Part B increases, then the IRRMA will increase by a higher rate, meaning that the IRMAA will also be higher.

Two-Midnight Rule

Retroactive to October 1, 2013, the much-discussed “two-midnight rule” will take effect. This means that if you are admitted to the hospital, and that hospital stay is expected to cross two midnights, then you will be presume to have inpatient hospital status. This is very important because it addresses many misunderstandings regarding Part A. First, inpatient hospital status means that Part A will be the coverage, and not Part B. Second, and related to the first point, Skilled Nursing Facility care can be covered by Part A, if your hospital stay lasts over three midnights.

It has been the case that Medicare beneficiaries have been unaware of their patient status in a hospital, and then have been transferred to a Skilled Nursing Care facility. If the patient was not admitted on an inpatient basis, then the Part A benefit under Skilled Nursing Facility care would not apply, but instead, would be covered by Part B (with 20% coinsurance, after covering the Part B deductible). Under the “two-midnight rule,” one important layer of this confusion should be resolved. It is important to note that the three-day criteria still remains in effect. A patient must be both admitted on an inpatient basis, and that hospital stay must cross three midnights, in order to be covered by Part A at a Skilled Nursing Care facility.