By Kenton Henry, editor
A double whammy is expected to impact the medical insurance market for 2017. There is bad news for the consumer on both the Medicare and the Under Age 65 ends of the medical insurance spectrum.
One positive note ― more than 60 million Medicare recipients are projected to receive a cost of living adjustment in their Social Security Benefit! But if you’re part of this group … don’t spend all your new found increase in one place. It’s projected to be a minuscule 0.2 percent! What the government giveth . . . (well, you can see this coming!) The flip side is, their monthly Part B premiums would go to $107.60 in 2017 ― a $2.70 increase.
On the other hand, 30% of recipients, which includes those new to Medicare in 2017; those who do not have their Part B premiums deducted from their Social Security Income Account in 2016; and those with higher incomes may see increases in premium to $149.00 for the lowest tax bracket; from $166.30 ― to $204.40 per month for the next; and from $380.20 to $467.20 in the highest bracket. Whether these projections―which amount to as much as a 22% increase for the highest income earners―are realized will not be known until October.
Part B premiums are extremely relevant when one has the option of remaining on one’s (or one’s spouse’s) company group health insurance beyond age 65 and into retirement and is weighing the cost of such against the cost of transitioning fully to Medicare Part A and B.
For guidance in this consideration please feel free to consult with the author / editor. *(see featured article from the Wall Street Journal below)
And for those still not age 65, or otherwise eligible for Medicare―and not covered by an employer’s group health insurance plan―your options for coverage are scheduled to diminish along with competition in the individual and family Affordable Care Act (ACA) compliant insurance market. If realized, the proposed mergers between Anthem and Cigna and between Aetna and Humana would reduce your options. This on top of Unitedhealthcare’s (America’s largest insurer) announcement it is pulling out of 90% of its current markets in 2017. Furthermore, BlueCross BlueShield Association announced they may also decline or diminish participation in the marketplace. Lastly (until our next episode), to cast further doubts on what options will remain for the consumer, both Aetna and Humana have announced they may pull out of the majority of their individual and family markets regardless of whether their proposed merger is approved. Humana issued a statement just last week to the effect they would be limiting coverage to 156 counties this month compared the 1,351 they participate in currently. **(please refer to feature article on Humana below)
For these reasons, and because the majority of my individual and family clients have been forced to migrate to Health Maintenance Organization plans (where their providers and treatment are rationed) I have been advising those who are business owners to transition to group health insurance where they not only have more options relative to benefits but can still benefit from Preferred Provider Organization (PPO) coverage. With the PPO plans, they have the final say on their providers and, thereby, better control the quality of their treatment. Small Business (less than 50 employees) owners should take note that if they enroll during the Small Business Open Enrollment Period (November 15th ― December 15th) they will not have to meet the 75% full-time employee participation rate or the 50% of employee premium contribution requirement. The only requirement is that a minimum of 2 full time, W-2 employees be covered on the plan. This is an excellent opportunity for small, closely held companies who want to improve their family’s health insurance but cannot afford coverage for all employees.
Again, please feel free to contact our office for further insight and guidance on this issue.
Feature Article #1
WALL STREET JOURNAL
By Anne Tergesen
Updated June 22, 2016 5:12 p.m. ET
Nearly a third of all Medicare beneficiaries face a steep increase in their premiums next year, the result of a policy that in certain circumstances requires some beneficiaries, including higher earners, to shoulder the burden of rising costs.
The government health-care plan’s trustees projected in a report Wednesday that premiums would rise by as much as 22% for wealthier beneficiaries of Medicare Part B, which covers doctor visits and other types of outpatient care.
The projected increase results from an intersection of the rules governing Medicare and Social Security, said Tricia Neuman, senior vice president and an expert on Medicare at the Kaiser Family Foundation.
Under the Social Security Act’s “hold harmless” provision, Medicare can’t pass along premium increases greater than what most participants would receive through Social Security’s annual cost-of-living adjustment. That adjustment is expected to be just 0.2% in 2017 thanks to low inflation. As a result, Medicare couldn’t pass along any premium increase greater than the dollar increase in Social Security payments to the estimated 70% of beneficiaries who will qualify for hold harmless treatment in 2017, Ms. Neuman said.
Instead, Medicare must spread much of the projected increase in its costs across the remaining 30%. Those who are paying the standard $121.80 a month for Medicare Part B this year would be charged $149 a month in 2017 if the trustees’ predictions come to pass.
Higher earners would pay more. The trustees project individuals earning between $85,001 and $107,000 and couples earning between $170,001 and $214,000 would have their 2016 monthly premiums rise from $170.50 a person this year to about $204.40 in 2017. For those earning more than $214,000, or $428,000 for couples, the projected increase is to about $467.20 a month, from $389.00 in 2016.
This isn’t the first time there has been such a disparity in Part B premiums between Medicare recipients.
Last year, Congress staved off a 52% premium increase for Medicare beneficiaries not covered by the hold harmless provision via a deal in the budget agreement that raised premiums by 16% for them instead. Those covered by the hold harmless provision, in contrast, pay $104.90 a month—the same amount they paid in 2014 due to the fact that there was no Social Security cost-of-living increase in 2016.
The projected increase in Part B premiums affects several other groups of Medicare beneficiaries, including those who receive Medicare but have deferred or aren’t eligible for Social Security benefits. It also would apply to those who are new to Medicare in 2017 and lower-income Medicare beneficiaries whose premiums are paid by state Medicaid programs.
In the latter case, the increase would be paid by Medicaid, Ms. Neuman said.
Paul Van de Water, senior fellow at the nonprofit Center on Budget and Policy Priorities, said the final Social Security cost-of-living adjustment won’t be known until October. If inflation rises by more than the trustees expect between now and then, it could “reduce the spike in the premium” for those who aren’t held harmless, he said.
Acting Administrator for the Centers for Medicare and Medicaid Services Andy Slavitt said at a news conference Wednesday, “We will continue to monitor the data and explore administrative options as needed.”
The Medicare trustees are projecting that the base Medicare Part B premium will reset for everyone at $124.40 a month in 2018, because they expect higher Social Security cost-of-living increases.
Medicare covered 55 million people last year, according to the trustees’ report. Part B covered nearly 51 million. In 2017 Medicare is expected to have 58.7 million total participants and 53.5 million in Part B.
Feature Article # 2
Humana beats 2Q forecasts, details ACA-related scale back
Tom Murphy, AP Health Writer
Published 9:09 am, Wednesday, August 3, 2016
Humana beat second-quarter earnings expectations and reaffirmed its forecast for 2016, even as the health insurer set aside an additional $208 million to cover expenses in its individual, commercial coverage.
The company also said Wednesday it was scaling back that individual business for next year and would only offer it in 156 counties, compared to 1,351 this year. The insurer also said it will sell coverage on Affordable Care Act individual exchanges in 11 states next year, down from 15 this year.
Humana, based in Louisville, Kentucky, provides individual coverage for nearly 500,000 people through the exchanges. It covers an additional 200,000 individual customers off the exchanges, a small slice of its total medical membership of 14.2 million.
Other major insurers like UnitedHealth Group and Anthem also have recently detailed struggles with coverage they sell on the ACA’s state-based exchanges, which have helped millions of consumers gain insurance since they opened for enrollment in the fall of 2013. Aetna, which is trying to buy Humana, said Tuesday that it cancelled its exchange expansion plans for 2017 and was taking a hard look at the markets in which it is currently participating.
Insurers have been struggling with higher-than-expected claims on the exchanges and lower-than-expected support from government programs, among other issues.
Humana also is one of the nation’s largest providers of Medicare Advantage plans, which are privately run versions of the government’s Medicare program for people over age 65 or disabled. The company said Wednesday that its core businesses remained strong in the second quarter.
Overall, Humana earnings plunged 28 percent to $311 million compared to last year’s quarter, when it booked a $267 million gain from a business sale.
Earnings, adjusted for non-recurring costs and amortization costs, came to $2.30 per share.
Analysts expected, on average, earnings of $2.22 per share, according to Zacks Investment Research.
The health insurer posted revenue of $14.01 billion in the period, which topped the average Wall Street forecast for $13.63 billion.
The company also said Wednesday that it still expects full-year earnings to total at least $9.25 per share.
Shares of Humana edged up 52 cents to $170.09 Wednesday morning while broader indexes were flat.
Humana shares have decreased 5 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed 5.5 percent.