Medicare Updates for 2013

The following is a guest post from Howard Peck of Senior Insurance Solutions.

Along with the usual and customary annual Medicare cost increases, 2013 will likely be the year that two BIG Medicare issues will be bantered about and then possibly implemented as our politicians try to get a handle on the runaway costs of Medicare.

First, here are the Increases:

The New Individual Rates

2013 medicare Premiums

The Part ‘A’ and Part ‘B’ Deductibles also went up slightly. These deductibles are typically covered by the standard Medicare Supplement Plans.

  • Part ‘B’ Medical Deductible is $147 per year (up from $140)
  • Part ‘A’ Hospitable Deductible is $1,184 per (up from $1,156)

Two Big Medicare Issues

Because of the financial catastrophe that Medicare is heading towards ($37 trillion dollar deficit), over the coming months there will be two large items on the table that will be discussed by the news pundits and politicians as we look towards a solution:

  1. Medicare Eligibility Age
  2. Independent Payment Advisory Board (IPAB)

Eligibility Age

Discussions about raising the Medicare eligibility age to 67 or 68 always includes the stipulation  that it is for folks 55 years old and younger, so if an increase in eligibility age does in fact happen, it won’t affect folks that are older than 55 today. The problem with this option is what folks are going to do when they stop working at age 60, 62 or 64, etc. They will have to wait even longer to receive Medicare Benefits. This could result in several harmful scenarios.

  • Pay extraordinarily high premiums for Health Insurance. With “Obamacare” we really don’t know what to expect. But even if there are no pre-existing condition obstacles, I would expect the insurance companies to charge hefty premiums for folks in their 60s, before Medicare is available.
  • If folks at the lower income levels can’t afford these high premiums, they would end up on Medicaid. Medicaid is under the same umbrella as Medicare, so once again it is costing the Gov’t to insure these folks, which makes the wait to 67 or 68 self-defeating.

The Independent Payment Advisory Board (IPAB)

As part of Health Care Reform, the President proposed an Advisory Board to repair, manage and maintain Medicare cost savings. Here are some details:

  • The Board will consist of 12 experts, including doctors, patient advocates, employers and financial analysts, who will be appointed by the President and confirmed by the Senate, and three nonvoting government officials. Its’ sole duty is to monitor and if necessary, reduce Medicare spending, which needs to be reined in to control deficits.
  • The Board will be prohibited by law from making any recommendations to ration care, raise premiums, increase cost-sharing, restrict benefits or limit eligibility.
  • If Medicare spending exceeds specified targets, the board must recommend changes (most likely cuts in payments to health care providers) to bring the growth rate back in line. Congress can override the board’s recommendations, but it must still find equivalent savings.

I think the IPAB is a great idea and it begs the question, why hasn’t this already been in place years ago? The working parameters of the IPAB (above) seem to have been crafted to avoid any political landmines, but even so, the Republicans are already starting to oppose it, mainly because the IPAB will be “appointed” and not elected. I feel the opposition will die down and this Board will be up and running as soon as the members are appointed.  Without watchdog pressure from such a Board, Congress is apt to be weak in resisting the demands by powerful health care groups and industries for higher Medicare reimbursements.  Look for the IPAB to be implemented soon…it could be the start of getting Medicare off of Life-Support!

About Mark Rioboli

Mark A. Rioboli, CFP®, CFS is Director of Wealth Management for Independence Advisors, bringing over 25 years of experience in the wealth management industry. Have a question for Mark? CLICK HERE TO ASK MARK

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