50+ Lifestyles

MACRA – Another One Sneaks In…

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Believe it or not another new tax law just snuck in with little or no publicity. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) became law on April 16, 2015. I was just introduced to this law at a recent conference and thought to myself ‘where’s the press
coverage?’

In addition to extending funding for the Children’s Health Insurance Program (CHIP), this act modifies
certain Medicare provisions. If you are currently covered by Medicare or will be in the near future, you may be interested in learning more about these changes. The good news that comes with MACRA are three important provisions:

• The physician payment cut that has been debated for several years has been permanently repealed and the law includes annual payment increases for physicians for some Medicare services. This may help ensure that patients will have continued access to their physicians AND may encourage physicians to continue to accept Medicare.

• New quality measures for physicians and certain hospital departments have been instituted; physicians who provide high-quality care will be rewarded.

• Medicare Advantage special needs plans (SNPs) have been extended through the end of 2018. These plans may cover extra services in addition to the services covered by all Medicare Advantage plans and may be available to people with chronic conditions, those who live in a nursing home or require nursing care at home, and those who are eligible for both Medicare and Medicaid.

As the ole saying goes….when there’s good news…..there’s bad news too. Here’s the bad news folks. There will be new income-related premium adjustments for Medicare Parts B and D. Today Medicare folks with higher incomes pay higher premiums for Part B (medical insurance) and Part D (prescription drug coverage). Today for most Medicare beneficiaries – anyone receiving Medicare benefits is called a Medicare beneficiary – the government pays about 75% of the premium and the beneficiary pays 25%. But beneficiaries with higher incomes shoulder a higher percentage of the cost based on modified adjusted gross income reported to the IRS. Beginning in January 2018, new income limits take effect which will subject some Medicare beneficiaries to higher income-related premium adjustments. That’s the newer tax folks. Passed by congress and signed into law by the President with little or no fanfare. A new tax just snuck in on us. Our annuity strategies may help to minimize this additional tax.

Further – and just as important – MACRA states that plans providing “first-dollar coverage” are no longer allowable. That means the coveted Medicare Supplement Plan F – the most comprehensive of the 10 standardized Medicare Supplements will no longer be allowed. At this point it appears that Medicare folks with in-force Medicare Supplement Plan F will be allowed to keep those plans. BUT the concern with no new folks entering Medicare Supplement plan F, current policyholder pool will decrease and that will mean substantial premium increases for current policyholders retaining those plans. Not good news for folks with the Medicare Supplement plan F. Eventually costs of Medicare Supplement plan F will substantially increase.

There is an alternative Medicare Supplement Plan G that provides very comprehensive coverage except it does not cover the Medicare Part B deductible – $147. This plan could become the most coveted of the Medicare Supplement Plans. Not all insurance companies offer the Medicare Supplement Plan G. But I anticipate this plan will become the more coveted of the plans unless new tax rulings also creep in.
MACRA also will eventually fund the removal of social security numbers from all Medicare cards. For newly issued Medicare cards this must be accomplished by April 16, 2019. Existing cards must be reissued no later than four years after that.

Richard J. Schillig, CLU, ChFC, LUTCF is an Independent Insurance and Financial Advisor with RJS and Associates, Inc. He can be reached at (563) 332-2200.