It is apparent people are struggling and there's no easy solution, especially when you are relying on a fixed and limited income
Belleville, IL (Vocus) November 21, 2008
With 2009 Medicare open enrollment here, many individuals are realizing they will face higher healthcare costs leaving less money for other essentials, according to Allsup, a leading provider of Social Security disability, financial and healthcare-related services to people with disabilities.
Despite Medicare Part B (outpatient services) remaining unchanged for 2009, costs for Part A (hospital) coverage are increasing moderately and Part D (prescription drug) premiums will experience a double-digit increase.
In fact, based on an analysis by Allsup, individuals relying on Social Security Disability Insurance (SSDI) are seeing health costs increasingly chip away at their limited income. For example, the Part B premium has increased from less than 3 percent of the average monthly SSDI benefit in 1983 to nearly 10 percent in 2008.
Analysis of Social Security Administration and the Centers for Medicare & Medicaid Services (CMS) data further shows that from 2000 to 2008, the average monthly SSDI benefit increased 33 percent, from $754 to $1,004. In that same period, the average monthly Part B premium jumped 112 percent, from $45.50 to $96.40. A person with long-term disabilities is eligible for Medicare 24 months after his date of entitlement to cash benefits, as determined by the Social Security Administration.
This is only part of the story for people with disabilities and mounting medical expenses that rely on traditional Medicare Part B. Medicare plans typically also require an individual to pay 20 percent of the Medicare-approved amount out of their own pocket.
Supporting Allsup's conclusions is a poll released in October by the Kaiser Family Foundation, which discovered that 36 percent of households report postponing needed health care.
"It is apparent people are struggling and there's no easy solution, especially when you are relying on a fixed and limited income," said Paul Gada, personal financial planning director and product manager for Allsup Medicare Advisor SM service, which helps people with disabilities choose the best, most affordable Medicare plan to meet their specific needs. "But people can take more control by better understanding the costs and coverage of their Medicare options."
Below, Allsup provides a summary of the Medicare cost changes for 2009:
· Monthly Premium - Increase: Premium rises 4.7 percent to $443 from $423 for certain individuals with disabilities that have less than 30 quarters of Medicare-covered employment; and 4.7 percent to $244 for those with 30-39 quarters of coverage. Most other Medicare beneficiaries do not have a Part A premium because they have at least 40 quarters of Medicare-covered employment.
· Annual Deductible - Increase: Deductibles increase about 4.3 percent; this includes a $44 increase to $1,068 for inpatient hospital admittance; the deductible for each day of inpatient hospital care increases to $267 from $256 for days 61-90 and to $534 from $512 for days 91-150.
· Other Considerations - Co-payments apply.
· Monthly Premium - Unchanged: $96.40 for those with income of $85,000 or less or married couples with income of $170,000 or less. (In 2008, income levels were $82,000 and $164,000, respectively.)
· Annual Deductible - Unchanged: $135; individuals are responsible for 20 percent of out-of-pocket expenses after the $135 deductible is met.
· Other Considerations: Acquiring Medigap insurance can help minimize expenses not covered; however this is not an option for people with disabilities because Medigap does not cover pre-existing conditions. Co-payments also apply.
· Monthly Premium - Increase: Prescription drug premiums will increase an average of 12 percent to $28.
· Annual Deductible - Increase: The deductible increases 7.3 percent to $295 from $275.
· Other Considerations - Donut hole: The gap in coverage begins when prescription drug costs reach $2,700. The person then must pay 100 percent of his out-of-pocket costs for the next $1,650. Medicare coverage resumes after total costs reach $4,350. Co-payments apply.
Medicare Part C: Medicare Advantage Plans
Medicare Advantage plans, which private companies administer through the Medicare program, can offer some people savings. Everyone in a Medicare Advantage plan must pay the same monthly premium as those enrolled in Medicare Part B.
These plans, however, can have lower prescription drug premiums. For 2009, the Medicare Advantage monthly prescription drug premiums are estimated to be $11 lower than under Medicare Part D, according to the CMS.
Many of these plans also offer coverage through the donut hole - the gap in prescription drug coverage that occurs once an individual's prescription drug costs reach $2,700. The person then is required to pay all out-of-pocket costs for prescriptions until the costs reach $4,350. As a result, having a Medicare Advantage plan that provides coverage during the gap can reduce out-of-pocket expenses. Melinda Gibson, a Wyoming woman who used the Allsup Medicare Advisor program, is an example of someone who saved hundreds of dollars in prescription drug costs by choosing a Medicare Advantage program that provided coverage in the gap.
Depending upon the services selected, Medicare Advantage plans may have an extra premium or have varying deductibles and co-payment requirements. However, these plans are less costly and, particularly important to individuals with disabilities, are required to cover pre-existing conditions. Additionally, some plans put ceilings on out-of-pocket expenses that individuals have to pay. On the downside, the participants must select from healthcare providers that participate in the specific plan. Also, unlike the single traditional Medicare plans, there are typically dozens of Medicare Advantage plans from which to choose, making it more work to select coverage.
"People often fall into the trap that Medicare is Medicare. But there are really a lot of choices available. Knowing what the cost and coverage is for each part of Medicare can help you better understand the options that are best for you," said Gada.
Allsup, Belleville, Ill., is a leading nationwide provider of financial and healthcare related services to people with disabilities. Founded in 1984, Allsup has helped more than 100,000 people receive their entitled Social Security Disability Insurance and Medicare benefits. Allsup employs more than 500 professionals who deliver services directly to consumers and their families, or through their employers and long-term disability insurance carriers.
The Allsup Medicare Advisor service provides customized, objective support to help individuals with disabilities navigate the complexities of Medicare and Medicare Advantage programs, analyze the best plan coverage and provider options based on individual preferences, better understand healthcare cost information, and simplify the confusing process of enrolling in a Medicare Advantage plan.
For more information, visit Allsup.com.
The information provided is not intended as a substitute for legal or other professional services. Legal or other expert assistance should be sought before making any decision that may affect your situation.
Editor's Note: A chart on the Allsup analysis of Medicare Part B costs as a percent if SSDI is available at http://www.allsup.com/portals/4/Medicare-PartB-Costs-as-Percent-of-SSDI-benefit-11.08.pdf.
Mary Jung, (773) 429-0940, firstname.lastname@example.org
Dan Allsup, (800) 854-1418 ext 5760, email@example.com