As Premiums Are Announced, Seniors Are Getting More Value Out of All Parts of the Medicare Program

As the Centers for Medicare & Medicaid Services (CMS) announces Medicare premium, deductible, and coinsurance information for 2012, seniors and people with disabilities continue to receive better value from all parts of the Medicare program, in many cases thanks to the Affordable Care Act.  The “standard” Part B premium will be $99.90 for 2012, over $6 lower than projected previously in the Medicare Trustees Report, and $15.50 lower than this year’s standard premium.  Additionally, the Medicare Part B deductible will be $140, a decrease of $22 from 2011. Earlier this year, HHS announced that average Medicare Advantage premiums for 2012 would decrease by 4% and average premiums paid for Medicare’s prescription drug plans would remain virtually unchanged.

Medicare is continually improving. Since 1997, anti-fraud measures have returned $18 billion to the Medicare Hospital Insurance Trust Fund, and the Affordable Care Act is strengthening these measures. Additionally, the Act provides new incentives and programs that will reward doctors and hospitals that coordinate care better and will improve the program for all seniors and people with disabilities.  In addition, specific provisions of the Affordable Care Act are already helping beneficiaries get more value out of their Medicare in the form of lower costs for prescription drugs and full Medicare coverage for prevention and annual Wellness Visits.

Here’s how seniors are benefitting:

In Traditional Medicare
Many seniors and people with disabilities will continue to see low premiums.  The standard Medicare Part B premium will be $99.90 a month in 2012, $6.70 lower than the amount projected earlier this year.  Part B enrollees who paid the higher standard Part B premium in 2011 of $115.40 will see their premiums decrease by $15.50. 

The majority of people with Medicare have paid $96.40 per month for Part B since 2008, mainly due to a law that prevents their Social Security check from decreasing as a result of an increase in the Part B premium.  In 2012, these people will pay the standard Part B premium of $99.90, which amounts to a monthly increase of $3.50, or 3.6%.   The Social Security cost-of-living adjustment for 2012 is also 3.6 %, meaning that Medicare Part B premiums for these beneficiaries will be the same percent of their Social Security check in 2012 as they were in the last three years. At the same time, the value of the Medicare coverage is improving.  New benefits are available as a result of the Affordable Care Act, including additional free preventive benefits and cheaper prescription drugs.  Through September 2011, nearly 20.5 million people in traditional Medicare received a free preventive service. Some of the free preventive services available to people with Medicare include:

• Mammograms and cervical cancer screenings
• Cholesterol and other cardiovascular screenings
• Colorectal and prostate cancer screenings
• Annual Wellness Visit

In Medicare Advantage
On average, seniors in a Medicare Advantage plan will pay premiums that are 4% lower in 2012 compared to 2011.  Plans also project enrollment to increase by 10%, while 99.7% of seniors and people with disabilities continue to enjoy access to a Medicare Advantage plan, and benefits remain consistent with those offered in 2011.

CMS used authority provided by the Affordable Care Act to protect people with Medicare Advantage from significant increases in costs or cuts in benefits in 2012, contributing to average premium declines for the second year in a row: 2012 premiums are projected to be 11.5% below 2010 premiums.

Medicare Advantage plans that achieve “three-star” or better quality ratings will receive bonus payments, giving an incentive for all plans to improve care for patients.  The best Medicare Advantage plans that achieve a five-star rating will be able to market to and enroll seniors all year round, not just in the open enrollment period – giving seniors the ability to move to the best plans any time.

In Medicare Prescription Drug Plans
Average prescription drug plan premiums will remain virtually unchanged in 2012.  Based on plans’ projections, the cost of the average Medicare prescription drug plan premium in 2012 will be about $30 – the average premium in 2011 is $30.76.

At the same time, out-of-pocket costs for many seniors are falling significantly as the Affordable Care Act closes the “donut hole” or coverage gap.  Seniors who hit the donut hole already receive a 50% discount on covered brand-name drugs under the Affordable Care Act, and Part D coverage for generic and brand-name drugs will continue to increase over the next few years until the donut hole is completely closed in 2020.  Through August of this year, nearly 1.8 million people who hit the donut hole received these discounts, saving almost $1 billion – coming to an average of $530 per beneficiary.

This follows last year, when nearly 4 million beneficiaries who hit the donut hole received a $250 rebate under the Affordable Care Act to help them afford prescription drugs in the coverage gap.

Learn more about Medicare premiums and deductibles for 2012.

Posted on: October 27, 2011