Effective budgeting solutions

THE FUTURE OF MEDICARE July 22, 2012Footer text here2 1

July 22, 2012Footer text here3

CURRENT REFORM July 22, 2012Footer text here4 Medicare Modernization Act of 2003 Added Prescription drug benefit (Part D) Added Medicare Advantage Health Plans (Part C) Medicare Doc Fix (MIPPA 2008) Restructured provider payment schedules Medicare reform in Affordable Care Act (PPACA 2010) Preventive Care added for all beneficiaries Hospital and Doctor penalties and incentives Test modeling

FUTURE REFORM / CHANGES July 22, 2012Footer text here5 In 2020 the most popular Medigap plan (F) will be discontinued Rural hospital issues have to be addressed Major mergers. Likely 3 or 4 giant insurers controlling the market Prescription drug costs. Possible ‘Public’ option with government negotiated rates. Rationing by delay, denial or cost structure. Or elimination of certain coverages by age or by condition or compliance.

MEDICARE MODERNIZATION ACT OF 2003 July 22, 2012Footer text here6 2

MEDICARE PART C Medicare “Health Plans” Similar to corporate health plans Low premiums “Pay As You Go” with copays and usually no deductibles Networks like PPO, POS and HMO Extra benefits like vision, dental, gym memberships, hearing aids July 22, 2012Footer text here7 MEDICARE PART D Prescription Drug coverage Dozens of plans per county Annual review are important “Donut Hole” is closing Costs are rising fast

2010 AFFORDABLE CARE ACT REFORM July 22, 2012Footer text here8 Penalties for Early Re-admission to hospital Penalties for High Infection rates Payments for Electronic Health Recordkeeping Provider payment restructuring Bonuses for high performance and star ratings Clinical measures tracking

July 22, 2012Footer text here9 INCOME & ASSET MANAGEMENT WITH MEDICARE 3

HIGH INCOME PENALTIES “Backdoor Tax” – Increased participation fee for high income TWO YEAR lookback Starts at $85,000 for individuals or $170,000 for couples Applies to Part B Outpatient premium and Part D Rx premium Rolling two year lookback and penalties do drop off Congressional committee is considering doing this with Part A Hospital coverage also. Part A usually has no premium currently. July 22, 2012Footer text here10

NON-PARTICIPATION PENALTIES July 22, 2012Footer text here11 Late enrollment into Part B or Part D creates a “rest of life” penalty Part B is 10% penalty per year. Premium now is $ so penalty is up to $12.18 per month. Part D is 1% penalty for each month eligible but not covered by qualified drug coverage. About 30 cents per month penalty. 36 months would be $10.80 per month. Penalties can be ended if you receive government help for paying your Part B or D premiums

July 22, 2012Footer text here12 MEDICARE ADVANTAGE VS MEDIGAP VS LTC Medicare Advantage plans premiums can be zero to over $1000 annually for a couple. Medigap Supplement premiums (plus Rx plan premium) runs about $2500 per person, $5000 per couple. LTC premiums run $2400 per person, or $4800 per couple.

July 22, 2012Footer text here13 MEDICARE ADVANTAGE VS MEDIGAP VS LTC What is the maximum risk under a Medicare Advantage plan? $6700 per person Not a deductible Rarely happens Can easily be eliminated with miniature additional policies: Hospital Indemnity Critical Care (Cancer, Heart Attack, Stroke) $6,700

July 22, 2012Footer text here14 What is the risk of not having a Long Term Care Policy? Average Nursing Home or Assisted Living Stay is 24 months Average cost in Atlanta is $6000 per month One year is $72,000, Two years is $144,000. Home care is a more likely payout Runs $22.50 per hour on average $4500 per month (8 hours a day for 25 days) $54,000 annually or $108,000 over two years MEDICARE ADVANTAGE VS MEDIGAP VS LTC

July 22, 2012Footer text here15 PRESCRIPTION DRUG COST MANAGEMENT Annual review of the list of drugs is very important Each year companies change formularies, change copays and change preferred pharmacies Average error per person is $600 to $700 each Popular websites like can help. 87% of seniors fail to do a review This leads to them being taken advantage of by their plan

July 22, 2012Footer text here16 LOW INCOME COST ASSISTANCE Social Security can provide a subsidy to cover the cost of a Part D Rx plan up to $30 per month Social Security also can provide a subsidy for drug cost at the time of purchase $2.95 max on generics $7.40 max on brand name Drug must be on the plan formulary Each state can provide assistance to cover Part B premiums Medicaid is the final level and will coordinate fully with Medicare Medicaid is for the indigent and is a State/Federal co-op

July 22, 2012Footer text here17July 22, 2012Footer text here THE GROWTH OF MEDICARE 4

July 22, 2012Footer text here18 Huge influx of newly disabled 10 Million Disabled on Medicare 4 Million more have been added to Medicare by Disability in the past 10 years alone!

July 22, 2012Footer text here19 85 MILLION BENEFICIARIES Baby Boomers will add 40 Million to Medicare This will increase Medicare from 52 Million today to over 85 Million These Boomers are generally coming from Private insurance and Employed status and are changing to Medicare and Social Security.

July 22, 2012Footer text here20 PREVENTING BANKRUPTCY? Estimates vary widely on Un-Funded promises (Medicare/Medicaid/Social Security) Democrats state $40 to $60 Trillion short Republicans state $75 to $150 Trillion short $200 Trillion? “The Coming Generational Storm” – Revised Nobel Laureate in Economics - Laurence Kotlikoff, MIT Press “The Father of Generational Accounting”

July 22, 2012Footer text here21 EXPANDING SERVICES Medicare is implementing some innovations Often are tested first in the Medicare Advantage system Examples include: Telemedicine Physician Homes (Central care coordination) Accountable Care Organizations Centers of Excellence

July 22, 2012Footer text here22 IMPROVING THE OUTCOMES Who is the target? 25% of population spends 75% of the funding Just 1% spends 25% of the funding Care Coordination Often common sense business practices to prevent wasteful spending Very important to implement to avoid Medicare penalties Chronic Illness Management Co-morbidities (Multiple conditions) are often the trigger Diabetes and Obesity, Heart and Lung, Kidney and Blood Pressure, etc.

July 22, 2012Footer text here23 PRESENTED BY Download our free Medicare eBook at