Preview of Medicare Part C and Part D for 2014

The actuaries at the Centers for Medicare & Medicaid Services (CMS) must have been burning their midnight oil, because they have already laid the foundation for Medicare Advantage (managed care) plans and Part D prescription drug plans for 2014. The good news for beneficiaries is that it looks like they have taken action to control increases in premiums for Medicare Advantage plans, and beneficiaries in Part D will see a lower deductibles and co-payments for drugs.


Part of the reason for this is in 2014 Part C and Part D plans will have to adhere to the Affordable Care Act provision to maintain a medical loss ratio of 85%, that is, they must spend 85% of revenue on clinical services, prescription drugs, quality improvements, etc.

And Part D will also improve for those beneficiaries who fall into the donut hole, as not only will manufacturers have to discount brand name drugs by 52.5%, as they do in 2013, but the program will discount generic drugs by 28%, up from the 21% in effect this year.

As 2014 is a long way off, there is no use to going into great detail about this at this point in time, and we will know more particulars as the year progresses and plans submit their specific offerings to CMS. But one interesting trend is that there will be more emphasis on quality of care. For one, Medicare will be refining its Part D Medication Therapy Management (MTM) program and tying it into the Million Hearts initiative to improve access and adherence to anti-hypertensive medications. It will also encourage beneficiaries to tie their medication reviews into their annual wellness visits to their physicians. And, interestingly, the Part D program has been in place for a long enough time that it is producing data on how Medicare beneficiaries are medicated. For example, it now has data on the use of anti-psychotic medications in the long-term care setting, and will begin using this to deal with the longstanding quality of care issue of the overuse of these drugs in this setting.

So stay tuned, and as we approach the annual enrollment period in the Fall (it always starts October 15), I’ll blog more about what beneficiaries should be looking for and what action they should take to ensure they are in the best plans for their circumstances in 2014.

Medicare Part D - Point of Service Denial Notice

Beginning April 1, the Centers for Medicare & Medicaid Services (CMS) will begin enforcing a requirement in Part D that a beneficiary who goes to one of their plan’s network pharmacies and whose prescription is denied at the point-of_service (POS), which usually means at the pharmacy window, will get a written notice about the denial. This notice is titled “MEDICARE PRESCRIPTION DRUG COVERAGE AND YOUR RIGHTS” and is Form No. CMS-10147.

The notice tells you only that your drug is not covered, and gives you some instructions on how to proceed. Basically, you’ll need to call your prescription drug plan and ask why the drug in question was not covered. You Plan then has to give you a coverage determination (a formal denial and the reason for the denial). If you or your doctor still thinks you should get the drug, you can make an exception request. The instructions in the notice will give you some details on this, and it’s also spelled out beginning on page 206 of Managing Your Medicare. Too, your doctor’s office probably has some experience with these (you almost certainly will have to get them involved), and you can also call your State Health Insurance Assistance Program (SHIP). Their number is on the back of your Medicare & You booklet; they are often quite skilled at dealing with drug denials.

You should note that you will not always get this notice. For example, if you were prescribed an over-the counter (OTC) drug (these are not covered by Part D), or if it isn’t yet time to refill your prescription, you will not get this formal notice.

Temporary Increase in Mail Order Diabetic Supply Prices for Certain Medicare Beneficiaries

In researching the big change which will affect many, many Medicare beneficiaries who use any kind of durable medical equipment and/or supply effective with July 1, 2013, and any beneficiary who uses mail order diabetic supplies from then forward, I learned that beginning January 1, 2013 that some beneficiaries may see an increase in the price of their mail order diabetic supplies.

This is because Medicare currently has a ”competitive bidding program” for certain items of durable medical equipment and supplies in effect in several areas of the country. (See my posting of October 1, 2010 for full details.) Mail order diabetic supplies were included in this program, but only until the end of December 2012. They will not be included beginning January 1, and this will be true until the expansion of this program goes into effect on July 1, 2013. (As of that date, no matter where you live, beneficiaries in Original Medicare will have to get their mail order diabetic supplies from certain suppliers.) But in the meantime beneficiaries who were covered by the program will likely see an increase in their diabetic supply costs, at least until July 1. The best advice is for you is to shop around to see if you can find a cheaper supplier in the interim.

You should also recall that Medicare has restrictions to protect you from unsolicited telephone calls from suppliers. If you believe a supplier is unduly pressuring you or has pressured you to switch suppliers, call 1-800-MEDICARE (1-800-633-4227).

2013 Income and Resource Levels for the Medicare Savings Programs

Medicare Savings Programs, sometimes abbreviated as “MSP,” are discussed in full beginning on page 16 of Managing Your Medicare. Remember that you apply for the Medicare Savings Programs with your state’s Medicaid program, and that states’ exceptions and disregards for the income limits given below, not to speak of their differing interpretations and waivers as to what does or doesn’t count as income, means that if you are anywhere near the limits shown below, you should always apply. (The income limits are somewhat higher than these in both Alaska and Hawaii.)

The resource limits are also shown (these are the same for all states), but again, states have differing interpretations as what counts or doesn’t count as a resource, and some states impose NO resource limit. Note that the resource limits shown below do NOT include the burial allowance of $1,500 (individual) or $3,000 (couple), but are often shown with these added in.

For the Qualified Medicare Beneficiary (QMB) program (which pays your Part B monthly premium, your Part A and Part B deductibles and your Part B coinsurances), your income must be at or below 100 percent of the federal poverty level, which is now:

For an individual, $11,490 annually, or $958 monthly.
For a couple, $15,510 annually, or $1,293 monthly.
For each additional person in a family, add $4,020 annually, or $335 monthly.

The resource limits are $7,080 for an individual and $10,620 for a couple.


For the Specified Low-Income Medicare Beneficiary (SLMB) program (which pays your Part B monthly premium), your income must be at or below 120 percent of the federal poverty level, which is now:

For an individual, $13,788 annually, or $1,149 monthly.
For a couple, $18,612 annually, or $1,551 monthly.
For each additional person in a family, add $4,824 annually, or $402 monthly.

The resource limits are $7,080 for an individual and $10,620 for a couple.


For the Qualifying Individual (QI) program (which pays your Part B monthly premium), your income must be at or below 135 percent of the federal poverty level, which is now:

For an individual, $15,512 annually, or $1,293 monthly.
For a couple, $20,939 annually, or $1,745 monthly.
For each additional person in a family, add $5,427 annually, or $452 monthly.

The resource limits are $7,080 for an individual and $10,620 for a couple.


For the Qualified Disabled & Working Individuals (QDWI) program (which pays your Part A monthly premium), your income must be at or below 200 percent of the federal poverty level, which is now:

For an individual, $22,980 annually, or $1,915 monthly.
For a couple, $31,020 annually, or $2,585 monthly.
For each additional person in a family, add $8,040 annually, or $670 monthly.

The resource limits are $4,000 for an individual and $6,000 for a couple.

Part D EXTRA HELP for 2013

Requirements to Become Eligible for Extra Help

This reviews the two main requirements for the Part D low income subsidy (LIS), that is, “Extra Help,” for the next calendar year, 2013, and also indicates what the basic structure of the Part D benefit looks like for those who qualify for it during 2013. The two main requirements are, of course, low income and few resources. And the new resource and income limits for 2013 have just been announced.

In 2013 you can qualify for Extra Help if your income is at or below $17,235 AND your resources are at or below $13,300 for an individual; or if your income is at or below $23,265 AND your resources are at or below $26,580 for a couple. Remember that neither your home nor your car or vehicle count as resources. And it has been said a thousand times before, but bears repeating, if your income or resources are ANYWHERE near these limits, apply, because there are many, complex rules as to what counts as income and what counts as resources, and as to how these are calculated if additional people live in your household. (And note that all the income levels are higher in the states of Hawaii and Alaska than we show here.)

All this is fully explained in Chapter 7 (which begins on page 99) of Managing Your Medicare.

And to summarize before we get into the details, if you do qualify for Extra Help, it will pay all or part of your Part D monthly premium, all or part of your annual deductible, and will eliminate or reduce your co-payments on drugs. (Full payment of the premium is restricted to plan premiums which are at or below the “benchmark” premium for your state. The benchmark premiums for each state for 2013 are shown the end of this text.) The specifics are as follows:

Basic Structure of the Extra Help Benefit in 2013

Those who qualify for Extra Help at these levels will pay no premium, and will not be subject to the deductible, and the cost of their drugs will be as follows:

If you have Medicaid AND:

You live in a nursing home or are in a community-based waiver program:

You pay nothing.


Your income is at or below $11,490 (individual) or $15,510 (couple):

You pay $1.15 for a generic or preferred brand, and $3.50 for a non-preferred brand.*


Your income is above $11,490 (individual) or $15,510 (couple):

You pay $2.65 for a generic or preferred brand, and $6.60 for a non-preferred brand.*


If you don't have Medicaid but your state helps you pay your Medicare premiums (that is, you are in the “Medicare Savings Program”) OR you get supplemental security income (SSI):

You pay $2.65 for a generic or preferred brand, and $6.60 for a non-preferred brand.*


If you are not in the categories above, but you qualify for Extra Help because your income and resources levels are as shown below, the cost of your drugs will be as follows, and you will be subject to an annual deductible and monthly premium payments as follows:


If your income is below $15,512 (individual) or $20,939 (couple) and your resources are at or below $8,580 (individual) or $13,620 (couple):

You pay $2.65 for a generic or preferred brand, and $6.60 for a non-preferred brand.* You pay neither a premium nor a deductible.


If your income is below $15,521 (individual) or $20,939 (couple) and your resources are at or below $13,300 (individual) or $26,580 (couple):

You pay 15% of the cost of your drugs, plus you are subject to a $66 annual deductible.** You pay no premium.


If your income is at or below $16,086 (individual) or $21,714 (couple) and your resources are at or below $13,300 (individual) or $26,580 (couple):

You pay 15% of the cost of your drugs, plus you are subject to a $66 annual deductible, and you must pay 25% of your premium.**


If your income is below $16,661 (individual) or $22,490 (couple) and your resources are at or below $13,300 (individual) or $26,580 (couple):

You pay 15% of the cost of your drugs, plus you are subject to a $66 annual deductible, and you must pay 50% of your premium.**


If your income is below $17,235 (individual) or $23,265 (couple) and your resources are at or below $13,300 (individual) or $26,580 (couple):

You pay 15% of the cost of your drugs, plus you are subject to a $66 annual deductible, and you must pay 75% of your premium.**

*If your “drug expenses” ever exceed $4,750 in 2013, you will pay nothing for any prescription. (These are “Full Subsidy” beneficiaries.)

**If your “drug expenses” in the year ever exceed $4,750 in 2013, you will pay not more than $2.65 for a generic or preferred brand, and $6.60 for a non-preferred brand. (These are “Partial Subsidy” beneficiaries.)

Note on resource limits: Technically, the resource limits are $7,080 for an individual and for $10,620 a couple for “Full Subsidy” beneficiaries, and $11,800 for an individual and $23,580 for a couple for “Partial Subsidy” beneficiaries. However, in practice, when determining resources for Extra Help, the Social Security Administration allows a burial expense allowance of $1,500 for an individual or $3,000 for a couple, so these resource limits are almost always shown as $8,580 for an individual and $13,620 for a couple for “Full Subsidy” beneficiaries, and $13,300 for an individual and $26,580 for a couple for “Partial Subsidy” beneficiaries, and these adjusted limits are the ones shown above.

Benchmark Premiums for 2013

This is the most that Extra Help will pay for a premium in each state. If you choose a Part D drug plan with a monthly premium higher than this, you will have to pay all of the difference between these amounts and the premium. (Note that, depending on a plan’s formulary and pricing structure, this might possibly be cheaper for an Extra Help beneficiary than choosing a plan whose premium is below the benchmark.)

Alabama $33.70; Alaska $34.70; Arizona $29.40; Arkansas $34.10; California $29.90; Colorado $31.90; Connecticut $31.30; Delaware $35.00; District of Columbia $35.00; Florida $24.80; Georgia $34.20; Hawaii $33.30; Idaho $42.10; Illinois $30.90; Indiana $37.20; Iowa $34.60; Kansas $36.00; Kentucky $37.20; Louisiana $37.30; Maine $33.50; Maryland $35.00; Massachusetts $31.30; Michigan $34.20; Minnesota $34.60; Mississippi $34.60; Missouri $34.60; Montana $34.60; Nebraska $34.60; Nevada $20.30; New Hampshire $33.50; New Jersey $37.00; New Mexico $22.50; New York $43.20; North Carolina $32.00; North Dakota $34.60; Ohio $29.90; Oklahoma $32.80; Oregon $37.50; Pennsylvania $36.60; Rhode Island $31.30; South Carolina $38.70; South Dakota $34.60; Tennessee $33.70; Texas $31.80; Utah $42.10; Vermont $31.30; Virginia $30.10; Washington $37.50; West Virginia $36.60; Wisconsin $38.20; Wyoming $34.60.