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Is the Medicare Donut Hole closing? Here we are almost 17 years later and the donut hole still strikes fear into most retiree’s wallets. Is it the actual donut hole that worries most, or is it the unknown? I am willing to bet it is the unknown! Most retirees never receive the necessary information to properly understand the donut hole, determine if their current prescriptions would place them in it, and comprehend how their Part D prescription coverage functions. Let’s take the mystery out of it.

What is the donut hole?

Before we discuss the infamous Medicare donut hole and its closing, lets go back to the beginning.  In 2006 the Medicare Part D program went into effect.  This was the likely one of the biggest changes to the Medicare program in almost 4 decades.  Prior to Medicare Part D, seniors had very limited options for having any prescription drug coverage.

While the introduction of Medicare Part D was a financial lifesaver to many seniors, there were a number of Medicare beneficiaries that would use all their initial coverage benefits and enter the coverage gap, which many folks and the media started calling the ‘donut hole’.  In 2007 (the first full year of the Medicare Part D program), a Medicare beneficiary would enter the donut hole after their drug costs of $2,400 was met (the amount paid by the beneficiary and the insurance company).  At this point you were on the hook for 100% of the drug costs until you reached a total of $3,850 in out-of-pocket costs for the calendar year.

It wasn’t until you exceeded spending $3,850 of your own money that you would enter the catastrophic phase which reduced your costs down significantly.

When is the donut hole closing?

The donut hole actually has been shrinking over the years and finally closed in 2020.  Now seniors pay a percentage of the cost of brand-name and generic drugs during the coverage gap.  A Medicare beneficiary does not enter the coverage gap until they along with their insurance plan have paid out a total of $4,660 in prescription costs.

Right now, you are likely saying to yourself “Whoa…wait a minute, you said the donut hole closed, but I am still paying 25%.”  This can be a bit confusing but let me explain it a bit simpler.  Prior to the donut hole closing you would pay 100% of the costs for the prescriptions during the coverage gap phase, but now you only pay 25%.  That is a 75% reduction in your overall costs.  The donut hole was just a way that folks described having to pay all the costs during the coverage gap.

What else has changed with the donut hole closing?

While the total amount of out-of-pocket spending during the coverage gap has increased over the years, the amount of your out-of-pocket expense being credited has increased.  What this means is that while you might be paying 25% of the costs for a prescription, you are being credited with up to 95% of the actual costs towards getting out of the coverage gap.

Here is an example that will better illustrate the expenses in the coverage gap.

Let’s say that when you enter the coverage gap the retail price for one of your brand-name prescription drugs is $100.  During the coverage gap the insurance plan you have may only pay $5, but you are only charged $25.  The other $70 will be covered by the drug manufacturer’s discount they are required to pay during the coverage gap phase.

How do you track all of your drug coverage phases?

The good news is that you as an individual do not have to track when you enter any of the 4 phases.

• Phase 1 – Deductible
• Phase 2 – Initial Coverage
• Phase 3 – Coverage Gap
• Phase 4 – Catastrophic Coverage

The Medicare Part D prescription drug plan you enrolled in for that calendar year must track this mandatory requirement for you.

What if I get my prescriptions through a Medicare Advantage plan?

The Medicare Advantage plan will track the same information for you as listed above.  Just like a stand-alone prescription drug plan, these plans have a coverage gap but with the closed Medicare donut hole. Remember, you cannot combine a Medicare Advantage plan with integrated drug benefits and a separate Medicare Part D drug plan.

What if I get extra help for Part D?

The Part D low-income subsidy program can reduce or even eliminate out-of-pocket costs.  This of course depends on what level of extra help you qualify for.

If you qualify for full extra help, then:

• There will be no deductible in your plan, nor will you pay a premium for your coverage.
• You will not be paying the 25% in the Coverage Gap phase or commonly referred to as the Medicare donut hole.
• Your co-payments for generic drugs will be up to a maximum of $4.15 and $10.35 for brand-name drugs.
• If you receive Medicaid and your individual income is lower than $14,820 your co-payment for generic drugs will be reduced to a maximum of $1.45 and $4.30 for brand-name drugs.  For those who are married, the income threshold is $19,956 in 2023.
• Once you enter the catastrophic phase you will have no co-pays for your medication refills.

If you qualify for partial extra help, then:

• The monthly premium you pay will be based on your income.
• The maximum deductible your plan can charge is $104
• You will pay a co-insurance for your prescriptions that will be no more than 15% of the price.
• You can qualify for partial extra help if your individual income is less than $22,116 and you have assets that do not exceed $16,660.  For married couples the income threshold is $29,820 and assets cannot exceed $33,240 in 2023.

Starting in 2024 more folks will qualify for full extra help.  If you meet the partial extra help income caps you’ll likely qualify for full extra help starting in 2024.  Additionally in certain states there may be a premium subsidy for Medicare Part D plans.

Takeaway Points

• Technically, the closure of the Medicare donut hole occurred in 2020.
• You are only responsible for 25% of the drug costs in the coverage gap but receive 95% credit towards getting out of the coverage gap.
• You may qualify for extra help.

When you are a Medicare Supplement client through us, our advisors happily assist with Medicare Part D plans each year.  Not a Medicare Supplement client with us yet?  Give us a call at (800)924-4727 to see if we can lower your current Medicare Supplement/Medigap monthly premiums. Want a quote now? Simply click on the button below to get a NO COST or obligation quote.

This article will focus primarily on the Medicare donut hole, but we will also show how you will move thru each phase of a Medicare Part D prescription drug plan. Every year, from October 15 to December 7, during the Medicare open enrollment period, beneficiaries have the opportunity to enroll in a plan that offers Part D prescription drug coverage. This can either be a stand-alone prescription drug plan (PDP) for those in traditional Medicare or a Medicare Advantage plan which includes all Medicare benefits, prescription drugs inclusive (MA-PD). In 2022, out of the 65 million people Medicare covers, 49 million are enrolled in Part D plans. More than half of these (53%) have enrolled in MA-PDs and 47% in PDPs.

Understanding The 4 Phases of Part D Prescription Plans

Prescription drug coverage operates through several stages. The initial phase begins with the effective date of your prescription drug plan, which is often January 1.

During this first phase, you must reach your deductible, which can be up to $505. You must pay this amount entirely.

Once you’ve satisfied the deductible, you progress to the initial coverage phase. Here, you’re only responsible for making copayments. When your drug costs escalate to $4,660, you transition into the donut hole stage.

While residing in the donut hole stage, you are obligated to pay 25% of the cost for both generic and brand-name drugs, until your out-of-pocket expenses total $7,400. As soon as you exit this gap, the final phase known as catastrophic coverage begins.

It is also important to keep in mind that your plan premiums do not count towards these phases. To understand a bit more about Medicare Part D plans and also penalties that can be incurred click here.

How have the Medicare donut hole regulations changed for 2023?

The designers of the Medicare Part D program intentionally included a coverage gap, commonly referred to as the “donut hole.” Prior to the Affordable Care Act, the program provided coverage for beneficiaries’ drug expenses up to a specific dollar amount after the deductible. On standard plan designs, beneficiaries paid 25% of the cost during this phase. Coverage then ceased completely until beneficiaries reached another expenditure level, after which more robust coverage kicked in. Beneficiaries then paid 5% of the cost or a nominal copay at this point.

What the heck is the Medicare donut hole?

The designers of the Medicare Part D program incorporated a coverage gap, commonly referred to as the “donut hole.” Before the Affordable Care Act, the program covered beneficiaries’ drug expenses up to a specific dollar amount after the deductible. On standard plan designs, beneficiaries paid 25% of the cost during this phase. Coverage then ceased completely until beneficiaries reached another expenditure level, after which more robust coverage kicked in. Beneficiaries then paid 5% of the cost or a nominal copay at this point.

Is the Medicare donut hole something I will encounter?

Over the last few years, the donut hole has actually closed.  Beginning in 2020, Medicare beneficiaries no longer had to pay the full cost of their medications while in the donut hole. Instead, they would now pay 25% of the cost during this period. That 25% cost share is what you still would pay during this phase. Depending on their plan design, however, there may still be differences in costs before and during the donut hole.

If my drug costs are high and I enter the donut hole, what will I be paying?

Once you reach the donut hole after spending $4,660 on your medications (in 2023), you will pay 25% of the cost of drugs. If your plan is designed with a copay instead of coinsurance before the donut hole, then your costs may change once you enter the donut hole. However, if you reach the catastrophic coverage stage, out-of-pocket costs decrease significantly.

Navigating the world of Medicare can be daunting. One of the most confusing aspects is the infamous “Medicare donut hole.” Before reaching this point in your Part D plan, your out-of-pocket costs are primarily covered by your copay or coinsurance. However, once you enter the donut hole, things change. Suddenly, the drug manufacturer provides a discount that mostly covers the cost of your brand-name drugs, while your coinsurance and Part D plan continue to cover generic drugs. It’s important to be aware of this shift and to educate yourself on the ins and outs of this notorious Medicare donut hole.

Exiting The Medicare Donut Hole and Entering Catastrophic Phase

If you’re enrolled in Medicare and regularly take prescription drugs, you might have encountered the term “donut hole.” It’s the coverage gap where you’re responsible for a portion of your drug costs until you reach the catastrophic coverage level. Unfortunately, the spending required to get there has been increasing over the years. In 2023, you’ll need to spend $7,400 before your coverage reaches the catastrophic level. Any discounts you receive from drug manufacturers for brand-name drugs will count towards reaching the threshold. Once you reach the catastrophic level, your drug costs will be significantly reduced. In fact, starting in 2024, there will be no out-of-pocket costs during that coverage level.

There’s more good news. With each prescription refill, you accumulate a higher amount in your out-of-pocket expenses. This means you will transition into the catastrophic coverage phase earlier.  Starting in 2024 the Inflation Reduction Act will eliminate the 5% coinsurance requirement in the catastrophic phase. You can read very informative article from the Kaiser Family Foundation that takes a very deep dive into Medicare Part D here.

What You Will Encounter in 2023 for the Medicare donut hole!

While each year looks to enhance the Medicare Part D program, lets focus back in on this current year.  Once again, if the total amount of expense paid out of your pocket combined with the expenses paid by your drug plan reaches $4,660 then you will move from the Initial Coverage phase into the Coverage Gap/Donut Hole.  After you enter the donut hole, your out-of-pocket spending combined with manufacturer discounts will count towards your $7,400 maximum in this phase.  Once you reach this maximum then you move into the catastrophic phase.  For year 2023 your out-of-pocket costs while in the catastrophic phase would be as follows:

• $9.20 co-payment or 5% coinsurance (whichever is greater) for Brand Name drugs
• $3.70 co-payment or 5% coinsurance (whichever is greater) for Generic drugs

Final Note

Though the out-of-pocket expenses may appear daunting and somewhat intimidating, estimates suggest that only about 12% of Medicare Beneficiaries will progress to the donut hole phase. Additionally, projections indicate that a mere 4% of Medicare Beneficiaries will advance to the catastrophic phase. Still need more help with your Medicare Part D prescription drug plan, then feel free to reach out to us at (800)924-4727.

If you went on Medicare after January 1st of 2020 then you cannot buy a Medicare Supplement Plan F. What is the best alternative for Medicare Supplement Plan F? Research you may have conducted on your own has likely returned results on Medicare Supplement Plan G. 

Prior to January 1, 2020 the most popular Medicare Supplement plan being sold was Plan F.  This plan was considered by many to be ‘Cadillac Coverage’ since the policyholder had no deductibles, co-pays, or co-insurance payments that they would be paying out of pocket.

If you went onto Medicare prior to January 1, 2020 you can still get a Plan F, but many choose to switch to a Plan G since it is typically lower priced than Plan F.  If you went onto Medicare January 1, 2020 or later, then you are not allowed to purchase a Plan F so this is another reason why the Plan G has risen to be the most popular Medicare Supplement right now.

So, what does a Medicare Supplement Plan G cover?

Let’s start with Part A of Medicare and how the Plan G works with this part.

If you go into the hospital as an inpatient Medicare says that you will be responsible for the first $1600. This amount is the Part A deductible for 2023.  After you meet the deductible, Medicare will cover for the first 60 days of your semi-private room and board, general nursing and miscellaneous services and supplies.  Medicare Supplement Plan G will cover that Part A deductible for you.  Keep in mind that the Part A deductible is not a calendar year deductible. It is very possible to incur that same deductible again if you were to go back into the hospital during the same calendar year.  If this happens, then the Plan G will cover the Part A deductible again.

Blood

If you were to need pints of blood while in the hospital, Medicare says that you are responsible for the costs of the first 3 pints. Keep in mind that you can have blood donated directly to you.  The Plan G will pay for those first 3 pints and Medicare will cover all amounts above that.

Skilled Nursing Facility Care

Many folks become a bit confused when it comes to receiving Skilled Nursing Facility benefits.  Medicare says that if you spend 3 days in the hospital then need rehab that they will cover the first 20 days in a Skilled Nursing Facility.  It is important to keep in mind that your date of discharge does not count towards the 3-day minimum requirement.  The easiest way to keep track of this is to understand you really need to spend at least 3 nights in the hospital as an inpatient.  After Medicare covers the first 20 days, it will now pay all but the first $200 per day for days 21 through 100.  The Medicare Supplement Plan G will cover those 80 days of co-pays in full for the policyholder.

What About Medicare Excess Charges?

Another area that sets the Plan G apart from other Medicare Supplement plans is that it covers excess charges.  In fact, with Plan G covering 100% of the excess charges, it is a perfect alternative for Medicare Supplement Plan F. So, what are excess charges?  Excess charges are amounts that a provider can charge you in addition to what Medicare approves. They can only do this if they don’t participate in the Medicare Assignment program. 

“A non-participating physician does NOT accept what Medicare approves as full payment.”

Let us look at an example of this.  You go to a physician who does not participate in the Medicare Assignment program. He/She bills you $500 for a specific service and Medicare only approves $400 for this.  Years ago, the physician could bill you for the full $100 that Medicare did not approve, but that is no longer the case. 

Excess Charge Limits

The maximum a provider can bill you for can be no more than 15% above the amount that Medicare approves.  This means that the physician could charge an additional $60.  Medicare Supplement Plan G will cover 100% of the excess charge amount.   It is important to keep in mind that around 95% of today’s providers participate in the Medicare Assignment program. This means they do NOT charge excess charges.

What’s Not Covered

The final area of benefits that we are going to touch on is the Part B deductible.  Currently in 2023 the Part B deductible is $226.  This amount is a calendar year deductible. Medicare Supplement Plan G does not cover the Part B deductible.  This one area is the only difference between Plan F and Plan G.  The Plan F covers the Part B deductible whereas the Plan G does not.

The good news is that with current policy pricing the Plan G is typically at least $226 per year less in cost than the Plan F.  This means that your premium savings are more than enough to cover the Part B deductible for the year.

When you see how close in benefits the Plan G and Plan F are to one another, it is easy to see why the Plan G has now become the most popular Medicare Supplement for complete coverage.

So how is Medicare in MD different than Medicare in any other state?

Maryland is actually a very interesting state when it comes to Medicare options and how insurance carriers must do business here.  When we look at Medicare in MD, we are going to break it down into a couple of categories.

• Medicare Supplement in Maryland
• Medicare Advantage in Maryland

Medicare in MD – 12 Questions You Must Ask Before Buying A Plan

Medicare Supplement in Maryland

In the state of Maryland, you will find that most folks on Medicare have a Medicare Supplement plan over a Medicare Advantage plan.  While there are several reasons for this, we are going to start by looking at how the pricing is done by insurance carriers.

When you look at Medicare in MD you will quickly see on the Medicare Supplement side that there is no area factoring allowed.  Area factoring is a practice where an insurance company can charge more in premium for those folks who live in what are known as high Medicare usage areas.  This means that if you happen to live in a zip code where Medicare typically pays more in claims, then you will pay a higher premium for the exact same plan as someone who lives in a lower usage area.

In the state of Maryland, this practice is not allowed which means someone who lives in Baltimore, Maryland will pay the exact same price as someone who lives in Hagerstown, Maryland (same age, sex, and tobacco usage), Frederick, Maryland or even Cumberland, Maryland.  It simply doesn’t matter where you live in Maryland because there is NO area factoring.

Medicare Supplement Rates in Maryland

We are fortunate to have so many available insurance carriers in the state, which helps keep pricing quite competitive.  Some of our favorite carriers offer great pricing on multiple plans.  In addition to competitive premiums, most of the carriers also offer additional discounts such as a household discount which many times doesn’t even require both spouses to have a policy with that insurance company.  This is beneficial when one spouse might have severe health issues that would keep them from being accepted by the new carrier, but still allows the healthier spouse to get the best pricing possible.  In fact, several carriers have a household discount if there is simply another person living in the house with the policyholder who is over the age of 50.  When looking at Medicare in MD you want to make sure that you are taking advantage of every possible discount that you can.

Medicare Supplement Carriers in Maryland

When looking at Medicare in MD you will quickly see that the amount of Medicare Supplement carriers far outpaces the amount of Medicare Advantage carriers.

Currently there are well over 30+ Medicare Supplement carriers doing business in the state of MD.  With this many carriers available it allows us to find not only competitively priced plans, but also ones that have different levels of underwriting.  The different levels of underwriting allow those folks with certain health conditions to find coverage as well.  They might not qualify for one company due to their health condition, but another company may be fine with that condition.

Medicare Supplement Prices in Maryland

If we are comparing a particular plan for a specific age, you will find that many times the monthly rate is within a dollar or less of each other.  An example of this would be for a 65-year-old female who is a non-tobacco user and wants a Plan G.  You will notice that here in 2022 the rates are close to one another.

• ACE Property and Casualty – $128.17
• Sbli USA Life – $129.83
• Allstate Health Solutions – $129.84

While Plan G is still one of the most popular plans in Maryland, the Plan N is also a favorite of those folks who want solid coverage but at even a lower monthly premium.  Using the same criteria as we did above, here are the current monthly rates for 2022.

• Allstate Health Solutions – $94.04
• Sbli USA Life – $96.73
• ACE Property and Casualty – $97.92

Keep in mind that the above rates do not factor in a household discount which can reduce premiums anywhere from 6% – 14% in Maryland.

Medicare Advantage in Maryland

Unlike Medicare Supplements there really are not many carriers offering Medicare Advantage in MD.  In addition, Medicare Supplement plans are standardized which makes it much easier to shop for your health insurance.  Medicare Advantage plans are not standardized and can vary quite a bit on out-of-pocket costs.

Important areas to look at when considering a Medicare Advantage plan in addition to monthly premiums:

1. What is the Maximum Out of Pocket Costs (MOOP)? In Maryland the MOOP ranges anywhere from $6,700 – $7,550 for 2022.
2. What type of network does the plan use? Most plans use either a PPO or HMO network. While a PPO network will give you more flexibility, you could also incur additional out of pocket costs by using a provider outside the network.
3. Are your doctors and hospitals part of the network? In Maryland there are hospitals that will not take certain Medicare Advantage plans. As well there are doctors who simply do not want to be part of the networks that these plans use.
4. Are your prescriptions covered in the plan’s formulary? Unlike getting a stand-alone Part D prescription drug plan where you can pick one that covers all of your prescriptions at the lowest out of pocket costs, the Medicare Advantage prescription portion might not cover some of your prescriptions or cover them at the lowest out of pocket costs for you.

Availability of Medicare Advantage in Maryland

The number of carriers choosing to do Medicare Advantage business in Maryland differs by county.  Yes, you read that correctly…they can limit their plan offerings to certain counties.  Unlike Medicare Supplement plans that must be offered in all counties and be guaranteed renewable, a Medicare Advantage plan can be offered in as many as all counties or as few as just one.  Also, Medicare Advantage plans are not guaranteed renewable which means that the plan can choose at the end of the contract year to exit the market in a particular county or even the whole state.

Plans by county/city:

Baltimore/Baltimore City – 6 carriers offering a total of 29 plans

Washington County/Hagerstown – 3 carriers offering a total of 8 plans

Frederick County/Thurmont – 5 carriers offering a total of 12 plans

Allegany County/Cumberland – 1 carrier offering a total of 2 plans

When you look at Medicare in Maryland you will see that there are far more choices for Medicare Supplement plans than Medicare Advantage Plans.  This doesn’t necessarily mean that the Medicare Advantage plans are not beneficial to certain folks, but it does mean that there are fewer choices and far less competition among them.

Takeaway

Choices for Medicare in MD can be overwhelming, so don’t try going at it alone.  Contact Senior Benefit Services, Inc and we will not only discuss all your options but explain how each one would work for you.  Call us at (800)924-4727 and you will see how ‘We Make Medicare Easy’.

So How Much Will Medicare Cost in 2023?

Medicare cost for 2023 showed an increase to  Part A deductible, but a small decrease to the Part B annual deductible over 2022.

In addition, the daily co-payments under Part A of Medicare showed increases in each phase.  The Medicare Part B coinsurance still remains at 20% as it always has.

If you worked 40 quarters during your lifetime, you will not be charged the Part A premium listed above.  During your working years, the Part A premium was paid thru your Medicare taxes from each payroll cycle.

The deductible for Part A increased from $1556 in 2022 to $1600 for 2023.  For days 61-90 of inpatient hospital care the daily co-payment rose from $389 per day in 2022 to $400 per day for 2023.  This will be an increase of $11 per day.  The lifetime reserve days which are days 91-150 of inpatient hospital care rose from $778 per day in 2022 to $800 per day for 2023.  This will be an increase of $22 per day.

Finally under Part A of Medicare the daily co-payment for skilled nursing facility care will increase from $194.50 per day in 2022 to $200 per day in 2023.  This will be an increase of $5.50 per day.

To compare our current chart to 2022 numbers click here.  To see the Medicare Fact Sheet click here.

To read about the 3 Most Common Questions Asked About Medicare Part A click here.  To read about the 3 Most Common Questions Asked About Medicare Part B click here.

Wondering if you are paying too much for your current Medicare coverage?  Get a FREE, NO OBLIGATION quote by clicking below or call (800)924-4727 for immediate service.

Traveling Abroad With Medicare

Well its that time of year when folks are doing a bunch of traveling.  Keep in mind that traveling domestically is different than Medicare foreign travel.  The great news is that anyone on Original Medicare can travel anywhere in the United States and have access to medical care from almost any hospital or doctor.

So now you might be wondering “What’s the bad news?”  Keeping in mind that the Medicare program is unique to the United States, it is not designed to provide benefits outside of the U.S. or its territories.  Medicare usually does not cover health care expenses when traveling outside the U.S., but there are some exceptions such as:

• Part B of Medicare may pay for care received on board a ship as long as it is within territorial waters, but it won’t pay for those services when a ship is more than 6 hours away from the nearest U.S. port.
• Medicare may pay for certain expenses in a foreign country if you are in the U.S. when a medical emergency occurs and a foreign hospital is closer than the nearest U.S. hospital.

How To Prepare

The good news is that with a little bit of advance knowledge and preparation, you can travel pretty much worry free about unforeseen medical expenses.  Currently most folks on Medicare fall into 1 or 2 groups.  They either have Original Medicare with a Medicare Supplement or they have a Medicare Advantage plan.  Let’s go quickly review how each works for foreign travel.

Some Medicare Advantage Plans provide you with worldwide emergency coverage.  Not all Medicare Advantage plans provide additional foreign travel coverage so it is imperative that you review your coverage before traveling.  Some plans that do provide additional foreign travel emergency care may want you to notify them before leaving the country.  If your Medicare Advantage plan does not provide additional benefits for foreign travel, it must still provide the same benefits that original Medicare would cover (see exceptions above).  Once again this is for emergency care only and not for routine types of visits.  Keep in mind that many foreign hospitals do not bill the plan directly so you will likely have to pay for these costs upfront and then submit an itemized bill to your plan for reimbursement.  Be sure to keep all of your medical receipts if anything unexpected happens.

For those folks on original Medicare and have a Medicare Supplement, the coverage will work a bit differently.  Original Medicare will not pay outside the U.S. (unless it qualifies as a listed exception) so you will need to have any of the following Medicare Supplement plans to provide your coverage:

• Plan C
• Plan D
• Plan F
• Plan G
• Plan M
• Plan N

The Medicare foreign travel benefit found in these plans is very simple.  There is a separate $250 deductible and then the plan will pay 80% of the costs up to a lifetime maximum of $50,000.  Keep in mind that your coverage is in effect during the first 60 days you are out of the country.

Take Away

So as you can see, you actually do have coverage under certain Medicare Supplement and Medicare Advantage plans.  With coverage being more restrictive outside the U.S. it is always best to purchase an additional travel policy to help supplement your existing coverage.  A word of caution, not all travel plans provide emergency health benefits, so be sure to get one that specifically does.  Check the fine print for such things as will the plan pay actual charges or ‘usual and customary‘, and how pre-existing conditions are treated.  If the policy will not cover pre-existing conditions and you have a Medicare Supplement plan with foreign travel benefits, then you could use your travel plan for any emergency or sickness not related to a pre-existing condition (and vice-versa for anything related to a pre-existing condition).  These plans can usually be purchased thru a travel agent and can provide coverage past 60 days.  Medicare foreign travel planning will make your next international trip much more relaxing.

Have you heard the big news that there is going to be a large Social Security Increase (COLA) in 2023? It is estimated that it could come in around 10.5% due to rising inflation. What does this mean for the average retiree?

The average retired worker receives about $1,665.00 each month.  If the full 10.5% increase takes place, then that same retiree will start receiving an extra $174.83 each month.  This would bring their payment to around $1,839.83.  As you can imagine this will be very beneficial in helping offset the rising costs of goods due to inflation.  This increase will be the largest increase since 1981 which was 11.2%.

To view the Automatic Cost of Living Adjustments since 1975 click here and scroll to the bottom of the page.

If you are like me and really enjoy the old Clint Eastwood cowboy movies, you will remember the classic…The Good, The Bad, and The Ugly.  While we have just discussed The Good about the increase, now we must take a look at the other areas.

The Bad

For those retirees that receive lower than the average Social Security payment each month and qualify for other benefits due to having a lower income, could be pushed out of those programs with a large Social Security increase to their check.  Here are just a few income based programs that could be impacted:

• The Supplemental Nutrition Assistance Program (SNAP) which provides benefits for seniors to purchase needed food items.
• The Home Energy Assistance Program (HEAP) which provides money to senior to help offset the cost of their monthly utilities.
• Property Tax Exemptions are offered in many states for low-income retirees.
• Prescription Assistance Programs thru the state to help pay for Part D prescription drug plans.

Finally, many states also have pharmaceutic assistance programs along with programs from drug manufacturers that offer assistance as well based on income.

The Ugly

The amount of Social Security benefits that are exempt from taxes is still the same since 1984.  This means that any increase above the payment threshold is going to end up being taxable.  So if the monthly payment increase pushes an individual above $25,000 or a married couple above $32,000 for the year then this will trigger a taxable event on the income above these thresholds.

While such a large increase (if the full amount goes thru) seems like there is going to be so much extra money going into a retiree’s pocket, that simply is not the case.  With the current inflation rate being around 8.6%, the increase is pretty much a wash.  In addition, while inflation is coming in at 8.6%, certain primary goods such as food costs have climbed at a much higher rate, so there really will not be any ‘extra’ money going into anyone’s pocket.

What Can You Do?

Maybe your concern is simply having as much money in your pocket at the end of the month as possible.  With the rise of inflation we have also started seeing the rise of interest rates.  While savings account interest rates are still extremely low, there are CD type annuities that are paying much higher interest rates.  Many of our 5 year multi year guaranteed annuities are paying out over 4.00% which can help bring in additional income if needed.  To get a personalized annuity quote click below.

Another way to increase your monthly income is by seeing if you can lower your current Medicare Supplement rates.  Many of our clients have been able to lower their older Medicare Supplement plan rates by a substantial amount.  As always with Senior Benefit Services there is no cost or obligation to get a quote from us.  It’s FREE and you have absolutely nothing to lose.