26 December 2004

Medicare changes will cause wallet checkups

If you are one of the nearly 42 million Medicare beneficiaries or among those expected to sign up in 2005, pay attention. There are some changes coming down the pike that could affect you and your wallet.

Thanks to the Medicare Modernization Act of 2003, there are new screenings available as well as choices to be made about prescription drug coverage. And there are price hikes. Beneficiaries and soon-to-be-enrollees (you can sign up when you turn 65 or sooner if you become disabled) could find mailboxes jammed with notices and updates.

"It's going to be a busy year," said Kathy Bakich, who heads up health-care compliance in the Washington, D.C., office of Segal Co., a human resources consulting firm.

- Premium increase. There are two parts to Medicare, Part A (hospital care) and Part B (doctor's care). Most individuals won't have to pay for part A, since they already paid their share of the cost through the FICA payroll tax. But if you are among the 1 percent that do, you will be paying $206 or $375 a month based on your length of Medicare-covered employment.

The cost for Part B is taking a 17 percent jump--the largest ever--to $78.20 from $66.60, and the deductible is going to $110 from $100. Check out www.medicare.gov for details on Part B eligibility and cost and what your share of the doctor's bill could be.

There are several reasons for the Part B premium bump, said Kirsten Sloan, AARP's national coordinator for health. People are using more services, and Congress authorized larger reimbursements to doctors and insurers participating in Medicare health plans.

Future estimates don't call for another double-digit increase, unless you have annual income of more than $80,000 ($160,000 as a couple). If you fall into that category, you'll pay significantly higher Part B premiums starting in 2007 based on your income.

- Prescription drugs. There are two things to keep in mind in 2005 about prescription drugs: The discount drug card and the Part D drug benefit. If you signed up for a discount card this year, but want to make a switch, now's the time to do it. If you've never enrolled, you can do it now.

In mid-November of 2005, you can start signing up for the new Part D benefit that kicks in in 2006 when the drug card program ends. As with the discount drug card, you'll have to pick a drug plan that best fits your needs. You can find more details at www.medicare.gov.

The Part D choices are most complicated for Medicare beneficiaries in a nursing home and those retirees who are currently covered by their former employer, said Michael Cook, a partner in the Washington, D.C., office of Baker & McKenzie law firm.

Nursing home residents want to make sure that the drug plan they choose works best with the pharmacy supplying the facility. Retirees who get prescription drug coverage now will want to find out if their former employer plans to keep its drug benefit, and compare it with what Part D offers.

- Medical screenings. There are new prevention care benefits that kick in Jan. 1, including a free "Welcome to Medicare" physical for participants who turn 65 in 2005 and beyond.

"Medicare started in 1966 and was intended to cover acute health-care costs," said Leslie Norwalk, deputy administrator at the Centers for Medicare & Medicaid Services, the government agency that oversees Medicare. "It wasn't until 1997 they added preventive benefits."

In 2005, new Medicare members get the free physical and all members can participate in the diabetes and cardiovascular screening at no additional cost.

By Lorene Yue
Your Money Chicago Tribune staff writer

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