MACRA:: Facts & Fiction


As I notified you a few months ago, Congress passed legislation in 2015 to permanently do away with the old method of calculating physician and other provider reimbursements for Medicare charges. The legislation, Medicare Access and ChiP Reauthorization Act or MACRA, in fact, deals with much more than this.

A couple topics that are only now getting much attention is a provision in the legislation that the limit Medigap plans starting in 2020 that essentially eliminate a beneficiary's out-of-pocket. Today's Plan F offers payment of all Medicare cost sharing amounts, while Plan C pays for all Part A & B deductibles. Therefore F and C will be going away. 

Another provision of MACRA will be that it will re-arrange the brackets for means testing to determine Part B premiums and Part D IRMAA premium add-ons. The next effect will be to pull more people into paying higher premiums based on the MAGI (modified adjusted gross income), as shown on their tax returns from 2 years previous.

What Are The Facts About Plan F

For years, folks inside the beltway have harbored the opinion that Medigap plans that pay for all Medicare cost shares (today’s Plans F and C, and Plan J prior to June 2010) actually cost Medicare more due to over-utilization of health care services. Despite several academic level studies in recent years that have shown this is not the case, in DC perception has become reality. Hence, these plans will be going away 2020.

However, if a new Medicare beneficiary becomes eligible prior to January 1, 2020, but delays enrolling in a Medigap plan, will be allowed to apply after 1/1/2020. Beneficiaries already on a Plan F will be "grandfathered" and allowed to keep that coverage after the change over date.

Higher Means Testing Comes Sooner

Perhaps more troubling are the changes being ordered in “means testing” amounts. Recall, that under this provision, the higher one's income, the higher Part B and Part D premiums become. Under MACRA, beginning in 2018, the tiering structure (thresholds) will change, sweeping more middle income taxpayers into higher premiums. In addition, the tiering will now become indexed to inflation. The means testing amounts are set by CMS, so we do not yet know exactly what the dollar figures will be.