Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - This week’s deep dive explores Medicare Part B.

3. Data Visual of the week 📊 - Data Visual highlighting Medicare Part B key statistics.

It’s only a 5 minute read, but it will make you 10x smarter.

Deep Dive 📚

Can’t Spell Medicare Without a “B”… Part B That Is

Back in August, we looked at Part A of Original Medicare including its history, administration, eligibility, coverage, enrollment statistics, and how it is funded. 

This week’s deep dive is going to continue through the Medicare alphabet by looking at Part B.

History

Since the history presented in August for Original Medicare Part A (“Part A”) also covers how Original Medicare Part B (“Part B”) came into existence, we’ll take a shortcut here. The year was 1965 and it was LBJ, in the Truman Library, with the ink pen. (For more on the Medicare’s history go here).

Administration

Part B is administered by the Centers for Medicare and Medicaid Services (“CMS”). 

CMS utilizes a network of Medicare Administrative Contractors (MACs) to process and pay claims for FFS beneficiaries. The Part B functions were previously handled by Part B carriers but the Medicare Prescription Drug Improvement, and Modernization Act of 2003 had CMS replace them with MACs. 

There are currently 12 A/B MACs that handle FFS Part B claims for a specified geographic jurisdiction and 4 that process Medicare Durable Medical Equipment, Orthotics, and Prosthetics claims. 

In 2022 alone, MACs processed approximately 957 million Part B claims, which equates to over 16 claims per Part B beneficiary.

Eligibility

Part B is available to individuals that are aged 65 or older, disabled, have ALS, or have end-stage renal disease. 

Individuals are not required to enroll in Part B, but if they elect to enroll, a monthly premium is required (there are some exceptions where individuals receive premium-free Part B). 

Additionally, individuals that do not enroll in Part B when first eligible will have to pay a penalty for as long as they remain enrolled (extra 10% for each year they were eligible to sign up for Part B and did not). 

The standard 2023 Medicare Part B monthly premium is $164.90. 

Note: On average the Part B premium has increased 4.6% per year over the last 10 years.

Individuals that meet certain income thresholds are considered high-income beneficiaries and pay a higher monthly premium (5 additional brackets that cap out as high as $560.50 in 2023). 

If you recall from the Part A deep-dive, Former President Truman and his wife Bess were the first recipients of Medicare cards. Their monthly Part B premium? $3 a month.

Coverage

Part B provides coverage related to:

• Outpatient services

• Doctor visits

• Home Health services

• Preventative services

• Medical supplies

The coverage of a service or supply by Medicare is dictated by law (federal and state), national coverage decision made by Medicare, and local coverage decisions by companies that process Medicare claims in their area. 

The primary Part B benefit pays 80% of the Medicare-approved amount after the beneficiary satisfies the annual Medicare Part B deductible. 

The 2023 deductible is $226 ($50 when Medicare was introduced in 1966). 

Note: On average, the Part B deductible has increased 4.4% per year over the last 10 years.

After the beneficiary satisfies the annual deductible, there are certain covered services that Medicare pays for completely such as clinical laboratory services, home health care, and an annual depression screening.

Some items and services that Original Medicare does not cover include long-term care, most dental, eye exams, cosmetic surgery, and concierge care.

Statistics

Within its first year of existence, Medicare provided coverage to over 19 million individuals. By the year 2005, Part B was providing coverage to nearly 40 million beneficiaries. As of year-end 2022, Part B has increased to covering nearly 59.5 million individuals. 

According to the 2023 Medicare Trustees report, the Part B program will experience an average growth rate of 2.0% over the next decade bringing the total number of beneficiaries to just under 73 million.

Funding

Part B is funded by the Supplementary Medical Insurance (SMI) Trust Fund, which consists of two parts for Part B and Medicare Drug Coverage (Part D). Each Part has its own account within the fund. The SMI Trust Fund receives its funding from the following sources:

1. Congress authorized funds

2. Premiums from Part B and Part D enrollees

3. Investment income from trust fund assets

(Note: In addition to Original Medicare and Part D, Medicare Advantage (Part C) is also partially funded by the the SMI Trust Fund)

Per the annual Medicare Trustees report, the financial status of each account within the SMI Trust Fund must be evaluated independently as there is not a regulatory provision allowing for asset transfer between the Part B and Part D accounts. 

However, each account is automatically in financial balance since the current law establishes a method for the premiums and general fund transfers and ensures the fund for each Part is adequate to cover the next year’s estimated expenditures. 

According to the 2023 Medicare Trustees report, it is currently estimated that both parts of the SMI Trust Fund will experience increases in fund balance from 2025-2032.

Final Thoughts

Individuals eligible for Medicare can elect to receive their benefits through Original Medicare or a Medicare Advantage plan. 

In either case, there are situations where the individual may be subject to significant out of pocket expenses. As a result, there are ample opportunities to support this population with supplemental products such as Medicare Supplement Insurance, Hospital Indemnity Insurance, Short-Term Care Insurance, and Critical Illness/Cancer Insurance.

What is your approach to ensuring this population has adequate financial protection from its medical expenses?

Data Visual of the Week 📊

Data Visual of the week comes from us! This is displaying key statistics for Medicare Part B, including projected SMI Trust fund balances, historical Part B premiums, and deductibles.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: promote your product or services to leaders in the Medicare space. Let’s discuss. (link) Note: 8 slots already taken.

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market. Let’s discuss. (link)