The New Face of Medicare? Nov. 12th , 2019
Have you heard, there is a new Medicare option available now that might just be the new face of Medicare? The Medicare Medical Savings Account (MSA) option is gaining momentum across the nation as a unique plan option for Medicare beneficiaries. The MSA is the only Medicare plan to give members money to use for their health care expenses on a tax-free basis. What makes this different from other traditional Medicare Advantage Plans? Simply put, there are 5 core elements that will never change with this plan because they\’re protected by the CMS. Let\’s take a look:
$0 PREMIUM, by law the MSA cannot have a premium
NO NETWORKS, by law any Medicare-participating provider is required to accept this plan. The exception to this is if the member wants to see a new provider, this new provider must be accepting new patients
ANNUAL DEPOSIT INTO MSA ACCOUNT, by law a deposit from the healthcare provider will be made on an annual basis. Deposit for 2020 is $3,240. MSA funds remaining at the end of the year will be transferred to the new year and will receive a new deposit. There is no cap on how much the MSA account can grow.
DRUG COVERAGE IS NOT INCLUDED, by law an MSA plan cannot include drug coverage, however, the member may add a stand-alone customized drug plan to coincide with their MSA.
HIGH DEDUCTIBLE, this is a high deductible health plan. After the deductible is satisfied, the insurance carrier offering the MSA pays 100% of Medicare A and B charges for the remainder of the year. It is a perfect fit to protect members from the cost associated with a catastrophic health event.
INTRIGUED YET? Are you seeing the potential of a plan like this for a Medicare-eligible? Take time to consider the Medicare Access and Chip Reauthorization Act of 2015 (MACRA) and its certain impact on Plan F policyholders after 01.01.2020. After this date, Plan F enrollments will not be permitted to new Medicare beneficiaries. Anyone who remains on a Plan F, and it should be logical to assume anyone with Plan F only has it because they cannot
medically qualify for another Medicare Supplement plan like Plan G, will undoubtedly experience higher than usual premium rate increases. This is because each plan is individually rated based on cost (i.e. Claims processed). After 2020, when Plan F is no longer accepting new Medicare beneficiaries, the pool of Plan F members will begin to age more rapidly than those of other plans, which will drive higher proportionate claims cost and thus drive up the premiums for Plan F. Not so good a situation for Plan F folks, especially those in rural areas. Now consider; a Medicare MSA could be a great solution to this problem. A lot of the Plan F folks did not have a backup plan until now, with the Medicare MSA there is not traditional underwriting like a Medicare Supplement plan The MSA has one health question which is do you have End-Stage Renal Disease? There are other qualifying criteria for the MSA, but these criteria are based mostly on factors unassociated with health. Big picture, the Medicare MSA is a great solution with its “no network” access to providers and a $0 premium it becomes the hero of the day.
Yes, Plan F folks can certainly benefit from the Medicare MSA, but there are a lot of other people who will be suited for it just as well. Think about individuals aging into Medicare (T65) and coming from a High Deductible major medical plans. These folks already are familiar with an HDHP, so the MSA will look very attractive to them with its $0 premium and an established MSA account with funds ready to use.
Some folks say this is the plan for the healthy and wealthy and this might be a fair assessment, BUT it is not the whole story. Considering the healthy or more to the point the un-healthy, understand the statistics tell us only 10% of Medicare beneficiaries with 3 or less chronic conditions are admitted for an inpatient stay in a hospital. Why is this number important? Because when you consider an inpatient hospital stay having the potential to use up all the members MSA funds it suddenly becomes the elephant in the room. If a prospective member for the MSA is concerned they will be part of the 10% with a hospitalization, encourage them to pair their MSA up with a supplemental plan like a Hospital Indemnity plan. The supplemental coverage can go a long way in protecting an MSA member from true out of pocket exposure.
As I have stated before, the MSA is a new concept for many Medicare beneficiaries and it is a great new sales opportunity for you. If you would like to have a more detailed discussion on this product including on how to market and sell it, I encourage you to reach out to me soon. As always, your friendly Producers XL staff appreciates you and thanks to you for giving us the chance to earn your business.