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Do I need to Worry About Future Health Care Expenses? PDF Print E-mail
Written by Ellen Breslow   
Thursday, 07 May 2015 00:00
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Unequivocally, yes, you do. According to the U.S. Department of Health and Human Services, approximately 70% of Americans who are currently age 65 or older will need some type of long term care in the future. And the costs associated with long term care continue to rise. A 2013 Genworth Cost of Care Survey indicated that the average nursing home stay costs $83,950 and, in some states, can be as high as $255,891. Home health care isn’t necessarily cheaper, either. The same survey found that the average annual cost for round the clock care by a professional home health aide can be as high as $170,000, often costlier that a high quality assisted care facility or nursing home.

 

Don’t count on Medicare. It may cover short term stays in a skilled nursing facility after leaving the hospital, however it will not cover long term custodial care at home, in a nursing home, or at an assisted living facility.

The selection of investments and the funding of these expenses can be a daunting task. While traditional long term care insurance has historically been the most common investment individuals have made for future care, it has most recently come under fire because of unexpected increases in premiums and fewer carriers that sell the coverage. That said, traditional long term insurance care can provide assistance with expenses and, if protection of health care costs is the primary goal, this can be a viable alternative.

One of the primary criticisms of traditional long term care insurance is the “use it or lose it” provisions of the plans. If the care is not used, there is no value to the premium payments made to the policy. In addition, premiums can be a component of ongoing cash flow, which may not suit an overall retirement planning strategy.

If you’re interested in planning for your future care, and at the same time preserving assets for heirs, hybrid life insurance with a long term care rider may be a worthwhile alternative. Hybrid life insurance has increased in popularity over the last five years, yet is still relatively unknown and a more complicated vehicle for funding future care. This insurance is an attractive means of financing long term care expenses, if they become necessary, but also allows the flexibility of including a death benefit if the funds aren’t used for long term care expenses. Premiums may be paid over time, or in a single premium payment at the time the policy is purchased contingent upon policy provisions. Hybrid insurance may have a number of additional stipulations which should be reviewed carefully before any investment is made.

Insurance is not a requirement for addressing long term care needs. Individuals can always self fund care in the future, if they have the savings to do so.

Don’t wait to explore options for future care. It only gets more expensive, and you may ultimately find that you can’t buy long term care insurance.

 

 

 

 

 

 

For additional information, contact EAB HealthWorks.

 

Last Updated on Thursday, 07 May 2015 15:48
 
Is Medicare "Fixed'? PDF Print E-mail
Written by Ellen Breslow   
Wednesday, 15 April 2015 00:00
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The Medicare system may not be totally fixed, but the physician payment formula is. The “doc fix”, as it has become known, passed the Senate this week with a rousing 92 to 8 victory, after passing the House 392-37.  It now moves to President Obama and he has indicated the he will sign the bill.

What exactly is “fixed”? The Senate vote came just a mere hours before Medicare doctors faced a 21 per cent Medicare cut. The new bill would remove the old physician payment rates, which were set based on an economic formula known as “sustainable growth rate” (SGR). This SGR was created by a 1997 deficit reduction law in an attempt to regulate Medicare expenditures. For first few years, the formula met its target and enabled physicians received small pay increases. Beginning in 2002, however, the SGR reduced physician payments by 4.8 percent. Since then, cuts have been deferred by Congress thereby increasing the size of the “fix”.

The new payment rates would give doctors a 0.5 percent increase in each of the next five years as Medicare moves to a payment system that rewards doctors based on the quality of care provided, rather than the number of procedures performed, as has been the case in the current formula. This corresponds to efforts in the federal law to link Medicare reimbursements to quality metrics.

The idea behind changing the way Medicare pays doctors is to encourage better care coordination and chronic care management. Existing payment incentive programs would be combined into a new “Merit Based Incentive Payment System”. Also alternative payment models, to be developed in the future, will be reviewed by a technical advisory committee to determine suitability.

Some seniors will be impacted by the new bill. Beginning in 2018, wealthier Medicare beneficiaries would see an increase in the cost of their Medicare coverage. This increase is expected to affect only 2 percent of Medicare participants.

Also, in 2020, Medigap (Medicare supplement) plans would no longer be able to cover the Part B deductible for new beneficiaries. This “first dollar” coverage usually covers nearly all deductibles and copayments. According to a Kaiser Family Foundation study, Medigap enrollment trends have been declining among 65 year olds so that, hopefully, this should impact fewer seniors.

The doc fix is part of a bigger bill with more components. What it will do for Medicare remains to be seen. Stay tuned.

 

 

 

 

 

 

 

 

For additional information, contact EAB HealthWorks.

 

Last Updated on Thursday, 16 April 2015 08:41
 
Are Biosimilars the New Generics? PDF Print E-mail
Written by Ellen Breslow   
Sunday, 15 March 2015 00:00
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Maybe soon. What exactly is a biosimilar drug and what makes it like a generic? Where do you find biosimilar drugs? Are they like biologics?

Biologics are specialty drugs available in the United States to treat a variety of conditions from anemia to multiple sclerosis to rheumatoid arthritis. These medicines make up a small but increasingly costly part of the U.S. drug market. Biologics are so expensive that they are often out of reach for many individuals. As an example, a biologic used to treat rheumatoid arthritis can cost at least $1800 a month.

Biosimilars were created to compete with biologics to reduce the cost. They are a little like generic drugs. The key difference between the two lies in the manner in which they are developed. Biosimilars are meant to replicate biologics which are made with living cells. It is difficult to make exact copies of biologics because they are manufactured differently than tablets or syrups.

Biosimilar drugs have been on the market in Europe for almost ten years and this has led to a price reduction of twenty to thirty percent for some biologics. Could this happen in the United States in the near future?

Yes.  The Affordable Care Act has established provisions for the development of biosimilar drugs in the United States. The Biologics Price Competition and Innovation Act is a forty page section of the Affordable Care Act that establishes the framework for the FDA to assess and approve biosimilars. Similar legislation was passed in the 1980’s that paved the way for the approval of generic drugs.

The standard for FDA approval of biosimilar drugs is a higher standard than what is required for traditional generics. The FDA has just approved its first biosimilar drug, brand name Zarxio, which is similar but not quite identical to Amgen’s Neupogen, a drug that received FDA approval in 1991 to be used to fight infections in cancer patients. Unlike other biosimilars scheduled for approval review, Zarxio has been used in Europe for years and had a significant amount of data to support its use, making the approval process easier.

 

Watch for biosimilars in the future!

 

 

 

 

 

For additional information, contact EAB HealthWorks.

 

Last Updated on Sunday, 15 March 2015 11:54
 
Health Care and College Tuition: Look Again PDF Print E-mail
Written by Ellen Breslow   
Saturday, 11 April 2015 00:00
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If you’ve been paying tuition and, at the same time reviewing health care expenses for your children, you’ve noticed that many colleges and universities have been offering students health insurance from the school as a part of fees and tuitions. Depending upon the school and the insurance, some colleges have offered very attractive plans. Many parents and students have elected those plans for coverage. So, why now are some colleges and universities no longer offering health insurance plans for their students?

There are a number of reasons. Most of these are associated with the Affordable Care Act (ACA). But wasn’t that why colleges offered health care to begin with? Not really. In fact, the ACA is a large part of the reason that many colleges aren’t or are thinking of no longer offering health insurance to its students.

In order for colleges and universities to continue to offer health insurance plans to its students, these plans must comply with the “minimum essential benefits” as specified by the ACA. Many of the plans are not compliant with these ACA provisions and must add benefits. Adding the provisions means that the cost of these plans increases significantly for the insurance carriers, and therefore for the university and subsequently for students and parents.  Unlike public health care exchanges, there are no subsidies available when enrolling in coverage though a college or university which can make them an even more expensive alternative for student health insurance.

Given the fact that the ACA has made it mandatory for all individuals to have health insurance, what do parents and students do about coverage if there is no student health insurance option available?

For parents covered by an employer sponsored health insurance plan, adult children may remain participants until age 26. That is most often the best coverage for children, and most parents elect to keep their college age children on their plans. Health insurance exchanges are available and children can elect to remain on their parents exchange plan or enroll in individual coverage through the exchange.

Don’t assume that your child’s university will automatically “roll up” health insurance in your tuition bill. When that bill arrives, review it carefully.

 

 

 

 

 

 

For additional information, contact EAB HealthWorks.

 

Last Updated on Saturday, 11 April 2015 08:23
 
The Supreme Court vs Obamacare Part Two: What You Need to Know PDF Print E-mail
Written by Ellen Breslow   
Friday, 27 February 2015 00:00
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It’s formally known as King v Burwell and its time has come. Beginning on March 4th, the Supreme Court will hear arguments that challenge the meaning of four key words in the ACA: “established by the state”. These words refer to health insurance exchanges—why are these words so critical? What are the consequences of the case?

 

The opinion rendered on King v Burwell in 2015 will impact the availability of subsidies to individuals who enroll in health insurance through the healthcare.gov website. This program is the federal health insurance exchange and is not state operated. So the question lies in the interpretation of those four words. Are those who enroll on the federal health insurance exchange eligible for a subsidy? Those who enroll on one of the thirteen state exchanges are eligible as the literal interpretation allows them a subsidy. But the residents of thirty six states are in a gray area, and their subsidies are what is now subject to interpretation by the Court. But what did the authors of the ACA REALLY mean? That is what the judges have to decide.

The availability of subsidies is not related to the individual mandate, the requirement that individuals purchase health insurance. The constitutionality of the ACA was decided by the Supreme Court in its  decision in 2012: NFIB v Sebelius. Owning health insurance remains a requirement regardless if an individual qualifies for a subsidy when purchasing health insurance on an exchange.

If the Supreme Court disallows subsidies to be offered through the federal government’s exchange, what happens to those people who are already receiving subsidies from healthcare.gov? According to a study done by the Urban Institute, 9.3 million people could lose $28.8 billion of federal assistance in the first year alone. Most of these people couldn’t afford to purchase health insurance without a subsidy, so that number of uninsured could rise by as many as 8.2 million people.

If you don’t have your health insurance through an exchange, could this ruling have an impact on you? It might. Even if the subsidies are disallowed for the federal government’s exchange participants, individuals can still purchase insurance on the exchange without subsidies. So those who are most likely to need medical services will continue to purchase coverage through the exchange. The problem is insurers are likely to increase premiums in a state for everyone who buys their own individual insurance even if it isn’t purchased on an exchange.

A Supreme Court decision is expected in late June. Generally, decisions take effect twenty five days after they are issued. This would mean that subsidies would cease in July or August. The individual mandate remains in effect, except if the lowest priced plan is more than eight percent of an individual or family’s income. Without a subsidy (and a possibility of increased premiums) many people would not be required to purchase health insurance.

As of now, there are no solutions if the subsidies go away. Stay tuned.

 

 

 

 

 

 

 

For additional information, contact EAB HealthWorks.

 

Last Updated on Friday, 27 February 2015 14:23
 
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