Tag Archives: Medicare

Annual Creditable Coverage Notice Deadline Approaches

September 21, 2018


The annual deadline for the Creditable Coverage notice is arriving once again. The Centers for Medicare and Medicaid Services (CMS) requires employers offering prescription drug coverage to disclose to all Medicare Part D eligible individuals the creditable status of their plan by October 15th each year. Employers may use the model notices available here on CMS’s website.

It can be very difficult for employers to know exactly who should receive the notice as there are ways to become Part D eligible beyond attaining age 65. Many employers resolve this issue by including the notice in enrollment materials or providing separate mailings to all employees who participate in the employer-sponsored plan. We’ve previously discussed distributing the notice here.

If mailing the notice, first-class mail is generally preferred. A single notice may be sent to Part D eligible employees and their Part D eligible spouse or dependents. If the employer is aware a spouse or dependent resides at a different address, a separate notice must be sent to their address. When including with enrollment materials, the notice must be:

  • Prominently referenced; and
  • In a (minimum) 14-point font in a separate box, bolded or offset on the first page.
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Medicare Part B Premiums Rise Next Year?

December 20, 2017


CMS Medicare has announced that the standard Medicare Part B premium will remain at $134 per month in 2018. The headline is comforting for retirees, as it appears that premiums are not increasing.  But read further down the press release and one notes that for many enrollees,  42 percent to be precise, they’ll see their Medicare premiums grow to $134 because the cost-of-living adjustment to their Social Security benefit eliminates a previous hold- harmless protection that kept  their Part B premiums at or under $107 per month.

The news isn’t favorable for our higher-income Medicare enrollees, either. With a five-tier chart of premiums that rises above $134 on incomes that exceed $170,000 for married couples, roughly 10% of Medicare enrollees have paid higher Part B and D premiums for quite a few years.  The change for 2018 that’s drawing considerable notice is that the top two earnings tiers have dropped, with income thresholds more than $100,000 lower than 2017.  This puts more enrollees in higher Part B premium categories.

With most enrollees paying Medicare premiums out of their Social Security checks, these increases can go unnoticed. It pays to be informed!  For details on the premiums you’ll pay to Uncle Sam for Medicare next year, please go here: https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html .  And, call us when you have questions on Medicare costs and coverages.

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Preventing Medicare Identity Theft

October 19, 2017


It shouldn’t surprise anyone that a card kept in our wallet and handed out to strangers at every medical facility represents a significant identity theft exposure.  In an effort to reduce healthcare related fraud, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) mandates the removal of the Social Security Number-based Health Insurance Claim Number (HICN) from Medicare ID cards.

Centers for Medicare & Medicaid Services (CMS) will mail out new Medicare ID cards beginning April 1, 2018 through April 1, 2019. The HICN, which contains the SSN, will be replaced with a Medicare Beneficiary Identifier (MBI).

Impact to Employers
Employers and their HR departments do not need to make any changes unless they capture and use the Medicare HICN for active employees or retirees.

Impact to Medicare Beneficiaries
Medicare beneficiaries who have a Medicare ID card will be required to use the new number on Medicare-related documents, including claims submission forms with medical providers.

Until the new ID card arrives in a beneficiary’s mailbox, the usual cautions on providing personal information apply.  See here for Medicare’s common-sense suggestions; https://www.medicare.gov/forms-help-and-resources/identity-theft/identity-theft.html

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Medicare Part D Creditable Coverage Notice Requirement

September 20, 2016


Group health plan sponsors that provide prescription drug coverage to Medicare Part D eligible individuals must disclose whether their plan is creditable. “Creditable” refers to whether the actuarial value of the prescription drug coverage equals or exceeds that of the standard Part D coverage. Plan sponsors must disclose their creditable status in two ways: filing with the Centers for Medicare and Medicaid Services (CMS) and distributing a notice to eligible plan participants.

Filing with CMS

Disclosures to CMS must occur annually and upon the occurrence of these other events:

  • Within 60 days after the beginning date of the plan year for which disclosure is provided;
  • Within 30 days after termination of the prescription drug plan; and
  • Within 30 days after any change in creditable status of the prescription drug plan.

Disclosures to CMS must be completed and sent electronically through their website.

Creditable/Non-Creditable Coverage Notice

Employers must distribute a creditable coverage notice to plan participants. The notice helps enrollees who are covered by Medicare make informed and timely decisions about whether and when to enroll in Medicare Part D, and avoid potential late enrollment penalties. The deadline for compliance is October 15th of each year.

Many insurance carriers send the notice annually, and employers are not required to provide their own notice if participants receive a compliance notice from the insurance company or employer’s claims administrator. Employers, however, should exercise caution as some carriers may only send the notice to individuals at certain age thresholds thus potentially missing eligible employees.

Employers who distribute the notice themselves often find it difficult to identify all individuals (including dependents) who may be eligible for Medicare. Many employers satisfy this requirement by including the notice in enrollment materials or in separate mailings provided to all employees who participate in the employer-sponsored plan.

If an employer wishes to distribute the notice with their enrollment materials, they must be aware of a few requirements. First, because the notice must be provided before October 15th each year, employers with open enrollment in November and December cannot rely on including the notice in enrollment materials to satisfy the annual requirement. The employer must also follow formatting requirements. The notice must be:

  • Prominently referenced
  • In a (minimum) 14-point font in a separate box, bolded or offset on the first page.

If an employer provides the notice in separate mailings, first-class mail is generally safest. CMS has indicated that an employer may generally provide a single notice to both the Part D eligible employee and their Part D eligible spouse or dependents. However, if the employer is aware of a spouse or dependent that is Part D eligible who resides at a different address from the participant, the employer must provide a separate disclosure notice to their address.

An employer may also send the notices electronically. Unfortunately, the rules on electronic disclosures are complex, so it is not the easiest method for employers to use. The plan administrator must follow these steps:

  1. Provide a notice to the individual’s email address that details:
    1. what documents they are consenting to receive electronically,
    2. that their consent can be withdrawn at any time without charge and how to do so,
    3. how to update their address information,
    4. any hardware or software requirements to access and retain the notice, and
    5. the right to a paper copy
  2. The individual must affirmatively consent via that email address to receive the notice electronically.
  3. Only after the first two steps may the plan administrator send the notice via email. Note that because spouses/dependents generally do not have access to employer’s email systems, personal email accounts should be used.
  4. Post the notice on the employer’s website, if applicable, with a link on the entity’s home page to the disclosure notice.

Other Distribution Dates

There are also other times that employers are required to provide this notice in addition to the annual requirement. Below is a list of times at which notice of creditable or non-creditable coverage is required:

  • Prior to an individual’s initial enrollment period for Part D
  • Prior to the coverage effective date for any Medicare-eligible individual joining your plan
  • Whenever prescription drug coverage ends or creditable status changes
  • Upon the request of the individual.

The model notices can be found on CMS’ website.

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6 Medicare Mistakes to Avoid

July 8, 2016


With over 55 Million enrollees, Medicare is a massive federal health program that touches nearly everyone. If you’re not enrolled or planning on joining, you probably have a loved one or friend taking part.  If so, then you’ve already heard some of the horror stories about problems, oversights, and miscalculations that leave folks with too little coverage, or painfully high premiums.  With so much bad information out there, I’d like to outline a few of the common mistakes and pitfalls I’ve seen clients struggle with over the years.

Missing Your Initial Enrollment Period  

For most enrollees, Medicare eligibility begins at the start of the month in which you turn 65. Guidelines provide for a 7 month enrollment window; 3 months prior, the month you turn 65, and 3 months after.  If you miss that enrollment period, you may have to wait until the next General Enrollment period, and you may have to pay a penalty.

Enrolling in Medicare is usually an opt-in process.  You can visit www.SSA.gov to find the local Social Security Office and enroll in person, or you can enroll online at www.Medicare.gov.  Please note however, that if you’re receiving your Social Security retirement check when you first become eligible for Medicare, you’ll be enrolled and receive your Medicare ID card automatically.

Enrolling In Medicare Part B When You Don’t Need It

If you have group health coverage through your employer (or through your spouse’s employer), and that employer has 20 or more workers, you can delay enrollment into Medicare Part B until employment ends. In this scenario, there are no penalties or waiting periods for delayed enrollment.  And, since there’s a monthly premium for Part B, you could be paying for something you don’t need (if you have both Part B and employer group health coverage).  Go here for details: https://www.medicare.gov/sign-up-change-plans/get-parts-a-and-b/employer-coverage/i-have-employer-coverage.html#collapse-5567

Failing To Enroll In Part B When You Have COBRA or Retiree Medical Coverage

Even though COBRA looks like a straightforward continuation of your former employer’s group health plan, federal rules make COBRA coverage a secondary payer to Medicare. This means you could have a significant, uncapped out-of-pocket exposure for any medical bills if you haven’t signed up for Part B.  You may have penalties and a waiting period for enrollment, too.

Retiree plans have a variety of rules and regulations that make one-size-fits-all guidance impossible. For many retiree plans, Medicare is your primary payer.  For some, Medicare isn’t even necessary.  When planning for your retirement, reach out to your employer HR department or union health and welfare fund administrator as early as possible to review their written rules and guidelines.  It’s a good idea to review coverage costs against market alternatives such as Medi-Gap plans, too.

Skipping Part D Coverage

Part D drug insurance plans should not be viewed as optional coverage. If you miss your initial enrollment opportunity, you’ll not only have a late entry premium penalty when you join, but you’ll have to wait until next January for coverage.  With all the expensive break-through drugs coming into the market, you could have some difficult choices to make if you’re without a Part D plan.

Choosing Cheap Over Good When Buying Medicare Insurance Products

Maintaining our health in retirement should be one of our most important goals. When we’re choosing Medicare insurance plans, we need to put quality ahead of cost.  Medicare Advantage plans with insufficient provider networks or high out-of-pocket exposures, drug plans with small formularies and poor customer service, MediGap plans from insurers with questionable financial stability are all hard-to-spot deficiencies that can leave us regretting our buying decisions. 

Trying the D-I-Y Approach

In taxes, law and finance, we know that well informed decisions are easier when we hire a professional CPA, attorney or financial planner. In much the same way, utilizing a Medicare specialist insurance broker will prove helpful and keep you out of do-it-yourself traps.  Your broker is your advocate and will support their recommendations with well-reasoned explanations, plain language consumer resources, and transparent cost information.  Look for the same professional criteria from your broker as you would the rest of your advisor team- experience, reputation, transparency and knowledge.

Getting the best available health coverage out of your Medicare enrollment shouldn’t be like peeling an onion, with layer after layer of tear-inducing effort that leaves you with nothing but a mess to clean up. Plan ahead, know your rights, rely on your experts and you’ll find the right path to great coverage in your retirement.

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Physician Shortage

February 24, 2016


According to projections from the Association of American Medical Colleges (AAMC), the demand for physicians will exceed the supply by a range of 46,000 to 90,000 physicians by the year 2025. The shortage will occur among primary care physicians along with non-primary care physicians including medical specialists, surgical specialists and other specialists.

The shrinking supply of physicians is due to several factors. Population growth is the largest driver requiring about 33,000 more physicians by 2025. The passing of the Patient Protection and Affordable Care Act also expanded coverage to an additional 34 million Americans. Another contributing factor is the large number of practicing physicians who are advancing in age. Currently, one in three practicing physicians in the United States is over the age of 55 and close to retirement. The aging population is also a major contributor. According to the AAMC, 10,000 Americans turn 65 daily and about two-thirds of individuals over the age of 65 have at least one chronic disease to manage.

Added to the shrinking physician practices, population growth and an aging population is the uneven growth of residency training positions in relation to medical school enrollment. Medical school enrollment has expanded by approximately 30 percent since 2002, but residency training positions have increased only by 8 percent since 2002. Although more individuals are graduating with a medical degree, new physicians may not be able to practice medicine and take care of the members of their community if they are unable to secure a residency. Secondly, the Balanced Budget Act of 1997 capped Medicare-funded residency positions at 1996 levels, limiting teaching hospitals’ efforts to expand or create new programs.

The answer is not an easy fix, but because it can take up to 10 years to train a physician, steps need to be taken now. Addressing the shortage will involve a multi-layer approach with no single solution. The AAMC recommends the following:

  • Increase in the number of federally supported residency and fellowship training positions by at least 4,000 new positions a year
  • Increase funding for new residency positions based on regional and state specific needs, with half of the new positions in primary care and other generalist areas
  • Encourage policymakers to use clinical reimbursement and other mechanisms to affect geographic distribution of physicians
  • Encourage the federal government to continue to invest in new technologies and evidence-based innovations in health care delivery

Sights should also be focused on increasing the productivity of current physicians and expanding the roles of other licensed healthcare providers such as nurse practitioners and physician assistants to efficiently and effectively meet patient needs. Even telemedicine can have an impact by increasing physician utilization rate.

Steps must be taken to ensure that people can access the care they need when they need it. To find out more:


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Reporting Deadline Approaching

September 21, 2015


The Centers for Medicare and Medicaid Services (CMS) requires you to notify Medicare Part D Eligible members if the drug coverage offered by the employer is Creditable or Non Creditable by no later than October 15th of every year and annually notify CMS, online within 60 days after the first day of the plan year of the coverage status.


Provide notice to Medicare eligible individuals whether the plans prescription drug coverage is creditable or not creditable. Most insurance carriers or Pharmacy Benefit Managers (PBM’s) are providing notices to employers as to whether the coverage is Creditable or Non Creditable. If you did not receive a notice from the carrier you can call and ask them. Although you are only required to provide this notice to Medicare eligible participants we recommend you provide this notice to all employees in the event an employee has a spouse or dependent who is Medicare eligible that you may not be aware of. CMS provides detailed guidance and model notices on their website.

Provide notice to Centers for Medicare and Medicaid Services (CMS) of employer program status. The online disclosure form can be found on the CMS website .


When providing notices to Medicare eligible individuals a number of options are allowed as follows:

  1. Provide the model notice “As Is” subject to completion of certain blanks.
  2. Prepare a customized notice – an employer with or without creditable coverage can provide a customized creditable coverage notice, provided that it meets CMS’s content standards, summarized below.

If coverage is creditable, customized disclosure notices must address the following items:

  • that the employer has determined that the prescription drug coverage is creditable ;
  • the meaning of creditable coverage , as defined by the guidance; and
  • Why creditable coverage is important and that the individual could be subject to payment of higher Part D premiums if he or she subsequently has a break in creditable coverage of 63 days or longer before enrolling in a Part D plan.

If the coverage is non-creditable, customized disclosure notices to Part D eligible individuals must address the following items:

  • that the employer has determined that the prescription drug coverage is not creditable ;
  • the meaning of creditable coverage , as defined by the guidance;
  • that an individual generally may only enroll in a Part D plan from October 15 through December 7 of each year, starting with the 2012 plan year; and
  • an explanation of why creditable coverage is important and that the individual may be subject to payment of higher Part D premiums if he or she fails to enroll in a Part D plan when first eligible.
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COBRA and Medicare: Know the Rules

March 10, 2015


If we’re working for an employer that has twenty or more full time employees, Medicare A & B pays on a secondary basis to our employer group health plan.  Thus, for many seniors with employer group coverage there’s no need to take Medicare when first available at age 65.  However, when employment ends and we become COBRA eligible, problems can develop.  Enrolling in COBRA without taking Medicare triggers two very significant exposures;

  1. COBRA is not creditable coverage. CMS Medicare guidelines leave you without credit for being insured when you’re on COBRA. This means the clock starts on your Medicare Special Enrollment Period the moment you lose employer group coverage and move to COBRA. When the clock starts, you have only 8 months to enroll with Medicare for Parts A & B. Otherwise you’re facing late enrollment penalties and waiting periods.
  2. COBRA is a secondary payer to Medicare. COBRA coverage pays after Medicare, as if you have Parts A & B. Failure to sign up for Medicare immediately on or before becoming COBRA eligible leaves you financially exposed and personally obligated to pay more than 80% of any medical bills incurred.

COBRA notices written by the Department of Labor don’t do a good job explaining the exceptional rules of Medicare.  It’s always wise to seek counsel from a specialist Medicare insurance broker, or your State Health Insurance Assistance Program.

For more information on Medicare, go to: www.Medicare.gov .  For questions on this article, or to discuss senior insurance plans and services, please contact Kevin Guss, at Kguss@jwterrill.com or 314.594.2717.


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Value Replacing Volume: New Medicare Reimbursement Goals

February 3, 2015


On January 26, Health and Human Services (HHS) Secretary Burwell announced a plan for Medicare reimbursement to start paying providers based on the quality of care they provide, rather than the quantity. HHS has three objectives to improve healthcare:

  1. Using incentives to motivate higher-value care;
  2. increasingly tying payment to value through alternative payment models; and
  3. coordinating providers to create more effective care for patients.

HHS aims to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016.  By 2018, the goal is 90%.  Out of those numbers, a percentage is desired to be achieved through alternative payment models. HHS gave themselves to 2016 to have 30% of Medicare payments tied to quality or value through alternative payment models and to 2018 for 50%.  These alternative payment models include accountable care organizations (ACOs) and bundled-payment arrangements under which health care providers are accountable for the quality and cost of the care they provide patients.   ACOs are becoming an increasingly common way to provide payments.  Three years ago Medicare almost never used ACOs for payment but today they account for 20% of Medicare payments to providers.

HHS created more groups to attempt to encourage hospitals and providers to focus on the quality of care Medicare patients received and not the quantity of patients. Partnership for Patients is one such group that encourages hospitals to focus on patient safety. For example, there is a national program to reduce hospital readmissions within 30 days after discharge by improving transitional care before a patient is discharged.  It has shown successful results so far with readmission rates decreasing across the nation.

While HHS appears determined to achieve these goals, it will have a struggle to overhaul such a large program as Medicare.   How successful they will be will become evident as time goes on.   For now, employers do not need to worry about changing anything in their health plans.

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Medicare Notice Deadline Approaching

September 12, 2014


Its that time of year where as an employer offering prescription drug coverage to Medicare Part D Eligible employees, the Centers for Medicare and Medicaid Services (CMS) requires you to notify these members if the drug coverage is Creditable or Non Creditable by no later than October 15th of every year and annually notify CMS, online within 60 days after the first day of the plan year of the coverage status.


Provide notice to Medicare eligible individuals whether the plans prescription drug coverage is creditable or not creditable. Most insurance carriers or Pharmacy Benefit Managers (PBM’s) are providing notices to employers as to whether the coverage is Creditable or Non Creditable. If you did not receive a notice from the carrier you can call and ask them.Although you are only required to provide this notice to Medicare eligible participants we recommend you provide this notice to all employees in the event an employee has a spouse or dependent who is Medicare eligible that you may not be aware of. CMS  provides detailed guidance and model notices on their website.

Provide notice to Centers for Medicare and Medicaid Services (CMS) of employer program status. The online disclosure form can be found on the CMS website .

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Retiree Coverage Options

March 19, 2014


As insurance costs continue to rise, one of the benefits of many organizations eliminate, or look for cost-saving alternatives, is coverage for retirees. Over the past several years, programs have been created in order to entice employer groups to keep retiree coverage with incentives of government subsidy payments and tax deductions. This article is intended to provide a background on two programs that have been around for many years. These programs may have an impact on what an organization may decide to do with that retiree coverage. The Retiree Drug Subsidy, established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), and the Employee Group Waiver Program, initiated by the Center for Medicare and Medicaid Services (CMS) are the two programs. Examining the pros and cons of both programs may help plan administrators decide which program is a better fit for an employer or Taft-Hartley plan.

Retiree Drug Subsidy

The Retiree Drug Subsidy, or RDS, was created by CMS for employers who sponsored group health plans providing benefits to retirees. This program was intended to encourage the continuance of drug benefit offerings to retirees, thus limiting the amount of retirees with terminated prescription drug benefits seeking these benefits through Medicare. Employers or union groups who keep these retirees covered are able to receive a subsidy from Medicare to cover these drug costs of the retirees. This subsidy rebates to plan sponsors 28% of each retiree’s pharmacy expenditures between the cost threshold and cost limit. The cost threshold and limit for 2014 is $310 and $6,350 respectively. The maximum rebate for a plan sponsor for any covered individual is $1,691. When first introduced, employer groups who utilized the RDS were also allowed to take a deduction for the subsidy, thus increasing the benefit of the program.

A group interested in the subsidy program must first file an application on the CMS website. This process requires the group to have an actuary attest that their current prescription drug plan is as good as Medicare Part D. It also requires that the group to submit reportable data regarding the covered retirees be submitted. Once the application is approved, the employer or multiemployer group will begin sending and receiving files with membership information. This is an ongoing process throughout the year, which also includes an annual reconciliation of these files. Each year, the group must reapply ninety days prior to the group’s plan year. This is a group effort made by the group representative, the actuary and the PBM.

As of 2013, under the introduction of the Patient Protection and Affordable Care Act, or PPACA, employers subject to income tax are no longer able to take a deduction for the RDS. This significantly decreased the value of the program to these employer groups and left them looking for an alternative subsidy program to replace the RDS. Benefit plans that are collectively bargained or tax exempt groups are not affected by the elimination of the tax deduction. These benefits are funded through Taft-Hartley trusts or act as non-profit plans, which are not subject to income tax.

Employee Group Waiver Plan (EGWP)

Employee Group Waiver Plan, or EGWP (pronounced egg-whip), is a strategy for reducing the cost of retiree drugs as well. This strategy is used as an alternative to the RDS, with the elimination of the tax deduction brought about by the PPACA. In an EGWP, the subsidy is not determined by a retiree’s pharmaceutical spending, rather by a formula for risk rating plan members done by the federal government. EGWPs can be either “800 series” or “Direct Contract.” In the 800 series EGWP, a third party holds the contract with CMS and in the Direct Contract, the employer contracts directly with CMS. The most common is the 800 series EGWP.

In an EGWP the plan sponsor contracts directly with one or more Prescription Drug Plans (PDPs) to provide at least Part D level prescription drug coverage to its Medicare-eligible participants on a group basis. The intention of this plan was to eliminate some of the administrative burden of file exchanges and reconciliation and improve flexibility. There is no actuarial equivalence test required as there is with RDS. The PDP (offered by the PBM or health plan) assumes most of the administrative workload and handles member issues. Member disruption is limited in an EGWP; however, is not zero as compared with the RDS. Another significant benefit of the EGWP is catastrophic reinsurance. Once an individual’s drug spending exceeds $6,773.75, the program pays 80% of the remaining cost for the rest of the plan year. This comes into play when high-cost specialty drugs are utilized within a plan. This type of reinsurance only applies to qualified Part D plans such as EGWPs and does not apply to the employer plans that use RDS. A group will also realize a 50% brand discount from manufacturers in the coverage gap.

Should you switch?

Before considering a switch from the RDS to an EGWP, an employer group should examine whether it is appropriate. Both options should be compared to one another with regard to financial benefits, implication of health care reform, administrative costs, and vendor support to ensure this would be a viable option. The results of this analysis will vary by plan depending on size and richness of the plan.


OPEB Liability- Does it Matter? By Barry Eyre and Mark Whitcher, CEBS- Benefits Magazine May 2013

Medicare Part D Retiree Drug Subsidy (RDS): Impact of Health Care Reform Legislation Is now the right time to switch to an Employer Group Waiver Plan (EGWP)? Transamerica Affinity Services, Inc. (RDS vs. EGWP White Paper 2013)

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Medicare Part B Premiums Remain Static

January 14, 2014


Medicare Part B monthly premiums remain at $104.90 for most enrollees for 2014. And, for those with higher incomes, Part B premium rates did not rise for this year either. Please make note that for those with higher incomes, the Income Related Monthly Adjustment surcharge on Part D drug plans did increase for 2014. This IRMA charge can add up to $69.30 onto your monthly drug plan premium, so it’s important to monitor.

For additional information and a chart outlining Part B costs and Part D surcharges, please check the here at the Medicare website: http://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html#collapse-4811 . As always, when you have questions please contact your J.W. Terrill consultant.

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