How the Build Back Better Plan Might Affect Medicare

As talks continue around the Build Back Better plan, many insurance agents and brokers might be unaware about the changes it will make to Medicare and its beneficiaries. Along with climate change and childcare initiatives, additions and adjustments to Medicare are included in the plan that can impact costs for beneficiaries.

While Medicare benefits include a variety of services, they don't cover everything, with many covering gaps existing in relation to hearing services and prescriptions.

These are two main areas the Build Back Better plan looks to improve. Insurance brokers and agents should keep an eye on the proposed changes to expand coverage for hearing services and capping out-of-pocket prescription drug costs, both of which will benefit beneficiaries but will likely impact their premiums.

Hearing Loss Services

With many Medicare beneficiaries having hearing issues, hearing care is one of the most expensive services that is not currently covered by Medicare. The Build Back Better plan looks to add hearing coverage to Medicare starting in 2023. New coverage under the plan would include hearing aids for enrollees with moderately severe to profound hearing loss, hearing treatment, and rehabilitation by qualified audiologists.

Hearing services would fall under Part B and be subjected to the deductible. Medicare would be required to pay 80%, leaving a 20% coinsurance. Adding coverage of hearing services would lower out-of-pocket costs for beneficiaries who would otherwise pay the full cost of their hearing aids and services without the benefit. As costs are usually a barrier to receiving care, adding this benefit to Medicare could increase the use of these services and contribute to better health outcomes. It's also important to make beneficiaries aware of the possibility of seeing higher premium costs as benefits increase due to influence from claims and inflation. The estimated cost of this benefit is around $36.7B over ten years.

Redesigning Medicare Part D

Medicare Part D currently is known for having an awful design for drug coverage with high out-of-pocket costs, but has no limit on the total amount that beneficiaries pay out-of-pocket each year. There are multiple phases including a deductible, an initial coverage phase, a coverage gap phase, and the catastrophic phase. Under the current Part D design, beneficiaries can face varying costs for the same medication depending on which phase of the benefit they fall in, and might see significant out-of-pocket costs for high-priced drugs because of coinsurance requirements and no hard out-of-pocket cap.

The Build Back Better Act would add a hard cap limit on how much beneficiaries can spend on drugs in a year starting at $2,000. It will also lower beneficiaries' share of total drug costs below the spending cap from 25% to 23%. The bill would limit cost-sharing for insulin and insulin products at $35 for a 30-day supply in Part D plans as well as in private insurance coverage. The legislation will allow beneficiaries the option of smoothing out their out-of-pocket costs over the year rather than facing sharp increases during any given month. The Part D redesign would take effect in 2024, whereas the provision to smooth out-of-pocket costs would take effect in 2025.

Medicare beneficiaries with Part D plans that have high out-of-pocket drug costs are likely to see substantial out-of-pocket cost savings from this provision. Many Medicare beneficiaries usually reach the coverage gap and catastrophic stages annually. This can cause enrollees to struggle to cover their drug costs and in severe instances, prevent them from taking their medication.

These changes proposed in the Build Back Better plan will allow Medicare beneficiaries to receive better care. While it's possible that beneficiaries will see increases in costs from other areas, the provisions around offering hearing services and the redesign of Part D are a step in the right direction to providing effective healthcare.

While the status of the Build Back Better Plan remains in limbo, this opens discussions around whether the Medicare-related policies included in the bill could stand on their own if the larger plan fails. Specifically, the plan to reduce the cost of prescription drugs has been a priority for many as it will ultimately increase beneficiaries' access to life-saving medication. A scaled back version of the plan could offer the potential of saving both taxpayers and individuals a lot of money through Medicare.

Most insurance agents agree that the Medicare program can benefit from improving drug and hearing coverage. As insurance agents, it's a priority to keep a steady pulse on relevant legislation.

Craig Sturgill is the co-founder of Excel Impact, the insurance marketing support firm that owns Medigap.com.