How an HSA can effect your Medicare Rx Coverage
Do you currently have Medicare and an HSA? This can impact your Part D (prescription drug) plan. Your prescription coverage with your HSA may not be considered “creditable” and you could incur a penalty.
What does creditable coverage mean? Prescription drug plans are considered "creditable" when they meet or exceed the Centers for Medicare and Medicaid Services (CMS) Standard Medicare Part D Prescription Drug plan.
A prescription drug plan is deemed to be creditable if it:
· Provides coverage for brand and generic prescriptions
· Provides reasonable access to retail providers and, optionally, for mail order coverage
· The plan is designed to pay on average at least 60% of participants’ prescription drug expenses
· Satisfies at least one of the following:
1. The prescription drug coverage has no annual benefit maximum benefit or a maximum annual benefit payable by the plan of at least $25,000.
2. The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 per Medicare eligible individual in 2006.
3. For entities that have integrated health coverage, the integrated health plan has no more than a $250 deductible per year, has no annual benefit maximum or a maximum annual benefit payable by the plan of at least $25,000 and has no less than a $1,000,000 lifetime combined benefit maximum.
What is the Part D penalty? The penalty amount typically is 1% of the national base premium for each month that the person didn't have Part D or other creditable coverage. The national base beneficiary premium for 2020 is $32.74. This penalty is incurred every month for life. For example: If you had 13 months on an HSA without Part D, you will incur a 13% increase every month for life.
If you are interested in learning more please contact Bud Fassnacht at 740-967-0210 ext. 4