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President Trump’s Budget Proposal: 5 Key Takeaways for Medicare & Medicaid

President Trump delivered his White House budget proposal on February 10, 2020. The lengthy document includes a few key proposals that Medicare beneficiaries may be interested to know

The administration’s budget proposal would first have to pass through the Democrat-controlled House of Representatives, which means that the following proposed changes are unlikely to ever become law.

White House proposes major cuts to Medicare funding

The Trump Administration’s proposed budget would reduce Medicare funding by $451 billion over the next 10 years. 

Part of the funding reduction would stem from initiatives designed to reduce Medicare fraud, such as requiring patients and doctors to seek prior authorization from Medicare before certain services may be obtained.

Other Medicare budget cuts would result from proposed efforts to encourage more seniors to use nurse practitioners or physician’s assistants as primary care providers. Still other cuts would be related to reduced reimbursement rates for certain health care providers.  

Cuts to Medicaid funding included in budget proposal

The proposed budget seeks to reduce Medicaid funding by 16 percent over the next 10 years.

The proposed cuts could potentially affect dual-eligible beneficiaries (those who are enrolled in both Medicare and Medicaid). 

The cuts would be implemented in tandem with work requirements for Medicaid eligibility.

Proposal seeks to reduce prescription drug prices

Trump’s budget proposal calls for “comprehensive drug pricing reform” that totals some $135 billion over the next decade.

These reductions in prescription drug spending would result from lowering the Medicare reimbursement rate for drug treatments covered under Medicare Part B.

Medicare Part B is part of Original Medicare (along with Part A) and covers qualified outpatient treatments and services. Part B currently includes only limited drug coverage.

The bulk of Medicare prescription drug spending comes from privately-sold Medicare Part D prescription drug plans.

Budget proposal includes cuts to Social Security and disability benefits 

The 2020 budget proposal includes a spending decrease of $75 billion over 10 years for Social Security Income (SSI) and Social Security Disability Insurance (SSDI).

Reducing the amount of retroactive benefits someone can receive after they’ve been found to be disabled would account for $10 billion of the total $75 million reduction in spending. The bulk of the cuts (around $47 billion) would come from proposed tests for new approaches to labor force participation, or in other words, redefining the eligibility requirements for SSDI. 

Some people under the age of 65 may be eligible for Medicare if they have received SSDI benefits for at least 24 months.

Opting out of Medicare Part A could become a new option

President Trump’s budget proposal includes a change that would allow beneficiaries to opt out of Medicare Part A (hospital insurance) without disrupting their Social Security benefits. 

Some beneficiaries who have a high-deductible health plan coupled with an HSA aren’t able to contribute to their HSA without a tax penalty once they’re enrolled in premium-free Part A.

Trump’s budget proposal would allow beneficiaries to receive their Social Security benefits and still opt-out of Part A so that they can make tax-free contributions to their HSAs.

Learn more about your Medicare coverage options

At this point, the Trump Administration’s 2020 budget proposal is more of an outline of presidential policy than a set of policy directives.

You can learn more about your personal Medicare coverage options, such as Medicare Advantage (Medicare Part C) plans and Medicare prescription drug plans by comparing plans online.

You can also call to learn more about Medicare Advantage plans available near you by calling to speak with a licensed insurance agent.

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