75% of Medicare beneficiaries worry about affording costs beyond premiums. Here’s how high out-of-pocket costs can go

75% of Medicare beneficiaries worry about affording costs beyond premiums. Here’s how high out-of-pocket costs can go

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Beneficiaries have coverage options

Basic (or original) Medicare consists of Part A (hospital coverage) and Part B (outpatient care) and covers 65 million people — 57.3 million are age 65 or older and the remaining 7.7 million are younger with permanent disabilities.

Many beneficiaries choose to get Parts A and B through Advantage Plans (Part C), which also typically includes Part D (prescription drug coverage) and often other extras like dental and vision.

These plans often have no monthly premium or a low one, and they limit how much you pay out of pocket each year for covered services. Deductibles, copays and coinsurance vary from plan to plan.

Why the U.S. health-care system is so bad at controlling costs

Other beneficiaries instead decide to pair Parts A and B with a standalone Part D plan and, often, a Medigap plan, which covers part of the out-of-pocket costs that come with Parts A and B. However, premiums can be pricey, depending on where you live and other factors.

Basic Medicare has no out-of-pocket limit

If you have only basic Medicare, there is no cap on what you might spend in any given year.

“With no secondary coverage, there is no out-of-pocket maximum, which leaves a beneficiary financially exposed,” said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans.

How hospital stays are covered

Part A, which comes with no premium for most beneficiaries, has a deductible of $1,600 when you are admitted to the hospital. That covers the first 60 days of inpatient care in a benefit period.

Days 61 through 90 come with coinsurance of $400 per day, and then it’s $800 daily beyond that (so-called lifetime reserve days). And for skilled nursing facilities, a daily coinsurance of $200 kicks in for days 21 through 100.

If you have Medigap, all of those charges are either fully or partially covered under most plans

Out-of-pocket maximums may range up to $8,300

Nopphon Pattanasri | Istock | Getty Images

With Advantage Plans, because the cost-sharing differs from plan to plan, “they will all vary but at least their hospital spending would count toward the plan’s out-of-pocket maximum, meaning it would be capped,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits.

In 2023, those maximums can be as much as $8,300 for in-network coverage, Roberts said. 

“In most urban areas, you can find good plans with considerably lower limits,” she said. “If you can find a plan that has a lower out-of-pocket limit, such as $3,000 or $4,000, that is a benefit to you.”

‘The sky is the limit’ on Part B coinsurance with basic Medicare

Part B — which comes with a standard monthly premium of $164.90 in 2023 — has a deductible of $226. But after that, you pay a 20% coinsurance for covered services with no cap on how high that goes.

“It means the sky is the limit on the 20% coinsurance,” Roberts said. “Imagine trying to cover 20% of eight weeks of chemotherapy or for dialysis for the rest of your life or until you get a transplant.

“In my opinion, this is the most important thing that you want to get covered,” she added. “Both Medigap and Medicare Advantage Plans do a good job of this, since most Medigap plans cover the 20% [coinsurance] and Advantage Plans have caps on Parts A and B spending.”

Part D currently has no out-of-pocket maximum

Under current law, there is no out-of-pocket limit associated with Part D, regardless of whether you get your coverage as a standalone policy or through an Advantage Plan.

A deductible for Part D, which may come with a premium, can be up to $505 in 2023, also regardless of how you get the coverage. 

Part D does come with catastrophic coverage that kicks in once out-of-pocket expenses reach $7,400 in a given year, Roberts said.

After hitting that threshold, “you pay only a small coinsurance or copayment for covered drugs for the rest of the year,” she said.

In 2025, each beneficiary’s annual out-of-pocket spending for Part D will be capped at $2,000.

Also be aware that Medigap plans do not cover any Part D costs.

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CNBC Special Pro Talks: Investor who predicted the Silicon Valley Bank collapse gives his best bets

CNBC Special Pro Talks: Investor who predicted the Silicon Valley Bank collapse gives his best bets



He’s the new ‘Big Short.’ Raging Capital Ventures Chairman & CIO William Martin famously warned of Silicon Valley Bank’s problems two months before its demise and profited on its collapse. Martin joins a CNBC Special Pro Talks with how he is investing for whatever comes next and to answer your questions.

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Exploring the changing risk factors in the technology industry

Exploring the changing risk factors in the technology industry

Exploring the changing risk factors in the technology industry


Technology has become a vital force engrained in our society. While it has enriched our lives for the better, a whole new wave of risks come with the rise of AI and new advancements.  

The idea that technology can now cause bodily injury or property damage is very real, and also very different to how things were ten, even five years ago.  

Whether you’re a broker or insurer, don’t miss the latest episode of IB Talk for a comprehensive guide to the new wave of technological advancements and what potential risks are on the horizon.  

Understand how these risks affect arising technology, like AI and the metaverse, and gain critical insights on how insurers can prepare themselves. Learn how emerging technologies will develop over the next decade, and what precautions insurers can take to combat these risks as well as how they can use new technologies to their advantage. 

Don’t miss this exclusive look into the future of technology, and how brokers and insurers can best position themselves in an ever-changing landscape.

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Deutsche Bank is not the next Credit Suisse, analysts say as panic spreads

Deutsche Bank is not the next Credit Suisse, analysts say as panic spreads

A general meeting of Deutsche Bank

Arne Dedert | picture alliance | Getty Images

Deutsche Bank shares slid Friday while the cost of insuring against its default spiked, as the German lender was engulfed by market panic about the stability of the European banking sector.

However, many analysts were left scratching their heads as to why the bank, which has posted 10 consecutive quarters of profit and boasts strong capital and solvency positions, had become the next target of a market seemingly in “seek and destroy” mode.

The emergency rescue of Credit Suisse by UBS, in the wake of the collapse of U.S.-based Silicon Valley Bank, has triggered contagion concern among investors, which was deepened by further monetary policy tightening from the U.S. Federal Reserve on Wednesday.

Central banks and regulators had hoped that the Credit Suisse rescue deal, brokered by Swiss authorities, would help calm investor jitters about the stability of Europe’s banks.

But the fall of the 167-year-old Swiss institution, and the upending of creditor hierarchy rules to wipe out 16 billion Swiss francs ($17.4 billion) of Credit Suisse’s additional tier-one (AT1) bonds, left the market unconvinced that the deal would be sufficient to contain the stresses in the sector.

Credit Suisse crisis: The market is in 'seek and destroy' mode, analyst says

Deutsche Bank underwent a multibillion euro restructure in recent years aimed at reducing costs and improving profitability. The lender recorded annual net income of 5 billion euros ($5.4 billion) in 2022, up 159% from the previous year.

Its CET1 ratio — a measure of bank solvency — came in at 13.4% at the end of 2022, while its liquidity coverage ratio was 142% and its net stable funding ratio stood at 119%. These figures would not indicate that there is any cause for concern about the bank’s solvency or liquidity position.

German Chancellor Olaf Scholz told a news conference in Brussels Friday that Deutsche Bank had “thoroughly reorganized and modernized its business model and is a very profitable bank,” adding that there is no basis to speculate about its future.

‘Just not very scary’

Some of the concerns around Deutsche Bank have centered on its U.S. commercial real estate exposures and substantial derivatives book.

However, research firm Autonomous, a subsidiary of AllianceBernstein, on Friday dismissed these concerns as both “well known” and “just not very scary,” pointing to the bank’s “robust capital and liquidity positions.”

“Our Underperform rating on the stock is simply driven by our view that there are more attractive equity stories elsewhere in the sector (i.e. relative value),” Autonomous strategists Stuart Graham and Leona Li said in a research note.

“We have no concerns about Deutsche’s viability or asset marks. To be crystal clear – Deutsche is NOT the next Credit Suisse.”

Unlike the stricken Swiss lender, they highlighted that Deutsche is “solidly profitable,” and Autonomous forecasts a return on tangible book value of 7.1% for 2023, rising to 8.5% by 2025.

‘Fresh and intense focus’ on liquidity

Credit Suisse’s collapse boiled down to a combination of three causes, according to JPMorgan. These were a “string of governance failures that had eroded confidence in management’s abilities,” a challenging market backdrop that hampered the bank’s restructuring plan, and the market’s “fresh and intense focus on liquidity risk” in the wake of the SVB collapse.

While the latter proved to be the final trigger, the Wall Street bank argued that the importance of the environment in which Credit Suisse was trying to overhaul its business model could not be understated, as illustrated by a comparison with Deutsche.

“The German bank had its own share of headline pressure and governance fumbles, and in our view had a far lower quality franchise to begin with, which while significantly less levered today, still commands a relatively elevated cost base and has relied on its FICC (fixed income, currencies and commodities) trading franchise for organic capital generation and credit re-rating,” JPMorgan strategists said in a note Friday.

Deutsche Bank CFO discusses the lender's highest profit since 2007

“By comparison, although Credit Suisse clearly has shared the struggles of running a cost and capital intensive IB [investment bank], for the longest time it still had up its sleeve both a high-quality Asset and Wealth Management franchise, and a profitable Swiss Bank; all of which was well capitalised from both a RWA [risk-weighted asset] and Leverage exposure standpoint.”

They added that whatever the quality of the franchise, the events of recent months had proven that such institutions “rely entirely on trust.”

“Where Deutsche’s governance fumbles could not incrementally ‘cost’ the bank anything in franchise loss, Credit Suisse’s were immediately punished with investor outflows in the Wealth Management division, causing what should have been seen as the bank’s ‘crown jewel’ to themselves deepen the bank’s P&L losses,” they noted.

At the time of SVB’s collapse, Credit Suisse was already in the spotlight over its liquidity position and had suffered massive outflows in the fourth quarter of 2022 that had yet to reverse.

U.S. banking sector appears in much better shape than European counterparts, says Ed Yardeni

JPMorgan was unable to determine whether the unprecedented depositor outflows suffered by the Swiss bank had been amassed by themselves in light of SVB’s failure, or had been driven by a fear of those outflows and “lack of conviction in management’s assurances.”

“Indeed, if there is anything depositors might learn from the past few weeks, both in the U.S. and Europe, it is just how far regulators will always go to ensure depositors are protected,” the note said.

“Be that as it may, the lesson for investors (and indeed issuers) here is clear – ultimately, confidence is key, whether derived from the market backdrop as a whole (again recalling Deutsche Bank’s more successful re-rating), or from management’s ability to provide more transparency to otherwise opaque liquidity measures.”

—CNBC’s Michael Bloom contributed to this report.

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Op-ed: Here are 4 key things investors should consider during volatile times

Op-ed: Here are 4 key things investors should consider during volatile times

Dima_sidelnikov | Istock | Getty Images

Recent headlines underscore the fragility of the stock market and, along with it, the ability for many investors to make reasonable decisions about their retirement readiness. Many who recall the violent reaction their portfolios had in the Dot Com Bubble and the Financial Crisis would prefer to avoid the next downturn.

It’s worth noting that crystal balls are in short supply, and we cannot predict the immediate future. What we do have in our arsenal is the ability to review our game plan to avoid making short-term decisions that impact our long-term outcomes.

More from Ask an Advisor

Here are more FA Council perspectives on how to navigate this economy while building wealth.

These are four things investors should consider during times of uncertainty.

1. Has your time horizon changed?

Our portfolios should reflect the timing of distributions, and the duration of your portfolio should take this need into account — particularly if there is a need for liquidity within the next three to five years. This should sound familiar because the bank run at Silicon Valley Bank stemmed from the lack of liquidity, as their portfolio of bonds could not accommodate the withdrawal demands of depositors. Your portfolio is akin to a bank balance sheet; you are the depositor, and there should be a viable distribution strategy that mirrors your retirement schedule.

2. Has your risk tolerance changed?

The banks will begin to reassess their penchant for taking risks, which will likely reduce their willingness to take chances. In turn, loan growth may suffer in the months ahead as the credit requirements become more onerous. Investors should follow suit and reconsider the high beta assets that outperform in a less rigorous environment. The question should not be whether to own stocks or bonds, but which securities have the best chance for success in a recessionary high-interest-rate environment.

CNBC FA Council members share their strategies for a volatile market

3. Do you have sufficient reserves?

During times of crisis, it’s always a good idea to have access to readily available resources. One of the problems facing the credit markets is that bonds don’t accurately reflect the true market value, because a sale hasn’t taken place that would establish a price. Your portfolio may have assets that can be sold at a price that is below what it might be worth in the future due to the current set of circumstances. Adequate reserves buy you time while your underperforming holdings have an opportunity to recover.

4. Have you considered the available alternatives?

Our interest rate environment has changed and that has sent shock waves throughout the banking system. For instance, why would depositors remain in a bank that pays 1% when they can receive 5% through another opportunity? The reason we own bonds is because they are less volatile than the stock market, albeit with a lower ceiling. Fortunately for savers, that ceiling just got a few feet higher. Instead of owning defensive stocks or bonds, investors may get 4% to 5% in a money market fund or a Treasury bill with little to no volatility.

We can all learn something from the recent banking crisis and apply these lessons to our own affairs. Soon-to-be retirees would be wise to review their portfolios and determine if they meet the needs of the day when rates are higher, corporate profits are decelerating and volatility doesn’t seem to be going away. This isn’t the time to panic; instead, it’s a chance to reduce your anxiety.

— By Ivory Johnson, certified financial planner and founder of Delancey Wealth Management. Johnson is also a member of the CNBC Financial Advisor Council.

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Stocks making the biggest moves premarket: Deutsche Bank, Coinbase, Block, Marathon Oil and more

Stocks making the biggest moves premarket: Deutsche Bank, Coinbase, Block, Marathon Oil and more

A Deutsche Bank AG flag flies outside the company’s office on Wall Street in New York.

Mark Kauzlarich | Bloomberg | Getty Images

Check out the companies making headlines in premarket trading.

Deutsche Bank — The German lender’s shares tumbled 13% following a spike in credit default swaps — a form of insurance for a company’s bondholders against its default — raising concerns again over the health of the European banking industry.

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Banks — Shares of U.S. banks fell as investors worried about the global banking system. First Republic Bank fell 3%, while Western Alliance, Zions Bancorporation and Fifth Third all lost more than 2%. Large banks weren’t immune from traders’ skittishness. JPMorgan Chase and Bank of America were down 2% as well.

Block — The payment company slid 1.9%, a day after losing nearly 15% when short seller Hindenburg Research alleged that Block facilitates fraud. On Friday, Block was downgraded to hold by Atlantic Equities on the lack of clarity on its Cash App after Hindenburg’s short position.

Coinbase — Investors put more pressure onto shares of the cryptocurrency exchange early Friday. The stock ticked down 2.3% in premarket trading, a day after the company disclosed it received a Wells notice from the Securities and Exchange Commission. The disclosure pushed the stock down more than 14% on Thursday. Year to date, the stock is still up 87% this year.

Energy stocks — Energy names fell in in the premarket as oil prices slid, with investors worried about potential oversupply. Marathon Oil and Devon Energy fell about 3%. Halliburton, Occidental Petroleum, Diamondback Energy and Exxon Mobil each lost about 2%.

Incyte — The pharmaceutical company saw its shares fall more than 3% after it issued a regulatory update on its ruxolitinib extended-release tablets. The FDA has said it can’t approve the company’s application in its present form.

Scholastic — Shares of the children’s book publisher fell 13% after the company reported a decline in revenue for its fiscal third quarter from the previous year and lowered its financial guidance for the full year. Scholastic now projects about 4% revenue growth for the year, compared to its previous outlook of between 8% and 10%.

 — CNBC’s Michelle Fox and Brian Evans contributed reporting.

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