Mike Mergen | Bloomberg | Getty ImagesIf you’re a Medicare beneficiary, now’s the time to evaluate your prescription drug coverage for 2023.In addition to checking during Medicare’s annual fall open enrollment whether there’s a more cost-effective plan for you, some legislative changes take effect next year that may reduce how much you pay out of pocket for your coverage.”It’s a quality of life issue,” said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans. “Saving money on medications means there’s more Social Security money left for other necessities in life.”More from Year-End PlanningHere’s a look at more coverage on what to do finance-wise as the end of the year approaches:Medicare’s enrollment period opened Oct. 15 and runs through Dec. 7. Beneficiaries can make changes to their coverage during this period.Prescription drugs are generally delivered through Medicare Part D. Of the estimated 64.5 million people enrolled in Medicare, about 50 million have such coverage, through either a standalone Part D plan or an Advantage Plan — both of which are offered by private insurance companies. Advantage Plans deliver Part A (hospital coverage) and Part B (outpatient care) and usually Part D.Here are some changes you may notice next year, as well as some tips for what to look for when evaluating your options for 2023.Insulin costs will be cappedSome changes to prescription drug coverage, enacted as part of the Inflation Reduction Act, take effect next year. This include a monthly $35 cap on cost-sharing for insulin under Part D, which will start on Jan. 1. (Some plans may already offer a $35 cap.)Part D deductibles — which vary from plan to plan but cannot be more than $505 in 2023, up from $480 this year — also won’t apply to the covered insulin product. For beneficiaries who take insulin through a traditional pump (which falls under Part B), the benefit starts July 1.”Some of my clients had to choose between buying food and buying insulin [or] rationing the insulin to make it last longer, thereby taking much less than the prescribed amount,” Gavino said. “This was dangerous, and now they can use the right amount they need to live.”100% coverage for recommended vaccinesAdditionally, there will no longer be any cost-sharing for recommended inoculations under Part D beginning Jan. 1, including for the shingles vaccine. “In the past, many people paid quite a bit for the shingles vaccine because of Part D’s rather high deductible,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits.”The vaccine usually was a covered medication, but because they hadn’t yet satisfied the deductible, they spent quite a bit for it,” Roberts said.
Other provisions that are intended to reduce Part D spending take effect in later years. This includes eliminating an existing 5% coinsurance in the so-called catastrophic phase of coverage (2024) and capping beneficiaries’ annual out-of-pocket Part D spending at $2,000 (2025). Currently, there is no out-of-pocket limit, regardless of whether you get your coverage as a standalone Part D option or through an Advantage Plan.Medicare also will be able to start negotiating the price of some drugs beginning in 2026.Your plan could change its list of covered drugsAs for choosing your 2023 coverage: While you aren’t required to take any action during open enrollment — your current coverage generally would continue into next year — plans often change their list of covered drugs and the price of them.Additionally, each plan assigns individual drugs to different tiers, with the first tier generally being the least expensive and the fifth costing the most. From year to year, various drugs may move from one tier to another in any given plan — which makes it important to check where your prescriptions fall for 2023.Also be sure to look at the pharmacies included in the plan. Some are “preferred” — meaning your medicine will be less expensive there than at a “standard” pharmacy.”The pharmacy you use can really impact the price of what you pay for your prescriptions,” said Ari Parker, a senior advisor at Chapter, a Medicare advisory firm.Beneficiaries with higher income pay more for coverageThe average premium for standard Part D coverage next year is projected to be $31.50, compared to $32.08 in 2022, according to the Center for Medicare & Medicaid Services. However, be aware that if your income is above certain limits, you will be subject to so-called income related adjustment amounts, or IRMAAs, which are in addition to any premium you pay (see chart below). Part B also comes with those extra amounts.Your tax return from 2021 is generally what would be used to determine whether you’re subject to those surcharges in 2023. You can ask for a reconsideration if your income has dropped since then.Getting prescription drug coverage through Medicare is optional. However, if you fail to sign up when you first qualify for coverage at age 65 and change your mind later, you’ll face a life-lasting penalty unless you meet certain exclusions (i.e., you receive acceptable coverage through an employer).The penalty is 1% of the national base premium for each month you didn’t have Part D or creditable coverage and should have.Be aware that while you can change your Advantage Plan early next year (Jan. 1 to March 31) if you discover it’s not a good fit, that’s not the case for standalone Part D plans.”Unless a special circumstance applies, you won’t be able to change it,” Parker said.Also, sometimes you can find medicines at a cheaper cost than through your plan, such as with a free drug-discount card. However, if you go this route instead of through your insurance, your plan won’t count the medicine’s cost and your copay toward your deductible or other calculations it uses to determine your share. .
.
Bitcoin uptake appears lowWhen El Salvador’s Bitcoin Law came into effect Sept. 7, 2021, Jaime Garcia was hopeful that it would fix a few big problems with the way that Salvadorans send, receive and spend money.As part of the law, prices are now sometimes listed in bitcoin, tax contributions can be paid with the digital currency, and exchanges in bitcoin will not be subject to capital gains tax. But crucially, Bukele promoted the law as a way to expand financial inclusion — which is no small thing for a country where approximately 70% of the population does not have access to traditional financial services, according to the Bitcoin Law.To help facilitate national adoption, El Salvador launched a virtual wallet called “chivo” (Salvadoran slang for “cool”) that offers no-fee transactions, allows for quick cross-border payments, and requires only a mobile phone plus an internet connection. It aimed to bring users onboard quickly, both to scale bitcoin adoption and to offer a convenient onramp for those who had never been a part of the banking system.Bukele tweeted in January that about 60% of the population, or 4 million people, used the chivo app, and more Salvadorans have chivo wallets than traditional bank accounts, according to a Sept. 20 research note from Deutsche Bank. Still, only 64.6% of the country has access to a mobile phone with internet, that note says.But a report published in April by the U.S. National Bureau of Economic Research showed that only 20% of those who downloaded the wallet continued to use it after spending the $30 bonus. The research was based upon a “nationally representative survey” involving 1,800 households.Garcia, who lives in the Canadian province of Saskatchewan, fled El Salvador when he was 11 after rebels bombed his house, but he keeps in close touch with family and friends who stayed behind — and he sometimes sends money back home, too.”There are pockets where bitcoin is popular, like in El Zonte, but it’s clear that adoption is not massive,” said Garcia.”Big chains like McDonald’s, Starbucks, and most merchants at a mall will accept bitcoin — but are people using it? Not too much locally,” he said. “It’s mostly tourists using bitcoin.”A survey by the El Salvador-based El Instituto de Opinion Publica, a public opinion think tank, found that 7 in 10 Salvadorans do not think the Bitcoin Law has benefited their family economy.Another survey by the institute found that 76 out of 100 small and medium-size enterprises in El Salvador do not accept bitcoin payments.”Bitcoin’s first year in effect has transcended from a commercial expectation to an irrelevant topic for traders,” said Laura Andrade, director of El Salvador’s Universidad Centroamericana, according to a CNBC translation of her Spanish-language comments.Andrade said many large corporations are still advertising that they’re taking payments in bitcoin but are making excuses to not accept the cryptocurrency including saying their system does not work or the bitcoin wallet is out of service.”The foregoing is evidence that this cryptocurrency, in reality, never had penetration in national commerce,” Andrade said.”There seems to be evidence that most people used it primarily to get the free money from the government but have not used it on an ongoing basis given volatility and fees,” Ziemba said.Meanwhile, those who did use the government’s crypto wallet reportedly had technical problems with the app. Other Salvadorans fell prey to schemes involving identity theft, in which hackers used their national ID number to open a chivo e-wallet, in order to claim the free $30 worth of bitcoin offered by the government as an incentive to join.A survey published in March by the Chamber of Commerce and Industry of El Salvador found that 86% of businesses have never made a sale in bitcoin, and only 20% of businesses take bitcoin, despite the Law’s mandate that all merchants accept the cryptocurrency.”They gave people the wallets, they forced businesses to accept them, but essentially, in my opinion, it’s a big nothing burger,” said Frank Muci, a policy fellow at the London School of Economics, who has experience advising governments in Latin America. “Nobody really uses the app to pay in bitcoin. People that do use it, mostly use it for dollars.”The experiment also involved building a nationwide infrastructure of bitcoin ATMs, but they’re too far away for many people to use.Another hope for the chivo wallet was that it would help save hundreds of millions of dollars in remittance fees. Remittances, or money sent home by migrants, account for more than 20% of El Salvador’s gross domestic product, and some households receive over 60% of their income from this source alone. Incumbent services can charge 10% or more in fees for those international transfers, which can sometimes take days to arrive and require a physical pickup.But in 2022, recent data shows that only 1.6% of remittances were sent to El Salvador via digital wallets. According to the Deutsche Bank report from September, part of the reason bitcoin transfers haven’t caught on has to do with the complications of buying and selling bitcoin for dollars. The report notes that “people who send and receive remittances frequently use informal brokers to convert local currency to and from bitcoin” and extremely volatile prices make buying and selling the cryptocurrency a complex task requiring technical know-how.”This is a new money, a new way of doing things for a population that is very comfortable with dollars. This is a population that is largely unbanked and would rather deal with hard cash that they can see and feel,” Garcia said.Miles Suter, the crypto product lead at Cash App, told CNBC on a panel at the Messari Mainnet conference in New York that the government’s 90-day rollout of the chivo wallet and nationwide adoption of bitcoin was “rushed” and that there are still a lot of problems.”You shouldn’t mandate the acceptance of a specific currency,” said Suter, who spent six months in El Salvador in the runup to the passing of the Bitcoin Law. However, Suter added that the media perception is worse than how things are actually going on the ground.”I saw and experienced lives being changed by having access to a new emerging monetary standard,” he said.
‘Sleepwalking into a debt default’Well before Bukele wagered that bitcoin would bandage over longstanding economic vulnerabilities, the country was in a lot of trouble.The World Bank projects that the Salvadoran economy will grow by 2.9% this year and 1.9% in 2023, down from 10.7% in 2021. But that growth itself was a bounce-back from an 8.6% contraction in 2020.Its debt-to-GDP ratio is almost 90%, and its debt is expensive at around 5% per year versus 1.5% in the U.S. The country also has a massive deficit — with no plans to reduce it, whether through tax hikes or by substantially cutting spending.In a research note from JPMorgan, analysts warn that El Salvador’s eurobonds have entered “distressed territory” in the last year, and S&P Global data reportedly shows that the cost to insure against a sovereign debt default is hitting multiyear highs.Both JPMorgan and the International Monetary Fund warn the country is on an unsustainable path, with gross financing needs set to surpass 15% of GDP from 2022 forward — and public debt on track to hit 96% of GDP by 2026 under current policies.El Salvador faces a heavy mix of multilateral and domestic debts, including imminent debt repayment deadlines in the billions of dollars, such as an $800 million eurobond that matures in January.”The domestic debt is very large, relatively short duration and needs to be rolled over frequently,” said Muci, who previously worked at the Growth Lab at the Harvard Kennedy School of Government.El Salvador has been trying since early 2021 to secure a $1.3 billion loan from the IMF — an effort that appears to have soured over Bukele’s refusal to heed the organization’s advice to ditch bitcoin as legal tender.Rating agencies, including Fitch, have knocked down El Salvador’s credit score, citing the uncertainty of the country’s financial future given the adoption of bitcoin as legal tender. That means that it’s now even more expensive for Bukele to borrow much-needed cash.Beyond the fact that global lenders don’t want to throw money at a country that is spending millions in tax dollars on a cryptocurrency whose price is prone to extreme volatility, the IMF’s largest shareholder, the U.S., is targeting Salvadoran officials as part of wider international sanctions against “corrupt actors.”The president’s efforts to consolidate power have also driven up this risk premium for global lenders.Bukele’s New Ideas party has control over the country’s Legislative Assembly. In 2021, the new assembly came under fire after it ousted the attorney general and top judges. The move prompted the U.S. Agency for International Development to pull aid from El Salvador’s national police and a public information institute and reroute the funds to civil society groups.Additionally, El Salvador can’t print cash to shore up its finances. El Salvador ditched its local currency, the colon, in favor of the U.S. dollar. Only the Federal Reserve can print more dollars. Meanwhile, its other national currency, bitcoin, is revered for the fact that it, too, is impossible to mint out of thin air.”One of the big issues has been the fact that the bitcoin gimmick has distracted from the fiscal and economic challenges of the country and made it more difficult for the country to access IFI lending and preferential terms,” Ziemba said.Ziemba added that there have been some swaps with major crypto firms that allowed the country to raise cash to pay off the debt due this year, and perhaps early next year, but the long-term debt sustainability remains a challenge.”They’ve spooked the bejesus out of financial markets and the IMF,” said Muci, who tells CNBC that nobody wants to lend money to Bukele unless it’s at “eye-gouging rates” of 20% to 25%.”The country is sleepwalking into a debt default,” Muci said.
Tourism and presidential popularity solidOn the day the Bitcoin Law took effect, Bukele revealed that the country had begun to add bitcoin to government coffers. Since then, the price of the cryptocurrency has plunged more than 60%, stoked by rising interest rates and failed projects and bankruptcies in the industry.The government has an unrealized paper loss on bitcoin of around $60 million. None of these losses are locked in until the country exits its bitcoin position.In aggregate, the entire experiment and all its associated costs have only set the government back around $375 million, according to estimates. That’s not nothing — especially considering the fact that El Salvador has $7.7 billion of bonds outstanding — but to an economy of $29 billion, it is comparatively small.El Salvador’s millennial, tech-savvy president — who once touted himself as the “world’s coolest dictator” on his Twitter bio — has tethered his political fate to the country’s crypto gamble, so he has a very big incentive to make it work in the long run and to pay off the country’s debt in the interim. Bukele faces reelection for another five-year presidential term in 2024.At least El Salvador’s big bitcoin gamble has been a win in terms of attracting bitcoin tourists.The tourism industry is up 30% since the Bitcoin Law took effect, according to official government estimates. The country’s tourism minister also notes that 60% of tourists now come from the U.S.The bitcoin experiment hasn’t hurt the president’s popularity either. Bukele’s approval ratings are north of 85% — thanks in large part to his tough-on-crime approach to leading. That’s no small thing to a country that was more dangerous per capita than Afghanistan five years ago.Suter said the project has also introduced many locals to the concept of savings, noting that before the Bitcoin Law, much of the population didn’t have a way to digitally hold their money and transact among one another.”It was all cash — and the cash that you earned that week, you typically spent it, because there wasn’t much ability to dream of growing it through investment.”
The president upped the ante in November when he announced plans to build a “Bitcoin City” next door to the Conchagua volcano in southeastern El Salvador. The bitcoin-funded city would offer significant tax relief, and geothermal energy rolling off the adjacent volcano would power bitcoin miners.But now, Bitcoin City is on hold, as is the $1 billion bitcoin bond sale, which was initially put on ice in March because of unfavorable market conditions.”Ultimately, El Salvador’s problems are just tangential to currency,” Muci said.”The plane is gonna crash eventually, if they don’t change things,” he said — “if they don’t raise taxes, cut spending, start being much more disciplined, convincing markets that they’re sustainable.””Bitcoin doesn’t solve any of El Salvador’s important economic problems,” he added.
.
