On March 23, 2010, the Patient Protection and Affordable Care Act, better known as health care reform, was signed into law. Medicare beneficiaries have had many questions about how their benefits will be affected by the new legislation. For most people on Medicare, the changes will be transparent, and their benefits will continue to be delivered as they always have. The cost of the improvements in healthcare will be covered mainly by reductions in fraud and waste in the system and by eliminating the Medicare Advantage subsidies that have been in place up to this point. Below are some specific changes that Medicare beneficiaries can expect with the new law.
Medicare Part D
Currently, Medicare prescription drug plans have a coverage limit of $2,850. When drug costs reach that limit, consumers enter the “donut hole” and are obligated to pay 100% of the cost of their prescription medications. Customers stay in the donut hole until they have paid $3,610 in out-of-pocket expenses, at which point they qualify for catastrophic coverage. Under the new law, the donut hole will gradually be eliminated between now and 2020. Starting in 2010, anyone entering the donut hole will receive a $250 rebate. In 2011, there will be a 50% discount on name-brand drugs while in the donut hole and a 7% discount on generics. The values will increase annually until the donut hole is gone.
Medicare Part B
Under Medicare right now, seniors pay a $226 annual deductible for Medicare Part B, the medical insurance part of Medicare. Beneficiaries also pay 20% of the cost for preventive care, including any tests or screenings and annual physical exams not covered. In 2011, the 20% co-pay for preventative screenings such as cancer and diabetes will be eliminated. Also, starting in 2011, an annual physical will be covered at no cost to the patient.
Medicare Advantage plans were implemented to privatize Medicare and have Medicare benefits provided by private insurers rather than the government. Medicare has been paying insurers a 10% subsidy which will be eliminated in 2012. Since this will result in higher costs for the insurance companies, some plans will likely disappear, some will have higher premiums, and others will have reduced benefits. Projects that are determined to be high quality by Medicare will receive bonus payments. However, that will offset the loss of the subsidy.
There are other changes to Medicare resulting from the new healthcare legislation, but these are the ones that seniors are most likely to be affected by. It is essential for anyone aging into Medicare to read up on the benefits they are entitled to and to know what to expect. Detailed information on all aspects of Medicare can be found online at Medicare.gov.