With the new health insurance exchange marketplace provided in the Affordable Care Act (known as ObamaCare), many of you are wondering how the new law will impact your current Medicare benefits and other medical services.
Nearly 50 million Americans are currently enrolled in Medicare, a federal health insurance program for older Americans and the disabled. We hope to answer important questions you have regarding healthcare and the new insurance exchange marketplace, as well as tips for better understanding important Medicare and prescription drug benefits.
The Affordable Care Act, passed by Congress in 2010, is designed to give you greater control over your own healthcare. The Affordable Care Act expands several key benefits for older Americans. These benefits include:
- Eliminating the Medicare Part D “donut hole” for prescription drug coverage
- Reducing unwarranted subsidies to insurance companies to control Medicare costs for a projected savings of $150 million over ten years
- Extending the financial health of Medicare by fighting waste, fraud and abuse
- Eliminating deductibles, co-payments and other cost-sharing for Medicare-approved preventative services
- Free wellness exams for seniors; there are no longer co-pays or deductibles
- Creating a voluntary long-term care insurance program, which provides cash benefits to help seniors and individuals with disabilities obtain services and support so they can remain in their homes and communities.
The Affordable Health Care act also includes an optional provision that allows states to expand Medicaid for individuals who are not currently eligible for Medicare. These individuals must be under age 65 with incomes up to 133 percent of the federal poverty level. The ACA will provide enhanced federal matching payments for newly eligible beneficiaries; however, state participation in this program is entirely voluntary.
Medicare Part D Prescription Drug Benefit
The Affordable Care Act closes the Medicare “donut hole,” a gap in prescription drug coverage. Prior to the Affordable Care Act, seniors who had more than $2,830 in total prescription drugs costs had to pay out of pocket for all additional expenses—until they reached $6,440 in total drug costs, whereby prescription drug coverage once again would kick in. Starting in 2011, the donut hole began gradually closing. Now, when seniors reach the “coverage gap,” they receive a 52.5% discount on brand name drugs and 21% discount off generics. This coverage gap will be gradually shrinking each year until it is fully closed in 2020. Starting in 2020, Medicare Part D enrollees will pay no more than 25% of their total prescription drug costs, no matter how high these costs are.
Expanding Preventative Care At No Cost
Under the Affordable Care Act, Medicare and private health insurance plans will now cover a wide range of preventive care services at no additional cost. These preventative services include a free annual health examination, immunizations (flu and pneumonia shots), and screening tests, such as cholesterol tests and mammograms. All of these services are provided with no fee, no deductible, and no co-pay. For a full list of services, you can visit http://www.HealthCare.gov for a list of the services covered.
No Need For Medicare Recipients to Enroll
The Affordable Care Act created the health insurance marketplace, which is an insurance exchange for individuals and small businesses without health insurance to purchase policies. Enrollment began last October 1 for policies that are now in effect as of January 1. Americans currently enrolled in Medicare Part A, which covers hospital care, or the Medicare Advantage plans, do not need to re-enroll or purchase insurance through the health care exchange. They will continue to receive coverage through Medicare’s traditional fee-for-service program or Medicare Advantage plans, which are private health plans approved by Medicare.
Improving Medicare Advantage Plans
Medicare Advantage Plans (also called “Part C” or “MA Plans”) are a health insurance plan offered by a private company that contracts with Medicare to provide Part A and Part B benefits and Medicare Advantage Plans may also be offered by Health Maintenance Organizations (HMOs), Preferred Provider Organizations, Fee-for-Service Plans, Special Needs Plans and Medical Savings Account Plans. Medicare Advantage Plans must follow rules set by Medicare; however, these plans can charge different amounts for out-of-pocket expenses and may have different rules for how to receive a referral in order to see a specialist.
The ACA makes several key improvements to Medicare Advantage plans. These improvements include:
- Not charging enrollees more than traditional Medicare for chemotherapy, skilled nursing home care, or other specialized services
- Starting in 2014, limiting the amount that Medicare Advantage plans can spend on administrative costs, insurance company profits and items other than health care to no more than15 percent of their Medicare payments
Reducing Expenditures, Not Benefits
The Affordable Care Act dedicates resources to crack down on individuals who commit Medicare fraud. In the last three years, the government recovered over $14.9 billion from individuals and companies committing Medicare fraud. Other fraud prevention measures include new technology resources to prevent fraudulent billing claims in the first place rather than trying to recover expenditures after the fact. The Senior Medicare Patrol program is also working to educate seniors about the warning signs of billing fraud and how to prevent fraud from occurring. By reducing fraudulent expenses, Medicare is able to expand benefits without increasing costs.
Thanks to an expansion in Medicare benefits, beneficiaries will save, on average, about $4200 over the next 10 years thanks to reduce drug costs, free preventative care, and health care cost reductions. Since the ACA passed in 2010, more than 6.6 million Medicare beneficiaries have saved over $7 billion on prescription drugs. Between 2010 and 2012, the number of seniors who joined private Medicare Advantage plans increased by 17% while premiums decreased by 16%.
The Affordable Care Act does not cut benefits to doctors or other medical providers; instead, the Affordable Care Act lowers expenditures by reducing fraud and increasing the quality and efficiency of health care. In order to encourage more doctors and nurses to enter primary care—which is currently under-staffed—nurse practitioners and doctors will be eligible for more health care scholarships. Primary care providers (doctors, nurse-practitioners and others) will receive a 10% bonus for all primary care services they provide to people enrolled in Medicare.
While the Affordable Care Act does not cut Medicare benefits, thanks to a crackdown on fraud, the government anticipates a reduction in overall expenditures by $716 billion over the next decade. The ACA is also cutting the payments to Medicare Advantage plans to bring those payments closer to what Medicare pays for care for beneficiaries enrolled in the traditional fee-for-service plan. While some senior citizen advocates worry this could reduce the number of health care providers who accept Medicare, this has not yet happened. Medicare officials stress that the spending changes will not reduce benefits or access to these benefits.
Understanding The Medicare “Doc Fix” And Plan Premiums
The “Doc Fix” refers to the substantial growth rate, known as SGR, which is a physical payment/reimbursement formula based on economic growth. SGR has been used to calculate physical payments since the late 1990s. Over the past decade, the SGR formula would have cut Medicare physician payments by 25 percent. However, Congress intervened to stop these payment cuts. While the Affordable Care Act does not change the SGR formula, bi-partisan legislation that is currently pending before Congress would change the law.
The Affordable Health Care Act requires individuals with an income that is greater than $85,000 ($170,000 for a couple) to pay more for their Medicare Part B premiums. This is the same sliding-scale approach that is already used to determine prescription drug coverage costs for Medicare Part D recipients. These income thresholds are frozen through 2019. (10).
Tips And Next Steps
The Affordable Care Act is designed to improve the quality of healthcare coverage currently available under Medicare. Americans who are currently enrolled in Medicare plans do not need to do anything to continue receiving their benefits. Older Americans who are not currently enrolled in Medicare but would like to apply during the open enrollment period may visit the Medicare.gov plan finder: https://www.medicare.gov/find-a-plan/questions/home.aspx. From here, individuals may perform a general or personalized search to learn more about their different plan options. Individuals may also enter their prescription drug information to compare drug benefits available under different plans. Please note that the site does not display pricing for over-the-counter drugs or diabetic supplies. The more detailed information that is entered, the more detailed information will be available for selecting the right plan that meets your health care needs. Individuals may choose between different search functions that limit the monthly premium, limit the annual drug deductible, or include special needs.
(1) http://www.nbcnews.com/health/faq-seniors-medicare-dont-need-apply-health-law-marketplaces-4B11234307; (2) http://www.whitehouse.gov/sites/default/files/rss_viewer/health_reform_seniors.pdf; (3) http://www.ncpssm.org/PublicPolicy/Medicare/Documents/ArticleID/216/How-the-Affordable-Care-Act-Helps-Seniors; (4) http://www.HealthCare.gov ; (5) http://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/medicare-advantage-plans.html; (6) http://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/how-medicare-advantage-plans-work.html; (7) http://www.ncpssm.org/PublicPolicy/Medicare/Documents/ArticleID/216/How-the-Affordable-Care-Act-Helps-Seniors; (8) http://www.ncpssm.org/PublicPolicy/Medicare/Documents/ArticleID/216/How-the-Affordable-Care-Act-Helps-Seniors; (9) http://www.nbcnews.com/health/faq-seniors-medicare-dont-need-apply-health-law-marketplaces-4B11234307; (10)