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How Does Health Care Reform Affect Medicare?

There have been many questions about the new Health Care Reforms, also known as the Affordable Care Act (ACA), and how they will affect beneficiaries of Medicare. The ACA requires everyone to have some form of health insurance by March 2014, or be fined.

But what if I have Medicare or Medicaid?

Those who are on Medicare or Medicaid are not required to purchase insurance, as they are already covered. However, the new reform has made significant changes to these programs.

MEDICARE TAX

Individuals with incomes higher than $200,000 or couples with incomes of over $250,000 will have to pay an additional tax of .9% on their incomes.

MEDICARE ADVANTAGE PLAN

Services and expenses covered under traditional Medicare are the same no matter where you live. Medicare Advantage Plans are typically local or regional plans offered by private companies, which cover all services covered by traditional Medicare but usually offer additional benefits or lower co-pays.

The ACA makes several key changes to these plans. For example, there will be limits on certain fees paid by seniors receiving chemotherapy and dialysis. Limits will also be imposed on how much Medicare Advantage Plans may spend on non-medical expenses such as marketing efforts. Federal funding for Medicare Advantage Plans has been cut drastically under the ACA in order to prolong the lifespan of traditional Medicare coverage.

MEDICARE PART D REFORMS

Closing Donut Hole Coverage Gap

In 2006, the Medicare Part D program was launched as part of the Medicare Modernization Act (MMA). Under this program seniors can purchase insurance that, presumably, will allow them to get prescription drugs at an affordable rate.  Part D plans have a monthly fee which varies depending on the coverage you choose.

As well as the monthly fee, you must typically pay for out-of-pocket drug expenses until you have satisfied a deductible. At that point, the Plan D will cover 75% of the prescription drugs for seniors up to another limit sometimes referred to as the maximum annual cost. Once this cap has been reached, the beneficiary hits what is known as the donut hole “coverage gap”, meaning the beneficiary will pay the remaining drug expenses out of pocket up to a certain amount known as the annual limit. If you exceed the annual limit, Plan D will cover the remaining expenses with only a small co-pay.

This is where the Health Care Reform comes into play, aiming to close the donut hole coverage gap with the following changes:

  • $250 rebate checks for beneficiaries once they enter the coverage gap
  • Discounts for Part-D-covered brand name drugs and some generic drugs upon entering the coverage gap

The goal with these changes is to eventually close the gap altogether over the next 10 years.

The ACA will also eliminate Part D co-payments for those eligible for both Medicare and Medicaid and who are receiving home and community-based services.

PREVENTION

Because of the Affordable Health Care Act, Medicare now covers annual physicals and preventative care such as cancer screenings and vaccines.