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Health-Care Reform Changes Affecting Seniors

James Lieb, CTFA
James F. Lieb, CTFA
Senior Vice President, Senior Trust Officer
[email protected]
(585) 419-0670 x50665

The Patient Protection and Affordable Care Act, enacted in 2010, contains some provisions that directly affect our nation’s age 65 and older population. If you’re a retiree or a senior, you may be concerned about how these reforms are affecting your access to health care and insurance benefits. The following is an overview of some of the associated health-care reform legislation provisions.

Medicare spending cuts

Not surprisingly, the concerns of retirees and seniors center on potential cuts in Medicare benefits. At the outset, the new legislation did not affect Medicare’s guaranteed benefits. However, two goals of the health-care legislation were to slow the increasing cost of Medicare premiums paid by beneficiaries and to ensure that Medicare will not run out of funds.

To help achieve these goals, cuts in Medicare spending are occurring over a ten-year period, beginning in 2011. In particular, these reductions target Medicare Advantage programs – Medicare benefits provided through private insurers but subsidized by the federal government.

These cuts are intended to bring the cost of federal subsidies for Medicare Advantage plans in line with costs for comparable benefits for Medicare beneficiaries. The cuts may reduce or eliminate some of the extra benefits an Advantage plan may offer, such as dental or vision care, and premiums may increase.

But Medicare Advantage plans cannot reduce primary Medicare benefits, nor can they impose deductibles and co-payments that are greater than what is allowed under the traditional Medicare program for comparable benefits.

Benefits added to Medicare

The legislation also improved some traditional Medicare benefits. Prior to the new legislation, traditional Medicare paid 80% of the cost for a one-time physical for new enrollees within the first 12 months of enrollment. Now, Medicare enrollees receive free annual wellness exams; preventive care tests such as screenings for high blood pressure, diabetes, and certain forms of cancer; and a personalized prevention assessment/plan to address particular health risk factors.

Medicare Part D drug program changes

Medicare Part D beneficiaries previously were required to pay for the entire cost of prescription drugs out-of-pocket after reaching a gap in annual coverage, referred to as the “donut hole”. Starting in 2010, beneficiaries began to enjoy a phased-in reduction in co-payments for drugs within the donut hole. By 2020, a combination of federal subsidies and a reduction in co-payments will reduce out-of-pocket costs for medications in the gap from 100% to 25%. However, individuals with annual incomes greater than $85,000 and couples with incomes exceeding $170,000 now pay additional Part D premiums as the federal subsidy offsetting some of the cost of Medicare Part D premiums is reduced.

Nursing home transparency

The Independence at Home demonstration program, implemented in 2012, is a test program that provides Medicare beneficiaries with chronic conditions the opportunity to receive primary care services at home. This is intended to reduce costs associated with emergency room visits and hospital readmissions, and generally improve the efficiency of care.

While in-home care may be a preference, often a nursing facility is the better or only alternative. In the past, consumers had very little information available in order to compare nursing homes. The health-care legislation addresses the need for more transparency regarding nursing facilities. For example, nursing homes now are required to disclose their owners, operators, and financers. The government is now also collecting and reporting information about how well a particular nursing home is staffed, including the number of hours of nursing care residents receive, staff turnover rates, and how much facilities spend on wages and benefits.

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