How Healthcare Reform Will Affect Medicare
On March 23, 2010 the Patient Protection and Affordable Care Act, better known as healthcare 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 largely covered by reductions in fraud and waste in the system and by the elimination of the Medicare Advantage subsidies that have been in place up to this point. Below are some specific changes that Medicare beneficiaries can expect to see 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 costs, 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 discounts will increase annually until the donut hole is gone.
Medicare Part B
Under Medicare right now, seniors pay a $155 annual deductible for Medicare Part B, which is 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 for things 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 put into place in an attempt 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 greater costs for the insurance companies, it is likely that some plans will disappear, some will have higher premiums and others will have reduced benefits. Plans 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 important 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.
Posted in Health Care Reform, Medicare
Tagged Affordable Care, Catastrophic Coverage, Coverage Limit, Healthcare Reform, Medical Insurance, Medicare, Medicare Beneficiaries, Medicare Part B, Medicare Part D, Medicare Plans, Medicare Prescription Drug, Medicare Prescription Drug Plans, Medicare Reform, New Legislation, Patient Protection, Prescription Drug Plans, Prescription Medications, Preventive Care, Quot, Subsidies
Catastrophic Coverage Saves Dollars and Makes Sense
For some people, the preventive care options provided by traditional health insurance plans are not a benefit they want or can afford. Instead, a health insurance policy that covers them only in the case of a catastrophic event, such as a car accident or emergency surgery, is much more appealing and affordable. For these people, catastrophic coverage (also called major medical) offers the perfect balance between reasonable coverage and cost.
What is Catastrophic Coverage?
Catastrophic coverage is generally sought out by individuals who do not anticipate needing full health coverage benefits but who do want the security of coverage in the event of an unexpected, emergency need.
Catastrophic health insurance often has a high deductible and low monthly premium, making it ideal for adults in their 20s who are without group coverage and adults between the ages of 50 and 65 who are primarily concerned with financial losses associated with heart attacks, accidents, and other serious illnesses. They are generally healthy, take few or no prescription medications, and would rather pay out-of-pocket for the occasional office visit to save on their monthly insurance premiums.
Catastrophic plans typically cover only major hospital and medical expenses above a certain deductible. The insured is responsible for paying the entire deductible along with follow up doctor visits and any prescription drugs. Deductibles typically start at $2500 and can be much higher-the higher a deductible you choose, the less expensive your monthly premiums. If your treatment costs do not exceed your deductible, the insurer will pay nothing.
Most catastrophic health plans have lifetime maximum benefits payments. Once the expenses of your treatments have reached the amount of your cap, the insurance company will not pay for additional medical expenses and the policy will be voided.
Before you buy a catastrophic health plan, consider:
- How much of a deductible can you afford?
- How extensive do you want your coverage to be?
- Do you need prescription medicines?
- Can you afford to pay for your own doctor’s office visits?
- Do you have any pre-existing conditions?
- Do you get sick often?
Posted in Health Insurance
Tagged Catastrophic Coverage, Catastrophic Event, Catastrophic Health Insurance, Coverage Benefits, Doctor Visits, Emergency Surgery, Financial Losses, Full Health, Group Coverage, Health Insurance Plans, Health Insurance Policy, Heart Attacks, Insurance Premiums, Maximum Benefits, Occasional Office, Prescription Drugs, Prescription Medications, Preventive Care, Traditional Health Insurance, Unexpected Emergency