If you are an American over 65, you may have questions about the new health care law and what it means for you and what you need to do. The short answer is that very little changes and most seniors will not have to do anything.
Some meaningful changes have already occurred, such as the shrinking of the prescription drug "donut hole," but most of the major reforms in the Affordable Care Act, such as the new health insurance marketplaces and penalties for not having coverage, simply do not affect seniors.
However, an important open-enrollment period (which has nothing to do with the new law) has started, and news about it might have been drowned out by the debate over the Affordable Care Act and the government shutdown. Medicare's open-enrollment period started Oct. 15 and continues through Dec. 7, and for seniors it can be pretty important.
More on that below. First we'll review some of the recent reforms and what they mean for seniors.
Health insurance exchanges, or marketplaces: These marketplaces are designed for individuals under 65 and small businesses. They have absolutely no impact on seniors. Medicare beneficiaries are already covered, they cannot lose their coverage and they have no reason to visit these new websites.
Medicare Supplemental Insurance (also known as Medigap insurance coverage) is not offered in these new marketplaces. Neither are Medicare Advantage plans. Seniors are not required to re-enroll in either of these plan types because of the new health care law.
However, seniors should be aware of telephone and internet scams that have sprung up because of the confusion surrounding the marketplaces. Seniors should be careful when they provide personal information over the phone or by email.
Individual mandate: This is the provision in the law that requires most Americans have health insurance in 2014 or pay a tax penalty. As long as seniors have Medicare Part A (which provides coverage for hospitals, nursing homes and hospice care), they already have sufficient insurance coverage and are not required to pay any penalty.
Medicare Part D coverage gap, or "donut hole": Discounts in the Medicare Part D coverage gap have been creating some cost relief for seniors since the Affordable Care Act passed in 2010, and unless the law is changed, the donut hole will close completely in seven years.
In 2014, prescription drug coverage stops when the insurer and Medicare Part D member together have spent $2,850 and resumes when the member has spent $4,550. In 2013, coverage stopped at $2,970 in spending and resumed at $4,750.(1) Discounts on drugs seniors buy while in the donut hole have also improved, and next year's deductible is $310 instead of $325.(2)
Wellness and preventive care: Seniors also have access to annual wellness visits and many preventative care services without additional fees or co-pays, as a result of the Affordable Care Act. You can find out more about these services from your Medicare provider.
Back to Medicare's open enrollment. During this seven-week period, Americans on Medicare can join or change their health and prescription drug coverage for 2014. Seniors can switch from traditional Medicare to a private Medicare Advantage (MA) plan, or move from MA coverage back to traditional Medicare. You can also switch your Medicare Part D prescription drug plan.
This open-enrollment period offers consumers an opportunity to evaluate their current coverage and examine alternatives. When it comes to prescription drug coverage, seniors can't assume that their current plan coverage will stay the same next year or that premiums will remain unchanged. Monthly premiums for prescription drug coverage may vary significantly from plan to plan.
According to Avalere Health, a health research firm in Washington, D.C., average premiums for stand-alone prescription drug plans will increase by 5.1 percent in 2014. However, among the top 10 prescription drug plans, or PDPs, half may implement a double-digit percent increase compared to 2013.(3)
On the positive side, one PDP (WellCare Classic) that implemented a preferred-pharmacy network forecasts a 38 percent drop in premium costs.(4) Preferred-pharmacy networks can offer lower premium costs as long as policyholders fill their prescriptions within the plan's network of pharmacies. Several other PDP plan providers with preferred-pharmacy networks can offer similar savings.
As for Medicare Advantage (MA) plans, since the passage of the Affordable Care Act in 2010, average MA plan premiums have gone down by 9.8 percent, according to the Centers for Medicare and Medicaid Services. The average MA premium in 2014 is projected to increase by only $1.64 from last year, coming in at $32.60.(5)
More than 99 percent of Medicare Advantage beneficiaries will still have access to an MA plan regardless of federal payment reductions under the Affordable Care Act. The average number of plan choices will remain about the same in 2014, and access to supplemental benefits remains stable.(6)
Now is the time for seniors to carefully examine their current coverage and compare monthly premiums, out-of-pocket costs, convenience and plan coverage. Seniors need to shop for the best value between now and Dec. 7. For more information on Medicare's open enrollment and to compare the coverage and premiums for 2014 Medicare health and drug plans, visit the following website: http://www.cms.gov/Center/Special-Topic/Open-Enrollment-Center.html
– Bob Semro
1, 2 – Susan Jaffe, Kaiser Health News, Seniors Cautioned To Pay Close Attention To Details As Enrollment Begins In Medicare Plans, Oct. 15, 2013.
3, 4 – Avalere Health, Avalere Analysis Reveals First Drop In Medicare Advantage Offerings Since 2011, Sept. 23, 2013.
5, 6 – Center for Medicare & Medicaid Services, Medicare Open Enrollment begins today; Seniors have more high quality choices, Oct. 15, 2013.