For Seniors: Health Care Reform Effects on Medicare Coverage

Apr 18th, 2010 | By Sharon Shaw Elrod MSW EdD | Category: Social Security & Medicare

Thirty-nine million seniors are on Medicare, a federally controlled and managed (socialized medicine) health care system for senior citizens in the United States.  Seniors are eligible for Medicare at age 65.  In 2003, the prescription drug program was added to covered services (hospitalization, care in physician offices/lab work/x-rays/other defined medical services, nursing home care and rehabilitation services had been created since the inception of Medicare in 1965; beneficiaries were actually able to begin signing up for coverage in 1966). 

The more than 70% of seniors covered by Medicare prescription drug coverage (Part D) will see a change as a result of the new health care legislation.  The original drug coverage that was passed in 2003 created a doughnut hole.  Put simply, after a senior spends $2830 on medications, s/he must take the next $3610 to pay for medicine out of their own pocket.  There is then no financial assistance available for Medicare recipients until they hit the $6640 mark with drug purchases.

However, health care reform has begun to bring relief for senior citizens on Medicare.  In 2010, a $250 rebate will be given seniors who fall into the doughnut hole.  Then in 2011, they will receive a 50 percent discount on brand-name drugs; in addition, seniors will receive a seven percent discount on generic drugs, which will increase seven percent every year thereafter.  Finally, in 2020 the doughnut hole will close, and seniors will no longer have any gap in coverage.

In addition to Part D changes as a result of health care reform, beginning in 2011, the legislation

  • gives seniors free wellness exams every year;
  • provides preventive tests, like screenings for high blood pressure and certain cancers;
  • requires some seniors who make $85,000 or more a year and already pay more in premiums for doctor’s visits and prescription drug coverage, to pay even higher premiums depending on which plan they choose.

The 11 million seniors who buy Medicare Advantage plans may pay higher premiums too.  Medicare Advantage plans are an effort to satisfy the demands of the health insurance industry to get a piece of the Medicare action.  The new legislation cuts $136 billion in subsidies over the next 10 years to these private insurers who offer plans as an alternative to original Medicare.

Of course, those of you who choose a Medicare Advantage plan should probably expect your premiums to increase; private insurers will have to cover the $136 billion loss somehow, and it will likely come out of your pocket.



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