By Claes Bell • Bankrate.com
- Health care reform closes Medicare Part D's doughnut hole in drug coverage.
- Co-payments for many kinds of preventive care like cancer screening end.
- Medicare Advantage plans may lose out on some benefits.
During the debate over health care reform. changes to Medicare became a major point of contention. Seniors packed town hall meetings and contacted elected officials in droves to make sure their benefits would be protected.
Opponents of health care reform charged that it would gut Medicare; supporters said reform would strengthen it for years to come. No wonder that a CBS News poll conducted the day that health care reform passed the House, 54 percent of Americans admitted they were confused by the law.
Now that the dust has settled, what does health care reform mean to Medicare beneficiaries now and in the future? Not as much as you might think from all the hype, says David Certner, legislative policy director for AARP in Washington D.C.
"A lot of people hear about the significant savings in the bill and are afraid of how that's going to impact their benefits," says Certner. "But there are no changes to Medicare's guaranteed benefits in this bill."
From 'doughnut' to Danish?
In fact, the law contains several new benefits for seniors that are worth noting. The biggest is the closing of the Medicare Part D "doughnut hole ," the name given to the gap in drug coverage that occurs after a beneficiary
reaches the initial limit but before he hits the catastrophic threshold several thousand, out-of-pocket dollars later. The doughnut hole isn't just a financial headache for those affected, it's a public health hazard, says Stuart Guterman, assistant vice president for payment system reform program at The Commonwealth Fund, a health care research foundation based in New York.
"The concern is that during this coverage gap, people with chronic conditions are cutting back on their use of the drugs they need to manage those conditions, and that puts them at risk," says Guterman.
The new law begins closing the doughnut hole this year by sending any beneficiary who hits the initial limit a $250 rebate check. Starting in 2011, the doughnut hole shrinks further as a drug discount program chops 50 percent off the cost of name-brand prescription drugs and additional subsidies kick in to reduce the amount seniors pay out of pocket for generic drugs.
By 2013, subsidies become available for prescription drugs as well and increase over subsequent years to completely fill the doughnut hole by 2020, ensuring that Medicare beneficiaries never pay more than 25 percent of drug costs out of pocket.
Another big benefit for Medicare recipients is an end to co-payments for many kinds of preventive care in 2011. Previously, beneficiaries had to pay an annual deductible for physician services plus 20 percent of the cost of each service, says Guterman.
However, under the new law, "things like immunizations, cancer screenings and colonoscopies will no longer have a co-payment," says Certner.