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Health-Care Reform Changes Affecting Seniors

January 08, 2016

The Patient Protection and Affordable Care Act(ACA), enacted in 2010, contains some provisionsthat directly affect our nation's elder population. Ifyou're a retiree or a senior, you may be concernedabout how these reforms may affect your access tohealth care and insurance benefits. The following isan overview of health-care reform legislationprovisions you should be aware of.

Medicare spending cutsNot surprisingly, the concerns of retirees and seniorsgenerally center on potential cuts in Medicarebenefits. At the outset, the new legislation does notaffect Medicare's guaranteed benefits. However, twogoals of the new health-care legislation are to slowthe increasing cost of Medicare premiums paid bybeneficiaries, and to ensure that Medicare will not runout of funds.

To help achieve these goals, cuts in Medicarespending will occur over a ten-year period, beginningin 2011, particularly targeting Medicare Advantageprograms--Medicare benefits provided through privateinsurers but subsidized by the federal government.These cuts are intended to bring the cost of federalsubsidies for Medicare Advantage plans in line withcosts for comparable benefits for Medicarebeneficiaries. If you participate in a MedicareAdvantage plan, these cuts could reduce or eliminatesome of the extra benefits your plan may offer, suchas dental or vision care, and your premiums mayincrease. But Medicare Advantage plans cannotreduce primary Medicare benefits, nor can theyimpose deductibles and co-payments that are greaterthan what is allowed under the traditional Medicareprogram for comparable benefits.

Benefits added to MedicareThe legislation also improves some traditionalMedicare benefits. For example, prior to the newlegislation, traditional Medicare paid 80% of the costfor a one-time physical for new enrollees within thefirst 12 months of enrollment. But beginning in 2011,

you will receive free annual wellness exams;preventive care tests such as screenings for highblood pressure, diabetes, and certain forms of cancer;and a personalized prevention assessment and planto address particular health risk factors you mayencounter.

Medicare Part D drug programchangesIf you are a Medicare Part D beneficiary, you may besurprised to find that you have to pay for a significantportion of prescription drugs out-of-pocket afterreaching a gap in your annual coverage, referred toas the "donut hole." Aside from co-pays anddeductibles, Medicare generally pays for yourmedications up to a certain annual dollar limit, afterwhich you have to pay more of the cost for yourprescriptions. But the amount you have to pay withinthe coverage gap decreases each year until 2020, atwhich time a combination of federal subsidies and adecrease in co-payments reduces your out-of-pocketcosts for medications in the gap to 25%. However, ifyour modified adjusted gross income as reported onyour IRS tax return from 2 years ago is above acertain limit, you may pay a Part D income-relatedmonthly adjustment amount (Part D-IRMAA) inaddition to your monthly plan premium. This extraamount is paid directly to Medicare, not to your plan.

If you are a full-benefit dual eligible beneficiary(eligible for both Medicaid and Medicare) receivinginstitutional care, such as in a nursing home facility,you do not owe any co-payments for Part D-coveredprescriptions. However, if you're dually eligible andreceiving long-term care services at home or in aday-care community-based setting, you are subject toPart D drug co-payments. Beginning in 2012, the newlegislation removes this imbalance by eliminatingco-payments for individuals receiving services athome or in a community setting.

Also, the time period during which Part D andMedicare Advantage beneficiaries can make changesto their coverage runs from October 15 to December

Benefits added toMedicare by the PatientProtection and AffordableCare Act include freeannual wellness exams;preventive care testssuch as screenings forhigh blood pressure,diabetes, and certainforms of cancer; and apersonalized preventionassessment and plan toaddress particular healthrisk factors you mayencounter.

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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

IMPORTANT DISCLOSURES

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7. During this period, you can not only join a Part Dplan for the first time, but you can switch from onedrug plan to another or drop your drug coveragecompletely.

Coverage for those under age 65You may be between the ages of 55 and 65 and donot have health insurance provided by your employer,or if covered, find that your cost for insurance issubstantial. If you're in this predicament, thehealth-care legislation provides you with opportunitiesfor affordable health insurance.

The ACA created Health Insurance Marketplacesthrough which you can purchase affordable healthinsurance coverage. The Marketplaces serve as aconduit for health insurance providers to offer healthplans with different benefits, co-insurance limits, andpremium costs. You can then compare the costs ofvarious plans and benefits. If you can't afford aMarketplace plan, you may be eligible for agovernment subsidy based on income and familysize.

Increased access to home-basedcareOften, people with disabilities or illnesses wouldrather receive care at home instead of at a nursinghome. The health-care reform law provides forprograms and incentives for greater access toin-home care. The Community First Choice Option isavailable for states to add to their Medicaid programs.This option provides benefits to Medicaid-eligibleindividuals for community-based care instead ofplacement in a nursing home.

Nursing home transparencyThe Independence at Home demonstration program,available in 2012, is a test program that providesMedicare beneficiaries with chronic conditions theopportunity to receive primary care services at home.This is intended to reduce costs associated withemergency room visits and hospital readmissions,and generally improve the efficiency of care.

While in-home care may be a preference, often anursing facility is the better or only alternative. In thepast, consumers had very little information availablein order to compare nursing homes. The health-carelegislation addresses the need for more transparencyregarding nursing facilities. For example, nursinghomes are required to disclose their owners,operators, and financers. The government will alsocollect and report information about how well aparticular nursing home is staffed, including thenumber of hours of nursing care residents receive,staff turnover rates, and how much facilities spend onwages and benefits.

Often, people withdisabilities or illnesseswould rather receive careat home instead of at anursing home. Thehealth-care reform lawprovides for programsand incentives for greateraccess to in-home care.

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