What will implementation of the Patient Protection and Affordable Care Act (Obamacare) mean for people on Medicare?

Medicare and Obamacare: Most provisions of the Affordable Care Act are scheduled to be implemented in 2014 – next year, and many people are still confused about what it does and what it will mean for them.

For most beneficiaries of Medicare Parts A and B, it will mean fairly little. The way Medicare works will not be changed; co-pays and deductibles are not changed by the Act, and premiums are not likely to change any more than they have in the past. Over time, premiums for Medicare supplement insurance may change, but there is no reason to believe there will be major changes in most policies.

Obamacare and Providers (Like Doctors and Hospitals)

Medicare and Obamacare: There are provisions in the Act designed to reduce the costs of Medicare to the government. Hospitals and some other health care providers are concerned about reductions in reimbursements for care, some of which have already gone into effect, and some of which may be recommended after 2015 by the Independent Payment Advisory Board. The Act also takes steps toward changing the way doctors and hospitals are paid. Currently, they are paid on a fee for service basis. Medicare pays a set amount for each service performed. The Act provides for experiments with a different kind of pricing based upon the overall care of a group of patients rather than specific payments for specific services. The policy change envisions better patient outcomes at less overall cost, a win-win situation, though it remains to be seen how well that works out.

Obamacare and Medicare Advantage

Medicare and Obamacare: For beneficiaries who have chosen Medicare Part C, also know as Medicare Advantage plans the changes may be greater. Currently, Medicare pays about 12% more per person on Medicare Advantage than it does for those on original Medicare. The Affordable Care Act provides for the reduction of that differential over a period of years. That may mean higher premiums, deductibles, or co-pays for Medicare Advantage plans. It may also result in some insurance companies no longer offering Medicare Advantage plans. Exactly what will happen with any particular plan is not known right now.

Obamacare and Medicare Part D

Medicare and Obamacare: Medicare Part D is improved for most beneficiaries. Originally, Part D beneficiaries paid 25% of the cost of their medications until the total bill hit $2,830, then paid the full cost of the medications until the total charges reached $4,550. The difference between the two amounts became known as the “donut hole.” The Affordable Care Act closes the donut hole by covering a little more each year until 2020, when it is closed.

For those who are still working, the Affordable Care Act increases the payroll tax for Medicare. Also, it imposes an annual fee on branded prescription drug manufacturers and importers, and eliminates the tax deduction for employers who receive Part D retiree drug subsidy payments, beginning this year.

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