Medicare Under Health Reform
The ACA provisions will reduce Medicare costs by requiring more efficient and coordinated care in a patient-centered, high-performing care system. These cost-saving provisions are necessary to extend the solvency of the Medicare A Trust Fund beyond 2017.
Rest assured. The Affordable Care Act (ACA) protects your existing, guaranteed Medicare benefits. You have the same ability to choose your own doctor today as you had prior to the ACA. Effective immediately, the ACA increases coverage of preventive care and addresses the gap in the Medicare Plan D prescription drug coverage. In fact, it is projected that over the next decade individuals covered by Medicare will save an average of $3,500 each.
This section explains how the ACA provisions impact individuals who are covered by Medicare. If you are a Medicare healthcare provider, go to the section on this website entitled Health Providers Under Health Reform.
At a Glance
At a Glance
Does the ACA change Medicare coverage?
The ACA includes many changes to Medicare, several of which affect how the program is administered. Your existing guaranteed Medicare covered benefits are protected. In brief, the ACA provisions enhance your Medicare coverage as noted in the following table:
Table 1: The ACA and Medicare Coverage
Click on the following for more information:
- Medicare Part D: Prescription Drug Coverage
- Preventive Care
- Assistance with Premiums
- Medi-Cal for Medicare Beneficiaries
- Medicare Advantage (Medicare Part C) – ACA Impacts
- Medicare A Trust Fund
- Additional Resources
Medicare Drug Coverage Part D
The ACA helps relieve the financial burden felt by the people with Medicare who hit the prescription coverage “donut hole” each year. This section first describes the “donut hole” and then describes the ACA provisions that incrementally close the “donut hole” by 2020.
What is the Medicare “donut hole”?
The Medicare “donut hole” refers to a gap that exists within Medicare Part D, a supplemental Medicare program that provides prescription drug coverage. Individuals who purchase Medicare Part D pay a monthly premium to have Medicare cover a portion of their prescription drug costs but there is a gap in coverage that occurs when prescription drug costs exceed $2800 per year until costs exceed $4550 per year. This gap in coverage is referred to as the “donut hole” and when you are in the “donut hole” you pay 100% of the cost of your prescription medication. The intent of the “donut hole” was to encourage people to closely manage and conserve the amount of money they spend on prescription medications but the unintended outcome is that the people who most need drug coverage fall into the gap and find they are unable to pay for the medications they need.
Many people with serious illnesses stop taking their medications once they fall into the gap. For example, the use of both generic and brand-name medicines to reduce cholesterol drops sharply once people hit the gap, and continues dropping with each month they are in the “donut hole”. One in ten people taking medicine to control diabetes stop taking their drugs when they hit the gap.[ii]
Will the ACA close the Medicare Part D “donut hole”?
Yes, by 2020 the coverage gap will be closed, meaning there will be no more “donut hole.” And, beginning in 2010, the following incremental changes will serve to shrink the gap in coverage for those people who are not also enrolled in Medicare Extra Help.
What is Medicare Extra Help?
If you have limited resources and income, you may qualify for Extra Help with the costs related to a Medicare prescription drug plan such as:
- monthly premiums
- annual deductibles
- prescription co-payments.
The Extra Help program is coordinated by the Social Security Administration. They will need to know the value of your savings, investments, income and real estate (excluding the home you live in, your car and a few other items). If you are married and living with your spouse, they will need information about both of you. By filing an Application for Extra Help with Medicare Prescription Drug Plan Costs (Form SSA-1020), Social Security will determine if you are eligible for the Extra Help. Most of the questions on the application deal with resources and income. Social Security will not ask for documentation initially to support the information you provide, but will match your information with data available from other Federal agencies.
To find out if you qualify for the Extra Help program, go to www.socialsecurity.gov/extrahelp
or call Social Security at
This ACA provision helps to mend a gap that exists between the recommended preventive health services that older Americans should receive and Medicare coverage for those services. In particular, the ACA improves coordination between assessing risk for certain illnesses, and then providing the appropriate tests and follow-up medical services.
Beginning January 1, 2011, Medicare beneficiaries will no longer have to pay out-of-pocket costs for most preventive services. In addition, Medicare will cover the cost of an annual wellness visit with your physician. During this visit, you and your doctor will assess your risk for certain illnesses and develop a personalized prevention plan that takes a comprehensive approach to improving your health.
Specifically, the Medicare wellness visit will cover the following services, free of charge to the patient:
- Routine measurements such as your height, weight, blood pressure, body-mass index (or waist circumference, if appropriate);
- Review of your medical and family history, including medications and current care by other healthcare providers;
- A personal risk assessment (including any mental health conditions);
- A review of your functional ability and level of safety, including an assessment of any cognitive impairment and screening for depression;
- Set up a schedule for Medicare’s screening and preventive services for the next 5 to 10 years; and,
- Any other advice or referral services that may help intervene and treat potential health risks.
In addition, the following preventive services that Medicare currently covers will be provided free of charge to the patient, including:
- Mammograms every 12 months for eligible beneficiaries age 40 and older
- Colorectal cancer screening, including flexible sigmoidoscopy or colonoscopy
- Cervical cancer screening, including a Pap smear test and pelvic exam
- Cholesterol and other cardiovascular screenings
- Diabetes screening
- Medical nutrition therapy to help people manage diabetes or kidney disease
- Prostate cancer screening
- An annual flu shot, a vaccination against pneumococcal infection (that may cause pneumonia), and the hepatitis B vaccine
- Bone mass measurement
- Abdominal aortic aneurysm screening to check for a bulging blood vessel
- HIV screening tests for people of who are at increased risk or who ask for the test
Finally, Medicare will also be able to expand coverage of additional preventive services with no charge to the beneficiary as new services, tests, or screenings become available and are recommended by the U.S. Preventive Services Task Force (USPSTF). This will ensure Medicare coverage stays on the cutting edge of preventive care for America’s seniors and individuals with disabilities.[iii]
What is the USPSTF?
The U.S. Preventive Services Task Force (USPSTF) is an independent expert panel appointed by the federal government to review and recommend various screenings and preventive health care procedures. It produced the following list of A-rated and B-rated preventive services for adults over 65:
For the recommended preventive screenings listed in the table above, only one — abdominal aortic aneurysms — was fully covered by Medicare for both coordination and service. The rest received either partial funding for one component and full funding for the other, or only partial funding for each.[iv]
Medicare has several programs called Medicare Savings Programs (MSPs) that assist people with low incomes and limited financial assets. Medi-Cal (the California Medicaid program) administers these programs. Some beneficiaries qualify for both Medi-Cal and a Medicare Savings Program, whereas other beneficiaries qualify for one but not the other.
If a beneficiary qualifies for full Medi-Cal or Medi-Cal with a share-of-cost under $500/month, then Medi-Cal may cover the beneficiary's monthly Medicare premium.
(Note: California also has the California 250% Working Disabled (CWD) Program.)
Certain Medicare beneficiaries may also qualify for Medi-Cal, the State’s Medicaid program for those who meet income, asset and residency requirements. People who qualify for both Medicare and full Medi-Cal are known as “dual eligibles” or “Medi-Medis.”
Qualifying for both programs will reduce out-of-pocket expenses for the beneficiary. If you have both Medicare and Medi-Cal but no other insurance, Medicare pays first and Medi-Cal pays second for "medically necessary" health care, including:
- Physician visits
- X-rays and laboratory tests
- Hospital and nursing home care
- Adult day health services, home health care
- Certain prescription drugs not covered by Medicare
- Some dental care
- Prosthetic and orthopedic devices
- Eyeglasses, hearing aids
- Durable medical equipment
- Ambulance services
- Hospice care
Medicare Advantage (Medicare Part C) is an alternative to traditional Medicare in which private insurance companies contract with the Medicare Administration to provide HMO and PPO options to beneficiaries.
Medicare Advantage Plans provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) coverage. They may also offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most plans include Medicare prescription drug coverage (Part D) as well. It is important to note that all plans may vary in their premium costs, out-of-pocket costs and rules for accessing services (referrals, specific provider networks, etc)
Under the ACA, the cost of Medicare Advantage plans has gone down by an average of 1 percent. Also more and more Medicare Advantage plans offer to pay for some prescription drug costs that now fall into the so-called “donut hole”.
The bottom line is that if you are in a Medicare Advantage plan, you will still receive guaranteed Medicare benefits. And, beginning in 2014, the new law protects Medicare Advantage members by taking strong steps to ensure that at least 85% of every dollar these plans receive is spent on health care, rather than administrative costs and insurance company profits.[v]
Medicare A Trust Fund
Medicare is funded by two Trust Funds. The Medicare Trust Fund that is primarily responsible for Medicare Part A is funded by Payroll taxes, income taxes paid on Social Security benefits, interest earned on the trust fund investments, and Part A premiums from people who aren’t eligible for premium-free Part A.
The overpayments made to Medicare Advantage plans were making the Medicare Trust Fund go bankrupt as early as 2017. The Affordable Care Act (ACA) extends the life of this Medicare Trust Fund by 12 years until 2029. It is important to know that Medicare costs do not impact the Federal deficit.
[i] Henry J. Kaiser Family Foundation. (2008, August 21). The medicare part d coverage gap: costs and consequences in 2007. Retrieved from http://www.kff.org/medicare/7811.cfm
[ii]Universaldrugstore.com, (2009, August 19). Close the donut hole now!. Retrieved from http://www.medicaredoughnuthole.com/MedicareArticles/tabid/465/articleType/ArticleView/articleId/384/CLOSE-THE-DONUT-HOLE-NOW.aspx
[iii] see pdf doc in Source Documents entitled 07-14-10_prevention_seniors_fact_sheet.pdf (Can’t site source – it is not noted on pdf)
[iv] Rivero, E. (2011, January 21). Health reform law can help align medicare with preventive care recommendations. Retrieved from http://newsroom.ucla.edu/portal/ucla/health-care-reform-can-help-align-190933.aspx
[v] U.S. Department of Health and Human Services, Center for Medicare Services. (2010). Medicare and the new health care law - what it means for you (CMS 11467). Medicare.gov: Retrieved from www.medicare.gov/Publications/Pubs/pdf/11467.pdf
[MB1]Note to self: Check to make sure the Medi-Cal Eligibility for Low Income Adults section has these programs described