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How will health care reform impact Medicare?

Created date

February 21st, 2014

The Affordable Care Act (ACA) took effect in January. Like any major system change, federal health care reform brings with it some inevitable questions and initial confusion. 

“Even seniors on Medicare are at risk of Obamacare-related cost traps,” The Senior Citizens League (seniorsleague.org) Chairman Ed Cates says. “Obamacare cuts about $156 billion from Medicare Advantage plans over ten years and some of the biggest Medicare health plans are ending contracts with doctors and major hospitals in 2014.”

Understanding how the Affordable Care Act could impact your medical expenses, if at all, is the key to avoiding unexpected costs. 

What to expect

High-income seniors enrolled in traditional Medicare plans can expect premiums to go up. Jordanna Davis, a policy expert at the University of Pittsburgh Medical Center (upmc.com), says couples that earn more than $170,000 and individuals taking in more than $85,000 annually will pay higher premiums.

“The ACA also freezes this threshold through 2019, so theoretically an increasing number of seniors will fall into this category each year,” Jordanna says.

Another important change is to Medicare Advantage plans. Matt Neal, director of marketing for Free Medicare Report (freemedicarereport.com), says the ACA requires Medicare Advantage plans to maintain a minimum loss ratio of 85%. That means that 855 of insurance premiums collected must be paid out as benefits to customers—arguably a positive change for patients. However, Neal says some smaller companies can’t afford to operate at that 85% minimum loss ratio. 

“I’ve seen in a lot of regions that there are fewer carriers and fewer options [for Medicare Advantage patients],” Neal says.

The bottom line: Check to make sure your doctors, hospitals, and pharmacies still accept your Medicare Advantage plan to avoid racking up out-of-pocket charges.

Older adults under age 65 who aren’t yet eligible for Medicare are now required to purchase health insurance that is compliant with the ACA—or face a tax penalty. Mary Johnson, a policy analyst with The Senior Citizens League, cautions people to read the fine print when purchasing insurance policies on government health care exchanges. She says some plans with low premiums charge deductibles as high as $6,000 a year for people age 62 and over. Also make sure your Medicare Part D prescription drug plan covers your specific medications to avoid unexpected charges at the pharmacy.

It’s no secret that the Health Insurance Marketplace website (healthcare.gov) experienced significant technical glitches during the rollout last October. As a result, Johnson says there is a risk people aren’t enrolled in the plans they selected or are being charged a different amount than they expected. 

Her advice: make sure you have received the correct insurance card if you signed up for a new plan and carefully review medical bills to make sure covered services are being paid by insurance. If you’re unhappy with your new plan, make changes before open enrollment ends on March 31, 2014.

The ACA also makes some important changes that could lower medical costs, particularly for older adults. ExHale Healthcare Advocates (exhalehealth.com) founder Sarah O’Leary says traditional Medicare patients can now access preventive care like blood pressure checks, cancer and diabetes screenings, and mammograms at no charge. 

“What we found with the aging population is that people weren’t always plugged in for preventive care because it is expensive,” O’Leary says. “Now people will get access to many services free of charge.”

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