How the Affordable Care Act Helps Seniors

The Affordable Care Act (ACA), signed into law on March 23, 2010, aims to provide greater access to health care coverage, improve the quality of services delivered and reduce the rate of increase in health spending.  The ACA provides new ways to help hospitals, doctors and other health care providers to coordinate care for beneficiaries so that health care quality is improved and unnecessary spending reduced.  Many seniors are already benefiting from provisions of the law such as receiving preventive services and paying lower Medicare prescription drug costs.  Below are some of the ways that the Affordable Care Act is helping seniors.

Medicare Benefits Expanded

• Under the ACA, Medicare benefits will not be reduced or taken away, but rather are expanding.  Medicare beneficiaries will save, on average, about $4,200 over the next 10 years due to lower drug costs, free preventative services and reductions in the growth of health spending.  Since passage of the ACA in 2010, more than 6.3 million people with Medicare saved over $6.1 billion on prescription drugs. 
• Private Medicare Advantage (MA) plans are not going away.  Between 2010 and 2012, the number of seniors who joined MA plans increased by 17 percent and premiums fell by 16 percent.

Free Preventive Services and Annual Wellness Visit

• Medicare beneficiaries are eligible to receive many preventive services with no out-of pocket costs. These include flu shots, tobacco use cessation counseling, as well as no-cost screenings for cancer, diabetes, and other chronic diseases.  Seniors can also get an annual wellness visit so they can talk to their doctor about any health concerns.  More than 32.5 million seniors have received at least one of these preventive services with no out-of-pocket costs since 2010.

Lower Medicare Part B Premiums

• Because successful reforms in the Affordable Care Act are making Medicare more efficient and reducing costs, the Medicare Part B premium for 2012 was $99.90, $6.70 lower than the amount projected, and only a few dollars more than the premium that most beneficiaries had been paying.  In addition, the Part B annual deductible decreased by $22 to $140, the first time in Medicare's history when the deductible was lower than the previous year.  The 2013 Part B monthly premium – $104.90 – is also lower than previously projected by the Medicare trustees.

Lower-Cost Prescription Drugs

• For the Medicare Part D prescription drug program, Medicare beneficiaries who fall into the coverage gap, known as the "donut hole," automatically receive a discount on prescription drugs.  Each year, beneficiaries pay a reduced cost for brand name and generic drugs in the coverage gap.  In 2020, the donut hole will be closed.
• In 2013, Medicare beneficiaries in the donut hole will receive a 52.5 percent discount on brand-name drugs and a 21 percent discount on generic drugs.  In 2012, seniors who reached the donut hole saved, on average, about $706 per beneficiary.
• Nearly four million people with Medicare who were in the donut hole in 2010 received a one-time, tax-free $250 rebate from Medicare to help pay for prescription drug costs.

Improvements for Medicare Advantage Plan Members

• Medicare Advantage plans cannot charge enrollees more than traditional Medicare for chemotherapy administration, skilled nursing home care and other specialized services.
• Starting in 2014, the health care law provides additional protections for Medicare Advantage plan members by taking strong steps that limit the amount these plans spend on administrative costs, insurance company profits and items other than health care to 15 percent of their Medicare payments.

Medicare Fraud, Waste and Abuse

• The Affordable Care Act includes new resources and tools to protect taxpayer dollars by preventing fraud in Medicare and Medicaid, building on the efforts of the Department of Health and Human Services and the Justice Department.  In the last three years, the government recovered over $14.9 billion from individuals and companies seeking fraudulent payments.  These efforts have been strengthened by tougher penalties for people who steal from Medicare and more law enforcement to identify criminals abusing the law and beneficiaries.
• Other measures include supporting technology to prevent fraud before it happens.  Examples are preventing fraudulent payments from going out in the first place vs. trying to recapture the money and working with the Senior Medicare Patrol program, which educates seniors and their friends and neighbors about how to stop Medicare fraud.

Helping Americans of All Ages

• The Affordable Care Act helps seniors and Americans of all ages. The following ACA benefits will be implemented in 2014, improving health care for more individuals and families.
• Requiring U.S. citizens and legal residents to have qualifying health coverage (there is a phased-in tax penalty for those without coverage, with certain exemptions).
• Providing refundable and advanceable tax credits and cost sharing subsidies to eligible individuals.
• Creating state-based health insurance exchanges where individuals and small businesses with up to 100 employees can purchase qualified coverage.
• Requiring guarantee issue and renewability of health insurance regardless of health status and allowing rating variation based only on age (limited to a 3 to 1 ratio), geographic area, family composition and tobacco use in the individual, small group market and the health insurance exchanges.
• Prohibiting annual limits on the dollar value of coverage.
• Requiring Medicare Advantage plans to have medical loss ratios no lower than 85 percent.
• Reducing Medicare payments to certain hospitals for hospital-acquired conditions by one percent.
• Expanding Medicaid (optional for states) to individuals not eligible for Medicare under age 65 with incomes up to 133 percent of the federal poverty level and providing enhanced federal matching payments for new eligibles.
• Allowing all hospitals participating in Medicaid to make presumptive eligibility determinations for all Medicaid-eligible populations.
• Requiring the Office of Personnel Management to contract with insurers to offer at least two multi-state plans in each health care exchange.
• Creating an essential health benefits package that provides a comprehensive set of services, limiting annual cost-sharing to the Health Savings Account limits.
• Creating a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals.
• Permitting states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200 percent of federal poverty level who would otherwise be eligible to receive premium subsidies in the exchange.
• Assessing a fee of $2,000 per full-time employee, excluding the first 30 employees, on employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit.
• Permitting employers to offer employees rewards of up to 30 percent, potentially increasing to 50 percent, of the cost of coverage for participating in a wellness program and meeting certain health-related standards.
• Imposing new fees on the health insurance sector.
• Establishing an Independent Advisory Board, comprised of 15 members, to submit legislative proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds a target growth rate.

                                                                                                Government Relations and Policy, May 2013

Sources: Kaiser Family Foundation (http://kff.org/interactive/implementation-timeline/); Centers for Medicare and Medicaid Services (www.cms.gov); and the White House (www.whitehouse.gov).