Improvements for Medicare Beneficiaries in the Health Care Reform Law

The new health care reform law includes substantial improvements and protections that are very important for Medicare beneficiaries. Some of the major provisions that will enhance benefits and limit out-of-pocket costs for Medicare beneficiaries are described below.

Providing Immediate Relief from the Prescription Drug Donut Hole

The health care reform law provides assistance to help seniors bridge the current "donut hole," a gap in coverage where beneficiaries must cover the full cost of their medications even while they continue to pay premiums. Under the new law, any senior who falls into the donut hole in 2010 will receive a $250 rebate. Beginning in 2011, a 50 percent rebate will be applied at the pharmacy for brand name medications purchased while in the donut hole.

Closing the Part D Prescription Drug Donut Hole

The law also phases out the donut hole by 2020 for brand-name and generic drugs. At that time, copayments for all drugs will be the standard 25 percent. Also, between 2014 and 2020, the law will help seniors get out of the donut hole sooner - as a lower level of spending will qualify beneficiaries for "catastrophic" coverage where Medicare covers 95 percent of their costs. Altogether, a typical senior who falls into the donut hole will save $250 this year, over $700 in 2011, and over $3,000 by 2020.

Assisting Low-Income Seniors with Part D Prescription Drug Costs

The health reform law improves eligibility and coverage for low-income Medicare beneficiaries by eliminating copayments for many beneficiaries receiving home- and community-based services who are eligible for both Medicare and Medicaid. The new law will reduce the number of low-income beneficiaries who are required to change plans each year to maintain zero premiums; and it allows widows and widowers to more easily retain their low-income eligibility. In addition, outreach programs are enhanced to ensure that more beneficiaries who are eligible for a Low-Income Subsidy are able to enroll.

Improving Preventive Health Care Services

The health care reform law includes improvements designed to help keep seniors healthy. Beginning in January 2011, preventive services such as cancer, cardiovascular, and diabetes screenings will no longer require any out-of-pocket payments for deductibles or coinsurance; the number of covered preventive services will be expanded; and for the first time, Medicare will cover an annual wellness visit and personalized prevention plan for every beneficiary.

Limiting Out-of-Pocket Costs for Medicare Advantage Enrollees

Although the health care reform law gradually reduces overpayments to private Medicare Advantage plans, it does NOT eliminate the plans or reduce the extra benefits they provide. It is up to each private insurer to decide what extra benefits to offer; they are required to offer all benefits covered by traditional Medicare. The health care reform legislation prohibits Medicare Advantage plans from charging seniors more than traditional Medicare for chemotherapy, skilled nursing facility care and renal dialysis. Decisions about limiting charges for other high-cost services can be made in the future. Often beneficiaries do not realize what their costs will be for these services until the need for them arises.

Requiring Medicare Advantage Plans to Spend on Care over Profits

The health care reform law requires Medicare Advantage plans to spend at least 85 percent of their revenue on senior care rather than profits or overhead. Plans that do not spend at least 85 percent of their revenue on patient care would be required to return money to the government and could be suspended or terminated from the program if their spending on patient care remains below 85 percent for two or more years.

Government Relations and Policy, April 2010

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