Health care reform has new senior rules

February 2, 2011
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D is for “doughnut hole” and discounts.

That’s what some Medicare recipients will discover this year when parts of the Patient Protection and Affordable Care Act of 2009 — the health care reform law — go into effect for the 65 and over set.

Part D is the basic Medicare plan that covers prescription drugs. When it was introduced in 2006, once the recipient met a modest deductible, it covered medications up to a certain point. Then coverage stopped, leaving people to pay out-of-pocket until their costs reach a “catastrophic” level.

Some seniors faced thousands of dollars in drug costs while in the “doughnut hole” — even though they still had to pay Part D premiums.

But 2011 will see the first step in health care reform’s 10-year plan to fill in the hole.

Jo Murphy, executive director of the Michigan Medicare-Medicaid Assistance Program, said several additional changes are ahead in 2011 prompted by the health care law.

“I think maybe half the Medicare population has a clue, but I don’t think they fully understand it,” said Murphy, whose private nonprofit organization trains staff and volunteer experts to help Michigan residents with Medicare and Medicaid questions.

“There was so much fear when all the health debate was going on,” she said. “When I went out and talked to people about the changes to Medicare brought on by health care reform, they were shocked.”

Medicare provides health benefits for about 46 million Americans, including 1.6 million in Michigan: those age 65 and older, some disabled citizens and anyone with end-stage kidney disease. About 40 million recipients take prescription coverage benefits under Part D.

The Kaiser Family Foundation estimated that 14 percent had to pay out of pocket for prescriptions in 2007 due to the doughnut hole.

Last year, eligible recipients received $250 from Medicare to offset prescription costs. This year, Medicare recipients pay a deductible, then 25 percent of drug costs up to $2,840.

New this year, as part of health care reform, are 50 percent discounts from pharmaceutical companies on brand name drugs once an individual’s spending exceeds the $2,840 mark. Generics will carry a 7 percent discount.

Pharmaceutical companies agreed to provide the Medicare discounts as part of the health care reform package.

When out-of-pocket drug expenses hit $6,444, recipients pay 5 percent of the cost of any additional prescriptions. Medicare will count the full price of drugs purchased in the doughnut hole — despite the discount — toward meeting the $6,444 point that triggers catastrophic coverage.

“It’s a good deal,” Murphy said. “I think what they observed was, when people got to the doughnut hole, they just quit taking their drugs.”

By 2020, seniors will pay 25 percent of their drug bills, brand name and generic, out-of-pocket from the time a recipient hits the deductible until spending reaches the catastrophic level. In addition, through 2019, Medicare will lower that level, prompting catastrophic prescription coverage at smaller spending amounts.

“In theory, if it doesn’t get repealed, by 2020 the doughnut hole will be entirely gone,” Murphy said. “Incrementally, that gap in coverage is going to get smaller every year.”

As the baby boomer generation moves into Medicare, they are likely to change the way the benefits are used, Murphy said.

“You’ve got this whole group of people who just turned 65, they’re on Medicare, they might still be working, they’re healthy — they may not take any drugs,” she said. “And then you might have somebody else that’s on 20 drugs or 30 drugs a month because they’ve got really bad health conditions.”

Preventive care: Starting this year, health care reform requires insurers to cover a list of preventive services. Under Medicare, that means seniors now can, at no cost, receive annual “wellness exams”; a cholesterol level blood test once every five years; an annual mammogram; Pap tests and pelvic exams to check for cervical and vaginal cancer once every two years or annually for high-risk patients; colon cancer screening, including colonoscopy once every 10 years, or more often or other types of screening tests for high-risk patients; annual PSA test for prostate cancer; annual flu and pneumococcal vaccines; Hepatitis B shots for high-risk patients; bone mass measurements for osteoporosis screening once every two years; diabetes screening test; nutritional counseling for people with diabetes, kidney disease or kidney transplant patients; up to eight smoking cessation counseling sessions per year; HIV test.

“The idea was, if you get people to use these preventive benefits, they don’t wait until they are really sick and you have catastrophic health coverage,” she said.

The services may carry a fee for the visit to the doctor’s office. Some other preventive services are covered at 20 percent co-pay.

Enrollment dates: 2011 sees several changes, Murphy said. First is a grace period for people who enrolled in Medicare Advantage at the end of 2010. They can renege and return to Original Medicare, until Feb. 14.

In a bigger change, the enrollment period for Part D and Medicare Advantage programs will be earlier: Oct. 15-Dec. 7.

“We’re all excited about that,” Murphy said. “The old enrollment period was over the holidays. People are busy and distracted. Oct. 15- Dec. 7 will be more convenient for the beneficiaries; it will be more convenient for programs like mine, who rely on volunteers to help people; it should help with processing, because it will give all the insurance companies a little more time.”

Higher Part D costs: Wealthy Medicare recipients are paying more in Part D premiums, as part of health care reform legislation.

“In the past, anybody who joined Part D paid the same premium,” aside from some special programs for low income persons, Murphy said.

Now, individuals with annual income above $85,000, or for couples, $170,000, will pay more for Part D. They’ll pay a percentage of the average national premium, Murphy explained, and it is withheld from Social Security or other federal retirement checks. The surcharges range from about $12 to $69 per month, depending on income.

This affects 2 percent of Medicare beneficiaries, according to the Department of Health and Human Services. The Kaiser Family Foundation estimates that as many as 9 percent of Medicare beneficiaries will be impacted by 2019.

A change in 2007 already ties Part B premiums, for services such as doctor’s office visits, to high incomes. That applies to about 5 percent of Medicare recipients. The health care reform law froze those thresholds at 2010 figures. By 2019, a Kaiser Family Foundation found, 14 percent will be subject to the higher premiums.

MMAP volunteers are located in all 83 Michigan counties to help people navigate Medicare and Medicaid, Murphy said. Access the free services by dialing 1-800-803-7174.

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