Straight Talk for Seniors™ <br> 5 Key Facts
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Straight Talk for Seniors™
5 Key Facts

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How will the new health reform law affect you? Here are 5 key facts about the Affordable Care Act.

FACT # 1 >> The law will not cut your basic Medicare benefits — and it will make some benefits better.

  • Starting in 2010: More help with prescription drug costs [Section 3301]

    You've probably heard about the "donut hole" in Medicare prescription drug coverage. If your drug costs were really high and you entered the donut hole last year, Medicare sent you a check for $250. You didn't have to do anything to get the check.

    In 2011: If you and your Part D plan together spent more than $2,840 this year, you will hit the coverage gap or "donut hole." Then you begin paying 100% of your prescription drug costs until your out-of-pocket expenses for drugs on the plan's formulary (a list of covered drugs) reach $4,550. If you enter the donut hole, you'll pay only half of what your plan charges for brand-name drugs—a 50% discount—and a 7% discount for generic drugs.

    By 2020: The donut hole will be slowly phased out and completely eliminated.

  • Starting in 2011: A free annual wellness visit and prevention plan

    The free annual wellness checkup will allow you to assess your health in partnership with your doctor, who will work with you to develop a prevention plan to keep you healthy. You'll set up a schedule to get a range of prevention services, such as cancer and diabetes screenings, which will be provided free—no cost sharing. [Sections 4103 and 4104]

  • Starting in 2011: Better care when you get sick

    If you're like 80% of older Americans, you have at least one chronic medical condition such as heart disease, high blood pressure, or diabetes. You probably see several doctors, who may not always work together. The law will invest in testing new models of care for people like you in order to provide better care, better coordination, and more patient-centered services. [Sections 3021, 3024, 3502]

    If you must be hospitalized, the law also will help you return home successfully—and avoid going back into the hospital—by providing incentives for hospitals to make sure that you get the services you need in your community and by teaching you ways to take good care of yourself. [Section 3026]

Fact # 2 >> The law will reduce Medicare spending growth, extend Medicare solvency, and is projected to reduce the budget deficit.

Medicare spending is growing and will continue to do so. But over the next 10 years, the new law will slow the overall rate of growth slightly—from 6.8% per year to 5.5%. Average spending per person will grow at about 2% per year (after inflation) instead of at 4%. These figures come from the independent, non-political Congressional Budget Office (CBO), which is the official scorekeeper for health reform cost estimates.

The CBO projects that the new law will save Medicare about $425 billion over 10 years. The law extends solvency of the Medicare Trust Fund for an additional 8 years—until 2024.

As spending increases slow down, the CBO also estimates that new revenues will be raised, primarily from taxes paid by people with incomes over $200,000. Together, the savings and dollars coming in are expected to be greater than the money going out to pay for new benefits. Therefore, CBO has estimated that the new law will reduce the budget deficit by over $200 billion over 10 years.

How will increases in Medicare spending slow down?

  • Starting in 2011: The law slows payment increases to Medicare providers, including hospitals, nursing homes, and home health agencies. Many providers—whose profits will increase with newly insured patients—have agreed to these new payments.

    Note: The law does not reduce payments to doctors and actually increases payments to primary care doctors, or general practitioners. Efforts to make sure payments to doctors are not cut in the future are expected to be addressed separately by Congress.

  • Starting in 2011: The law will reduce payments to Medicare Advantage (MA) plans. About 75% of seniors have original Medicare. The rest are enrolled in MA managed care plans, such as HMOs and PPOs, offered by private insurance companies.

    Medicare has paid these MA plans over $1,100 (13%) more per person than it pays original Medicare to take care of a similar person. People with Medicare pay higher monthly premiums to fund this overpayment. The new law will gradually lower these overpayments. But if MA plans provide high-quality care, they will be eligible for bonus payments.

    Because of these changes, some MA plans may cut some of the extra benefits they offer that original Medicare does not cover—such as eyeglasses or hearing aids. Some MA plans may increase premiums. And some plans may drop out of the Medicare program completely. However, MA plans cannot cut any benefits that Medicare guarantees, such as hospital care or doctors' visits.

    If you're in an MA plan, you will have the same right you have now to switch to another plan or go back to original Medicare during the fall enrollment period—and for some people, at other times as well. You will never lose your basic Medicare benefits because of the new law.

    Also, if you need expensive care from your Medicare Advantage plan—such as kidney dialysis, chemotherapy, or skilled nursing home care for more than 3 weeks—your plan will no longer be allowed to charge you more than you would pay if you were in original Medicare.

  • Starting in 2011: The law requires people with higher incomes to pay higher Medicare premiums for prescription drug coverage. This change will affect about 5% of people with Medicare—singles with incomes above $85,000 and couples with adjusted gross incomes above $170,000. [Section 3308]

  • Starting in 2014: The law will create a new Payment Advisory Board. This board of experts will recommend specific ways to reduce Medicare costs without cutting benefits or increasing out-of-pocket costs. If Congress does not act, the cuts could happen automatically. [Section 4304]

Fact # 3 >> The law will make it easier to receive and pay for long-term care at home.

Medicare currently does not cover long-term care. This means millions of older adults who need help at home must spend their life savings to get the care they need.

  • Starting in 2011: The law attempts to make it easier for lower income people who are on Medicaid to get long-term care at home instead of in a nursing home by providing states with the option to receive extra federal funds to provide in-home services. [Sections 2401-2403]

  • Starting in 2012: A new national long-term care insurance program called CLASS (Community Living Assistance Services and Supports) will become available. Full and part-time workers will be eligible to participate in CLASS and may choose to have the premiums deducted from their paychecks. Non-working retirees are not eligible for the program. [Section 8002]

    After you have participated in CLASS for at least five years and you can no longer perform basic activities (such as eating, dressing, or bathing, or if you have Alzheimer's disease or other forms of dementia), you are eligible to receive a daily cash benefit. This cash benefit is expected to average $75 per day and can be used to pay for anything that will help you stay at home.

  • Starting in 2014 through the end of 2019: The law will increase protections for spouses of people who receive Medicaid home care services. They will no longer be forced into poverty so that an ill spouse can qualify for Medicaid home care. [Section 2404]

Fact # 4 >> The law will improve care for older adults in other ways:

Starting in 2010, many retirees received help to keep their health insurance premiums down. [Section 1102]

Starting in 2011:

  • Medicare will pay bonuses of 10% to primary care doctors (general practitioners) to improve access. [Section 5501]
  • Some nursing home quality standards will be improved. [Sections 6101-6114]
  • There will be enhanced training for workers who care for seniors. [Sections 5302 and 5305]
  • There will be new protections against elder abuse, neglect, and financial exploitation. [Section 6703]

Fact # 5 >>The law will improve health insurance coverage for most younger Americans who don't have Medicare.

Younger Americans will get the most benefits from health reform.

Starting in 2010:

  • Small businesses received tax credits of up to 35% of premiums to make employee coverage more affordable.
  • Insurance companies were prohibited from denying coverage to children with pre-existing conditions.
  • Insurance companies were required to allow young people up to age 26 to remain on their parents' insurance policy.
  • Insurance companies were no longer allowed to drop people from coverage when they get sick.

Starting in 2014:

  • The law will provide health coverage for an estimated 32 million Americans who currently do not have health insurance.
  • Almost all Americans will have the kind of guaranteed health care access and security that Medicare beneficiaries have today.
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