Despite having been established by Congress in 1965, the United States Medicare program remains fluid. Laws and new regulations modify the details of the program to improve its effectiveness. In March of 2010 President Obama signed into law one such modification. The Affordable Care Act was put into place to establish comprehensive reforms to health insurance designed to unfold over the course of four or more years. With the decision of this law finalized, there are many critical changes coming to the Medicare program. Understanding these changes can help beneficiaries maximize the benefits offered by the program and make informed decisions regarding their coverage needs.
Closing the Doughnut Hole
One aspect of the Medicare program is Part D coverage, also known as Prescription Coverage. Prior to the changes enacted by the Affordable Care Act, Part D coverage worked essentially as follows:
- Monthly Part D premiums are paid out of pocket all year.
- Until a $310 deductible amount is met, 100 percent of drug costs are paid by the beneficiary.
- After this deductible, the beneficiary will pay 25 percent of drug costs. This payment schedule continues until drug spending reaches $2,800.
- Once the $2,800 limit is reached, the beneficiary enters the “doughnut hole,” meaning that he or she is once again responsible for the total cost of all drugs until the out-of-pocket spending threshold has reached $4,550.
- Once this spending limit has been reached, the beneficiary will again be responsible for only a small portion of the drug cost.
As of 2011 the Affordable Care Act began reducing this coverage gap, beginning with a 50 percent discount on brand-name prescription drugs covered by Medicare Part D. The plan is designed to offer additional savings on these drugs, gradually integrating generic drugs, until the doughnut hole is completely closed in 2020.
Cracking Down on Health-Care Fraud
According to Healthcare.gov, billions of dollars have been lost to health-care fraud. This results in the sharp increase of health-care costs to the public. An important feature of the Affordable Care Law is efforts to fight this fraud. The law allows for new resources to be invested into the detection and diffusion of health-care fraud, as well as the establishment of new screening procedures to be used by health-care providers in order to reduce the risk of fraud. The Medicare Trust fund is utilized to protect the program and work to provide additional savings on premiums and coinsurance into the future.
Protection of Coverage
The Affordable Care Act establishes protections to Medicare benefits, ensuring that these benefits cannot be reduced or taken away so long as eligibility continues. This element of the Act also ensures that beneficiaries will continue to have the ability to choose their own doctors to provide needed services and treatments.
Regulation Effective Dates
When the Affordable Care Act was signed into law, it was done with the goal of implementing the various program modifications and regulations progressively over the course of several years. Some of the key dates at which program elements are considered in effect include:
September 23, 2010—Medicare coverage is expanded to cover small, rural facilities and hospitals, and Medicare patients coping with chronic illnesses will be evaluated every three months in order for coverage of medications and treatments to continue.
January 1, 2011—Centers for Medicare and Medicaid Services are responsible for the development of innovative delivery and payment models for applicable services.
January 1, 2013—An additional 3.8 percent Medicare tax will apply to unearned income.
January 1, 2015—Payments made to physicians from Medicare will be modified so that they will be based not on the volume of care provided, but on the quality of such care.
January 1, 2017—States will have the option of applying for a waiver for state innovation from the Secretary of Health and Human Services. This option will be available only if the state also passes legislation intended to implement an alternative health-care plan.
2018—Approved preventive care, including regular checkups, must be covered by all existing health insurance plans and be provided without a co-payment. A 40 percent excise tax will also be applied to health insurance policies with high-cost premiums. The premium thresholds, including higher thresholds that are imposed on retirees and those that are employed in professions considered high risk, will be modified in accordance with inflation.
2020—The Medicare Part D doughnut hole, or coverage gap, will be eradicated, providing Medicare beneficiaries with more consistent drug coverage.