The federal healthcare reform law was passed in March 2010, and some changes to Medicare have already taken place. One welcome change: Closing the "donut hole" on prescription drug coverage.
The law itself, known as the Affordable Care Act, is complicated. Some new provisions won't be completely in place for several more years. But we’ve highlighted a few parts of the new law that affect Medicare coverage.Closing the “donut hole”
The biggest change with healthcare reform will be the amount you pay for prescriptions, especially if you are in the "donut hole." That's the nickname for the coverage gap that occurs in some Medicare Prescription Drug Plans. Once costs for prescription medicines reach a certain amount, you enter the donut hole.
Healthcare reform aims to close this gap by 2020. In the meantime, Medicare has a program to help people in the donut hole pay for their medications. It's called the "Medicare Prescription Coverage Gap Discount Program," which provides manufacturer discounts of 50% on covered brand-name drugs, beginning in 2012. You can use this program for brand-name drugs and pay less for your prescriptions.
If you’re a Medicare member, you do not need to call your insurer or the Centers for Medicare & Medicaid Services (CMS, the agency that administers Medicare) when you enter the donut hole. CMS keeps track of your spending on prescriptions with your health plan. The Medicare Prescription Coverage Gap Discount Program will automatically start when you reach the coverage gap.Discounts for brand-name medications
CMS works with prescription drug companies to give people in the coverage gap discounts on brand-name prescriptions. The amount you save will increase over time. If you were a Medicare member in 2012, you got a discount of 50% on covered brand-name drugs. In 2013 and 2014 your Part D Plan will cover 2.5% of covered brand-name drugs in addition to the manufacturers’ discounts. With the discount and the Part D coverage, you will only be responsible for 47.5% of the cost of covered brand-name drugs.
If you are a Medicare member who receives a low-income subsidy or if you are covered by a prescription plan through an employer, you do not receive this discount.
Not all brand-name drugs are covered under these benefits. Only the drug companies that agree with the terms and conditions of CMS work with Medicare plans.Save more on generic drugs
If you prefer to buy lower-cost generic prescription medications while in the donut hole, there are options. Medicare beneficiaries with Plan D coverage will get a discount of 21% on generic prescription drugs in 2013, and 28% in 2014 (up from 14% in 2012). Keep in mind that if you have a Medicare drug plan that already includes coverage in the gap, you may not be eligible for any more help.Make sense of "pre-existing conditions"
You might have heard a lot about how healthcare reform is "eliminating pre-existing conditions". This means that insurance plans will not be able to charge fees or deny coverage for people who had health conditions before they signed up.
Pre-existing condition clauses have never been part of Medicare Advantage (MA) plans. Medicare Advantage plans enroll anyone who is covered by both Medicare Part A and Part B -- unless that person is being treated for End Stage Renal Disease (ESRD). These plans have always covered pre-existing conditions, the same as Original Medicare.Changes in Enrollment
In the past, people with Medicare enrolled in Medicare Advantage and Prescription Drug Plans (PDP) from October 15 through December 7 -- called the Annual Election Period (AEP) -- for the following year’s coverage. Your plan selection became effective on January 1. If you wanted to change your Medicare Advantage plan or prescription drug coverage on or after January 1, Medicare had certain rules in place. If you changed your mind about the MA plan you had enrolled in after January 1, you were able to enroll in a different one up until March 31. That enrollment option was called the Open Enrollment Period. That has changed.
There is now a time called the Annual Disenrollment Period (ADP). Starting in 2013, the ADP is January 1 through February 14 each year. During this time, people who have a Medicare Advantage plan are able to drop their MA coverage and go back to Original Medicare. You would not be able to enroll in a different Medicare Advantage plan, but you can enroll in a stand-alone prescription drug plan.
The rules about when you can make changes apply to all plans except Medicare Advantage-only Private-Fee-for-Service (PFFS) plans. If you are enrolled in an Medicare Advantage-only PFFS plan and want to go back to Original Medicare with a stand-alone drug plan, you must ask your PFFS insurer to disenroll you from the PFFS plan before you can enroll in a stand-alone drug plan.
Note: People who have Medicare plans through a group such as an employer have their own enrollment period. The Annual Disenrollment Period does not apply. If you have questions about your plan, see your company's benefits administrator.
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This information is only a high-level summary of certain provisions of the health care law. This information does NOT attempt to summarize all provisions of the health care reform law. This information is not and should NOT be used as legal or tax advice; it should not be used as a basis for decisions regarding how the health care reform law will affect you and/or your business. Should you have any questions on how the health care reform law (including the high level summary of certain provisions of health care reform) will affect you and/or your business, you should seek professional advice from attorneys or other advisors.
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