How healthcare reform changes impact Medicare plans

December 2012

The federal healthcare reform law was passed in March 2010, and there are some new provisions that won't be completely in place for several more years. The law itself, known as the Affordable Care Act is complicated. But we’ve highlighted a few parts of the new law that affect Medicare coverage.

Note that this is intended to provide basic information for Medicare Advantage plan members. If you need more information about Medicare, go to the Medicare Website or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Both lines are open 24 hours a day, 7 days a week.

Donut hole changes

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 with the cost of medicines. It's called the "Medicare Prescription Coverage Gap Discount Program", which provided manufacturer discounts of 50% on covered brand-name drugs in 2012. You can use this program for brand-name drugs and pay less for your prescription costs.

Medicare members do not need to call Humana or the Centers for Medicare & Medicaid Services (CMS, the agency that administers Medicare) when they enter the donut hole. You don’t need to do anything. 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.

Take advantage of discounts for brand-name medicines

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 are a Medicare member in 2012, you can get 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 plan coverage, you will pay 47.5% of covered brand 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, otherwise their drugs won't be covered. To view a complete list of drugs covered under the Medicare Coverage Gap Discount Program follow the link to "2012 Labeler Code File" (under Downloads) for a list of participating manufacturers.

Save more on generic prescription medicines

If you prefer to buy lower-cost generic prescriptions while in the donut hole, there are options. Medicare beneficiaries in the donut hole will get Plan D covereage of 21% on generic drugs in 2013 and 28% in 2014 (up from 14% in 2012).With this additional coverage, you’ll pay even less for covered generic drugs – 79% in 2013 and 72% in 2014. 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 conditions people had before they signed up.

Pre-existing condition clauses have never been part of Medicare Advantage 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). Medicare Advantage plans have always covered pre-existing conditions, same as Original Medicare.

Know when to enroll or change your Medicare Advantage plan

People with Medicare enrolled in 2013 Medicare Advantage (MA) and Prescription Drug Plans (PDP) from October 15 through December 7, 2012. Your plan selection during the 2012 Annual Election Period (AEP) was effective January 1. If you want to change your MA plan or prescription drug coverage on or after January 1, Medicare has certain rules in place. In the past, if you changed your mind about the MA plan you had enrolled in after January 1, you were able to enroll in a different MA plan 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). The ADP is January 1 through February 14 each year. During this time, people who have a MA plan are able to drop their MA coverage and go back to Original Medicare. You would not be able to enroll in a different MA plan, but you can enroll in a stand-alone prescription drug plan. If you go back to Original Medicare, you still have the choice of buying a Medicare Supplement plan to help cover your out-of-pocket medical expenses. If you want to make these changes during the disenrollment period, you must do so before February 14, 2013. For more details, go to the Medicare Website or call 1-800-MEDICARE (1-800-633-4227) or visit TTY users should call 1-877-486-2048. Both lines are open 24 hours a day, 7 days a week.

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 MA-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 ADP does not apply. If you have questions about your plan, please see your company's benefits administrator.

Remember: If you still have questions about these changes or Medicare, go to the Medicare Website or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Both lines are open 24 hours a day, 7 days a week.

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