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Obamacare - How Does It Impact Medicare?

While health care reform laws are far from perfect, they do little to impact the quality and affordability of Medicare.
Friday, 06 May 2016

A lot has been written about the negative effects of the Affordable Care Act, also known as Obamacare, but much of it is politically motivated misinformation. While health care reform laws are far from perfect, they do little to impact the quality and affordability of Medicare. In fact, some Medicare benefits are getting better because of Obamacare.

One of the most important benefits for seniors under Obamacare is that several preventive care services are now free. This benefit is effective across all insurance plans, whether they are individual plans, group plans, high-deductible or federally-subsidized. You can check to see what services are now free by visiting healthcare.gov.

Seniors on Medicare can still choose their own doctor and should be paying less for most medicines. That said, there still may be a few things to watch out for, such as changes in Medicare Advantage plans that could impact the benefits and costs associated with hospitalization.

An article on WebMD, "How Health Reform Affects Medicare," illustrates how seniors will actually get more "free care" with the Affordable Care Act than they did previously. For those using the Original Medicare, free benefits include an annual wellness exam, most screenings, a mammogram, colonoscopy and routine checks for diabetes, high blood pressure and high cholesterol.

What about prescription drugs?

Seniors will save money on medicine through Medicare because the donut hole is shrinking. This means if you take a lot of prescription medications you will have less of a gap in drug coverage through Medicare Part D.

Currently, each Part D plan covers up to $2,970 in prescription drugs per year, which includes the amount seniors pay and what their insurance company pays. Once that limit is reached, benefits for prescription coverage goes down, thus creating the "donut hole." While in that "donut hole" portion of the benefit year, seniors are liable for 47.5 percent of the cost of brand-name drugs and 79 percent of generics; that is until the $4,750 is spent. Needless to say, this coverage gap has put an unnecessary strain on seniors with a limited income.

Starting with the full implementation of Obamacare and leading up to the year 2020, the percentage of seniors that pay for medications while in this coverage gap will get progressively smaller. Within six years, the most they will pay is 25 percent for all medications, whether brand-name or generic.

How does Obamacare affect Medicare Advantage plans?

Also known as Medicare Part C, Medicare Advantage plans help seniors manage Medicare benefits by "packaging" the most popular supplements and keeping co-pays to a minimum. Depending on which plan you have, coverage could be changing for the better or the worse.

Coverage incentives are given to Medicare Advantage plans based on the insurance company's ability to improve the plan. When this doesn't happen, Medicare will be paying less to some Medicare Advantage plans, which could result in benefit cuts, such as dental care.

Obamcare reigns in excess spending on Medicare Advantage, which currently causes a taxpayer burden that is disproportionate to the number of people it helps.

Higher premiums for higher incomes

Just like the plans offered by Obamacare, Medicare premiums will be impacted by a member's household income. Fortunately for most Medicare recipients, the costs will remain the same. That is because 95 percent earn less than $85,000 per year and will continue to pay $104.90 per month for Medicare Part B, which includes Part D drug coverage.

However, if your income is more than $85,000, the cost of Medicare coverage will go up. This will affect about 5% of the people on Medicare. For example, people earning $85,000 to $107,000 a year (or $170,000 to $214,000 for a couple), will pay an extra $42 per month for Part B plus $11.60 for Part D coverage.

This helpful chart from healthcare.gov outlines the Part B insurance premium you can expect to pay based on your income. 

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Medicare funding cuts will not affect most seniors

The fact is that the official formulas for determining Medicare Part B premiums were established by Congress and cannot be negatively affected by the Affordable Care Act. Even though the law essentially "cuts" Medicare funding, those cuts are designed at improving the care given to seniors, not raising their out-of-pocket costs. The truth is, millions of additional seniors will be getting coverage under the new health care reform laws. Better access to health care will lead to a healthier population and ultimately reduce the cost of medical care across all demographic groups.

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