ACA and Seniors


Written for The Benefit Bank Newsletter May 2013

How Does the Health Reform Law Affect Seniors? 

The Patient Protection and Affordable Care Act (ACA) was passed by Congress and signed into law by the President just over two years ago. Some features of the health reform law have been implemented; other key parts are scheduled to roll out in 2014.

Most of us by now have heard about some of the law's major elements:
  • Important new insurance protections for consumers
  • Health insurance marketplaces where individuals and small businesses can buy coverage
  • Premium tax credits and other subsidies to make coverage more affordable
  • Individual mandate to purchase coverage
  • Medicaid expansion -- effectively made optional by a Supreme Court ruling

Through these provisions and many others, the law offers clear choices and benefits for consumers -- including seniors -- and provides new ways to hold insurance companies accountable. Less well known, but also highly significant, are a number of Medicare and Medicaid elements in the new health reform law that directly help individuals age 65 and older. Most people in this age group -- about 40 million people -- are enrolled in Medicare, the health insurance program for people age 65 or older and people with disabilities. About 15.4 percent of seniors -- about 6.3 million people -- depend on Medicaid, coverage for people with low income. Most seniors receiving Medicaid are "dual eligibles" -- individuals who are entitled to Medicare and are also eligible for some level of assistance from their state Medicaid program. In addition, a small percentage of seniors in Medicaid are not eligible for Medicare, because their own or others' work histories were not sufficient to qualify them for Medicare.


Through enhancements to Medicare and Medicaid, the ACA has provided a range of immediate, tangible benefits to millions of seniors. Some of these provisions are described below.   


Lower Medicare out-of-pocket prescription drug costs

Among the most important changes made by the health reform law are to Medicare Part D, the prescription drug benefit. The ACA phases in the end of the "donut hole" -- the gap in prescription drug coverage when total drug costs reach a certain level. Before the ACA, beneficiaries had to pay 100 percent of the cost of their drugs while in the gap, unless they had other coverage. And only when they had spent a large amount out-of-pocket in a year could they get out of the gap and once again qualify for coverage until the end of the year.


For individuals reaching this coverage gap, the new law provides a 50 percent discount on brand-name medications, including insulin and vaccines. Beneficiaries also get increased coverage for generic drugs. Over the next 10 years these discounts will get larger, so that by 2020 beneficiaries will pay no more than 25 percent of the cost of any Part D-covered drugs in the "donut hole." Anybody who gets Part D drug coverage and falls into the "donut hole" is entitled to the discounts. This change means beneficiaries will spend less while in the coverage gap until the gap is gradually phased out.


Reduced out-of-pocket payments for most Medicare beneficiaries

The ACA is expected to gradually lower the growth of premiums and of-of-pocket costs for beneficiaries in traditional Medicare.


Expanded preventive care and screenings under Medicare

Prior to the ACA, Medicare beneficiaries were required to pay a deductible and co-payment for many preventive health services. The law eliminates cost-sharing for many preventive services and introduces an annual wellness visit for beneficiaries. The ACA also eliminates cost-sharing for screening services, like mammograms, Pap smears, bone mass measurements, depression screening, diabetes screening, HIV screening, and obesity screening.


Reform of Medicare Advantage Program

The ACA strengthens protections for beneficiaries against high cost sharing and reduced wasteful subsidies to Medicare Advantage plans. An Advantage Plan is a type of Medicare health plan offered by a private company, like an HMO, that contracts with Medicare to provide coverage.


Improved Low Income Subsidy (LIS) plans (also called "Extra Help")

The law eliminates the LIS cost sharing requirement for certain individuals. It also changes the methodology used to determine which plans are eligible to enroll low-income beneficiaries so that more plans will qualify, reducing the number of beneficiaries who need to change plans from year to year. The redetermination of LIS eligibility subsequent to the death of a spouse is to be postponed for a year. Additional funding is also provided for outreach and assistance for low-income programs.


Reduced hospital readmissions

The ACA's Hospital Readmissions Reduction Program reduces Medicare payments to hospitals with relatively high rates of potentially preventable readmissions to encourage them to better coordinate post-discharge care and support.


Medicaid long-term care reforms

The ACA provides incentives to encourage states to shift Medicaid spending from institutions to the home and community, so that individuals who require long-term care services may receive care in the least-restrictive environment.


Elder abuse protections

The bill mandates enhanced elder abuse protections and nursing home transparency provisions so that care offered older adults is provided in a safe environment free from abuse.


Looking ahead

Many health economists have predicted the ACA will reduce Medicare spending growth, extend Medicare's solvency and reduce the federal budget deficit. Assessing the accuracy of these projections is some time away. But in the meantime, contrary to claims that the ACA would harm seniors, seniors are among the many groups already benefiting from the law.

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