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What does the Affordable Care Act mean for older Americans?
If you’re 65 or older and on Medicare, you can keep your plan.
Medicare’s basic structure hasn’t changed, although the Affordable Care Act (ACA) makes some important benefit improvements.
If you’re too young for Medicare and don’t have access to health insurance through an employer, you should shop in the ACA health insurance marketplaces, or exchanges, where plans offer important new options and protections.
Older adults often have trouble finding affordable individual insurance policies or can’t get coverage at all because of pre-existing conditions.
Starting next year, insurers can’t turn you down due to a pre-existing condition, and the law sets a floor for the benefits policies must provide.
Finally, premiums will be more affordable, especially if you qualify for the law’s sliding-scale tax subsidies and credits.
If You’re on Medicare
Here’s the most important thing to understand if you’re already on Medicare: no big changes are required for 2014.
If you are enrolled in Medicare Part A (hospitalization), you do not need to enroll in the exchanges to meet any of the ACA’s insurance coverage mandates.
Beware of scam artists entrapping seniors in identity fraud schemes by telling them they need to re-enroll in Medicare or sign up for their “Obamacare card” (no such thing exists).
If you use traditional fee-for-service Medicare with add-ons such as prescription drug or Medigap (Medicare supplement insurance) plans, you can stick with those plans.
If you use an all-in-one Medicare Advantage plan, that hasn’t changed, either.
ACA Reforms to Medicare
The ACA makes some important improvements to Medicare, including shrinking the catastrophic-level coverage gap – known as the “donut hole” – and adding a free, annual preventative check-up.
The donut hole is the gap in prescription drug coverage (Part D) that affects seniors with substantial medication needs.
It starts when combined spending by an enrollee and his insurance provider hits a certain dollar amount.
The hole is closing gradually under the ACA, and will be closed completely in 2020.
In 2014, the gap will begin when combined spending by patient and insurer hits $2,850, and will end when spending reaches $4,550.
As in 2013, there will be a combined 52.5% discount on brand name drug coverage from manufacturers’ discounts and government discounts.
The discount for generics during the donut hole will increase from 21 percent to 28 percent.
Prescription drug reform is producing substantial savings for seniors.
The Centers for Medicare & Medicaid Services reported recently that the 2.8 million seniors who entered the donut hole coverage gap saved an average of $834 per beneficiary through the first nine months of 2013, up from savings of $657 in the same period last year.
Next year marks the third consecutive year that the premium for Part B (outpatient services) will be flat or down.
Next year’s Part B premium is $104.90 – unchanged from 2013 and below its peak of $115.40 in 2010. The Part B deductible also is unchanged at $147.
Shopping in Health Insurance Marketplace
Sign up for coverage using the marketplace in your state.
Remember you may be eligible for subsidies depending on your income but they’re only available if you shop in your state’s official exchange. Find your local marketplace here, or call 800-318-2596.
You’ll be able to choose between four levels of plans: Bronze (lowest premiums), Silver, Gold, and Platinum (highest premiums).
Plans with the higher premiums will have lower out-of-pocket costs.
Bronze plans, on average, will cover 60% of enrollee costs, with the rest covered by deductibles and coinsurance. Gold and platinum plans will cover 80% and 90% of costs, respectively.
Insurance companies are permitted to set premiums up to three times higher for applicants over age 50 because of these applicants’ higher utilization of health care.
But for many, total premium costs will be held down by subsidies.
An advanced premium tax credit is one type of subsidy available to families with incomes between 100% and 400% of the federally defined poverty guideline.
At 400%, families aren’t required to spend more than 9.5% of income on premiums.
Next year, subsidies are available for individuals with annual incomes between $11,490 and $45,960, and from $23,550 to $94,200 for a family of four.
The definition of income used here is modified adjusted gross income, or MAGI, which includes wages, salary, foreign income, interest, dividends, and Social Security benefits.
Although those figures may not sound very high, they will apply to many under-65 retirees, who–after all–don’t have high levels of ordinary income because they aren’t working.
The Financial Samurai blog offers a series of helpful charts showing insurance premium costs for various household sizes and incomes for Silver plans.
Retiree Health Coverage
Some retirees receive health benefits from their former employers, such as a prescription drug benefit.
It’s relatively rare – just 7 percent of private-sector employers offered a benefit to early retirees in 2010, and 6 percent offered it to Medicare-eligible retirees, according to the federal Agency for Healthcare Research and Quality.
Retiree health benefits have been for years as employers strive to shed costs, and the Affordable Care Act gives employers reason to step back further.
A recent survey by Aon Hewitt, the benefits consulting firm, found that many employers are considering moving retirees into the new health insurance exchanges, or into Medicare Part D in the case of retirees over age 65.
The impact on retirees probably will vary. Retirees who enjoyed especially robust policies may find that their coverage isn’t as good.
In other cases, coverage won’t be diminished.