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On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law. The provisions of this law not only apply to individuals, business owners, and health insurance companies, they will also have some effect on Medicare. While the PPACA will not require seniors to change their Medigap coverage, there are some changes that current and future Medicare recipients should be aware of. Below is a general look at some of the ways that the health care reform bill will alter Medicare.
While there will be no cuts for Original Medicare plans, there will be some enhancements in coverage as a result of health care reform. Medicare will start paying for wellness visits each year. As it stands at the moment, only a general check up is paid for when a person initially enrolls in Medicare.
Medicare Advantage will see a number of spending cuts as a result of the health care reform bill, amounting to $132 billion. These spending cuts will be phased in over a period of 10 years. There will also be a $40 billion reduction on Medicare payments for home health care and a $22 billion reduction on certain Medicare payments to hospitals.
The health care reform bill aims to close the gap in Medicare Part D prescription drug benefit. In the current program, coverage ends when $2,700 is spent on prescription drugs and resumes again once $6,154 is spent. All prescription drugs purchased between those two amounts must be handled out of pocket. This has been referred to as the doughnut hole.
This year, those who fall into the doughnut hole will receive a $250 rebate to help with payments for prescription drugs. In 2011, they will be eligible for a 50% discount on brand name drugs. These discounts would expand over the course of the next few years. It is projected that by 2020, an estimated 75% of prescription drug costs will be covered.
Individuals earning more than $200,000 a year and couples earning more than $250,000 a year will experience a 0.9% increase in their Medicare payroll tax. Beginning in 2013, individuals earning more than $200,000 a year and couples earning more than $250,000 a year will also experience a 3.8% surtax on investment income.
To learn more about Medigap supplement insurance plans as well as how Medicare coverage will be affected by the Patient Protection and Affordable Care Act, contact Medicare Benefits Direct today.