How Does PPACA (“Obamacare”) Affect Medicare Supplements?

How does PPACA, or “Obamacare”, affect Medicare supplement insurance. This is a good, and common, question. It’s one that we get asked frequently since the bill was passed into law a couple of years ago. The short answer is that PPACA does not directly impact Medicare Supplement insurance in any way.

The bill does not apply to supplemental, or secondary, policies in the same way that it applies to primary insurance or “under-65” insurance. So, for people on Medicare, there is minimal impact overall and no impact to their Medicare supplement coverage. Medigap plans (another name for Medicare Supplements) are still standardized into the ten plans that were established in June 2010. These plans are set forth by the government – private companies that offer Medigap plans must go by these coverage outlines, but they can set their prices however they want.

Although Medigap plans are not directly affected, the PPACA does affect Medicare in some ways, primarily in the areas of Medicare Advantage (the private plans that replace Medicare) and Medicare Part D (Rx coverage for people on Medicare). For Medicare Advantage plans, the bill took some money away from the plans in the form of reimbursement rates. This is where part of the money to pay for the under-65 portion of the plan comes from. Medicare reimburses the private Medicare Advantage companies a certain amount per person for those who elect Medicare Advantage instead of Medicare itself. Decreasing this amount will obviously decrease the level of coverage (or added benefits) that these plans can offer.

For Part D, the biggest change is the reduction and eventual elimination of the Part D donut hole. This is the portion of Part D coverage during which the insured must pay the largest portion of their cost. In the past, the individual was responsible for paying the full retail costs of medications during this coverage “gap”. Because of the PPACA, this gap is being reduced each year up until 2020, at which time consumers will pay 25% of the retail costs of medications during the coverage gap (instead of the 100% that they were responsible for in 2010 before the bill).

For Medicare Supplements, many people believe “Obamacare” will have a “trickle-down” effect on Medigap insurance companies, particularly those who also are involved in the under-65 insurance market. There have been several companies that have pulled out, or reduced, their service areas for under-65 insurance, and some feel that this will affect their profit needs/motives in the Medicare supplement market.

If you have questions about this information or wish to discuss this further, you can contact me at 877.506.3378 or online at Secure Medicare Solutions.

Health Care Reform – How Will It Affect Medicare?

Even if you wanted to, you cannot escape the talk of health care reform these days. It is everywhere in printed, online and television media. As a leading, independent resource for Medicare and Medicare insurance news, Secure Medicare Solutions has closely examined both sides of how the proposed bill will affect those on Medicare. Our goal is to give you an unbiased look at how some of the proposed changes will affect you and your Medicare and/or Medicare insurance.  

Proposed Reform: Better Pricing for Part D Drugs
How it Affects You: This is a proposed change to assist in regulating the pharmaceutical industry and controlling drug prices. Medicare Part D aims to do this by negotiating better overall prices for Part D drugs, which should, over time, reduce the Part D premiums and co-pays that Medicare-eligible individuals have to pay. Some headway has been made on this already, with the pharmaceutical industry agreeing to a 50% cut for those that reach the dreaded “donut hole” (details for this are still pending).

Proposed Reform: Reduce Medicare Payments to Private Insurers (Medicare Advantage)
How it Affects You: If you have been paying much attention to the health care debate, you have heard the Medicare Advantage program mentioned numerous times. The projected change is to base the payments to these private insurers on an average of the plans’ bids, rather than the system now which is a standardized government-set amount. For those on Medicare Advantage, this reduced funding will, most likely, lead to an increase in premium and/or reduced benefits. For everyone on Medicare, it should lead to the ability to reduce the Medicare Part B premium.

Proposed Reform: Link Payments to Hospitals to Hospital Performance
How it Affects You: The idea to link hospital payments for Medicare patients to hospital performance has been around for a while, and it is a major part of the proposed health care reform. It’s intention is to increase overall hospital efficiency and give hospitals an economic incentive to “do right” by the patient. Some feel that this will lead to greater efficiency at hospitals, while others believe it will lead to greater dishonesty and fraud within the system. If it is a part of any legislation that is passed, we’ll find out for sure!

Proposed Reform: Standardization of Payments to Skilled Nursing Facilities/Long-term Care Facilities
How it Affects You: This provision of proposed legislation is intended to cut waste in the current Medicare system by measuring actual costs to come up with a more uniform system for reimbursing these facilities through Medicare. It remains to be seen if this will affect the quality of care received if in one of these facilities; however, the overall goal is to reduce waste in this part of the system and reduce the cost of Medicare to all Medicare-eligible individuals.

Proposed Reform: Reduce/Regulate Fraud, Waste and Abuse in the Medicare System
How it Affects You: This is the proposed reform that most everyone can agree upon. There have been many ideas tossed around as to how to do this. One of the primary ways that this is projected to be accomplished is higher scrutiny of health care providers and hospitals. Additional pre-payment reviews will be implemented, particularly on doctors/hospitals that order a significant amount of high-risk or high-cost procedures. Over time, this is intended to reduce the cost of Medicare (Part B premium, etc) to the individual.

Regardless of which side of the debate you come down on, it is obviously important to keep an eye on how it will all play out and how it will affect you. At Secure Medicare Solutions, we will do our part to keep you updated on any changes. You can always get updated information and follow along with us at Secure Medicare Solutions: An informative Medicare Insurance and Medicare Supplement Blog.