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What Health Care Reform Will Mean to You

A quick guide for people age 50 and older.

It may be, like many Americans, that you’ve been bewildered—or bored—by the raft of details on health care legislation. But now that the overhaul is the law of the land, you’re probably wondering what these reforms will mean to you and your family.

Here is a simple guide to the new law for those age 50-plus. Look for your own situation below.

I have insurance through my employer.

Almost 60 percent of Americans are insured through their employers, and the law doesn’t change their coverage. And insurers will not be able to cap—for a year or a lifetime—how much they will spend on you if you are ill. But if you lose your job or change jobs, you will have more protections and options for buying affordable insurance.

I’m on Medicare.

The government has guaranteed that basic benefits will not be cut. Next year, all Medicare preventive services, such as screenings for colon, prostate and breast cancer, will be free. Annual wellness visits will also be free starting in 2011.

I fall into the Part D prescription drug doughnut hole every year.

This year you will receive a one-time check for $250 to help pay for your medications in the coverage gap. In 2011, you will get a 50 percent discount on brand-name and biologic drugs. The law gradually reduces expenses in the gap until 2020, when the gap will disappear entirely. According to an analysis by the House Committee on Energy and Commerce, the average person who falls into the doughnut hole will save $700 in 2011 and $3,000 in 2020, when the gap will be eliminated.

I have a Medicare Advantage plan.

Starting in 2012, the government will start significantly lowering the subsidies to these private plans, which cost the government more on average than traditional Medicare. While they cannot reduce basic, guaranteed Medicare benefits, some extras—such as free eyeglasses and gym memberships—will likely be paired down. The costs of the plans may rise, but what happens will depend on the business decisions these insurers make. Plans that meet certain quality standards will receive bonuses, which means that even while the subsidies are cut, plans that provide quality care will be rewarded.

I have a preexisting condition and have been unable to get insurance.

By July of this year, people with a health condition that has made it difficult for them to get privately purchased insurance—from high blood pressure to cancer—can get coverage from the government until 2014, when no coverage can be denied on the basis of preexisting conditions. It’s not yet clear how much you will have to pay for this insurance, but it cannot be more than $5,950 annually for an individual and $11,000 for a family. This insurance will be available only to people who have been uninsured for at least six months.

My 21-year-old son and daughter are on my health insurance.

They can remain on your insurance until age 26.

I have a grandchild with a preexisting medical condition.

By July 2010, insurance plans can no longer deny coverage to children under age 19 with preexisting conditions.

I have a so-called Cadillac plan through my employer.

Starting in 2018, if total premiums for your family are above a certain level a year—including both what you pay each month for insurance and what your employer pays for you—your insurer will have to pay a 40 percent tax on the cost of your plan that is above $27,500 for families and $10,200 for individuals. Experts say that at least a portion of the tax will be passed on to employees in the plans through lower benefits and higher premiums.

My family makes more than $250,000 a year.

Starting in 2013, you will pay more in Medicare payroll taxes (2.35 percent instead of the current 1.45 percent). That would mean, for example, an extra $225 per year in taxes for a couple earning $275,000.You’ll also pay an additional 3.8 percent tax on income from stocks and other investments. If you have a flexible spending account, you will only be allowed to contribute $2,500 a year tax-free rather than the current $4,000 or $5,000 that is typically sheltered.

I own a small business.

If you employ fewer than 50 people, you are not required to provide health insurance for your workers. But companies with fewer than 25 employees—whose average wage is below $40,000—can get tax credits to help buy insurance. That means the smallest companies with the lowest-wage workers get the most help. If you employ more than 50 workers and do not offer coverage, your company will have to pay fees if some employees receive government subsidies to buy insurance. Starting in 2014, small businesses—or their employees—can purchase competitively priced insurance through the state-run insurance exchanges.

I am self-employed and have private insurance—does this affect me?

Yes. Within a year, private insurers cannot cancel your coverage because of illness. Lifetime limits on your coverage are prohibited. Insurers must create standardized websites to help you compare coverage options before you purchase. In 2014, you will be able to purchase insurance through the state-run exchanges, which should make health care more affordable. And insurers will no longer be able to deny coverage based on preexisting conditions or gender. Moreover, they may only charge older Americans three times what they charge younger people. Subsidies are available for moderate-income families to help them purchase private insurance.

I don’t make enough money to afford health insurance.

Depending on how much money you make, in 2012 you may be eligible for Medicaid, the insurance program for low-income people. Anyone with an income below 133 percent of the poverty level—about $14,400 for an individual and $29,327 for a family of four in 2009—can enroll in Medicaid. Also, doctors who treat Medicaid patients will receive higher payments, so more may be willing to treat people in the program. There will be subsidies for those who don’t qualify for Medicaid.

The May print issue of the Bulletin will have an in-depth, 8-page pull-out guide on what health care reform will mean.

Elizabeth Agnvall is a contributing editor at the AARP Bulletin.

If you would like to discuss health care reform in AARP’s Online Community, please join the group Health Action Now Mythbusters.

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