The following questions are among those asked during AARP’s webinar series about the new health care law. Additional information about the health care law and Medicare is available in AARP's fact sheet series about the new health care law.
The Health Care Law and the Medicare Part D “Doughnut Hole”
Q: I want to be sure I understand the "doughnut hole." Could you tell me how it works?
A: You can choose to purchase "Part D" prescription drug coverage from Medicare-approved insurance companies. Under current law, you pay your monthly premiums and an annual deductible, and then a co-pay of about 25 percent for each prescription drug.
In 2011, when your total drug costs (i.e., what you and your plan have paid during the year) exceed $2,840, you will fall into the coverage gap, or the "doughnut hole."
During this gap in coverage, you continue to pay your premiums. But you also pay the full price for your drugs until your out-of-pocket costs are high enough that you qualify for what is called catastrophic coverage. (In 2011, this amount is $4,550.)
After reaching the $4,550 mark, you are responsible for only 5 percent of your prescription drug costs for the rest of the year. The health care law gradually narrows the doughnut hole until it disappears in the year 2020.
Q: How is the doughnut hole going to close?
A: The gap will gradually narrow until it disappears in 2020. If you reach the doughnut hole in 2011, you'll get a 50 percent discount on brand-name prescription drugs and a 7 percent discount on generic prescription drugs while you are in the coverage gap. This means that, unlike in 2010, you will not have to pay 100 percent of the cost of all your drugs while you are in the coverage gap. Depending on the drugs you take, you will be paying only half of what you had to pay in 2010.
But even after the gap is gone, everyone on Part D will still have the same level of cost sharing — about 25 percent — from the time you meet your deductible until the time you reach catastrophic coverage.
Catastrophic coverage remains in place even after the coverage gap goes away. Catastrophic coverage starts in 2011 when your total out-of-pocket drug costs have climbed to $4,550. After that point, you only have a 5 percent co-pay.
Q: Is everyone on Medicare getting a rebate check?
A: This year, only those with Medicare Part D who fall into the coverage gap and are not receiving the low-income subsidy will receive a onetime tax-free check for $250 to help with their drug costs.
Q: Will there be a rebate check offered in 2011 if I fall in the doughnut hole?
A: No, this benefit was only available in 2010. However, starting in 2011 if you reach the doughnut hole, you’ll get a 50% discount on brand-name drugs and a 7% discount on generic prescription drugs while you are in the coverage gap..
Q: I think I’m going to continue to spend a lot on drugs even after you tell me that the doughnut hole closes in a few years. My question: Will there be some level that I reach where I’ll only have to pay 5 percent for my drugs? In other words, will there still be catastrophic coverage even after the doughnut hole closes in 2020?
A: Yes, even after the doughnut hole disappears in 2020, there will be a level where your out-of-pocket costs will be high enough that you will qualify for catastrophic coverage. Here’s how it will work:
- As now happens, most people with Medicare Part D will pay a deductible before the plan pays anything toward their drug costs; this means the beneficiary pays 100 percent of the deductible.
- After the deductible has been paid, but before the catastrophic cap is reached, the beneficiary will pay approximately 25 percent of the costs of the drugs.
- After the catastrophic cap is reached, the beneficiary will pay 5 percent of the prescription drug costs for the remainder of that year.
The good news is that Medicare will continue to have important protections for people who have very high drug costs.
Q: After the doughnut hole is closed, will the 25 percent share apply to all my prescriptions, or will it only apply after I reach what would have been the doughnut hole level?
A: Once the doughnut hole is closed in 2020, you will pay approximately 25 percent of the cost of your prescriptions until you reach the catastrophic level. After you have reached the catastrophic level, you will pay 5 percent of your drug costs. In 2011, the catastrophic level was $4,550.
Q: When will the Medicare doughnut hole rebate checks go out and when will the distribution of these checks conclude?
A: The rebate checks for people with Medicare Part D Prescription Drug Coverage who fell into the coverage gap, or doughnut hole, started going out in June. The checks will be sent out periodically throughout the year. (If you fall into the doughnut hole by even $1, you will get a check.) People who reach the doughnut hole late in 2010 will receive their check early in 2011. The rebate checks, however, are only for 2010 costs. No checks will be issued in 2011 to cover 2011 drug costs.
Q: Is there an income limit for the $250 rebate when dropping into the doughnut hole?
A: No, anyone who falls into the doughnut hole in 2010 will receive a $250 rebate check. But if you already receive help paying for your drugs through the Low Income Supplement, you won’t be eligible to receive a rebate.
Q: Is it just prescriptions that count toward the doughnut hole or all medical costs?
A: Just the amount you and your Part D plan have paid for your prescription drugs determine when you reach the coverage gap.
Q: My drugs are very costly. I will reach the doughnut hole fast, so does that mean I will pay the full cost of my medication after I reach the hole?
A: Yes, while you are in the coverage gap, or doughnut hole, you pay 100 percent of the cost of your prescription drugs. Once you reach the catastrophic limit ($4,550 in 2010), you are responsible for only 5 percent of your drug costs for the rest of the year.
Q: Will I receive a rebate check if I fall into the doughnut hole in 2011?
A: No, this benefit is only available in 2010. Starting in 2011, if you reach the doughnut hole, you’ll get a 50 percent discount on brand-name drugs and a 7 percent discount on generic prescription drugs while you are in the coverage gap.
Q: I reached the doughnut hole in June 2010. What will the doughnut hole amounts be in 2011?
A: The thresholds for the coverage gap have not been announced yet. But people who do fall into the doughnut hole in 2011 will see a 50 percent discount on brand-name drugs and a 7 percent discount on generic prescription drugs.
Q: I only reason I won’t fall into the doughnut is because I can’t afford to get some of my prescriptions filled. Is there an affordable way for me to get my medications?
A: If you can’t afford to pay for your prescriptions, you should check to see if you are eligible for the program called Extra Help through Medicare. People who qualify for the largest amount of Extra Help pay nothing for their Medicare drug plan premium and deductible, and only $2.50 for generic drugs and $6.30 for their covered brand-name drugs. Other people pay only a portion of their Medicare drug plan premiums and deductibles based on their income level.
You can apply for Extra Help online at Social Security, or call Social Security at 800-772-1213 to apply by phone or get a paper application. TTY users should call 800-325-0778.
Some states have State Pharmaceutical Assistance Programs (SPAPs) that help people pay prescription drug costs. Each SPAP has different rules about eligibility, how to apply and how it works with Medicare prescription drug coverage. For more information, call the SPAP in your state. Find the phone number on the State Pharmaceutical Assistance Program website.
The Health Care Law and Medicare Advantage
Q: How do I know if I have Original (Traditional) Medicare or a Medicare Advantage plan?
A: Your Medicare card should indicate if you have Original Medicare or a Medicare Advantage plan. If your card does not have the information you need, you can always contact Medicare at 800-633-4227 to find out what type of Medicare coverage you currently have.
Q: I don't have Medicare yet. I know what Original Medicare is, but Medicare Advantage plans are new to me. How are they different from regular Medicare?
A: Medicare Advantage plans are an alternative to Original Medicare. They may also be known as Medicare Part C. These plans are offered by private insurance companies and pay for the same basic health care services as Original Medicare. Medicare Advantage plans include both Medicare Part A (hospital insurance) and Part B (commonly known as medical or "doctor-visit" insurance). Most Medicare Advantage plans also include Medicare Part D prescription drug coverage.
Many advantage plans will pay for additional services that aren’t covered by Original Medicare, such as fitness club memberships or certain vision-related services. In most Medicare Advantage plans, you can only go to doctors, specialists and hospitals on the plan’s list. Otherwise, you might pay more or you might not be covered for services at all.
Examples of Medicare Advantage plans include health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
Q: I read that Medicare Advantage will no longer be available. Is this true?
A: Nothing in the law make Medicare Advantage plans go away. But Medicare Advantage plans will differ in how they respond to the changes as a result of the health care law. Every year, companies that offer Medicare Advantage plans make decisions about what they will charge and whether they will continue in the insurance market. Under the law, they will continue to make the same set of business decisions.
Q: What assurances are there that Medicare Advantage plans will not reduce benefits, raise premiums or simply not offer those plans anymore?
A: There are no assurances. These are business decisions that the private insurers that run Medicare Advantage plans make every year, regardless of the new health care law.
Q: Is it true that people with Medicare Advantage coverage will be locked into one plan and not be allowed to switch to other plans?
A: The health care law does not change the rules about switching Medicare Advantage Plans. You will be able to switch to another plan or select Original Medicare during the annual open enrollment period.
Q: What will happen to premiums for Medicare Advantage plans?
A: Every year, even before the health care law, Medicare Advantage plans made a decision about what to charge and what to cover. Under the law, each plan will continue to make a business decision whether to change your benefit package and costs.
Q: I have a Medicare Advantage plan. Do I still need Medigap insurance?
A: Generally, once you have a Medicare Advantage plan, you don’t need or can’t use a Medicare Supplemental or Medigap policy. If you already have a Medigap policy, you cannot use it to pay for out-of-pocket costs under your Medicare Advantage plan. For more information on Medigap insurance, go to Medicare.gov.
Medicare Enrollment, Premiums and Costs (As a result of the health care law)
Q: I heard that my Part D premiums will increase because I earn too much money. Is that true?
A: The income levels for higher premiums start at $85,000 for a single person or $170,000 for married couples filing joint tax returns. If your income level is higher than those threshold numbers, your Part D prescription drug premiums are scheduled to increase.
Q: Will I have to pay federal income tax on my Medicare benefits?
A: No. There is nothing in the health care law that requires you to pay Federal income tax on your Medicare benefits.
Q: What defines "income" as far as health care limits are concerned? Are retirement funds considered income?
A: Individuals who have annual earnings (wages, salary or self-employment income) of more than $200,000 will see an increase in the Medicare Part A tax rate from 1.45 percent to 2.35 percent. Investment returns are not considered to be earnings.
Q: I’m 66 years old and do not have Medicare Part D. Can I sign up for Medicare Part D at anytime, or do I need to wait until a certain time of year?
A: If you are newly eligible for Medicare, you can enroll in a Medicare prescription drug plan up to three months before or no later than three months after the month you become eligible. If you didn’t sign up for Medicare Part D at age 65 because you had other drug coverage as good as Medicare’s, you will not have to pay penalty for signing up late, provided you sign up for a Medicare drug plan before going 63 days without coverage.
If you just didn’t sign up for Part D and currently have no drug plan, you will have to pay a late enrollment penalty if you now want to begin a Part D plan. The longer you wait to sign up, the higher your penalty — and you will have to pay the higher premium for as long as you have Part D!
Q: What changes are being made to Medigap plans? When will they take effect?
A: Changes to Medigap policies this year came about from a law that was passed in 2008 — specifically, the Medicare Improvements for Patients and Providers Act. While these changes are not a result of the new health care law, people in Medicare had some different choices beginning in June 2010 if they shopped for a Medicare supplemental insurance plan, also known as Medigap.
(For instance, beginning June 1, 2010, two new plans — M and N — were offered. At the same time, plans E, H, I and J were no longer available to those purchasing a new plan. Anyone currently in plans E, H, I and J could keep their current coverage by continuing to pay their premiums.)
The most important thing to know about these changes is that if you already had a Medigap plan that you like, you could keep it. Your plan and benefits will remain the same as long as you continue to pay your premiums on time.
Your State Health Insurance Assistance Program can help you navigate these changes so you can get the coverage you need. Find your local SHIP at SHIPtalk.org.
The New Health Care Law and Preventive Care
Q: When do the new Medicare-approved preventive benefits become effective?
A: The new Medicare-approved preventive benefits became effective Jan. 1, 2011. To find out more about the Medicare-approved preventive benefits visit Medicare.gov or call Medicare at 800-633-4227.
Q: Will any additional preventive services be covered by the changes to Medicare in the health care law other than colonoscopies, mammograms, and bone-density screenings?
A: Yes. The health care law adds an annual personalized health assessment and prevention plan to the list of covered preventive services in Medicare. You will be able to see your provider for this assessment every year, with no cost to you. Also, under the health care law, the secretary of Health and Human Services has the authority to review and modify coverage for preventive services.
Q: When I first signed up for Medicare, I didn’t get my free checkup. Can I still get a checkup that won’t cost me anything? If so, when can I get it and can I get that checkup every year?
A: Starting in 2011, you will be able to go to a health care provider and get Medicare-approved preventive care services where Medicare will cover all the costs with no co-payments or deductibles. These services will include at least a free annual wellness visit, plus free screenings for bone density, diabetes and certain cancers. Mammograms, colonoscopies and other preventive screenings are also included, and you should check with Medicare to see specifically which other approved preventive services are covered at no cost to you. And yes, you can get this wellness visit and these screenings once a year, so it’s not just a onetime benefit.
But those who are new to Medicare cannot get both the Welcome to Medicare exam and the annual wellness visit during their first 12 months of enrollment.
Q: If I have Medicare, will the office co-pay still be required for preventive services?
A: Not if you have Original Medicare. If you have a Medicare Advantage plan, check with your plan to see what preventive benefits are included without co-payments.
Q: I have Medicare. Can I get a colonoscopy with no cost to me?
A: Medicare currently covers several colorectal screening tests to help find precancerous growths in the colon so they can be removed before they turn into cancer. The frequency that you can repeat the screening depends on the type of test your doctor recommends. Check with your doctor about the various types of screening tests and any costs in addition to the screening.
Q: If I’m on Medicare now, will the health care law have provisions to cover annual checkups, or is this just for new applicants?
A: People new to Medicare get a free Welcome to Medicare wellness visit and personalized prevention plan. Under the provisions of the health care law, everyone on Medicare can now take advantage of a free wellness visit every year.
Q: In 2011, Medicare benefits expand to include free coverage for wellness and preventive care. Is this under Medicare Part A or Part B?
A: The preventive care coverage comes under Part B. If you have a Medicare Advantage plan, however, check with your plan to see what preventive benefits are covered.
Medicare Coverage Options and Costs
Q: Will chiropractic services still be covered under Medicare?
A: Anything that was covered under Medicare before the passage of the health care law will continue to be covered. Covered services are being expanded to include more preventive care screenings.
Q: My son is 20 and doesn’t have any insurance. My wife and I are both on Medicare. Can he be added to our Medicare?
A: No, he cannot be added to your Medicare, although there is a provision in the new law that allows adult children to stay on their parents’ health insurance policy until they reach age 26. Many young adults who were forced off their parents’ employer or private policies once they reached an age limit (usually 18 or 21, or once they graduated from college) will now have greater access to coverage.
Under the new law, these kids can stay on the parents’ policy or be added to the family policy until they reach age 26, even if they have left home or are no longer a student. But this new provision relates only to health insurance policies that are purchased or have been acquired through an employer or union, and not to Medicare. So, no, you will not be able to add your son to your Medicare plan.
Q: If you're not yet old enough for Medicare and your COBRA supplement has expired, what's the best thing to do in New York for insurance to cover the gap between COBRA and Medicare? In my case, it will be one year.
A: When the state based health insurance exchanges are in place by 2014, there will be a marketplace where people without insurance will be able to shop for private insurance at more affordable group rates. Meanwhile, visit HealthCareReform.ny.gov/ to see what help may now be in place to help you get insurance coverage now. For those in other states, go to HealthCare.gov for the latest information on new insurance coverage.
Q: I am starting Medicare in November 2010. Will I get a choice of programs before November?
A: If you are already on Social Security, you will automatically be enrolled in Medicare. About three months before your 65th birthday, you will receive an Initial Enrollment Questionnaire to fill out. It will give you the instructions on what to do so your medical bills can be paid quickly just as soon as your Medicare starts in November. You will be able to choose whether you wish to join a Medicare Advantage Plan, purchase Part D prescription drug coverage or obtain Medicare supplemental (Medigap) insurance in addition to Medicare Part A (hospital coverage) and Part B (physician coverage). As soon as you are on Medicare, you should schedule your free Welcome to Medicare physical exam with your physician.
Q: Will Medicare supplements be guaranteed in 2014? In other words, if I want to switch insurance companies in 2014, will there be any health questions?
A: There is no change to the regulations on switching Medicare supplemental insurance plans.
Q: I will be signing up for Medicare when I turn 65 next spring. Is there anything special I need to do in regard to the new law?
A: No. There are no changes in what you need to know or do to sign up for Medicare. But be sure to take advantage of your Welcome to Medicare physical exam as soon are you are enrolled.
Q: Will the minimum age for Medicare coverage be changing due to the new health care law?
A: No. People are eligible for Medicare coverage at age 65. There is no change.
Q: Will there be an increase in the surcharge paid by higher income people for Medicare Part B?
A: There is no change to the surcharge for Medicare Part B. The change is that the same income levels used for Part B will now be used to surcharge the Medicare Part D premiums.
Medicare and Other Types of Health Coverage
Q: I am currently enrolled in a health benefit program through my federal retirement. I also have Champus (Tricare) as a secondary insurance. Do both of these coverages drop when I become eligible for Medicare?
A: Check with your insurance companies about how their benefits will be coordinated with Medicare.
Q: As I understand it, people who are currently on Medicare will not be eligible for the long-term care CLASS program. Is that true?
A: You can be any age to receive the CLASS (Community Living Assistance Services and Supports) benefits as long as you have paid your premiums for at least five years, worked at least three of the initial five years you are enrolled, have a qualifying disability and meet other eligibility requirements to be eligible for benefits. You can use your CLASS benefits to help pay for nonmedical services and supports you need to help you stay independent in your home. This could include home modification, assistive technology, transportation and personal care. You can also use CLASS to pay part of the cost of assisted living or nursing home care.
Q: I am on Social Security and have Medicaid and Medicare. How will the health care law affect me? I am unable to work due to pre-existing conditions.
A: Since you already are covered by Medicaid and Medicare, you should be able to continue getting health care coverage just as you are now.
Q: When one spouse who is retiring has continuing health insurance coverage for herself and her spouse for five years (as a benefit of her employment), must the couple still enroll in Medicare Part B and pay the premiums throughout those five years?
A: If you currently have health coverage through your or your spouse’s employer, you can decline Medicare Part B. If you later decide that you do want Part B, you will need to enroll within eight months of when your coverage or employment ends.
The Health Care Law and Fraud
Q: Somebody came to my door wanting to sell me a Medicare supplemental policy that he said was required by the health care law. When he asked for my Medicare number I told him to get lost. Did I do the right thing?
A: Yes, you sure did. Medicare never sends representatives door-to-door. Nor will it try to sell you a supplemental policy. If you think someone is trying to scam you or steal your Medicare number, call Medicare at 800-633-4227. For more about spotting and fighting health care fraud, see AARP's webinar Protect Yourself From Health Care Fraud or visit AARP.org/fightfraud.