Seniors and Obamacare

Sign-up for the Affordable Care Act starts in October with the bulk of the law, known as Obamacare, taking effect starting in January 2014. For most seniors, no action is necessary as Medicare will cover most of their needs.

But for those between 50 and 65 years old, and for wealthy seniors, all the talk about the Affordable Care Act is extremely confusing. So let’s try and answer some of the important questions you and your family may have here.

Some of the details will be different in each state – specifically the prices of the different health insurance plans – if you choose to register for health insurance under the exchanges. So it is important to find out what your state’s plans are and what the federal government is offering in states that have chosen not to set up their own health care exchanges (including Alaska).

The federal government’s clearing house, http://www.healthcare.gov, will be available with specific details starting October 1, including price comparisons. To answer some of your questions, there’s a live chat option that will be very helpful at http://www.healthcare.gov/help-center. But since it’s an open forum, you should not provide any personal information, such as your Social Security number or any other sensitive medical or personal information.

Q: I’m retired and on Medicare. How is Obamacare relevant to me? Do I have to sign up? Does the new law apply to us seniors at all and if so, how?

A: If you are one of the 52 million seniors who are over 65 and on Medicare, you are already covered and do not have to do anything. You are already covered under Medicare and your health coverage will continue. Your benefits are not changing for the most part. Medicare is not part of the “marketplace” also called “exchanges.”

However, if you are between the ages of 50 and 65, you have many options to find the best health care plan for you and your family. Enrollment in health plans offered on the exchanges begins October 1 and runs for six months until March 2014. What may confuse some seniors is that at the same time, the two-month sign-up period for private health plans for Medicare beneficiaries begins October 15.

At that time, seniors can shop, as they have in the past, for a private health plan known as Medicare Advantage or you can pick a drug insurance policy or buy a supplemental medigap plan.

In more than two dozen states, some Medicare beneficiaries who also qualify for Medicaid may be choosing private, managed care plans. But none of these kinds of coverage will be offered in the president’s health law’s exchanges. So don’t be confused when many of the same insurance companies offering coverage for seniors are also selling and advertising policies in the exchanges.

Let’s be very clear about something that will confuse many of us. If you are a senior and you want to sign up for an exchange plan, you actually can. Nothing in the health care law prevents Medicare beneficiaries from signing up for exchange plans. But you will not qualify for premium tax credits for the exchange plans.

Q: So which seniors will want to shop in the exchanges?

A: Some of the exchange plans may appeal to wealthy seniors – about 5 percent of Medicare beneficiaries – people with an income of $85,000 or higher as an individual, or $170,000 as a couple. These people will pay higher premiums for Medicare Part D, the prescription drug program, based on their income and assets. But for the vast majority of seniors, Medicare’s benefit package is probably better and more affordable compared to the exchange coverage.

Q: People keep talking about expanded benefits under Medicare for seniors under the Obamacare law. What are the facts?

A: There is expanded coverage under the new law for all Medicare recipients, beginning with preventative care. Already in effect under the law, seniors no longer have co-pays or deductibles when they seek preventative care, which includes a yearly wellness visit. This coverage includes mammography, screenings for smoking cessation, diabetes, prostate cancer screening and a flu shot.

The health law also has some changes in Medicare payment systems to make the payment

focus on the quality of the health care delivered. Right now about three-fourths of Medicare recipients are in traditional Medicare or fee for service. Medical folks provide a service for a recipient and they get paid for that service. But now Medicare is trying to change that idea to shift to the quality of the care rather than the quantity.

Q: Will I lose Medicare coverage?

A: No.

Q: Do I need a new Medicare card?

A: No.

Q: Do I have to re-enroll in my Medicare Advantage or supplement plan through the marketplace? And will seniors in Medicare have to buy supplemental insurance?

A: No, these policies are not sold in the exchanges and no, seniors won’t have to buy supplemental insurance.

Q: So what happens to my medigap insurance under Obamacare?

A: Supplemental Medicare insurance, known as medigap, are plans that seniors buy to add additional benefits not covered by Medicare’s traditional plan. Under the Affordable Care Act, there is no aim to increase those costs. Those annual prices are set differently, largely based on the expenditures in that plan. That is not part of the law to raise your premiums for Part B, which is your physician or outpatient services, or for Part D, which is your prescription drug plan or for your supplemental coverage. It could change for a variety of reasons but that is not in the government’s plans for now.

Q: Will seniors be fined if they don’t buy coverage in the health marketplaces?

A: No, seniors who have Medicare Part A, which is free and covers hospitals, nursing homes and hospice – already have insurance, so they are not subject to the penalty that most uninsured adults under 65 will have to pay.

Q: Will Medicare recipients pay more for their prescription drugs? What about the folks in the doughnut hole?

A: There is also increased prescription drug coverage under Part D of Medicare for most seniors under Obamacare. In fact, most seniors will actually pay less. Under the new law, there are greater discounts on brand name and generic drugs. By 2020, the government will close the infamous “doughnut hole” – the gap in coverage that you hit at just under $3,000 ($2,970 is 2013’s threshold number). Catastrophic coverage under Medicare kicks back in when what you and your plan have paid reach $4,750 again, according to this year’s numbers from the Centers for Medicare and Medicaid Services. So when you go into that gap, it used to be that the beneficiary picked up the full freight until they hit the catastrophic threshold at about $4,750. But Medicare beneficiaries will still be responsible for 25 percent of their drug costs.

Q: Are my Medicare premiums going up in October?

A: Your part B premium is stable for the next year, at about $104, and if you take Medicare Part D, the prescription drug coverage, those plans average about $30. Whether or not your expenses go up as a beneficiary depends on what the government pays providers. The government actually lowers Medicare spending by about $700 billion and doesn’t cut any benefits under the Affordable Care Act. So for now, your payments should be stable.

Q: Remember during the 2008 election there was all that talk about “death panels” and “rationing of care?” What’s happened to that panel of doctors created in the health care law to get Medicare costs under control?

A: IPAB, the Independent Payment Advisory Board, is a panel created in the health care law that would have about 15 health care experts, to make recommendations to Congress to control Medicare spending if it went beyond a set target.

But because of other changes, there’s been a slowdown in Medicare spending, so there doesn’t seem to be an immediate need for the panel. Many Democratic and Republican members of Congress want to repeal the IPAB provision, but so far that has not happened successfully.

If it ever were to be put into place – and so far, President Obama has not nominated anyone for the 15 positions – there are severe restrictions on what the IPAB panel can actually do. The panel cannot change Medicare beneficiaries’ cost sharing. It is also prohibited from making recommendations to reduce benefits and it is also not allowed to do anything that would be even perceived as rationing care. Medicare is not expected to exceed its spending targets until 2022, so it doesn’t seem like anything will happen on this until that time.

Q: So how is this law supposed to help government reduce health care costs? Wasn’t that the original idea of health care reform? Will any of those things affect me as a Medicare recipient?

A: The law includes some important payment reforms for Medicare. There’s an effort to reduce hospital re-admissions within 30 days on a few medical conditions, including heart failure, pneumonia and heart attacks. So far, there has already been a slight reduction in the numbers of hospital re-admissions – but those are very early numbers.

CMS, the Centers for Medicare and Medicaid Services, has moved forward on something called ACOs (affordable care organization), a term you will probably hear a lot about. This is another payment reform provision in the bill, to try to get hospitals, doctors and everyone who takes care of a Medicare beneficiary, to work together. Yes, that would be actual coordination between doctors, nurses, insurers – think of it as a coordinated care effort. If there are savings, everyone involved would share in those savings through incentives. Again, just to be clear, there are savings moving forward, but nothing in the law would cause a mandatory reduction in a Medicare patient’s benefits.

Q: What if I’m a retired veteran who gets my coverage through the Veterans Administration?

A: Much like those over 65 on traditional Medicare, you are fine. You don’t have to enroll in an exchange or worry about dealing with the subsidies.

Q: How does the law help me if I want to retire early? And how does this thing work for those of us who don’t yet qualify for Medicare and are between 50 and 65 years old?

A: Early retirees are potentially the big winners under the Affordable Care Act. People must now be covered by insurers – even if they have medical conditions like heart issues or diabetes. The law says insurance companies will not be able to set the premiums they charge on the basis of someone’s health. Starting Oct. 1, millions of Americans can buy one of the plans available through newly created online state marketplaces, or exchanges, for coverage that begins in 2014. For those with low incomes, subsidies are available to help pay premiums. While seniors could pay up to three times as much as younger people buying coverage, because rates can take account of age, the exchanges could allow them to buy a policy for much less than they would pay today – especially if they have expensive medical conditions.

The big changes come for people who find themselves in early retirement. With the exception of a few states, insurers have been able to choose whom to cover, avoiding those people who could have potentially expensive medical conditions and older Americans who are much more likely to have a chronic health condition. Nine million Americans between 50 and 64 years old were uninsured in 2010 according to a recent analysis by the AARP Public Policy Institute.

An early analysis of premiums in a dozen states showed that 60 year olds are likely to pay about $615 a month in premiums for a mid-level plan, before the impact of any subsidies, according to Avalere Health, a Washington research firm, but there is wide variation among the states. Ohio’s rates average $150 higher than those in Maryland for the same type of plan, according to projected estimates already available.

Early retirees may well be better off on the exchanges, with a range of plans from which to choose and the possibility of subsidies, according to Paul Fronstin, who leads the research into health benefits for the Employee Benefit Research Institute. He told the New York Times recently that because subsidies are based on income, individuals — even those with considerable nest eggs — may be able to defer payments under a pension or withdrawals from a 401(k) so they qualify. Subsidies, through tax credits, begin for people whose modified adjusted gross income is under the threshold of 400 percent of poverty, around $62,000 for a couple with both buying coverage.

The Kaiser Family Foundation, a research group, has developed a calculator at kff.org/interactive/subsidy-calculator/ for people trying to determine whether they might be eligible and how much they could receive.

Whether the new plans will be more attractive than the coverage early retirees have now will also depend on where you live and how much you make. Make sure to look carefully at the policies offered and compare them to see that they have similar coverage. AARP’s Policy Institute has created a website where consumers can learn more about how the health care will work for you at http://www.bit.ly/1a805Gg.

Q: So what if I am in the age 50 to 65 group and want to explore my options in the exchanges? What do I need to know and where can I find the most useful information?

A: The Affordable Care Act is supposed to open the door to health care for millions of people beginning Jan. 1 through the health care marketplace or exchanges. Specific plans and prices will be available after October 1, when open enrollment begins. The October 1 date isn’t a deadline, it’s your starting point to shop around. So take your time. You have until January to get things sorted out, and until March 2014 to sign up without a penalty. Each state is supposed to have a website to compare plans and help you apply for coverage. Aside from cost, don’t wait to get your other questions answered.

Q: Are scammers trying to take advantage of all this confusion over the health care law?

A: Absolutely yes. Law enforcement agencies are reporting an increase in fraudsters preying on the public’s confusion over the massive changes taking place in the nation’s health care system. Seniors are often the targets, in part, because they are more likely to be home to answer their phone and tend to have retirement savings that scammers hope to tap into. But they aren’t the only victims.

The federal government received nearly 83,000 complaints of “imposter scams” last year, up 12 percent from the year before. A spokesman at the Coalition Against Insurance Fraud in Washington, D.C. says they’ve already seen people trying to sell fake Obamacare coverage. Recent polls have found that well over half of Americans say they still don’t understand how the new health law will affect them. Crooks are playing on that confusion.

In Denver, AARP officials received complaints from seniors who were told they would lose their Medicare coverage if they didn’t divulge their Social Security numbers and other confidential information needed for their new “national health insurance card” under the Affordable Care Act. The Federal Trade Commission issued an alert about such scams last spring.

Q: What can you do to avoid these scammers?

A: First, be wary of calls out of the blue from anyone who offering to help you fix your “Obamacare” problem. Cold calls, unsolicited emails or unsolicited text messages should not take place. Think about the answer you give them and what they’re asking. And never give up any personal or financial information over the phone. If the question seems too invasive, just hang up.

There are many senior groups, health care and non-profit advocates who are getting paid to help you and your family navigate through the new law. But they shouldn’t be contacting you unsolicited. Put the burden on you and your family members to find help. Go to your local senior center, your local AARP folks or an insurance broker you already know, or look online at the federal government’s clearinghouse site, http://www.healthcare.gov.

Also contributing to this report: Kaiser Health News, National Public Radio, C-SPAN, the Washington Post and the New York Times.