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6 essentials of health care reform

By Jennie L. Phipps · Bankrate.com
Wednesday, July 28, 2010
Posted: 3 pm ET

The National Council on Aging says that most older Americans don't understand health reform or how it will affect them.

In recent research, the organization found that only 17 percent could correctly answer half of the factual questions about health care reform that the study posed.

A key aspect of retirement planning is figuring out the best way to pay for health care. So if you haven't been paying attention to the news and analysis surrounding the Affordable Care Act, now's the time to put on your glasses and figure it out.

Here are six of the most important important things to know about health care reform and retirement:

  1. No more doughnut hole. Previously, if you had Part D Medicare prescription drug coverage and you spent more than $2,830 on drugs in a single year, you would hit a coverage gap -- or doughnut hole -- after which you had to pay all your own drug costs until you'd spent a total of $6,440 per year, then coverage kicked back in. Reform gradually eliminates that gap, closing it by 2020.
  2. Drug coverage costs are rising for some people. Beginning in 2011, singles with incomes above $85,000 and couples with adjusted gross incomes above $170,000, will pay more for prescription drug coverage.
  3. Free checkups. Beginning next year, every Medicare recipient will be entitled to a free wellness exam every year. Free cancer and diabetes screenings will be included.
  4. Medicare Advantage plans may not be so great. Medicare Advantage plans, which are popular among better-heeled seniors as well as some people who live in areas that aren't well served by health care providers, cost taxpayers more than regular Medicare. Beginning next year, the government won't pay the difference, so Medicare Advantage plans will probably offer less and cost more. On the good side, if you are covered by a Medicare Advantage plan, your doctor can't charge you more than Medicare pays for expensive services.
  5. CLASS, a national long-term care insurance program, will be available in 2013. Full- and part-time workers with salaries of at least $1,200 per year will be eligible to participate in CLASS and may choose to have the premiums deducted from their paychecks. Nonworking retirees are not eligible for the program. After you have participated in CLASS for at least five years, if you are no longer able to perform basic activities -- such as eating, dressing or bathing, or if you have Alzheimer's disease -- you are eligible to receive a daily cash benefit, expected to average $75 per day. The money can be used to pay for anything that will help you continue to live at home.
  6. Reform WILL NOT cut Medicare payments to doctors. Despite myths to the contrary, payments to primary care physicians will increase immediately and payments to other specialists will stay the same for  awhile then grow slowly.
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