2010 brought the passage of the controversial comprehensive health care reform bill, a bill long enough and complicated enough that even plenty of the people who voted on it don’t understand all its possible implications.
Naturally people want to know how the new law’s reforms will affect them. Let’s look specifically at the provisions of the law of most relevance to seniors and retirees.
1. Changes in doctor and hospital Medicare reimbursement.
Doctors now receive a bonus on their Medicare reimbursement for practicing in high need areas of the country. Hospital reimbursement has been reduced in cases of preventable patient readmissions and hospital-acquired illnesses.
2. Changes in medical tax deduction.
Beginning in 2013, the threshold for itemized medical deductions will increase from 7.5% to 10% of Adjusted Gross Income. This is delayed until 2016 for taxpayers age 65 and older.
3. Early retiree coverage encouraged.
Companies that provide health insurance coverage to former employees who are 55 or older but not old enough for Medicare are now reimbursed 80% of the health care costs between $15,000 and $90,000.
4. Elimination of the “donut hole.”
Prior to reform, Medicare Part D prescription drug plans were plagued by a gap in coverage for drug costs over $2,830 and under $4,550. Nicknamed the “donut hole,” this gap will gradually be closed from 2010 to 2020 via rebates, drug discounts, and subsidies.
5. Free preventative care.
As of January 1, 2011, Medicare patients no longer have to pay for preventative services such as cancer screenings. Medicare now covers one annual wellness visit that includes a comprehensive health-risk assessment and an individualized prevention plan. Medicare payments to doctors for preventative services are increased.
6. Higher premiums for the wealthy.
High income seniors will pay higher premiums for both Medicare Part B and Medicare Part D. In part this will come about through bracket creep, as the income thresholds for the higher premiums will be held constant at least through 2019 rather than being adjusted for inflation.
7. Long term assisted living insurance available.
The voluntary Community Living Assistance Services and Supports program will allow people who pay premiums for at least five continuous years to receive $50 or more per day for community living assistance services should they become disabled.
8. Medicare Advantage revamped.
Among many changes, federal payments to Medicare Advantage plans are frozen at 2010 levels. Beginning in 2014, Medicare Advantage plans will be required to spend at least 85% of the health insurance premiums they collect on providing health care.
9. Payroll tax increase.
Beginning in 2013, to increase the funding for Medicare, the payroll tax will increase from 1.45% to 2.35%, and there will be a 3.8% tax on investment income for high income taxpayers.
Emily Brandon, “How the Health Care Bill Impacts Retirees.” U.S. News & World Report Money.
Susan B. Garland, “Health Care Reform: What it Means for Retirees.” Kiplinger.