All the healthcare and health insurance options in the United States can be overwhelming. You can’t turn on the news without reports of changes to insurance. Then you are bombarded with commercials touting different products and options.
When you get close to 65, your options begin to change as Medicare becomes a factor in decisions you need to make.
Over the last 10 years, there has been much talk about Obamacare and the impact it has had on health insurance and medical costs for the average American.
Let’s talk about Obamacare vs Medicare. Do they overlap? Have they created new benefits? What should you know as a Medicare recipient in relation to the changes brought by Obamacare?
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What is Obamacare?
Obamacare is really just the political label given to the official Affordable Care Act (ACA). The legislation known as Obamacare was designed to make insurance for healthcare affordable for American citizens. As you know, many Americans will often go uninsured due to the cost of health insurance.
High numbers of uninsured puts undue stress on the healthcare system. Ultimately, the uninsured get subsidized by the system which includes the medical industry, private companies, and private citizens.
One way that the Affordable Care Act attempted to improve the health insurance market was to create laws that prohibit an insurance company from dropping coverage if you become sick or injured. It also eliminated the possibility of being charged more because of a pre-existing condition or due to discrimination. Further regulation of health insurance rates were implemented as well.
One wrinkle in insurance under the ACA was that there would be penalties for not having health insurance. This fine is assessed on your annual taxes. Employers over a certain size are also required to offer health coverage to their employees.
For those unable to obtain affordable health insurance through an employer or private health insurance company, the ACA created Marketplace plans to provide at least the minimum coverage at affordable premiums.
What is Medicare?
Medicare was signed into law by President Lydon Johnson in 1965. The law took effect in 1966. Americans aged 65 and older were enrolled in Part A Medicare and millions of other seniors signed up for Part B of Medicare. Over 19 million Americans signed up for Medicare during the first year.
Medicare is composed of 4 primary components: Part A, B, C, & D.
Medicare Part A
Part A of Original Medicare covers the baseline hospital expenses that most seniors would require.
Part A covers:
- Inpatient care in a hospital
- Skilled nursing facility care
- Nursing home care
- Hospice care
- Home health.
Part A of Medicare coverage, as with all parts of Medicare, is regulated and controlled by federal laws. Hospital care coverage includes any hospital expense critical to your inpatient care. This could include a semi-private room, meals, nursing services, medications, and any other service you would receive from the hospital.
Medicare Part A does not cover costs for a private room, unless medically necessary. It also does not cover the cost of blood. The first three pints are covered under Part B.
Home health services include part-time skilled nursing, physical, speech or occupational therapy, and medical equipment when ordered by your doctor.
Part A of Medicare is free for most Americans over 65. If you paid into the Medicare system via employee taxes for a certain period of time, you will get this benefit when you turn 65. There is a small group of Americans who did not contribute enough toward Medicare during their working year. For those individuals there will be a monthly premium for Part A.
Even with the benefits present in Medicare Part A, not everything is covered. You will have some out-of-pocket costs with each part of Medicare.
Medicare Part B
Part B of Medicare covers doctors and outpatient services. It includes preventive services in addition to normal medical services. Clinical research, ambulance services, durable medical equipment, mental health services and outpatient prescription drugs are services available to Part B recipients from a provider who accepts assignments. There are costs with Part B of Medicare related to co-insurance and copays that supplement insurance can cover the gaps.
Most Americans will pay a monthly Medicare Part B premium.
Medicare Part C
Medicare Part C is an alternative to Original Medicare Parts A & B. It is often referred to as a Medicare Advantage Plan. Advantage plans combine elements of Part A, B & D of Medicare into one package policy. They are administered and sold by private insurance companies and function similar to a PPO or HMO network plan. You are tied to a specific healthcare network to receive coverage, and these networks are not available everywhere. There are Medicare Advantage plans that allow more doctors to accept coverage beyond those two networks plans. These plans are available in certain areas. They are called Private Fee-for-Service Plans (PFFS), they allow non-network doctors that accept Medicare to approve the terms and conditions of the Medicare Advantage plan.
Medicare Part D
Medicare Part D is also known as Medicare prescription drug coverage. Part D of Medicare is mandated by Medicare unless you can prove prescription coverage through another plan.
Part D is also sold through private insurance companies and can vary in benefits and cost based on the insurance company you choose.
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Does Affordable Care Act legislation affect Medicare?
If you are enrolled in Medicare, you meet the law’s coverage requirements and don’t need to take any action as long as you are enrolled in Medicare Part A.
Those enrolled in Medicare should not sign up for a Marketplace plan. The government blocks the sale of Marketplace plans under Obamacare to anyone who is a Medicare beneficiary.
Medicare Part B & Obamacare
Medicare Part B provides coverage for doctor visits. Under ACA certain Part B coverages were expanded. The expansion applied to preventative services.
Here is a list of several services covered under Part B:
- Annual ‘Wellness’ visits
- Abdominal aortic aneurysm screenings
- Alcohol abuse screenings and counseling
- Cardiovascular disease screenings
- Cervical and vaginal cancer screenings
- Certain colorectal cancer screenings
- HIV screenings
- Depression screenings
- Diabetes type 2 screenings
- Nutrition counseling services
- Obesity screenings and counseling
- Certain vaccines, such as the flu shot, pneumococcal shot, and hepatitis B shot
- Sexually transmitted infections screenings and counseling
- One-time ‘Welcome to Medicare’ preventive visit
Make sure to confirm the details of coverage with your plan and healthcare provider. There may be other eligibility requirements to be covered by Medicare. Also, you want to verify that your provider accepts Medicare. This list is NOT exhaustive, check with your provider if you have questions about coverage and other preventative services.
Higher premiums for higher-income enrollees
In 2021, most Medicare Part B enrollees will pay $148.50/month in premiums. With the ACA beneficiaries with higher incomes will pay additional amounts. Some will pay up to $504.90/month in the highest income brackets.
The highest income bracket for Part B of Medicare is $500,000 for individuals and $750,000 for couples.
The brackets began changing in 2018 and have been adjusted upward based on inflation since 2020. The high-income bracket now starts at $88,001 for singles and $176,001 for married couples.
Medicare Part C & Obamacare
One change in ACA affected Part C Medicare Advantage. The ACA reduced costs by restructuring payments to Medicare Advantage. The changes have seen several iterations since the ACA was originally enacted.
In 2011, law froze the benchmark spending amount at 2010 levels for the maximum paid for Medicare Advantage plans in every county in the country. In 2012, the government began phasing in payment reductions to Medicare Advantage. The purpose was to Advantage spending in line with Original Medicare.
From 2014 through 2021, Medicare Advantage plans saw an increase in their reimbursement rates. Even though payment cuts had been proposed they were essentially reversed.
Early predictions were that Medicare Advantage enrollment would drop because of changes. The opposite has happened. In 2021, there were 26 million Medicare Advantage enrolled which is up from 2010 when the ACA was enacted. Part of the increase was not due to legislation but due to the aging of the Baby Boomer generation.
One change we have seen is that payment reforms via the ACA have forced Medicare Advantage plans to be more efficient and shrink the size of their networks. There is more diversity of plans with higher out-of-pocket costs as enrollees take more of the cost burden to keep premiums lower.
Part D Prescription Drug Coverage
You’ve heard of the donut hole or coverage gap related to Part D Prescription Drug coverage plan. The ACA legislation enacted several changes affecting Part D and the coverage gap.
Part D recipients enter the coverage gap once they and their plans have spent a certain combined amount on covered prescription drugs. Previously, recipients were responsible for 100% of drug costs in the coverage gap.
Insurance under the ACA reduced the costs through discounts and government subsidies. Eventually in 2020, the coverage gap was closed.
The changes for Part D have helped. Since 2020, those with enrollment in Part D have paid no more than 25% of the cost of generic and brand name drugs after meeting the initial coverage threshold but before reaching the catastrophic level.
Even though technically the donut hole coverage gap no longer exists, the concept still applies to you. It will play a role in determining how much our out-of-pocket costs are counted and who will pay for the drugs.
Other Affordable Care Act Impacts on Medicare
Expanding Access to Medical Care
Many areas of the countries are underserved because of economic or geographical reasons. In 2003, the Medicare Modernization Act included a provision to pay 10% bonuses to Medicare physicians who work in these areas. ACA expanded this program to include general surgeons from 2011 to 2015. After that date, the bonus applies to physicians who provide primary and/or mental health services.
Transition from Obamacare to Medicare
Perhaps you are currently covered by a Marketplace plan. How do you make the transition from a Marketplace plan to a Medicare plan? Are there any special steps you need to take to ensure a seamless transition from Marketplace to Medicare?
The transition from ACA compliant coverage to Medicare is not automatic. Market plans no longer terminate automatically when you turn 65. This is positive because it prevents the possibility of coverage gaps as you transition into Medicare. However, because termination of your Marketplace plan is not automatic, you must actively cancel the policy.
Can You Stay on Obamacare Instead of Medicare?
You can keep your individual Marketplace plan when you turn 65, but premium subsidies will terminate when you become eligible for Medicare Part A.
If you are already receiving Social Security benefits, the government will automatically enroll you in Medicare Part A when you turn 65. If you are not receiving these benefits, you have a 7 month window where you can enroll in Medicare. The window is 3 month prior to your birth month, your birth month, and 3 months after your birth month.
Even though you have 7 months to enroll in Medicare, you should do so as early as possible.
Benefits to having both plans?
There are no real benefits to having both Medicare and a Marketplace plan in effect at the same time. The plans provide duplicate coverage.
If you are looking to supplement your Medicare coverage, you can do so with a Medicare Advantage plan or a Medicare Supplement insurance policy.
Canceling an ACA Marketplace Plan
If you are enrolled in a plan through the Healthcare.gov Marketplace, you can cancel your exchange plan when you transition into Medicare. If you have other family members on the plan, make sure to only cancel yourself so family members do not lose coverage.
If you are in a state with a state-run exchange, follow the steps outlined by your exchange. If you have questions about the steps to cancel a plan, please contact us and we can help determine the steps you need to take.
Timing can be everything when canceling your plan under the Marketplace.
You want to make sure to avoid gaps in coverage. Know the date when your Medicare will start before you cancel Marketplace. For example if Medicare begins on July 1, you can schedule your exchange plan to terminate on that same day.
Summary of Medicare vs Obamacare
Obamacare or the ACA was designed to make healthcare more affordable for Americans, especially those under the age of 65.
Inside of the ACA was the creation of the insurance Marketplace or Exchange so that people could find affordable coverage when they did not have access to healthcare with an employer or because of pre-existing conditions.
Insurance plans under the Marketplace are not needed once a person enrolls in Medicare.
ACA legislation did affect Medicare as noted above by expanding several benefits in the various parts of Medicare.
The key takeaway of this information is to understand what you should do if transitioning from an Exchange plan to Medicare. Also realize that Medicare does not cover everything even with ACA expansions. There are still out-of-pocket costs you need to consider.
One way we recommend seniors combat out-of-pocket medical expenses is through a Medicare Supplement insurance policy.
If you need help transitioning from a plan under Marketplace or have questions about controlling healthcare spending after you turn 65, please contact one of our agents for more information. We can examine your situation and make recommendations based on our years of experience and knowledge of the industry.
Hopefully this information gives you a better grasp of some of the confusion around Medicare vs Obamacare. Contact us for more information on how we can help you keep your healthcare dollars in your pocket.
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