Medicare and Obamacare 2014

We have received many inquiries from those on Medicare wondering what they have to do to prepare for the provisions of the Affordable Care Act (Obamacare) going into effect on January 1, 2014.

The short answer is, NOTHING.

It’s not that Obamacare doesn’t affect individuals on Medicare, but the primary provisions of Obamacare that take effect in 2014 are:
Everyone will qualify for insurance, regardless of health status.

Coverage will meet minimum essential benefits.

Neither of these apply to those on Medicare.

We have received other questions from readers as well:

1.  Will I enroll in Medicare through new exchanges?
No, absolutely not.

2.  What about Medicare supplements and advantage plans?
No, you will not purchase those products on an insurance exchange. You will deal with the companies offering those products directly, or in the case of a Medicare Advantage Plan, Medicare or the Plan.

3.  Has Obamacare affected Medicare?

Yes, in a number of ways:

Part D – After Obamacare was implemented, those on Part D who went into the donut hole, received a $250 rebate. After that, plans were required to extend a discount on brand name drugs in the donut hole which has reduced their out-of-pocket expense. The Obamacare legislation proposes closing the donut hole in 2018, but it is too early to speculate about what might happen in 2018.

Taxes – Obamacare increased taxes on higher income Americans to help support Medicare Part A which has historically been funded by payroll contributions from employers and employees. Until this year almost all retired Americans on Medicare did not pay to be on Part A but as of 2013 all higher income Americans who are working, will pay an additional Medicare payroll tax and all higher income Americans (income of $200,000 for an individual and $250,000 for a couple) will pay additional taxes on unearned income. Hence, higher-income Americans will pay their entire working and entire retired lives to support Part A as long as they remain high income.

4.  How else has Obamacare affected those on Medicare?

This is very comprehensive legislation spanning a 10-year period. Federal funds have been made available to hospitals, doctors and medical centers to transition from paper to electronic health records. Legislation also supported development of so called accountable care organizations; groups of doctors and/or hospitals who accepted risk to care for medicare patients with a goal of improving quality and reducing cost increases.

5.  Is there anything else I should know or be thinking about?

Stay tuned! Quite ironically, Obamacare will lead to non-medicare coverage being more comprehensive in some ways than Medicare coverage.

6.  Will Medicare change to become more comprehensive?

We don’t know but it doesn’t really make sense that non-medicare coverage would be more comprehensive than Medicare.

Also, in many states, Medicare supplements are only guaranteed issue products (you apply and get one regardless of health status) during an official enrollment period. If you defer applying and then want one several years later, the medicare supplement insurance company has the right to consider health status in your application and can reject you. It is not clear whether this will go away too, since factoring in pre-existing conditions goes away in the non-medicare marketplace for Americans under age 65.

Healthcare coverage issues are complex and evolving. Stay tuned for updates as we get closer to 2014.