Medicare, Prescription Drugs & The Healthcare Law
|Written by Chris Hawkins|
SeniorLiving.Org Expert on Senior Care & Assisted Living
Come January 1, 2014, all U.S. citizens and legal residents will be required to buy health insurance. The Patient Protection and Affordable Care Act was signed into law by President Obama in 2010 and upheld by the U.S. Supreme Court in June 2012.
Each year, new provisions of the bill roll out, affecting citizens, insurance companies, pharmaceutical companies, health care providers, businesses and the government.
No matter what your feelings are about the law, you will be affected in some way. Specifically, we’ll look at how the law will affect seniors, their prescription drugs and what’s known as the “donut hole.” But first, we’ll look at how important prescription drugs are to seniors with some numbers.
Prescription Drugs: The Numbers
There’s no doubt America’s seniors are taking more prescription drugs than ever. These pharmaceuticals can help avoid more costly, invasive surgeries, improve quality of life and potentially prolong life.
|More Senior Living Articles|
Senior Lifestyles: What Are All My Options
Paying For Senior Care
Home Care: The Most Affordable Option
Best Places In The US To Retire
Aging Well: How To Master The Art
CCRCs: What Is Continuum Care And Why Should I Care?
Here are some stats on prescription drug use and expenditures:
- Spending for prescription drugs was $250 billion in 2009 and accounting for 12% of personal health care expenditures
- Expenditures for prescription drugs more than doubled from 1999 to 2009
- 90% of those 65 and older used one prescription drug in the last 30 days in 2008 compared to 73% in 1988
- 65% of those 65 and older used 3 or more prescription drugs in the last 30 days in 2008 compared to 35% in 1988
- 31% of those 65 and older used 5 or more prescription drugs in the last 30 days in 2008 compared with 14% in 1988
- 8.3% (all ages) did not buy prescription drugs because they couldn’t afford them; in 1988 it was 4.5%
Medicare Part D: A Primer
If you’re eligible for Medicare, you are eligible for Part D, Medicare’s prescription drug coverage. Only insurance companies and other private companies who are approved can offer these plans. Here are the two ways to get prescription drug coverage:
Medicare Prescription Drug Plans (PDPs): drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
Medicare Advantage Plans (MA-PDs): These plans require you to have all of Medicare Part A and Part B as well as Part D to join.
When can you join Part D?
- When you first get Medicare
- During certain enrollment periods (usually Oct-Dec and Jan-Feb)
- Under other special circumstances
How can you join a Medicare Drug Plan?
- Enrolling on the Medicare Plan Finder
- Completing a paper application
- Calling 1-800-MEDICARE
Fixing the "Donut Hole"
If you’ve already been using Part D of Medicare, you may have run into the “donut hole.” This is a gap in coverage when your total drug costs (costs paid by the individual plus those paid by the insurer) reach the coverage limit. Once you reach the coverage limit, you are responsible for paying the entire costs of prescription drugs until (and if) you reach the catastrophic threshold.
The Affordable Care Act fixes this donut hole over a period time by offering discounts on prescription drugs while in the gap. The coverage gap in 2012 is $2,930.
According a Department of Health and Human Services (DHHS) press release, since 2010, “5.1 million seniors and people with disabilities on Medicare saved over $3.2 billion on prescription drugs because of the new health care law.” This, according to the DHHS, means an average savings of $635 for those beneficiaries.
Health Care Law Timeline for Prescription Drugs
While you are in the coverage gap or donut hole, here is what you’ll pay under the new Affordable Care Act each year until 2020 when the gap is closed completely.
2012: Pay 50% for brand-name drugs and 86% for generics
2013: Pay 47% for brand-names and 79% for generics
2014: Pay 47.5% for brand-names and 72% for generics
2015: Pay 45% for brand-names and 65% for generics
2016: Pay 45% for brand-names and 58% for generics
2017: Pay 40% for brand-names and 51% for generics
2018: Pay 35% for brand-names and 44% for generics
2019: Pay 30% for brand-names and 37% for generics
2020: Pay 25% for brand-names and 25% for generics
Updated: Jul 13, 2012