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Inside the ACA #3: Positives for Medicare Recipients

August 13, 2012

In my third post in a series about the Affordable Care Act, I’ll share a bit more positive news about its impact for a specific group of Americans—seniors. Some of the biggest beneficiaries of the ACA will be Medicare recipients, who will see some improvements in coverage, notably the continuation of a program that began in 2011 providing Medicare recipients with access to health screenings and preventative care services without having to pay the usual Part B annual deductible, a copayment, or the 20% coinsurance fee. The list of preventative programs covered under this portion of the law is extensive and includes wellness visits, mammograms, prostate and colon cancer screenings, diabetes screenings, flu shots and much more. Along with better preventative care comes a welcome change to a little-liked aspect of Medicare often referred to as the “donut hole” coverage gap. Essentially, the donut hole worked like this:

  • After reaching the annual deductible, Medicare patients were responsible for only 25% of the cost of their prescription drug coverage until their total annual medication spending reached $2,930.

  • Above $4,700, and Medicare paid for virtually all of patients’ drug costs.

  • Between $2,930 and $4,700 however, patients were responsible for 100% of their drug costs!

(2011 cost structure)

This gap is being gradually phased out over the next several years. In 2012, that 100% cost obligation shrinks to 50%, and by 2020 that gap is closed completely. Lots to like, right? Well, yes—until you starting tallying up the costs of these programs and trying to figure out who is going to get the bill. I’ll dig into that less positive topic in my fourth and final post in this series about the ramifications of the Affordable Care Act.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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