Elert Law Alert: Effects of new Health Care Law on Medicare Program

By Alan Polack

1. For 2010 only, any senior with spending in the donut hole will receive a $250 rebate check. The donut hole is where the gap in the Medicare D Program between $2,830 and $4,550.
Seniors pay 100 percent of drug costs while “in the hole.”
In 2011, seniors in the donut hole will get a 50 percent discount on brand name drugs and a seven percent discount on generics. These discounts will increase gradually until the donut hole is eliminated in 2020.
2.  The catastrophic coverage level for drugs is the trigger point where the copay drops to5 percent. The catastrophic coverage level is lowered from 2014 through 2019 so more seniors qualify.
3. Up until now, drug copays were waived for nursing home residents on Medicare and Medicaid but not for dual eligibles in the MI Choice Medicaid Waiver Program.
Beginning in 2012, drug copays are waived for dual eligibles nursing homes and the MI Choice Program.
Currently, Medicare Advantage Programs are allowed to set deductibles and copays higher than the original Medicare program. Those plans are now prohibited from charging higher deductibles and copays than original Medicare.
4. Deductibles and copays for preventive services (whatever they are) are eliminated in Medicare starting in 2011. Annual checkups are covered with no deductibles or copays in 2011.
5. Primary care doctors will receive a 10 percent bonus for treating Medicare beneficiaries for 2011 through 2015.
6. The life of the Medicare Hospital Trust Fund is extended from 2017 to 2026.
7. Annual increases to Medicare providers will be reduced starting 2011, cutting the annual growth rate from seven percent to six percent.
8. Payments to Medicare Advantage Plans are frozen in 2011 and restructured gradually beginning in 2012 so that payments, on average, are equal to original Medicare.
Plans are limited to 15 percent for overhead and profits beginning 2014 and receive bonuses if they meet quality benchmarks.
9. The current income ceiling for higher Part B premiums are $85,000 for individuals and $170,000 for couples.
These thresholds will be frozen at these levels from 2011 through 2019. Seniors at these levels will pay higher Part D drug premiums as government subsidies are reduced.
10. In 2013, the Medicare payroll tax will increase from 1.5 percent to 2.35 percent for wages over $200,000 for individuals and $250,000 for couples.
Taxpayers at these levels will also pay a new 3.8 percent Medicare tax on investment income.
There are several other changes that may or may not affect Medicare but the provisions are quite fuzzy and quite frankly could create a lot of strange outcomes.
I guess we’ll have to wait and see what happens
Alan F. Polack specializes in elder and probate law and practices out of Shelby Township. He is a former president of the Macomb County Probate Bar Association.


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