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The Affordable Care Act: How It Impacts Seniors

Compliments of:Wendy K. Goidel, Esq. - October 10, 2013


Understanding the Affordable Health Care ActSince its passage in 2010, the Affordable Care Act ("ACA") has been the subject of heated debate and great confusion. The conversation and debate over health care reform will continue for years to come. In fact, the issues are so polarizing and contentious that they essentially caused the shutdown of the federal government. The latest issue of the ElderCounselor sheds some light on how the ACA affects seniors. According to the National Council on Aging, the changes under the ACA give seniors greater Medicare benefits. 1

Individual Mandate
The ACA imposes an individual mandate requiring everyone to obtain health care insurance. Failure to obtain coverage will result in a penalty of at least $95 in 2013.  The penalty will increase annually until it reaches a maximum of $695 in 2016.  This change has the least impact upon seniors, as all individuals 65 of age and older are eligible for Medicare coverage. So long as seniors enroll in the coverage available, they will not be penalized.  

Medicare Changes
Although there will be payment cuts to Medicare, the ACA provides absolute protection for certain key benefits. Benefits under Medicare Part A (hospitals, hospice care and some home health services) and those under Medicare Part B (medical insurance) are fully protected. 

Changes to Prescription Drug Coverage
The ACA decreases the expenditure on prescription drugs for Medicare recipients. Prior to the enactment of the ACA, Medicare recipients were subject to what has become commonly known as the "Donut Hole." Simply put, Medicare regulations previously required recipients to reach a $310 deductible prior to Medicare providing assistance. At that point, enrollees started paying 25% of their drug costs until they reached a total expenditure of $2,800.  Enrollees then paid 100% of drug costs between $2,800 and $4,550. Once drug expenses reached $4,550, Medicare would again provide assistance with enrollees only paying a small percentage of the costs. The ACA requires Medicare to pick up more of the costs and, by the year 2020, close the "Donut Hole."  Eventually, Medicare recipients will pay 25% of all prescription drug costs. This is good news for seniors since the number of prescription drugs taken typically increases with age.

Preventative Care Expanded
Another benefit to seniors under the ACA is an increase in preventive care coverage. Prior to the ACA, Medicare did not cover preventive services.  In an effort to reduce necessary future treatment, the ACA requires that Medicare cover preventive care procedures and screenings. Such services include flu shots, tobacco use cessation counseling, cancer screenings, diabetes screenings and screenings for other chronic diseases. In addition, seniors are allowed an annual wellness visit. Previously, these services, whether recommended or not, were paid out of the patient's own pocket. 

Changes to Medicare Advantage Plans
Seniors enrolling in Medicare may choose the traditional Medicare coverage plan or a Medicare Advantage Plan. Medicare Advantage Plans have their own terms of coverage and usually cover services not traditionally covered by Medicare such as dental or vision.  However, these Plans may require co-pays or cost-sharing fees for services which are fully covered under traditional Medicare. Presently, 25% of seniors are enrolled in Medicare Advantage Plans.

The ACA prohibits Medicare Advantage Plans from charging higher cost-sharing fees for seniors receiving chemotherapy and dialysis. In addition, the Medicare Advantage Plans are now limited as to the amount that can be expended on administrative, marketing and other non-medical expenses. While certain additional covered services under these Plans may be eliminated, there are prohibitios against the elimination of certain benefits.

The ACA reduces payments to Medicare Advantage Plans by $145 billion over 10 years. Because of these cuts, the future of these Plans is uncertain and raises questions as to the ultimate benefit for seniors. 

Non-Medicare Changes
Although there will be payment cuts to Medicare, the ACA provides absolute protection for certain key benefits. Benefits under Medicare Part A (hospitals, hospice care and some home health services) and those under Medicare Part B (medical insurance) are fully protected. 

No Pre-Existing Conditions Clauses
All health insurance carriers are prohibited from including pre-existing conditions clauses in their plans. This means that health cannot be a factor when applying for medical insurance. Furthermore, insurance companies are prohibited from charging individuals varying amounts for coverage based on their health, gender, age or other commonly-considered factors. This is welcome news for the ill, women and the elderly, all of whom have traditionally paid more for coverage.

In addition, the ACA now protects consumers once they are enrolled in a plan. Indeed, insurance companies are prohibited from dropping consumers once they become ill.

Grants as Incentives to Hospitals
The ACA provides incentives to hospitals to take extra care of seniors by providing grants to them for working with seniors who are at high risk for frequent hospital readmissions.

The Elder Justice Act
The Elder Justice Act - enacted under the ACA -- is aimed at protecting seniors from crimes and abuse including physical and mental abuse and financial exploitation.

Nursing Home Care Changes
There are several provisions under the ACA concerning nursing homes. For example, the ACA requires the Center for Medicare and Medicaid Services to provide a comprehensive website where consumers may find information regarding local nursing homes, including inspection and complaint reports. 1   Consumers will be able to review the number of violations and complaints a specific nursing home has received. In addition, consumers will be able to access other information including: the identity of the owner of the nursing home; the amount the nursing home spends on resident care as opposed to administrative costs; the number of hours of nursing care received by residents; and, staff turnover rates.

In addition to being able to more fully evaluate nursing homes, the ACA has made it easier to file complaints about the quality of care within nursing homes. It also prohibits retaliation for filing such complaints. 2

Further, in the event a nursing home decides to close its doors, the ACA imposes new, expanded notice requirements. Nursing homes must provide notice of a closure far enough in advance for its residents to relocate.  Prior to actual closure, the nursing home must ensure that all residents have been successfully relocated. 3

Finally, the ACA provides all states with the option of enrolling in federal grants to pay for criminal background checks on more nursing home employees. This would include background checks not only for nurses and nursing assistants, but for all staff members coming into contact with residents.

Community Based Long Term Services and Supports
The ACA aims to strengthen the emphasis on home and community-based care by giving states several options to expand such programs for Medicaid enrollees.

Under Medicaid, there are three voluntary provisions for the expansion of home and community-based services ("HCBS"). First, a state may choose to offer a community first choice option to provide attendant care services and supports. Second, a state may amend its state plan to provide an optional HCBS benefit. Third, states may rebalance spending on long term services and supports to increase the proportion that is community-based. As an incentive, the first and third provisions offer states enhanced federal matching rates. Although the new provisions are valuable, the law does not set minimum standards for access to HCBS. The new financial incentives are designed especially for the many states facing serious budget problems. Wide variations in access to HCBS can be expected to continue, while HCBS will continue to compete for funding with mandated institutional services. 4

How is the ACA Funded by Seniors
The benefits received under the ACA must be funded. Although too lengthy to detail, the following outlines how seniors will bear part of the burden of this funding.

As already mentioned, the $145 million to be cut from the Medicare Advantage Plans over a ten year period will provide partial support. In addition, the ACA will be funded through a surcharge tax of 3.8% on unearned or investment income of single taxpayers with annual incomes exceeding $200,000 and married taxpayers with annual incomes exceeding $250,000.  Seniors who fall within these income brackets will be subject to the additional tax. 

Starting in 2013, another impact on seniors is the increase in the floor for medical expense deductions from 7.5% to 10% of Adjusted Gross Income.

Finally, working seniors may be subject to the additional 0.9% Medicare payroll tax on high income earners (defined as single taxpayers earning more than $200,000 and married taxpayers earning more than $250,000). This additional tax - starting in 2013 -- applies to the excess over the stated limits.

Clearly there are many changes under the Affordable Care Act that will affect seniors and their loved ones. It is important to have a general understanding of what seniors are facing in terms of their health care coverage. With seniors facing so many changes during a vulnerable time in their lives, it is crucial that they be directed to resources to assist them in making educated decisions about their finances and health care options. CWI Medical is dedicated to helping seniors and their loved ones create cost-savings solutions with their home healthcare needs, and provides resources and referrals to work legal planning and residential needs. If we can help in any way, please don't hesitate to contact CWI Medical at 1-877-929-4633.


[1] http://www.ncoa.org/assets/files/pdf/130812-FAQs.pdfhttp://www.canhr.org/newsroom/newdev_archive/2013/ACA%20Nursing%20Home%20Report.pdf

[2] Id.

[3] http://www.healthindustrywashingtonwatch.com/2013/03/articles/regulatory-developments/hhs-developments/other-cms-developments/cms-finalizes-aca-nursing-facility-closure-notification-rules/

[4] http://www.ncbi.nlm.nih.gov/pubmed/22497357


Compliments of:Wendy K. Goidel, Esq. - Estate Planning & Elder Law Center. A Division of Goidel Law Group pllc.


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