The ACA — also known as Obamacare — has significantly transformed the healthcare landscape in the United States, primarily by requiring insurance companies to offer specific benefits in order to qualify for their Healthcare Exchange Marketplaces. Many of those requirements have a direct effect on senior care issues, including prescription drug costs.
Medicare Part D: Closing the ‘Donut Hole’
Medicare Part D, implemented in 2006, already had a significant impact on prescription drug costs for senior citizens, but left a horrible gap in coverage called the ‘donut hole,’ wherein seniors were responsible for all of their prescription drugs costs if they spent over a certain amount ($2,970 in 2013) but didn’t reach a higher threshold ($4,750 in 2013). The donut hole was a hardship for many seniors, so much so that special insurance policies specifically to cover costs in that gap sprung up rapidly.
One of the rules the Affordable Care Act enforces offers partial coverage of all costs within the donut hole. For example, in 2015, even in the donut hole, you only pay 45% of the cost of name-brand drugs — but 95% of the cost counts toward getting back out of the donut hole, further reducing your total costs. That 45% is set to decrease every year until, by 2020, the donut hole will vanish completely, leaving seniors paying the same percentage of all of their prescription drug costs.
Once that coverage gap vanishes, the universal standard will be a $310 annual deductible, and a 25% co-pay for all prescribed medicines.
Increase in Prescription Costs for Wealthy Seniors
In addition, the Part D coverage system is changing — also due to Obamacare rules — such that senior citizens who have an income of more than $85,000/year (or $170,000/year for married couples) will pay slightly more — very slightly more.
For example, if you earn in between $85,000 and $106,999/year ($170,000 and $213,999 for married couples), you will pay an additional $12.30/month for your Medicare Part D costs. The amount goes up in typical ‘bracket’ fashion, reaching the maximum surcharge of $70.80/month if you bring home $214,000/year ($428,000/year for married couples) or more. These numbers vary slightly for married couples filing separately as well.
According to the Health Department’s calculations, less than 5% of all senior citizens fall into this category. As with all forms of health insurance, the additional money goes to help pay for the costs of the less-wealthy and less-healthy that are covered by Medicare Part D.
To Learn More
You can learn more about these changes, including the exact rules regarding income-based surcharges, click through to The SSA’s Medicare Information Page, or call the Social Security Administration directly at 1-800-772-1213 (TTY 1-800-325-0778).
If you are particularly income-challenged, you can also apply for Medicare’s Extra Help program by calling the phone number above and asking for Extra Help. Monthly premiums, monthly surcharges, and annual deductibles are all flexible for those seniors in genuine need.