How the Health Care Bill Impacts Retirees

The donut hole will be eliminated and more preventative care covered.

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Long-term care insurance program. The new legislation will establish a voluntary long-term care insurance program called Community Living Assistance Services and Supports (CLASS). Citizens who pay premiums into the program for at least five continuous years become eligible for payouts for community living assistance services if they become unable to perform the activities of daily living for a period of 90 days or more. The payouts will average at least $50 per day, vary based on the functional ability of the participant, and will have no lifetime maximum.

Medicare Advantage plans. Many provisions of the health legislation change how Medicare Advantage plans work. New rules prohibit Medicare Advantage plans from imposing more expensive cost-sharing requirements than those charged for traditional Medicare. Rebates for Medicare Advantage plans will be reduced beginning in 2011, while high-quality Medicare Advantage plans will receive bonus payments. "It's hard to say how plans will respond to changes over time but they are likely to make adjustments once the payment changes take effect," says Neuman. "Medicare Advantage plans are required to cover Medicare benefits, so any cuts to Medicare Advantage plans will be extra benefits such as contributions toward eyeglasses or fitness club memberships." Beginning in 2014, Medical Advantage plans will be required to spend at least 85 percent of the health insurance premiums collected on providing health care to their customers.

[See New Medicare Online Application Launched.]

Changing payment structure. The health bill changes the ways doctors are paid for the services they provide Medicare recipients. For example, hospitals with excess numbers of preventable patient readmissions will receive reduced Medicare payments for the services provided beginning in 2012. And beginning in 2015, hospitals will receive 1 percent lower payments if patients develop hospital-acquired conditions. "Patients will not see the cuts that are made to providers," says John Holahan, director of the Urban Institute's Health Policy Center. "My guess is it will largely be absorbed." Rewards will also be offered to doctors who work in the public interest. For example, primary care physicians and general surgeons who choose to practice in areas of the country with health professional shortages will receive 10 percent Medicare bonus payments beginning in 2011. The idea behind these payment changes is to reward care that helps seniors get and remain well. "I have no reason to suspect that my mother's quality of care will diminish," says Jonathan Skinner, a professor of economics at Dartmouth. "I have not warned my mother."