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How Obamacare Impacts Medicare Advantage Plans
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Obamacare affected under age 65 health insurance but left Medicare alone. That popular belief is incorrect. Obamacare (ACA) reduces funding for Medicare plans and cut’s reimbursement to carriers. Taxpayer subsidies to “poor” people (those earning less than $95,400 for a family of 4) are funded in part by cut’s to the Medicare program. These funding cuts amount to $700 billion from 2013 through 2022.
Depending on which side of the aisle you are on determines whether you refer to these cuts as lower funding or savings.
No matter what you call it, the federal government will spend less on Medicare each year in order to fund Obamacare for the “working poor”.
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Obamacare impacts how Medicare Advantage carriers are paid
According to Benefits Pro as of January 2015 20% of the Medicare cuts have been implemented and retirees are paying more for their Medicare Advantage plans. These higher costs come as
higher premiums
higher copay’s
higher deductibles
higher out of pocket
smaller networks
more HMO’s
fewer plan choices
Most Medicare plans began receiving less pay in 2012 but the cuts are to be phased in from 2012–2017, so we have a ways to go yet.
Under PPACA, plans also can qualify for a bonus payment for providing better care. Plans have to report data detailing how many of their members are routinely getting preventive care under the plan, as well as how many get additional support in managing chronic conditions such as diabetes. Plans receiving higher star ratings get higher bonuses, with the desired result being that the bonus program will encourage plans to focus on delivering a higher quality of care, thus increasing the value of the health care dollars spent by consumers.
There is only one 5 star plan in Georgia. Most are 3 to 3.5 stars and several do not qualify for a star rating.
Benefit changes because of Obamacare
Original Medicare as well as Medicare Advantage plan have certain benefits that must be included in all plans. “No charge” annual preventive exams are now the norm as are “lifestyle” counseling and information pamphlets.
But Medicare Advantage plans have had a more drastic makeover than original Medicare and Medigap plans.
PPACA also introduced a new mandatory cap for all Medicare Advantage plans designed to cut member costs. The cap limits the total out-of-pocket costs a member can incur for Medicare covered services each year. The limit is set to $6,700 in-network right now, which is substantially lower than limits many plans had before the law and thus results in higher spending by the plan.
Most plans now have out of pocket maximums of $6700 for charges by par providers. These charges can run significantly higher when you use non-par providers. This is considerably higher than the average max OOP of less than $4,000 from just a few years ago.
Compare that with less than $150 OOP for our most popular Medicare supplement plan AND no networks. Our second most popular plan has less than $500 OOP (and often less than $300) and features premiums that are about 20% lower.
Georgia retirees in rural counties hit the hardest
The number of Medicare Advantage plans available to those living in outlying counties shrinks every year. In the last few years at least 7 rural hospitals have closed, at least in part because of Obamacare.
Folkston – Charlton Memorial Hospital
Richland – Stewart-Webster Hospital
Hartwell – Hart County Hospital
Glenwood – Lower Oconee Community Hospital
McRae – Telfair Regional Hospital
Arlington – Calhoun Memorial Hospital
Eastman – Dodge County Hospital
Other hospitals like Ty Cobb in Lavonia may be shuttered before too long. CMS rules for Medicare Advantage plans require them to have a specific number of doctors and hospitals under contract in a given area before they are allowed to offer a plan. As regional hospitals close your choice of Advantage plans also dwindles.
Retirees in rural areas face higher premiums and PPO plans are being replaced with more restrictive HMO offerings. In some areas Advantage premiums of $50 – $70 per month (or more) are becoming quite common.
For a few dollars more you can have a Medigap plan, not have to worry about networks and have considerably less out of pocket.
Georgia Medicare Plans specializes in low cost Medicare supplement plans and tailoring a drug plan to fit your needs. Our average client saves over $1,000 per year in out of pocket drug costs. We showed one client how to save over $6,500 per year in premiums and OOP costs.
Don’t get tripped up by Obamacare changes to Medicare Advantage plans. Let us help.
