Plan ahead for new Medicare benefits

Coverage for drugs, preventive care, and more improves

National polls show that many Medicare recipients are uneasy about the new health-reform law, the Affordable Care Act, passed in 2010. Perhaps that is because they've heard that reform is paid for, in part, by shaving about $400 billion from Medicare spending over the next decade. What they may not realize is that those savings are expected to come not from cuts in benefits but from improvements such as increasing patient safety and decreasing waste and fraud. (For more on that, see our interview with Medicare chief Donald M. Berwick, M.D.)

In fact, the Affordable Care Act and other Medicare changes are bringing significant new benefits to seniors this year.

Shrinking doughnut hole

The dread "doughnut hole"—the point in your Medicare drug plan where your coverage ends and you have to start picking up the full tab for your medications—continues to close, thanks to a provision of the Affordable Care Act. In 2010, the 3.5 million people whose drug costs were high enough to put them in the doughnut hole received a check for $250 to help defray those expenses. This year, if you hit the doughnut hole, the benefits are even richer: a 50 percent discount on brand-name drugs and a 7 percent discount on generic drugs.

More good news: You will get those discounts automatically, without having to apply or sign up.

Here's how it works

You become eligible for the discounts once you and your drug plan together have paid $2,840 in drug costs (not counting your Part D premiums). Your personal share will depend on your plan's deductibles and co-pays, and the mix of drugs you take, but on average it's about 25 percent of the total.

Once you're in the doughnut hole, you'll automatically start getting the discount at your pharmacy. The discount will apply until you and your drug plan together have paid an additional $3,608. Then you'll become eligible for what's called catastrophic coverage, through the end of the calendar year. During that period you are responsible for only 5 percent of your total drug costs. (That provision has been part of the Medicare drug benefit since its inception.)

To find out whether you'll get into the doughnut hole this year and what your costs will be, use AARP's online calculator, at doughnuthole.aarp.org.

In coming years, your share of the cost within the doughnut hole will gradually decrease until the hole disappears, in 2020. Then you'll pay an average of 25 percent of the cost of your drugs throughout the year until and unless you reach catastrophic coverage.

Free preventive care

If you're in an original Medicare plan (as opposed to a private HMO, PPO, or other Medicare Advantage plan), starting this year the Affordable Care Act entitles you to free coverage of 20 preventive services. That includes an annual "wellness exam," where you can go over the general state of your health with your doctor and work with him or her on a plan to stay as healthy as possible.

Everyone is eligible for preventive services such as screenings for HIV and cancer (colorectal, prostate, and breast); bone-mass measurements; smoking-cessation counseling; and flu and pneumococcal vaccines. Some preventive services, such as aortic-aneurysm, glaucoma, or diabetes screening, and hepatitis B vaccines, are covered only if you meet certain risk criteria.

If your doctor or clinic accepts Medicare reimbursement as payment in full (and most do), you don't have to do anything to take advantage of the benefit other than make an appointment for the preventive care. In other words, you won't have to pay up front and get reimbursed later.

Medicare Advantage plans do not have to provide that free preventive care until 2012, but "I think almost every plan has signed on this year," Berwick said. Double-check with your plan to make sure that you are covered.

Caps on Medicare Advantage

Consumers in private Medicare Advantage plans got a major new financial protection this year. Previously, if you elected to get your Medicare benefits through Medicare Advantage, there was no limit to what you might owe in co-insurance or co-payments. And it's against the law for insurers to sell you a supplemental policy to pick up those costs, the way they can with original Medicare.

But starting this year, the Medicare program requires Medicare Advantage plans to put a cap on total out-of-pocket expenses. The most you'll have to pay out of pocket for care under any plan is $6,700, though plans have the option of setting an out-of-pocket cap as low as $3,400.

"This really protects people who become seriously ill in a particular year," said Joe Baker, president of the Medicare Rights Center, a consumer-advocacy group based in New York. "It gives you a snapshot of the worst-case scenario for the year. People often join Medicare Advantage because they see it as a cheaper alternative to original Medicare, yet if you go to a lot of doctors and get a lot of outpatient procedures, the co-pays really add up."

If you're not sure what your plan's out-of-pocket limit is, you can find it by looking up the plan in the Medicare Plan Finder at the Medicare.gov website.

It's important to note that the out-of-pocket limit doesn't apply to the drug benefit in Medicare Advantage plans that offer such a benefit.

New dates for changing plans

The window of time during which you can change or join a Medicare health or prescription-drug plan for the coming year is being moved up a month. The Annual Enrollment Period for plans that begin Jan. 1, 2012, will run from Oct. 15 to Dec. 7, instead of Nov. 15 to Dec. 31.

"The reason for that is that a lot of beneficiaries had trouble getting their ID cards for the new year in time to use their coverage," said Adrienne Muralidharan, senior product specialist at Allsup Medicare Advisor, a company that helps customers select appropriate Medicare plans.