Is a Medicare Supplement Necessary Under the Obamacare Plan?

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Last week I was a bit taken aback when I overheard a senior talking to a friend about her Medicare. She said something to the effect of “I can’t wait until Obamacare kicks in so I can cancel my Medigap plan.” With a little digging around on answer sites, I discovered that this is a common misconception.

Seniors, Obamacare does not relieve you from the need to carry Medicare supplemental insurance to protect yourself  from medical care liability.

While there is a lot of election year hype going around touting that Obamacare “robs Medicare money from seniors,” the new law seems to have more benefits [for seniors] than it does detriments.  However, there is a lot of confusion regarding the changes in benefits, both now and in the future.

While Obamacare is an all-encompassing healthcare model for the country, it emphasizes health insurance for citizens under the age of 65 that are not covered by an employer health plan or a state welfare system (Medicaid). Much has been said about how Obamacare “robs Medicare of $700-billion,” but in reality it is simply counting on future savings in Medicare spending to help fund Obamacare.

Let’s examine how Obamacare changes your standard Medicare parts:

Original Medicare (Parts A and B) – The one change that Obamacare made to Original Medicare is the addition of preventive check-ups. In the past, Medicare allowed an individual to have a “Welcome to Medicare” exam during their first year of Medicare eligibility. After that, wellness exams came out of the senior’s own pocketbook. This is an excellent new benefit that will save both the federal government and seniors money. As they say, an ounce of prevention is worth a pound of cure.

Medicare Part C (Advantage) – Medicare Advantage is a HMO/PPO insurance option for Medicare beneficiaries. Obamacare does not eliminate the Advantage program, however, it does freeze the federal contributions to the program. As written, the law provided for a one time increase in federal funding. To no one’s surprise, that option was exercised for 2012, just in time for the election. Many experts believe that seniors using Medicare Advantage in 2012 could have a big surprise coming in 2013. We’ll know in a few short weeks.

Medicare Part D (Prescription Drugs) – Original Medicare does not cover prescription medications. Medicare beneficiaries who need insurance to help pay for their prescription medications must purchase a stand-alone prescription drug plan.

As originally enacted in 2003, Medicare Part D includes a cost control measure that seniors have dubbed the donut hole. The Medicare doughnut hole is an insurance gap that starts when insurance coverage ends and additional federal aid kicks in. Under Obamacare, the donut hole gradually closes over the next few years.

The way Obamacare closes the donut hole is buy regulating how much pharmaceutical companies can charge seniors for medications. It is still unknown what effect this regulation will have on the cost of the Part D insurance policies

Even with the new changes to Medicare, seniors that want to reduce their risk to the potential of high medical bills will need Medicare supplement insurance. Obamacare does nothing to change the 80/20 rule (e.g., Medicare pays approximately 80% of your medical bills and leaves you stuck with 20% of the liability). All of the reasons people purchase supplemental health insurance and a prescription drug plan still exist. Your Medicare Part B still has no “Out-Of-Pocket” limits and Medicare still does not pay for for your prescription drugs.

All-in-all, Obamacare is a step in the right direction for seniors.  Preventative care is important, as is access to affordable medications.  Regardless of which political party controls the White House after 2012, tough decisions are coming that will change Medicare even further, so be sure to get out and vote this November.  It’s your positive vote for change that keeps us healthy and strong.

About 

Mr. Bynon is a Medicare benefits expert, senior rights activist, world traveler, proud U.S. Navy veteran and coffee achiever extraordinaire. Connect with him on Twitter @MedicareWire.

  • http://www.trustedadvisorsolution.com Rudy Garcia

    David, thank you for the additional clarity. Medicare is confusing enough for those eligible to participate. Your article simplified HCR and it’s impact on Medicare beautifully with no political slant. Thanks.

  • Bob Tronsen

    As a senior living in the poverty level, will payments to medicare still be deducted from my social security?

  • David Bynon

    Hi Bob,

    That’s a great question. In most cases the answer will be “yes”. However, if you qualify for Medicaid and/or the Extra Help program, what you pay could be much less or nothing at all. The place to start is with your local Social Security office.

    db

  • Dixie Burge

    I’ve been on Social Security disabiltiy over a year now, and have been paying a premium for insurance I purchased through the Exchange. You say a person who has been approved for disabiltiy is not eligible for that insurance? You mean to tell me I’m doing something that’s illegal??

    I think you mean a person is no longer eligible if he/she has been on disability for 24 months, in which event you automatically become covered by Medicare, starting in the 25th month.