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The momentous passing of health care reform has inspired us to bring you this special Health Care edition of The Elder Law Update. While the new legislation offers much to discuss, we have focused on four areas where health care reform impacts our senior population and their loved ones: Medicare improvements, prescription drug help, expansion of Medicaid to home-based services, and long term care insurance available for any working adult.
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Understanding Health Care Reform and Its Effect on Our Senior Population
 During the month of March, and after much debate, the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Affordability Reconciliation Act of 2010 were signed into law. This new legislation, commonly referred to as "health care reform," made sweeping changes to health care as we currently know it, including the introduction of new programs aimed to assist older Americans with long term care.
Four areas of the health care reform that impact our senior population and their loved ones and deserve close examination are Medicare improvements, prescription drug help, expansion of Medicaid to home-based services, and long term care insurance available for any working adult.
Medicare Improvements
Preventive benefits. Older adults will no longer have to pay out of pocket for preventive care services such as cancer and diabetes screenings. Effective January 1, 2011, all deductibles and co-insurance for preventive benefits will be eliminated. Medicare recipients will also receive one free annual wellness visit.
Dual-eligible subsidy improvements. Those seniors who are eligible for both Medicare and Medicaid (called "dual-eligibles") and are enrolled in home and community-based services waiver programs will no longer have to pay cost sharing for their Part D prescription drugs.
Reduced government subsidies to Medicare Advantage plans. Medicare Advantage plans are run by private insurers as an alternative to traditional Medicare. Historically, private insurers offering Medicare Advantage plans have received subsidies from the government for entering the Medicare market. As a result, care for people in Medicare Advantage plans costs approximately 13% more on average than care for people enrolled in traditional Medicare. Under the new legislation, subsidies to private insurers offering Medicare Advantage programs will be frozen at the 2010 levels. Then, cuts averaging 12% per year will be phased in over the next six years to bring payments closer to what traditional Medicare spends to provide medical care.
Planning Note: Individuals currently enrolled in a Medicare Advantage plan may see reductions in their covered services in the near future and should review their coverage closely in the coming months.
Prescription Drug Help
Closing the doughnut hole. The coverage gap in the Medicare Part D prescription drug benefit, often called the "doughnut hole," will be completely closed by 2020. Currently, this gap begins when a beneficiary's total prescription drug costs reach $2,830. Beneficiaries must pay the next $3,610 in prescription drug costs themselves, then catastrophic coverage begins.
Under the new legislation, beneficiaries who fall into the doughnut hole will receive a $250 rebate in 2010. Starting in 2011, they will receive a 50% discount on name-brand drugs and other discounts on generic drugs. These discounts will increase each year until 2020, when beneficiaries will be responsible for 25% of the cost of drugs until the catastrophic limit is reached. This 25% co-pay is the same percentage beneficiaries pay for initial coverage under Part D.
Planning Note: The "doughnut hole" will be gradually reduced until completely closed in 2020. Rebates and discounts on prescription drugs begin this year. Contact us to learn about other programs that may provide assistance with prescription drugs and other out-of-pocket medical expenses.
More In-Home Services Provided by Medicaid
Incentives to encourage in-home Medicaid services. Under the new legislation, states are given more incentives to offer home and community-based services. One incentive is offered under the "Community First Choice" option. With this option, states that did not offer these types of services previously can begin to do so by amending their state Medicaid plan beginning October 1, 2011. Those states that offer home and community-based services under the "Community First Choice" option will receive an increase in Medicaid matching dollars for the cost of the program. States that already offer home and community-based programs are also eligible for increased Medicaid matching dollars if they submit an application that includes a detailed plan and budget for increasing the use of non-institutional care. For a five-year period beginning in 2014, states will be required to extend the same spousal impoverishment protections currently provided to spouses of nursing home residents to spouses of individuals receiving home and community-based services.
Planning Note: The Medicaid qualification rules are complex and change often. It is important to consult with an elder law attorney to discuss planning options and to understand what programs provide the most benefits.
Long Term Care Insurance with No Health Limitations
Government-operated long term care insurance program. Beginning in January, 2011, Community Living Assistance Services and Supports (CLASS) will be available to working adults. While premiums and benefits have not yet been set, an individual must be enrolled in the program for 5 years and maintain the minimal work requirements for 3 of the first 5 years of employment. Premiums will be deducted automatically from the individual's paycheck and are expected to range from $150 to $240/month depending on the age of the enrollee (with decreased premiums available to persons with low income). The $50/day minimum benefit can be used to pay for personal care needs, medical equipment and in-home care.
Planning Note: Not everyone who pays a premium for 5 years is eligible to receive benefits. During those five years the employee must have earned the equivalent of a quarter of coverage under the Social Security program and paid premiums for at least 24 consecutive months.
Conclusion
There are a number of provisions within the health care reform legislation that can provide significant benefits to seniors and their loved ones. However, it will be months and years before many benefits are fully realized, if at all. This new legislation and the need for it bring to light the potential financial crisis that many seniors may face once long term care is required. It is vitally important for individuals to create a long term care plan that covers how care will be obtained, how it will be paid, and who will act on behalf of the individual in the event of incapacity.
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.
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Elder Law Associates PA is a boutique elder law firm that practices exclusively in Medicaid and long term care planning including long term care insurance, Medicaid applications, home and community-based Medicaid waiver services, diversion program benefits, nursing home benefits, spousal refusal applications, and Medicaid fair hearings and appeals; nursing home and assisted living facility residents' rights litigation; asset preservation planning with a special focus on planning in light of the Deficit Reduction Act of 2005, including personal service agreements, the purchase of life estates, income producing real estate and spenddown planning; disability planning, including special needs trusts and guardianship; estate planning, including wills and trusts and advance directives; and probate, which encompasses estate and trust administration as well as litigation.
We assist clients in planning for the possibility of disability, incapacity, home health care, assisted living and/or nursing home placement. Our firm enables clients to avoid impoverishment caused by the escalating cost of long term care, to maintain their right to make health care decisions and to avoid unnecessary medical treatment.
We hope you have enjoyed The Elder Law Update. If you have questions about something you read, elder law matters or issues concerning persons with disabilities, we would be delighted to hear from you. We serve as an elder law resource to many professionals and organizations and want to become your elder law resource as well. You can reach us at Info@ElderLawAssociates.com.
Warm regards, |
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Ellen S. Morris, Esq. & Howard S. Krooks, Esq., CELA, CAP
Elder Law Associates PA
phone: (561) 750-3850 / (800) 353-3752
fax: (561) 750-4069
This publication is intended for general information purposes only. It is not intended to constitute individual legal advice to any specific client. |
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