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How Will You be Impacted by Medicare Changes?

During the Presidential campaign, health care reform was a hot topic. When President Obama took office, elected officials began to work on creating a plan that they hoped would benefit the majority of America.

Another health care issue that has drawn concern, especially among retirees and those preparing to retire, is the proposed change to Medicare coverage. We will look at why changes are inevitable, what changes are being considered, and what impacted retirees should do now.

Why are changes inevitable?

As individuals, as states, and as a country, we have all been impacted by tough economic times. Everyone is looking for ways to cut unnecessary spending. Government officials are attempting to make cutbacks to help open up funding for the new health care program. Many cuts are expected to come from Medicare Advantage.

Medicare Advantage is a group of private health care plans that receive federal funding. The plans include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and private fee for service (PFFS).

The government is trying to attack the unfair practice by some insurance companies of overcharging Medicare Advantage patients. Average government spending per Medicare Advantage beneficiary has been more costly than the average for beneficiaries enrolled in traditional Medicare coverage.

What changes are being considered?

If government funding is reduced for Medicare Advantage plans, premiums for individuals using these plans will increase. As a result, these options may become less appealing.

Individuals may reconsider their coverage and opt for a traditional Medicare plan with a Medigap supplement. However, there are also changes on the horizon for the various Medigap supplement options.

For example, at-home recovery, a benefit rarely used, is being eliminated. Preventative care is being removed from Medigap policies. It is now available under traditional Medicare. As a result of these changes, some Medigap policies are being discontinued.

For those concerned with high premiums, there will also be new policies added that will offer lower premium payments and higher co-payments and deductibles.

What should impacted seniors do now?

Given the vast number of changes that are coming, it would be advantageous for all individuals covered by Medicare to reevaluate their current coverage. It is possible that one of the new policies could be a better alternative to the old policy that is being used now. There could be a policy with similar benefits and lower premiums.

In reconsidering coverage, it is important to keep in mind that some programs work better than others for some individuals. For example, some plans are designed specifically for local health care service. If there are plans to travel frequently, it may be better to choose a plan that will provide coverage when out of town.

Also, some policies differ in the kind of prescription drug coverage offered. It may be a good idea to review the policies to determine which option works best for the kinds of prescriptions used most and the frequency with which prescriptions are purchased.

The changes are still in the works. By summer, the details should be finalized. Contacting a local professional or visiting the Medicare website may help determine whether there is a need to make any changes in the near future.

About the Author:

Ozeme J. Bonnette is a financial coach, speaker, and the author of Get What Belongs to You: A Christian Guide to Managing Your Finances. After working for a top financial services firm, she shifted her focus to teaching and speaking to groups and organizations working to increase financial literacy in the U.S. She earned 3 Bachelor's degrees at Fresno State and an MBA at UCLA's Anderson School. Find her at www.thechristianmoneycoach.com .

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