How Health Care Reform Will Affect Medicare Advantage Plans

Aug 16, 2010  /  By: Charles B. Pyke Jr., Estate Planning Attorney  /  Category: Medicare

Nearly 25% of senior citizens enrolled in Medicare choose a Medicare Advantage Plan. Medicare Advantage is offered by private insurance companies and subsidized by Medicare funds. Medicare Advantage Plans typically offer more benefits than the Original Medicare Plans; however, you may be required to see doctors that belong to the plan or go to certain hospitals, much like a traditional HMO.

Medicare Advantage is similar to a private insurance plan, but offers lower rates to senior citizens as the plans receive subsidies from the Medicare program. In essence, the Federal Government is paying these plans to manage Medicare benefits. But the 2010 Health Care Reform Act cuts the subsidy payments Medicare makes to private Medicare Advantage Plans.

What remains to be seen is how these cuts will affect the care and benefits of those enrolled in these popular programs. Many are concerned that these cuts will lead to a reduction in their plan’s “extra” benefits, such as dental coverage and free eyeglasses, to make up for the subsidy reduction, or worse, a rise in premiums.

There is a bright spot for Medicare Advantage recipients; the new health care law takes strong steps to ensure that by 2014, at least 85% of every dollar received in these plans is spent on health care, rather than administrative costs and profits. Supporters hope that this results in better health care and coverage for seniors.

The 2010 Health Care Reform ACT will affect the health care of senior citizens and Medicare benefits and programs, particularly the Medicare Advantage Plans. These changes are being phased in over the next several years, but it’s important to remember that no one currently using Medicare Advantage is going to be suddenly without coverage.

Stay informed and up to date as we see the details on these changes to health care emerge.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

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