ACA Repeal and Medicare Beneficiaries

There is a lot of talk in Washington about repeal of the Affordable Care Act (ACA) – Obamacare. The question for Medicare beneficiaries is–how will any changes affect you?

The most important direct impact is that Medicare beneficiaries could pay more for prescription drugs. Here’s why:

•      Under Medicare’s prescription drug coverage (Part D) there is a gap in your insurance coverage–called the “donut hole.” You are affected by this gap once you and your insurance company have paid a certain minimum amount. Once you trigger this gap you have no prescription drug insurance coverage until your total drug costs reach almost $5,000—and then your insurance starts covering more of your costs.

•      The Affordable Care Act is gradually closing this gap, eliminating it altogether by 2020. So, if ACA is completely repealed, the gap will reappear.

There are a lot of variables in play, including the type of coverage you have, how much you spend on prescription drugs, and whether any ACA repeal bill finds a way to avoid reopening this gap. But, the important thing to know is that your out of pocket drug costs could rise by as much as $3,000 a year.

Repealing ACA would also impact other parts of Medicare.

•      Premiums for prescription drug plans under Medicare Part D will go down for higher-income individuals. This happens because ACA increased Medicare premiums for people with yearly income over $85,000 (single) or $170,000 (married). The repeal of ACA would also mean the repeal of these higher premiums.
•      Payroll taxes for Medicare Part A (Hospitalization coverage) will also go down for higher income individuals (incomes more than $200,000 (individual) or $250,000 (couple)). This happens because ACA increased payroll taxes on earnings of higher-income workers. The repeal of ACA would also mean the repeal of these higher taxes.

Bottom line—Medicare beneficiaries should stay tuned to the debate over ACA repeal—you have a direct stake in the outcome.