As politicians continue to argue over immigration, Supreme Court nominations and whether Putin had a say in U.S. elections, many older Americans just want to know if they are going to be able to afford their health care and medicine.
One senior advocate has a promising message for them, however. “Whatever the changing political winds, support for the needs of older Americans clearly remains a deep and abiding national commitment,” said John Taylor. “Seniors can be assured their government benefits are intact and initiatives will continue to help them access better health coverage, decrease their out-of-pocket health costs and prepare for their golden years with peace of mind,” he said.
With enrollment season coming up soon, Taylor said it’s important to know just what has changed—think healthcare reform and its impact on seniors—and what has stayed the same. As a professional with decades of experience in senior benefits and affairs including growing a senior living facility from six skilled nursing and one assisted living community in 2001 to 43 senior housing and health care properties while securing capital in excess of $300 million, Taylor understands the needs of seniors. The founder and CEO of StoneGate Senior Living is also a founding member of OKALA (the Oklahoma Chapter of the Assisted Living Federation of America), director of TALA (the Texas Chapter of the Assisted Living Federation of America), member of the Owners’ Advisory Board of the National Investment Center for Seniors Housing and Care Industry (NIC) and a member of the Public Policy Action Team of the Assisted Living Federation of America. Taylor recently shared an update on:
- The current state of healthcare reform and its impact on seniors.
- An explanation of the Medicare landscape.
- Where Medicaid stands now.
- Senior planning strategies for long term and catastrophic care.
“For U.S. healthcare reform, the past eight years have been a rollercoaster ride. With significant shifts in national leadership and priorities, the Patient Protection and Affordable Care Act of 2010 (ACA) – President Obama’s signature healthcare legislation – is facing critical changes in policy, services, and funding,” Taylor said.
Although recent tax reform legislation repealed the mandate requiring Americans to obtain healthcare coverage, many aspects of the ACA are still in full force and delivering distinct benefits to seniors including:
- Eliminating denials for preexisting conditions.
- Continuing to close the coverage gap for prescription drug benefits.
- Expanding the Medicaid program.
- Providing access to free preventive care and annual wellness checkups.
- Increasing transparency for skilled nursing facilities.
Some 61 million Americans are enrolled in Medicare, the federal health insurance program for people age 65 and over. One of the most-popular government-run programs, accounting for about 15 percent of the federal budget, Medicare provides guaranteed healthcare for U.S. seniors. Last year, Medicare benefit payments totaled $702 billion, up from $425 billion in a decade ago. A new report by the American Association of Medical Colleges (AAMC) predicts, however, that Medicare’s trust fund has less than a decade of solvency until 2026—three years earlier than last year’s estimate. The AAMC also predicts that overall Medicare costs will increase from 3.7% of gross domestic product (GDP) to 5.8% between 2017 and 2038. From there, it is expected to grow steadily to 6.2% of GDP by 2092.
This solvency projection, says the AAMC, is due in part to lower revenues from payroll and Social Security benefit taxes, along with higher-than-forecasted expenditures for payments to hospitals and Medicare Advantage plans in 2017.
Lawmakers are being encouraged by the AAMC and others to vigorously pursue policy options, including tax increases, that would reduce or eliminate existing short term-financing shortfalls in Social Security and Medicare and keep the programs solvent, Taylor said.
Options for Medicare coverage continue to be diverse, and the four-part program is still in its original form:
- Part A, hospital care.
- Part B, doctor and other outpatient services.
- Part C, Medicare Advantage (MA) plans.
- Part D, prescription drugs.
- Seniors also have a range of choices for “Medigap” coverage to help with out-of-pocket costs.
Most Medicare drug plans have a coverage gap, popularly known as the “donut hole” – a temporary limit on what the plan will pay for prescription drug costs. Closing this gap in Part D donut hole provisions to make prescription drugs more affordable is widely touted as the ACA’s most beneficial provision for seniors, and the primary reason AARP is lobbying hard to keep it open. In fact, AARP CEO Jo Ann Jenkins hand delivered a letter just last week to Senators Mitch McConnell (R-KY) and Charles Schumer (D-NY), and Representatives Paul Ryan (R-WI) and Nancy Pelosi (D-CA) urging congress to resist efforts to undo the Medicare Part D doughnut hole provisions included in the recent Bipartisan Budget Act (BBA) of 2018. (This includes closing the donut hole one year earlier and requiring higher manufacturer discounts on brand name prescription drugs for beneficiaries who are in the coverage gap.)
“We applauded the inclusion of this provision in the BBA 2018 because it will particularly help beneficiaries who face the highest prescription drug costs,” the letter reads. “As the cost of prescription drugs continues to rise, access to affordable prescription drugs is a key issue for older Americans. Those age 65 and older use prescription drugs more than any other segment of the U.S. population, typically on a chronic basis. However, older Americans continue to struggle to afford the drugs they need, and the cost of prescription drugs continues to rise.”
As part of the new budget deal, Part D enrollees will pay 25% of the cost of all their prescription drugs from the time they enter the gap until they reach catastrophic coverage beginning in 2019.
According to AARP, Congress made the early close of the doughnut hole possible by requiring certain pharmaceutical manufacturers to pay more of the costs for enrollees who are in the coverage gap. Currently, brand-name drugmakers pay 50 percent of enrollees’ brand name drug costs while they are in the coverage gap. Under the new budget law, they will pay 70 percent.
Also in the spotlight post-reform is Part C Medicare Advantage (MA) plans, which are run by private insurers that contract with the government. Although the ACA proposed to trim as much as $150 billion in payments to insurance companies that administer these plans, which today cover nearly one-third of Medicare beneficiaries, the current administration is perceived as “tipping the scales” toward wider MA adoption.
These MA plans provide all benefits covered under traditional Medicare, and many offer additional benefits. Most plans also provide Part D prescription drug coverage. With new federal rules, MA plans have even more flexibility to broaden their scope of services, from delivering healthy meals to adding home safety adaptations – additional benefits that may drive even higher enrollment in Part C, Taylor said. “Although MA plans, true to their name, have clear advantages, they also have widely varying premiums and cost-sharing requirements, along with a narrower network of healthcare providers,” he said adding that he “advises seniors to weigh the options closely to make an informed choice between the original Medicare and MA programs.”
Medicaid, the insurance program for low-income Americans, also continues to be a focus of post-reform debate. The state-managed program, jointly funded by the federal government and states, covers 4.6 million seniors, nearly all of whom are also enrolled in Medicare and would not be able to afford medical coverage on their own. Medicaid also pays for nursing home care if eligibility requirements, including strict limits for income and assets, have been met. Also, beneficiaries whose nursing home care is paid for by Medicaid must forego Social Security income, except for a small portion to pay for personal items. Medicaid nursing home coverage has no cutoff point, and the Medicaid beneficiary has no co-payments to make.
A key provision of the ACA is offering states more federal funds for expanding their Medicaid programs to cover more people and broaden access to medical and long-term care (LTC), Taylor said. Coverage of low-income aged, blind and disabled people, along with pregnant women and mothers with young children, has been a mandatory program for states to fund safety net access to care for this vulnerable population. But extending free government health insurance to able-bodied, childless adults – the focus of Medicaid expansion – has been optional.
“Despite pledges from the current administration to end this option, and instead use the money to provide federal block grants to the states, 33 states and the District of Columbia have elected to expand their Medicaid programs,” Taylor said. “Non-expansion states continue to debate the merits of expansion, and in the states where Medicaid is severely underfunded, such as Texas and Oklahoma, providers are advocating for improved reimbursement rates.”
With so many changes and uncertainties, the question many older Americans and those approaching the distinction have is whether long-term-care is a must-have.
“Over the next 40 years, the 85-plus population will more than triple, leading to a surge in the need for LTC services,” Taylor said. “It’s a mistaken belief that Medicare and standard private insurance policies will pay for LTC expenses, including help with nonmedical daily activities, or custodial care. These programs pay only limited benefits for rehabilitation and recovery at a short-term transitional skilled nursing facility after an acute hospital stay. Those seeking LTC services but not eligible for Medicaid can find themselves financially strapped.”
Depending on the type of help needed—including assistance with activities such as bathing, dressing and eating to skilled care that’s provided by nurses, therapists or other professionals—private insurers are bridging the gap by offering a range of LTC policies. LTC insurance typically covers basic daily needs that come with nursing home, assisted living and home care, and can help navigate the cost of long-term illnesses, such as Alzheimer’s disease.
“Despite the benefits of these policies, just 10 percent of the elderly have a private LTC plan. The low participation rate reflects that, for most Americans, this protection is prohibitively expensive,” Taylor said. The ideal time to start planning is between ages 52 and 64, according to the American Association for Long-Term Care Insurance. “Those who wait longer face costlier premiums and an increased possibility of being denied coverage. Most LTC policies also have limits on how much they will pay and for how long.”
Whether it makes sense to pay LTC insurance premiums, rather than focus on building a retirement savings account, is a complex question that requires understanding the benefits and potential drawbacks of each choice, Taylor said. “Evaluating the options with a financial advisor who specializes in elder care is a prudent step in LTC planning.”
Tips on factors to consider when considering purchasing LTC insurance offered by AARP include:
- Your age and health:Policies cost less if purchased when you’re younger and in good health. If you’re older or have a serious health condition, you may not be able to get coverage — and if you do, you may have to spend considerably more.
- Premiums: Will you be able to pay the policy’s premiums — now and in the future — without breaking your budget? Premiums often increase over time, and your income may go down. If you find yourself unable to afford the premiums, you could lose all the money you’ve invested in a policy.
- Your income:If you have difficulty paying your bills now or are concerned about paying them in the years ahead, when you may have fewer assets, spending thousands of dollars a year for a long-term care policy might not make sense. If your income is low and you have few assets when you need care, you might quickly qualify for Medicaid. (Medicaid pays for nursing home care; in most states it will also cover a limited amount of at-home care.) Unfortunately, in order to qualify for Medicaid you must first exhaust almost all your resources and meet Medicaid’s other eligibility requirements.
- Your support system:You may have family and friends who can provide some of your long-term care should you need it. Think about whether or not you would want their help and how much you can reasonably expect from them.
- Your savings and investments:A financial adviser — or a lawyer who specializes in elder law or estate planning — can advise you about ways to save for future long-term care expenses and the pros and cons of purchasing long-term care insurance.
- Your taxes:The benefits paid out through a long-term care policy are generally not taxed as income. Also, most policies sold today are “tax-qualified” by federal standards. This means if you itemize deductions and have medical costs in excess of 7.5 percent of your adjusted gross income, you can deduct the value of the premiums from your federal income taxes. The amount of the federal deduction depends on your age. Many states also offer limited tax deductions or credits.
Article Originally From: Forbes.com
Article Written By: Robin Seaton Jefferson