Health care: Big change in drug costs for seniors

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney) -- Under health care reform, consumers will see several new changes to their insurance coverage this year, the most significant of which affects the nation's 47 million Medicare beneficiaries.

Amy Bergner, principal with global benefits consulting firm Mercer, said senior citizens who are also Medicare enrollees will see the biggest effects.

"One of the most important changes is how much seniors will now pay for prescription medicines," Bergner said.

Here's what you need to know:

  • 50% discount on prescription drugs: On Jan. 1, drugmakers began giving seniors a 50% discount on brand-name prescription medicines filled in the Medicare Part D "coverage gap."

When Medicare beneficiaries fall into the coverage gap, also known as the "donut hole," Medicare stops paying for drug coverage and patients can't afford to pay for drugs out-of-pocket. The legislation aims to close the hole by 2020.

  • Free preventive care: On Jan. 1, seniors on Medicare became eligible for certain free preventive services, such as annual checkups, some cancer screening tests and personalized prevention plans that include a full health risk assessment.
  • Post- hospital care: On Jan. 1, the Community Care Transitions Program kicked in. The program is designed to help Medicare beneficiaries who are hospitalized avoid unnecessary readmissions by coordinating care and connecting them to health services in their communities.
  • Changes to tax-free health savings accounts: Starting in 2011, you can no longer use money from your flexible spending account to buy over-the-counter drugs that are not prescribed by your doctor.
  • Rebates to consumers: This year, insurance companies have to spend 80% to 85% of premiums on medical care instead of toward their own profits and overhead costs. If insurers fall short of that target, they will have give a rebate to their customers beginning in 2012.

The health care reform legislation, passed last year, phases in a number of new provisions yearly until 2014 -- when most of the changes mandated by the new health law take place. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,232.02 -53.72 -0.29%
Nasdaq 5,089.36 -1.43 -0.03%
S&P 500 2,126.06 -4.76 -0.22%
Treasuries 2.22 0.03 1.37%
Data as of 3:56pm ET
Company Price Change % Change
Bank of America Corp... 16.75 0.05 0.30%
Apple Inc 132.54 1.15 0.88%
Hewlett-Packard Co 34.76 0.93 2.75%
AT&T Inc 34.71 -0.42 -1.18%
Microsoft Corp 46.90 -0.52 -1.10%
Data as of May 22
Sponsors

Sections

The record airbag recall and the GM ignition switch recalls has resulted in a huge percentage of cars on the road today having been recalled. More

The True Cost, a new documentary, chronicles the evils of the clothing industry and asks us to stop buying so much cheap stuff More

Sarah Kauss launched S'well to rid the world of plastic water bottles. In five years, she's sold 4 million of her stainless steel bottles. More