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 16,979.13 59.54 0.35%
Nasdaq 4,526.48 -1.03 -0.02%
S&P 500 1,986.51 4.91 0.25%
Treasuries 2.43 0.02 0.87%
Data as of 10:44pm ET
Company Price Change % Change
Bank of America Corp... 15.52 0.07 0.45%
Apple Inc 100.57 0.04 0.04%
General Electric Co 26.36 0.31 1.19%
Intel Corp 34.50 0.16 0.47%
Staples Inc 11.32 -0.30 -2.58%
Data as of 4:01pm ET

Sections

This month, Delaware became the first state to pass a law giving heirs the right to access the online accounts and assets of someone who has passed away. More

Median income is up 3.8% since 2011, though it's still down since the economic recovery began in 2009. More

Small business owners say the economy is still their biggest challenge, which keeps them from expanding and hiring, according to a CNNMoney-Manta survey. More

This month, Delaware became the first state to pass a law giving heirs the right to access the online accounts and assets of someone who has passed away. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.