Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Search for Jobs

Index Last Change % Change
Dow 19,549.62 297.84 1.55%
Nasdaq 5,393.76 60.76 1.14%
S&P 500 2,241.35 29.12 1.32%
Treasuries 2.41 -0.05 -2.05%
Data as of 9:08am ET
Company Price Change % Change
Regions Financial Co... 14.46 0.35 2.48%
Xerox Corp 9.48 0.18 1.94%
Frontier Communicati... 3.60 0.07 1.98%
Intel Corp 35.50 0.78 2.25%
Huntington Bancshare... 13.21 -0.01 -0.08%
Data as of Dec 7
Sponsors

Sections

Michael Jordan just won a legal battle with a Chinese sportswear company over the use of his name. More

A Bumble Bee senior executive will plead guilty to his role in a conspiracy among major seafood firms to fix the price of canned tuna. More

From PlayStation VR and Nintendo's mini console to gorgeous connected watches from Kate Spade and Emporio Armani, here are our top picks of 2016. More

For Americans under age 40, about half of them say they can't come up with $2,000 if an emergency came up, according to the New York Federal Reserve. More