Estate Planning: How Will the Affordable Care Act Affect Seniors?

By Friends & Neighbors December 15, 2013 12:52

By Jim Gianelli and Tamara Polley

Many seniors have no doubt shrugged as rancorous debate over the controversial new federal health plan has swirled around them. “Obamacare? I’m on Medicare. It has nothing to do with me.”

But the Affordable Care Act (ACA) indeed affects seniors, making key but not widely publicized changes in prescription drug coverage, preventive care benefits and Medicare Advantage Plans. It also provides additional protection against physical and financial abuse of seniors, as well as bolstering nursing home regulations and patient protections.

The ACA, of course, is not free. Taxpayers, including many seniors, will face new levies aimed at covering program costs.

Feelings about the Act, known as Obamacare since its passage in 2010, to say the least are strong. Some praise it as an enlightened measure that will bring health insurance to many who have never been able to afford it before. Others condemn it as a misguided foray into socialized medicine, blasting its glitch-plagued roll-out and claiming the plan will lead to sky-high premiums for many.

Although the health care debate will continue, the ACA is the law of the land. Its far-reaching changes have already begun and will continue in the years to come. Those in all population groups should know how it affects them. Below are the law’s key impacts on seniors according to ElderCounsel, a national organization for Elder Law attorneys.


Mandate exemption – The ACA requires all Americans to have health insurance and sets significant fines for those who don’t get it. The penalty will start at $95 (or 1 percent of your family income, whichever is higher) in 2014, rising each year until 2016 when the penalty reaches $695. Those 65 and over, by virtue of their Medicare coverage, are deemed insured and face no penalties. 

Protected programs – Although Medicare funding will be cut, ACA guarantees that Part A (hospitals, hospice care and some home health services) and Part B (medical insurance) are protected and may not be cut. In fact the ACA, according to the National Council on Aging, gives seniors even more Medicare benefits.

Prescription drugs – The ACA cuts seniors’ out-of-pocket expenditures on prescription drugs. Prior to the law being enacted, Medicare Part D (prescription drug) recipients were subject to the “Donut Hole.” Simply put, the law previously required recipients to reach a $310 deductible before Medicare kicked in. At that point, enrollees start paying 25 percent of the drug costs until they reached $2,800. All expenses from $2,800 to $4,550 were then paid by the enrollee. Medicare would then kick in again, and the enrollee would pay only a small percentage of costs for the remainder of the year. Under the ACA, Medicare picks up more of the tab and will close the “Donut Hole” by 2020. Eventually, Medicare recipients will pay 25 percent of all prescription drug costs.

Preventive care – The ACA requires that Medicare cover previously unpaid preventive care procedures and screenings to reduce future treatment. Included are flu shots, screenings for cancer, diabetes and other chronic diseases, and an annual physical or “wellness visit” with a doctor.

Medicare Advantage – When seniors enroll in Medicare, they may choose the traditional coverage plan or opt for an Advantage Plan. Advantage plans, chosen by about one in four seniors, usually include services not covered by Medicare, such as dental or vision. But they may require co-pays for services provided at no out-of-pocket expense under traditional Medicare.

The ACA prohibits Medicare Advantage plans from charging higher co-pays for chemotherapy or dialysis. It also limits the amount such plans may spend on administrative, marketing and other non-medical expenses. As the ACA protects some benefits from being cut, other services covered under these plans may be eliminated for budgetary reasons.

The new law cuts payments to Advantage plans by $145 billion over 10 years. Because of these cuts, the future of these plans is uncertain.

Other provisions

There are several non-Medicare changes in the law that could affect baby boomers who are not yet old enough to enroll in Medicare and that may well benefit those over 65 as well.

Pre-existing conditions – Under the ACA, health insurance carriers may not deny coverage because of an applicant’s pre-existing medical conditions. Nor may a carrier cut coverage for a client who becomes ill after securing a policy. Also, companies may no longer charge varying amounts based on clients’ health, sex, age or other commonly considered factors. This is good news for the ill, women and the elderly, who have historically paid more for their coverage.

Hospital grants – The ACA offers hospitals grants to work with seniors who are at high risk for frequent readmission.

Abuse, fraud protection The Elder Justice Act, part of the ACA, is aimed at protecting seniors from crimes and abuse including physical and mental abuse and financial exploitation.

Nursing homes – The ACA provides for a new website with information on local nursing homes, including inspection and complaint reports. The site will also list nursing home owners, the amount homes spend on resident care versus administration, hours of care received by residents and staff turnover rates. (Currently, some information is available at

The law makes it easier to file complaints against nursing homes, bans retaliation for doing so, expands notice requirements for homes that are going out of business and prohibits actual closure before all residents have been relocated. Finally, the ACA offers all states grants to pay for criminal background checks not only on nurses and nurses’ assistants, but on any staff member coming into contact with patients.

ACA funding

The benefits received under the ACA must be funded. Here are a few of the ways seniors will bear part of the burden:

Advantage plans – As previously mentioned, $145 billion will be cut from Medicare Advantage plans over 10 years, impacting enrollees.

Surcharge – A surcharge of 3.8 percent on unearned investment income of singles with a total annual income over $200,000 and of couples with a total over $250,000 will help fund the program.

jim and tamaraDeductions – The floor for medical expense deductions will rise from 7.5 percent to 10 percent of adjusted gross income, effective for 2013 taxes.

Payroll tax – Effective for the 2013 tax year, working seniors with more than $200,000 ($250,000 for families) in earned income may be subject to the additional 0.9 percent Medicare payroll tax.

 Jim Gianelli and Tamara Polley are partners in Gianelli & Polley,


Copyright © 2013 Friends and Neighbors Magazine

By Friends & Neighbors December 15, 2013 12:52
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