Obamacare. It’s been around for a while now, but many people are still not clear on how it will affect them. What is Obamacare? The official title is the Patient Protection and Affordable Care Act, which President Obama signed into law on March 23, 2010. The requirement that all Americans carry health insurance is a key provision of the act and the Supreme Court upheld the law June 28, 2012. The objective of Obamacare is to provide affordable, quality health care to all Americans.
Obamacare attempts to solve several problems. It was passed because there were some serious problems with our health care system. If you have been able to get quality heath care and have costs fully covered by insurance, you have been fortunate. A problem for some has been that private health insurance companies could deny coverage to people with pre-existing conditions. These are typically folks who need health insurance the most. If you cannot work because of ongoing sickness and are not on an employer plan, you would have to buy your own insurance to get coverage.
If your condition is such that no insurance company will cover you, then you could get stuck being responsible for huge medical bills. This could be financially devastating. Other problems include small companies not being able to afford health insurance for their employees, insurance companies imposing coverage limits, raising premiums and even canceling policies without justification, and Medicare beneficiaries in the “doughnut hole” charged up to $4,550 per year in prescription drug costs. This has been very difficult for those trying to survive on a fixed income.
Now that we have identified some of the problems people have been facing, let’s summarize some of the key provisions of Obamacare:
- Individuals with pre-existing conditions will be able to get health insurance.
- Young people can stay on their parents’ policies until age 26. This gives them time to get out of school and get a job where they’ll be covered by employer-sponsored health insurance.
- Employers have been given incentives to offer health insurance to employees in the form of tax credits.
- Everyone is required to have health insurance or pay an additional tax.
- Health plans are required to provide a minimum level of coverage.
- Medicare beneficiaries will get some relief from high drug costs.
- High-income Americans will pay additional taxes to help cover the costs of Obamacare.
We have listed some of the key provisions, but as The Retirement Guys we obviously want to outline how Obamacare will affect those who are 65 and older. If you are 65, the government generally requires you to enroll in Medicare. One way Obamacare helps you if you are on Medicare is that you can now get certain preventive services without paying a deductible or copayments. These include yearly wellness visits, mammograms, bone mass measurements, prostate cancer screenings, diabetes screenings, flu shots and more.
Most Medicare beneficiaries are not taking advantage of these services, mainly because they don’t know about them, even though they are listed in the “Medicare & You” book that every Medicare beneficiary receives each year. If you are on Medicare, talk to your doctor about getting some of these free screenings. And be sure to get your annual flu shot. It’s free.
The big change for certain Medicare beneficiaries is relief from high drug costs.
If you happen to take a lot of meds, such that your total drug costs exceed about $2,800, you enter the coverage gap, or doughnut hole. While you’re in the doughnut hole, you have to pay 100 percent of your drug costs until your out-of-pocket costs reach about $4,550, at which point the insurance company comes back in and pays most of your costs. This doughnut hole can be a killer for a lot of people. Obamacare has arranged for you to get a discount on covered brand-name drugs and some coverage for generic drugs. These discounts are starting out small, but they will increase in the years ahead. By 2020 the doughnut hole will be closed.
Part of smart retirement planning is to understand what health care costs can be in retirement and where the money is going to come from to pay for them. A helpful tool can be “The Baby Boomers Guide to Medicare Planning.” You can get a copy by going to www.retirementguysnetwork.com and sending us an email request.
For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1370 WSPD or visit www.retirementguysradio.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc. does not provide tax or legal advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. (419) 842-0550.
