The Health Care Law: What it Means for People with Medicare Welcome to this presentation on the Health Care Law and What it Means for People with Medicare.

Welcome If you are like many people with Medicare, you may have questions about what the health care law means for you. Some of the improvements and changes in the law will happen quickly. Others will phase in over several years. By understanding what is in the law, you can make the best decisions for yourself and your family.

Agenda What’s changing and when Medicare Advantage plans Medicare Part D plans Medicare Advantage plans Questions and answers Today we are going to focus our discussion on the different things people with Medicare will start to see as the health care law is implemented over the next few years We’ll point out the what is going to stay the same We’ll talk about lowering prescription drug costs, including enhancements to Medicare Part D prescription drug plans We’ll include improvements and changes to Medicare Advantage plans We’ll cover other changes that people on Medicare should expect We’ll leave plenty of time for you to ask questions at the end of this presentation If we can’t get to all your questions you will be able to more information about the health care law at www.aarp.org/getthefacts

How the Law Improves Medicare Protects guaranteed Medicare benefits Improves Medicare benefits Lowers out-of-pocket prescription drug costs Adds more preventive care benefits The health care law aims to improve Medicare by lowering the cost of the program. In other words, the law requires Medicare to spend more wisely. The savings that will result from this will help keep Medicare financially stable at least 12 years longer than if no law had been passed. If you have Medicare your guaranteed Medicare benefits are protected. This includes doctor and hospital visits, and rehabilitation services. This is true whether you have Original Medicare (Part A and Part B) or a Medicare Advantage plan. You will also receive improved benefits. For example, improvements to Medicare will lower your out-of-pocket costs for the prescription drugs you need to stay healthy and expand the preventive services you can get at no additional cost to you. Let’s go over in a bit more detail how the health care law helps to lower the cost of prescription drugs by closing the Medicare Part D Coverage Gap or the “Doughnut Hole”.

What is the Doughnut Hole? Medicare Part D coverage gap You fall into the doughnut hole when your out-of-pocket drug costs exceed $2,930 While in doughnut hole you pay premiums, plus a portion of the price for drugs You leave the doughnut hole when your total drug costs reach $4,7000 Before I start talking about the Medicare Part D doughnut hole, I want to briefly make sure all of you understand how Medicare Part D prescription drug coverage works. You can choose to purchase Part D prescription drug coverage from Medicare-approved insurance companies. Under current law, each year you pay your monthly premiums and a deductible and then a co-pay of about 25% for each prescription drug. So let’s talk about the Medicare Part D coverage gap or “doughnut hole.”

Medicare Drug Coverage 50% discount for Brand Name and 14% for Generic Initial Benefit Doughnut Hole Catastrophic Benefit 50% discount for Brand Name and 14% for Generic You pay: Deductible and 25% of drug costs You pay: 5% of drug costs Let’s take a minute to review the Medicare Coverage Gap or Doughnut Hole. I know this can be confusing, so here’s a visual presentation of the doughnut hole that may be helpful. Starting on the left side, this is your initial benefit period where you pay your Part D deductible and about 25% of your drug costs. Moving to the middle, once you reach the initial coverage limit, you are in what is commonly called the "Coverage Gap” or "Doughnut Hole,". You reach the doughnut hole when you exceed a certain amount, which in 2012 is $2,930. In the past, you would have had to pay all of your prescription drug costs while you were in the doughnut hole. What is new this year (2012), is that your plan will pay 50% of the cost of brand-name prescription drugs and 14% of your generic prescription drug costs while you are in the doughnut hole. This is a change that came about as a result of the health care law. By the way, exactly how much you pay out of pocket for each drug while you are in the doughnut hole will vary widely depending on the Part D plan you’ve chosen and the price your plan has negotiated with the companies that manufacture your drugs. Moving to the right side, when your total out-of-pocket expenses for drugs on your plan’s approved drug list reaches $4,700, you reach the "Catastrophic Coverage " benefit.  From then until the end of the year, you pay roughly 5% of your drug costs under the catastrophic benefit. Just to clarify a bit …. your out of pocket costs include your deductible, copayments, and coinsurance. But this does not include your Part D premiums.

Doughnut Hole Will Gradually Disappear 50% discount on brand name drugs 14% discount on generics drugs By 2020, the doughnut hole will disappear Part D cost sharing will remain AARP’s Doughnut Hole Calculator www.aarp.org/doughnuthole If you reach the doughnut hole this year (2012), you’ll get a 50% discount on brand-name prescription drugs and a 14% discount on generic prescription drugs while you are in the coverage gap. This means you will not have to pay 100% of the cost of all your drugs while you are in the coverage gap. Depending on the drugs you take, you will be paying only half what you are paying this year. The gap will gradually narrow until it disappears in 2020. However, even after the gap is gone, everyone on Part D will still have the same level of cost sharing -- about 25% -- from the time you meet your deductible until the time you reach catastrophic coverage . Catastrophic coverage remains in place even after the coverage gap goes away. Catastrophic coverage starts when your out-of-pocket drug costs have climbed to $4,700 . After that point, you only have a 5% co-payment for your drugs for the remainder of the year. Because this can be so confusing let me recap what will happen this year to lower your drug costs. If you have Medicare Part D, you will pay premiums each month; you will pay the plan’s deductible, then you will pay about 25% for your drugs until the total amount of what you and your plan have paid toward your prescriptions reaches $2,930 --- you will then pay 50% on brand-name drugs and 86% on generics. Once you have paid $4,700 in out-of-pocket costs, you will then pay 5%.

www.aarp.org/doughnuthole You can use AARP’s Doughnut Hole Calculator to find out if or when you will hit the coverage gap and find recommendations for less expensive drugs. When you click on the Doughnut Hole Calculator, you just enter your zip code and follow the steps. It’s easy to use and shows you to ways to save right now on your drug costs. It’s at www.aarp.org/doughnuthole

Adds More Preventive Care Benefits Yearly wellness visit Screenings for diabetes and certain cancers Includes mammograms, colonoscopies and other preventive screenings No copayments or deductibles Call Medicare at 1-800-633-4227 www.medicare.gov You will no longer have to pay for Medicare-approved preventive care services. You will also be able to work with your doctor on a personalized prevention plan to keep you as healthy as possible. This means that health problems can be detected sooner and treated more quickly. The additional preventive benefits started last year (2011). The benefits include: A free yearly wellness visit. Screenings for diabetes and certain cancers. This includes mammograms, colonoscopies, and other preventive screenings. The Secretary of Health & Human Services may also add other tests, screenings, or health counseling. You will not have to pay co-payments or deductibles for this Medicare-approved preventive care. Screenings currently available such as pap smears and prostate exams will continue to be available. These new preventive services are in addition to the free “Welcome to Medicare” checkup available to every person who is new to Medicare during their first year of entering the Medicare program. Call Medicare at 1-800-633-4227 or visit www.medicare.gov to see which of the Medicare-approved preventive care services are covered at no cost to you. Your copy of the booklet Medicare and You has a long list of all the preventive screenings now available. You can get the booklet by calling Medicare at 1-800-633-4227. If you are in a Medicare Advantage plan, check with your plan to see if you’ll have co-payments or deductibles for any screenings or tests.

Improves Access to Primary Care Doctors Primary care doctors who treat people with Medicare get bonus payments Medicare gives extra payments to health providers in areas of the country with a shortage of providers Like most people with Medicare, you want to be sure that you continue to get quality health care. You also want to know that primary care providers are available to give you that care. The law addresses some of these needs. Primary care doctors who treat people with Medicare will get a 10% bonus payment. This will help ensure that you continue to get the medical care you need. In areas with doctor shortages, Medicare will also give extra payments to physicians and nurses who provide primary care. This will encourage doctors and nurses to serve under-served communities.

Improves Care Coordination of Medicare Home Health Services People who get Medicare home health services must have a face-to-face visit from certain health practitioners A physician must certify the need for home health services Visit must occur within 90 days before you receive home health care or 30 days after you start care People who get Medicare home health services in Original Medicare must have a face-to-face visit from a health practitioner or a physician to certify that you are eligible for Medicare-covered home health services. The health practitioner can be a physician, nurse practitioner, clinical nurse specialist, certified nurse midwife, or physician’s assistant. The face-to-face visit must occur within: 90 days before you receive home health care or 30 days after you start care It is important to note that this does not apply to people who have a Medicare Advantage plan. For more information about certification requirements for home health services, contact Medicare at www.medicare.gov or 1-800-633-4227 or ask your doctor.

What are Medicare Advantage Plans? Alternative to Original Medicare Offered by Medicare-approved private insurance companies Pays for the same basic health care services as Original Medicare, but may also pay for additional services Before we go over how the law changes Medicare Advantage plans, I am going to spend a moment reviewing what Medicare Advantage plans are. Medicare Advantage plans are an alternative to Original Medicare. They may also be known as Medicare Part C. These plans are offered by private insurance companies and pay for the same basic health care services as Original Medicare. Medicare Advantage plans include both Medicare Part A (hospital insurance) and Part B (medical insurance). Most Medicare Advantage plans also include Medicare Part D (prescription drug coverage). But they also may pay for additional services that aren’t covered by Original Medicare, like eyeglasses and gym memberships. In most Medicare Advantage plans, you can only go to doctors, specialists, and hospitals on the plan’s list. Otherwise, you may pay more or you may not be covered for services at all. Examples of Medicare Advantage plans include Health Maintenance Organizations or (HMOs) or Preferred Provider Organizations (PPOs).

How the Law Changes Medicare Advantage Plans Guaranteed Medicare benefits are protected You can still choose either a Medicare Advantage plan or Original Medicare Now let’s talk about how the law changes Medicare Advantage plans. The health care law makes a number of improvements and changes in how Medicare Advantage plans operate. If you have a Medicare Advantage plan, it is important to know how and when these changes might affect you. The health care law prohibits Medicare Advantage plans from reducing or eliminating your guaranteed Medicare benefits. You will still have a choice of how you want to get your Medicare benefits. This fall during Medicare’s Open Enrollment period, you can choose either a Medicare Advantage plan or Original Medicare for next year. You will have time to decide whether to switch to a new Medicare Advantage plan, or move to Original Medicare.

Medicare Advantage Plans More emphasis on quality and value: Plans will get bonuses for providing quality care Plans must use some of the bonus for extra benefits and rebates to people with Medicare Advantage Plans can’t charge more than Original Medicare for certain services Plans must limit how much they spend each year on administrative expenses www.medicare.gov The law keeps Medicare Advantage plans as an option for you to choose. It does, however, set up new rules that will result in significant savings to the Medicare program, overall. It also rewards Medicare Advantage plans that provide high quality care. The Centers for Medicare & Medicaid Services (CMS) already has a rating system for Medicare Advantage plans. Plans that rate at least 4 stars on the Centers 5-star scale will receive bonus payments this year for providing you with better quality care. You can review your plan’s rating anytime on Medicare’s website at www.medicare.gov Medicare Advantage plans must use some of the bonus money they receive to provide those in their plans extra benefits and rebates. This means that higher quality plans may be able to offer you more services. , Medicare Advantage plans cannot charge more than Original Medicare for certain services. These include chemotherapy administration, kidney dialysis, and skilled nursing care. Starting in 2014, Medicare Advantage plans must limit how much they spend each year on administrative costs. For each dollar they get in premiums, Medicare Advantage plans may not spend more than 15 cents on administrative expenses.

Medicare Advantage Plans How Medicare Advantage plans are paid Subsidies that Medicare currently pays to private insurance companies will be lower to bring payments more in line with Original Medicare Changes in Medicare Advantage payments will result in savings to the Medicare program Currently, Medicare pays subsidies to the private insurance companies that offer Medicare Advantage plans. This means that these plans cost the Medicare program more than Original Medicare—on average about 13% more per person. However, this year (2012), Medicare will start to lower these subsidies. As a result, Medicare Advantage payments will be more in-line with Original Medicare. The changes in Medicare Advantage payments will result in significant costs savings to the Medicare program overall. These savings can be used to fund other services—such as better prescription drug benefits and preventive care for everyone on Medicare.

Medicare Advantage Plans What lower subsidies could mean Some plans may drop extra services Some plans may raise premiums and co-payments Others may decide to leave the Medicare program Medicare Advantage plans will differ in how they respond to the lower subsidies. It will depend partly on the state and county where the plan is located, and on the quality bonuses the plans receive. The lower subsidies could mean that some plans may drop extra services such as eyeglasses and gym memberships. The law prohibits plans from reducing or eliminating your guaranteed Medicare benefits. These benefits are protected. Every year, companies that offer Medicare Advantage plans make decisions about what they cover and what they charge. Some plans may raise their premiums and co-payments. Others may even decide to leave the Medicare program. Companies have made these business decisions each year, even before the health care law was enacted. Under the health care law, they will continue to make the same set of business decisions.

Medicare Advantage Plans What lower subsidies could mean You will receive a notice of what changes, if any, will take place You can stay with you plan, switch to a different plan, or go to Original Medicare Contact your Medicare Advantage plan or call Medicare at 1-800-633-4227 www.medicare.gov In the Fall, you will receive a notice from your Medicare Advantage plan. It will tell you what changes, if any, will take place in your plan for 2013. This is the time for you to look at your plan options and make the best choice for yourself. You can compare your options using the Medicare Options Compare tool. This site shows which Medicare Advantage plans are offered in your area. You can find the tool at www.medicare.gov. If your plan is changed or dropped, you can switch to a different Medicare Advantage plan or to Original Medicare. If you have questions about the notice, you can contact your Medicare Advantage plan directly. You can also call Medicare at 1-800-633-4227.

Other Changes to Medicare Income-related premiums Income-related premiums for Part D drug coverage Income levels for higher premiums start at $85,000 for a single person $170,000 for married couples filing joint tax returns The law includes an important change in the premiums for people with higher incomes. Currently, you pay a higher premium for Medicare Part B if your income is above a certain level. The income level starts at $85,000 for a single person or $170,000 for married couples filing joint tax returns. Income-related premiums also apply to those who have Part D prescription drug coverage. This provision went into effect in 2011. The income levels for Part D are the same as those just mentioned for Part B -- $85,000 for an individual or $170,000 for married couples.

Other Changes to Medicare Reduces waste, fraud and abuse Cuts inefficient care Identifies fraudulent providers Reduces overpayments to insurance companies Protects personal information Call Medicare at 1-800-633-4227 www.aarp.org/fightfraud Billions of dollars are lost each year to waste, inefficiency and fraud in Medicare and throughout the health care system. Significantly reducing this waste helps to drive health care costs down. It also helps strengthen Medicare’s long-term stability. According to official estimates, cost savings—some of which come from reducing waste—should keep Medicare financially stable more than a decade longer than if no law had been passed. The law also has many provisions to aggressively crack down on waste, fraud and abuse. It will also help cut inefficient care, identify fraudulent providers, reduce overpayments to insurance companies and protect the privacy of consumers’ personal information. AARP is monitoring these new provisions to cut waste, fraud and inefficiencies to make sure the federal government is cracking down on fraud and holding scam artists accountable. This is your chance to get involved. If you suspect fraud in the Medicare program call Medicare at 1-800-633-4227. For more information on fighting fraud in health care visit www.aarp.org/fightfraud.

Key Points to Remember Helps lower your prescription drug costs Protects guaranteed Medicare benefits Improves Medicare-covered benefits Makes some changes to Medicare Advantage plans Reduces waste, fraud and inefficiencies In summary, the health care law will be phased in over a number of years. The law : Helps you lower your prescription drug costs Protects guaranteed Medicare benefits Improves and expands Medicare covered benefits Makes some changes to Medicare Advantage plans, and Reduces waste, fraud and inefficiencies in the health care system

About the health care law www.aarp.org/getthefacts For More Information About the health care law www.aarp.org/getthefacts www.aarp.org/consigarespuestas About Medicare 1-800-633-4227 www.medicare.gov www.aarp.org/medicare There’s a lot to absorb about the health care law, so you are bound to have questions as the law is implemented. AARP is working hard to provide you with updated information, so please visit www.aarp.org/getthefacts frequently. You can also find answers to your Medicare questions at www.medicare.gov or by calling Medicare at (800) 633 – 4227. Or visit AARP’s website at www.aarp.org/medicare

This is what the Get the Facts page looks like. You can link to a collection of Fact Sheets about various aspects of the health care law.

To learn more at www.aarp.org/getthefacts

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