Q and A: Reform law's effects on health care costsQUESTION: I have a Medicare Advantage plan, and I love it. Small co-payment, no deductible and a fair limit of yearly out-of-pocket expenses, plus coverage for (Medicare) Part D drug benefit included in the premium. So, why is the new health care program going to eliminate it? What is wrong with it?
By: Bruce Japsen, Chicago Tribune
QUESTION: I have a Medicare Advantage plan, and I love it. Small co-payment, no deductible and a fair limit of yearly out-of-pocket expenses, plus coverage for (Medicare) Part D drug benefit included in the premium. So, why is the new health care program going to eliminate it? What is wrong with it?
—Emilie Smith, Newport News, Va.
ANSWER: Assuming no changes to the health care overhaul with the shift in political power in the House, these plans are not being eliminated.
They are, however, facing reduced funding to expand coverage to millions of uninsured Americans. The health insurance industry lobby said the law freezes rates for 2011 at the 2010 levels the government pays to the plans. There will be "little changes in premiums from 2010 while continuing to offer robust benefits," the lobby says.
But as cuts take effect in the future, seniors in these plans could see costs rise and benefits reduced.
Q: It's my understanding with the new health care reform there no longer would be maximum limits on medical insurance. I am a retiree and have supplemental insurance with a $50,000 lifetime limit. My former employer tells me the caps still apply to a post-retiree supplemental plan. Is that right?
A: It's true that the new health law bans lifetime limits on coverage, so plans may not impose caps on the dollar amount they will pay for care. But so-called retiree-only plans, like the one you have, are exempt from the Affordable Care Act.
Retiree-only plans generally have been exempt from federal mandates. The exemption arose from concerns by members of Congress and the business community that more companies would drop retiree coverage if they had to pay for additional benefits.
And considering the number of companies offering retiree coverage has been dwindling in recent years, Congress agreed to certain exemptions so as not to jeopardize more plans.
Q: I have a question relating to allowing dependent children to remain on their parents' plan until age 26. Are companies allowed to restrict certain health plans from this provision (of the health overhaul law)? We were just told that our son is being removed from the plan (he is 23) because the company has said the retiree health plan is excluded from dependent child coverage. Is this allowable under the law?
A: Companies can reduce retiree health benefits and eliminate them altogether pretty much at any time. And they increasingly are doing so.
Retiree-only plans are exempt from certain tenets of the health overhaul law, in part because of concerns from Congress and the business community that more companies would drop such coverage if they were required to pay for additional benefits. But the reality is companies are looking in this economy to limit their own health care costs.
Just 25 percent — the lowest percentage ever — of large employers are offering a health plan to retirees younger than age 65, according to a recent survey by benefits consulting firm Mercer.
Q: In March 2009, my husband died and my daughter and I went on COBRA via his employer. Are there any changes to COBRA as part of health reform?
A: There are no changes under the health care law to the Consolidated Omnibus Budget Reconciliation Act. COBRA benefits are offered to terminated workers for up to 18 months after they leave their employer. COBRA benefits are available for 36 months when coverage is dropped for certain reasons, such as death of an employee whose dependents are on his or her plan.
Cost varies from plan to plan, but it's not uncommon for COBRA premiums to cost more than $1,000 per month for families.
By 2014, however, there likely will be less of a need for COBRA. That's when state exchanges are scheduled to be in place, offering more affordable health coverage to the uninsured.
Also, the health care law prevents insurance companies from denying medical coverage if people have a pre-existing medical condition — often a key reason consumers are forced to seek expensive COBRA benefits.
Q. I am enrolled in the Medicare Part D prescription drug plan and received their information packet for my 2011 benefits. My premium is increasing from $39.40 per month to $54.40 per month, an increase of 38 percent. Why are these premiums going up so much?
A. Jack, it is indeed difficult to reconcile such an increase in premiums for your drug coverage, especially given the increasing number of popular drugs going off patent and available generics such as statin cholesterol drugs and prescription heartburn pills.
But health plans say they are seeing higher drug costs. They say they have more older subscribers taking expensive brand drugs derived from biotechnology, such as rheumatoid arthritis treatments like Enbrel and Humira, that can cost $15,000 a year per health plan subscriber. Such drugs work better than older treatments but come with a higher price tag.
Some analysts also say health plans are raising premiums across the board in all their plans, given they are losing customers as unemployment remains above 9 percent and the number of uninsured Americans rises.