People with disabilities may be unable to afford Medicare Advantage plan under healthcare provisions

Apr 15 2010

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 are the most powerful developments in decades affecting healthcare coverage for people with disabilities, according to Allsup, a nationwide provider of Social Security disability representation and Medicare plan selection services.

“With the healthcare provisions, people with disabilities may be caught in a position where they're unable to afford a Medicare Advantage plan and unable to secure coverage under Medigap”

"Many of these healthcare provisions are desperately needed by people with disabilities who require but are unable to secure affordable medical treatment," said Paul Gada, personal finance director for Allsup who directs Allsup Medicare Advisor^®, a Medicare plan selection service for people with disabilities and individuals over 65.

People applying for Social Security Disability Insurance (SSDI) may have to wait months, even years, for their claim to wind through the process. Currently, there are more than 1.7 million people stuck in the SSDI backlog and awaiting a decision on their claim for benefits. These individuals often have limited or no source of income and few healthcare coverage options. In addition, more than 7 million people who rely on SSDI benefits are eligible for Medicare, following a 24-month waiting period.

"People with disabilities need continuous access to affordable healthcare coverage," said Gada. "They can't wait until they have SSDI income to finally pay for healthcare coverage or hold out the 24 months required before becoming eligible for Medicare."

Eliminating Pre-Existing Conditions Provides Some Relief, But Exposes Potential Gaps

One key provision of healthcare legislation having a profound impact on millions of people with disabilities is eliminating the pre-existing condition clause.

Starting later this year, children with pre-existing conditions cannot be denied health insurance coverage. This extends to adults in 2014 when state-run health insurance exchanges, which will have to cover pre-existing conditions, are established.

In the interim, as of June, the legislation creates temporary state-run high-risk insurance pools to offer coverage to individuals with pre-existing medical conditions who have not had insurance for at least six months. Most states have high-risk insurance pools already, but all states are required to establish these pools as of June, or the U.S. Department of Health and Human Services will create one for them. People living in states with a high-risk insurance pool can go to their state insurance commission Web site to learn more, or visit the National Association of State Comprehensive Health Insurance Plans' Web site for a complete listing at http://www.naschip.org/states_pools.htm.

"The high-risk insurance pools may offer some people a safety net if they've exhausted their COBRA coverage or were denied private coverage because of a pre-existing condition. However, more detail on how the pools will operate, how to enroll and costs are needed before people can determine their true value; it's troubling that individuals will have to wait six months to be eligible," said Gada.

People relying on Medicare may find fewer coverage options as a result of healthcare legislation. For 2011, the legislation freezes payments to Medicare Advantage plan providers at 2010 rates and further reduces payments over time to bring them in line with traditional Medicare.

Medicare Advantage plans have become increasingly popular because they generally offer more coverage options and are more affordable than traditional Medicare with Medigap supplemental coverage.

Medicare Advantage plans also have always been required to cover most pre-existing conditions, whereas Medigap plans are not required to cover pre-existing conditions and often exclude or limit coverage. As a result, Medicare Advantage plans often have been a better choice for people with disabilities. However, the reduced subsidies to providers under the legislation may reduce the number of insurers offering Medicare Advantage plans, and consumers may see premium increases or reductions in plan coverage benefits.

"With the healthcare provisions, people with disabilities may be caught in a position where they're unable to afford a Medicare Advantage plan and unable to secure coverage under Medigap," said Gada. "It is going to be very important for people to carefully review their options when making enrollment choices for this year and beyond."

Additional Provisions Affecting People with Disabilities

Among the other provisions affecting people with disabilities are:

• Expanding Medicaid coverage. Between now and 2014, when expanded Medicaid programs are required in each state, states can choose to apply to the federal government to receive additional Medicaid funding and expand their community health centers. Expansion could take on a variety of forms: an increase in staff, supplies and other resources or increasing the income limit to encompass more people. People can learn more about their state's Medicaid offerings, when states will be expanding their coverage and how to apply by contacting their local Medicaid office. Contact information is available at http://www.medicare.gov/contacts/organization-search-criteria.aspx. Just search for either a specific State Health Insurance Assistance Program (SHIP) or State Medical Assistance Program.
  
  In 2014 when Medicaid expansion is required, Medicaid in every state will cover people under age 65 who have income of 133 percent of the federal poverty line ($29,326.50 for a family of four in 2010). This is especially important to lower-income individuals applying for SSDI who have limited income and no coverage.
  
  However, the legislation did not raise the asset value requirements of Medicaid eligibility. The maximum allowed asset value is determined by each state; among states that have asset value requirements, the maximum asset value generally ranges from $2,000 to $4,000 for single people and $4,000 to $6,000 for couples. This excludes someone's home, one car and their retirement savings, if they are under age 60; however, retirement savings are considered if they are 60 or older. As a result, someone no longer able to work because of their disability who had accumulated more than the allowable assets under Medicaid would have to chip away at this savings before becoming Medicaid eligible.

• Expanding long-term care options. Starting in January 2011, the Community Living Assistance Services and Supports (CLASS) Act expands community living assistance options through a voluntary insurance program. Paid for through a payroll deduction of about $75 a month, all working adults will be enrolled automatically, unless they choose to opt-out. After a five-year vesting period, people with mobility issues are eligible for a cash benefit of at least $50 a day on average to buy non-medical services and support. Assistance may include caregiver support, adult day care and home modifications to support daily living, such as installing shower grab bars.
• Removing limits on insurance coverage. Starting later this year, individual policyholders no longer will be subject to lifetime caps or have their coverage dropped, except in instances of fraud. Individuals who already have been dropped from their insurance will be eligible for the high-risk pools. In 2014, annual limits are removed and people with health problems can no longer be denied coverage or charged higher premiums; limits also are placed on how much premiums can increase as people age.
• Reducing prescription drug costs. Effective immediately, Medicare recipients who have a gap in prescription drug coverage will receive a one-time, $250 rebate to supplement their medical expenses. Medicare Part D plan participants who have hit the donut hole will receive a $250 check. The first checks will go out in June to people who already reached the gap in early 2010. Additional checks will go out as people reach the donut hole, according to the U.S. Department of Health and Human Services. Although details are still being worked out, these checks likely will be processed through prescription drug plans. Individuals who hit the donut hole but do not receive a check should contact their prescription drug plan to learn how to receive their rebate. Starting next year, pharmaceutical companies are required to provide a 50-percent discount on brand-name prescription drugs for Medicare beneficiaries facing the prescription drug donut hole with additional subsidies phased in through 2020 to close the gap.
• Adding free preventive care under Medicare. Starting in 2010, Medicare beneficiaries can make free preventive care visits to their healthcare providers, without any copayments or deductibles. People with disabilities may have frequent appointments with specialists; this provision helps ensure basic health needs are addressed.

"All of these provisions have the potential of helping people with disabilities improve their healthcare coverage. However, more detail on how they will be carried out is needed to understand if they deliver," said Gada.