ACA Repeal and Medicare Beneficiaries

ACA repeal donut hole

People who have prescription drug coverage under Medicare may, once again, fall into the "donut hole" if Obamacare is repealed.

There is a lot of talk in Washington about repeal of the Affordable Care Act (ACA) – Obamacare. The question for Medicare beneficiaries is–how will any changes affect you?

The most important direct impact is that Medicare beneficiaries could pay more for prescription drugs. Here’s why:

•      Under Medicare’s prescription drug coverage (Part D) there is a gap in your insurance coverage–called the “donut hole.” You are affected by this gap once you and your insurance company have paid a certain minimum amount. Once you trigger this gap you have no prescription drug insurance coverage until your total drug costs reach almost $5,000—and then your insurance starts covering more of your costs.

•      The Affordable Care Act is gradually closing this gap, eliminating it altogether by 2020. So, if ACA is completely repealed, the gap will reappear.

There are a lot of variables in play, including the type of coverage you have, how much you spend on prescription drugs, and whether any ACA repeal bill finds a way to avoid reopening this gap. But, the important thing to know is that your out of pocket drug costs could rise by as much as $3,000 a year.

Repealing ACA would also impact other parts of Medicare.

•      Premiums for prescription drug plans under Medicare Part D will go down for higher-income individuals. This happens because ACA increased Medicare premiums for people with yearly income over $85,000 (single) or $170,000 (married). The repeal of ACA would also mean the repeal of these higher premiums.
•      Payroll taxes for Medicare Part A (Hospitalization coverage) will also go down for higher income individuals (incomes more than $200,000 (individual) or $250,000 (couple)). This happens because ACA increased payroll taxes on earnings of higher-income workers. The repeal of ACA would also mean the repeal of these higher taxes.

Bottom line—Medicare beneficiaries should stay tuned to the debate over ACA repeal—you have a direct stake in the outcome.