Learn About the Affordable Care Act

Changes that Save Medicare Money

Saving Medicare money

Reducing the extra cost of Medicare Advantage plans

In 2009:

  • 78% of seniors were enrolled in a traditional Medicare plan (A or B)
  • 22% were enrolled in a Medicare Advantage plan offered by private insurers (MA)

Private insurance companies are paid from the government's Medicare Trust Fund.

The federal government pays at least $1,000 more per person for the same benefits from a private MA plan than a traditional Medicare plan. Some MA plans provide extra benefits, such as eyeglasses or hearing aids. They are not required to continue this.

The extra money spent on these plans affects everyone. That's because everyone's Medicare premiums are increased to cover the extra cost of Medicare Advantage plans. Over time, the ACA will reduce payments to MA plans until Medicare spends about the same amount on seniors in traditional Medicare plans and seniors with Medicare Advantage plans. This will save Medicare money and help preserve the Trust Fund for future generations. Medicare Advantage plans may not cut guaranteed benefits or increase Medicare Part B premiums above the legal amount.

Encouraging health care provider productivity

How much Medicare pays your doctors is increased each year to cover inflation. In 2010 the rate was increased less than the amount of inflation to encourage doctors to be more efficient in how they provide healthcare.

The Center for Medicare and Medicaid Innovation is working to help doctors with this. The Center is researching, developing and testing new payment systems. Their goal is to find a system that best coordinates care between health care providers.

Increasing money to fight Medicare fraud

Some health care providers bill Medicare illegally for unneeded or unperformed services. Doing this is fraud, which is a crime. The ACA increases efforts to find fraud and get the money back.

Creating an Independent Payment Advisory Board

The ACA created the Independent Payment Advisory Board (IPAB). The Board recommends how Medicare can save money to continue providing care for future generations. The IPAB's suggestions for saving must be about better ways to pay providers. It cannot recommend:

  • Rationing your care
  • Changing your benefits
  • Eligibility
  • How much you pay out-of-pocket

Freezing the high income amounts that cause some seniors to pay higher Part B premiums

Seniors pay the standard Medicare monthly premium if their income is

  • Above 120% of the federal poverty level (FPL), and
  • Below the high-income threshold (in 2013 it is $85,000 for individuals and $170,000 for couples).

Seniors with high incomes ($85,000 for individuals and $170,000 for couples) pay higher monthly premiums. In the past the income amounts have increased every year to cover inflation. However, from 2011-2019 the high income amounts will stay at the 2010 levels. This means that any seniors whose income increases above those amounts will have to pay higher premiums. This may affect about 2% of seniors.