Fixes to come for the broken Rx system

Helping seniors close Medicare’s ‘doughnut hole’

It’s dreaded by seniors who get their prescription drug coverage through Medicare Part D: the “doughnut hole.”

That’s the name given to the gap in coverage between the standard Medicare Part D benefit and the point at which catastrophic coverage kicks in. Seniors in the doughnut hole must pay 100 percent of cost of their prescriptions.

Right now, for most Part D plans, that can mean up to $3,610 in uncovered drug costs. In the absence of reform, the coverage gap was projected to grow to $6,000 by 2019.

The doughnut hole was inserted into the Medicare prescription drug program in order to save money. For seniors, though, it means struggling to pay for expensive medications out of fixed pension and Social Security checks.

Seniors can breathe a little easier now. The health care reform bill signed into law by President Obama last March will eliminate the doughnut hole completely by 2020.

Meantime, the new law is already helping Medicare Part D enrollees with their prescription drug expenses. This year, seniors who reach the dreaded doughnut hole will receive checks for $250 to defray their out-of-pocket expenses.

According to the Department of Health and Human Services, more than 1.2 million seniors had received checks by mid-September.

Starting in 2011, seniors in the doughnut hole will get additional help. The Department of Health and Human Services has signed agreements with major pharmaceutical manufacturers to provide a 50 percent discount on brand-name drugs for seniors who fall into the coverage gap. The discount kicks in this January. Over time, federal subsidies will reduce the share of costs that seniors must pay for both brand and generic drugs from 100 percent (as it is now) to 25 percent.

Source: UAW Research and Social Security Department

For more information on what health care reform means for seniors (and for all Americans), visit healthcare.gov.

E-mail alert: Have you gotten the one about W-2 tax forms?

In the wake of November’s election, getting the truth out is more important than ever.

This brings us to yet another deliberately misleading mass e-mail you’ve probably received from an old classmate beginning with, “I don’t know how true this is, but …”

Here’s the gist of it:

“Starting in 2011 – next year – the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided. It doesn’t matter if you’re retired. Your gross income WILL go up by the amount of insurance your employer paid for. So you’ll be required to pay taxes on a larger sum of money than you actually received.”

Not surprisingly, this e-mail is an “urban legend” created and circulated widely by opponents of health care reform. So it’s important to have the facts to debunk it.

While it’s true that the value of health care benefits will be reported on W-2s next year, that is the only part of the e-mail that’s accurate. The rest is false. The W-2 reporting is for informational purposes only; this amount will not be added to taxable income and will not be subject to taxes.

Snopes.com, the award-winning website that separates fact from fiction, has tried to put this falsehood to rest for some time now. But like a bad rash, it keeps spreading.

The W-2 reporting is completely separate from the excise tax on high-cost health plans, which does not take effect until 2018 and is paid by plans, not by individuals. (The UAW strongly opposed the excise tax and is working to fix it.)

Here’s the truth: If Americans are motivated by fear, we all lose. If we join together in a spirit of hope and optimism, we will win.

Source: UAW Research and Social Security Department