Those who have Medicare and buy prescription drugs using Medicare Part D may be eligible to receive a $250 rebate in 2010 to help by lessening the impact of the "doughnut hole" - the coverage gap in which beneficiaries pay the full cost of their prescriptions out-of-pocket. The rebate will be mailed automatically to those who are eligible.

The gap in Medicare Part D prescription coverage, which is addressed by the $250 rebate in 2010, will gradually narrow starting in 2011 when pharmaceutical companies begin discounting 50 percent of the cost of a Part D drug. Eventually, Part D members will be responsible for 25 percent of the cost of Part D medicines (generic and brand-name) when they are in the "doughnut hole."

The federal government plans to reduce payments to Medicare Advantage plans starting in 2012, based on the assumption that they are currently over-funded. However, many plans offer richer benefits because of the current payment levels. Members of these plans may see premium increases and/or service reductions as a result.

The reform law eliminates out-of-pocket costs for most preventive services covered by Original Medicare. Starting in 2011, Original Medicare recipients will pay no deductible or copayment for services such as wellness visits and personalized prevention plans.

Part D prescription drug plans are required to include on their formularies all Part D drugs within the following six protected categories or classes:

• Anticonvulsants
• Antidepressants
• Antineoplastics
• Antipsychotics
• Antiretrovirals
• Immunosuppressants

Starting in 2014, a Medicare Advantage plan must demonstrate that at least 85 percent of its revenues are going toward member benefits. If a plan does not meet this requirement, it must pay the government a penalty. Repeated annual violations of this requirement could lead to a new enrollment freeze or termination of the plan.

Effective for plan year 2012, there will be an Annual Election Period (AEP) that will run from October 15 to December 7, instead of November 15 to December 31. This means beneficiaries will have a longer amount of time to make an initial enrollment decision. It also means that Plans have more time to make sure that all members are enrolled and have all the information they need in-hand (ID cards, booklet, etc.) before the plan year begins on January 1.

Additionally, the current open enrollment period during the first three months of each year will be eliminated. Beneficiaries will no longer be able to switch from their Medicare Advantage plans into other Medicare Advantage or prescription drug plans. Instead, there will be a period from January 1 to February 15 during which beneficiaries can leave Medicare Advantage plans and choose Original Medicare and prescription drug plans.

Starting in 2011, Social Security will assess a charge to Medicare beneficiaries who are above a certain income level and who choose a Medicare Part D plan. This high-income assessment will work the same way that it currently works for the high-income premium assessment for Part B participants - that is, it will be a percentage of the base premium determined by the government each year. This means the cost of Medicare may rise for beneficiaries with above average incomes or net worth.

Previously, employers who provided qualified drug coverage even after the enactment of Medicare Part D were given a federal rebate of 28 percent of that cost - and were also entitled to deduct the full cost from their taxes, as if they had received no rebate. Under the new law, employers cannot include that 28 percent in their tax deduction.

The health care reform legislation requires enhanced enforcement and screening procedures for health care providers in an attempt to reduce waste, fraud and abuse in Medicare, Medicaid, and other sectors of the health care system. These efforts are intended to fight health care fraud and help reduce the overall costs of health care leading to lower premiums for all Americans.