Provisions effective January 1, 2011:
General provisions

• Tax-free health accounts (FSA, HSA, HRA) may no longer be used to purchase OTC drugs without a prescription.
• Health plans are required to revise their internal appeals processes to include additional rights for members:
  • Right to review information used to make benefit determination
  • Right to receive certain denial notices in a culturally and linguistically appropriate manner with additional information such as denial and treatment codes.
  • Non-grandfathered, self-funded plans must also have an external review process.

Provisions specific to Medicare beneficiaries:

• Pharmaceutical companies will subsidize brand name drugs 50 percent. Medicare beneficiaries will be responsible for the remaining 50 percent. By 2020, beneficiaries will pay 25 percent of the cost of brand name drugs.
• Medicare Part D plans reduced the beneficiary cost share of generic prescriptions by 7 percent. Beneficiary cost share will reduce an additional 7 percent each year until 2020, when beneficiaries will pay 25 percent of the cost of generic drugs.
• Many preventive services covered with no cost sharing for most Medicare beneficiaries.

• If you are affected by the Part D coverage gap, or the "doughnut hole," you are eligible for a $250 rebate check for the 2010 benefit year. There are no forms to fill out; the government will automatically mail these checks to eligible individuals.
• Beginning in 2011, the government freeze on payments to Medicare Advantage may lead plans to reduce benefits, increase premiums or both.
• There is no longer any deductible or copayment cost for certain preventive services for Original Medicare beneficiaries.

The effects will be different for different people - there is no simple answer. But if you are planning to retire soon, you should talk to your employer, your doctor and your insurer about the prospects for changes in your health insurance premiums, the medications you take and the cost options for continuing their use, and ways you can take advantage of preventive care to help avoid serious health problems in the future.

The way Medicare Part D is currently set up, there is a gap in coverage - when the regular coverage limit has been exceeded but a catastrophic coverage limit hasn't been reached yet. In this gap, all costs are the responsibility of the beneficiary. People who find themselves in this situation are eligible for a one-time $250 payment from the government in 2010. Cost-sharing changes over the next several years are intended to close the gap as drug companies and insurers pick up more of the costs. By 2020, insured individuals will simply pay 25 percent for all drugs in the "doughnut hole," up to a catastrophic limit.

There's no simple answer. It depends on which parts of Medicare and/or Medicare Advantage you use and what your treatment and drug needs are. It also depends on the government's decisions in the future around this issue.

Some believe Medicare premiums may decrease under health care reform, and free preventive services may help decrease out-of-pocket costs.

However, we see this against the backdrop of rising general health costs and an aging and increasingly unhealthy population, both of which tend to drive premiums upward. How do medical costs affect what people pay for health insurance?