Medicare Part D Premiums to Remain Steady, But Cuts to Nursing Homes Could Reach $65 Billion

With the healthcare system in a state of flux, seniors are left to wonder how their coverage may change under Medicare over the next few years. The good news, according to Reuters, is that seniors enrolled in the Medicare Part D prescription drug program can expect their premiums to remain steady over the next year. But that doesn’t mean there many not be major changes coming down the line. It appears the nursing home industry is taking the most hits, with cuts projected to reach $65 billion over the next 10 years.

Skilled Nursing industry slapped with $4 billion in cuts by 2014

Affordable Care Act aims to close the doughnut hole

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Long Term Living magazine reports that new budget-reducing regulations from the Centers for Medicare and Medicaid Services (CMS) are overlapping with federal regulations, resulting in $4 billion in reductions to nursing homes between 2013-2014. Further cuts coming down the line could result in a total loss of $65 billion in funding for the skilled nursing industry over the next decade.

The data was compiled by Avalere and reflects the impact of the Affordable Care Act, case mix adjustments made by CMS and legislative cost-reduction efforts. These steep financial impacts will make it increasingly difficult for the skilled nursing sector to compete with other health providers in terms of hiring qualified staff, which will eventually impact the quality of care.

Affordable Care Act takes a bite out of the “doughnut hole”

The Affordable Care Act seems to be working in favor of seniors, at least in terms of out-of-pocket costs. Because the government subsidizes the difference between the premiums participants are required to pay and the actual cost of a program’s premium, seniors and other Medicare Part D participants won’t be subject to an out-of-pocket premium increase in 2013. Largely, premiums actually paid by participants have remained relatively stable over the past several years; the premiums averaged $30.76 monthly in 2011, and estimates project $30 premiums for 2013.

The aim of the healthcare reform law is to close the “doughnut hole,” or the gap in drug coverage that creates significant out-of-pocket expenses for seniors if utilization reaches a certain level during the year. The goal is to fully close this coverage gap by 2020, and measures to date have resulted in a savings of about $3.9 billion for Part D participants.

Future remains uncertain for seniors, skilled nursing industry

Still, political agendas have been taking center stage in terms of U.S. healthcare for a number of years, and that’s not likely to change anytime soon. Efforts to reduce costs inevitably result in cuts somewhere, and seniors will be impacted in one way or another no matter how the cuts are broken down. The good news is that for now, seniors are benefiting from stable out-of-pocket costs for the most part. Fortunately, more and more seniors are already opting for alternative long-term care options, such as assisted living and home care, which may not be as severely impacted by drastic cuts as the skilled nursing industry.


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