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By Christine Benz | 10-11-2010 03:51 PM

What Health-Care Reform Means for Seniors

Retirement specialist Mark Miller says health-care reform will be a net positive for seniors, but they need to carefully follow developments.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. What implications does the health-care reform act have for senior citizens? Here to discuss that question is Mark Miller. Mark is an author, a columnist, and also an expert on retirement planning.

Mark, thanks so much for being here.

Mark Miller: Hi, Christine.

Benz: So, Mark, there have been a lot of rumors flying around, a lot of seniors very concerned about what this health-care reform will mean for them personally.

Let's talk about some of the highlights. You had indicated that there will be some implications for prescription drug plans?

Miller: Yeah, seniors certainly are very concerned about it. I think, when you just sort of netted all out, I think, healthcare reform is a modest plus for Medicare and for seniors. Although I think many people aren't convinced to that yet and the proof will be in the pudding. But with respect to prescription drug plans this coming year what we will see will be a couple of things; one, is the infamous doughnut hole starts to shrink, which is the gap in coverage when you get to a certain level on your annual spend and that starts to close.

We're also seeing more of the prescription drug plans starting to introduce gap coverage, meaning that plans that will include some coverage in that doughnut hole. However, they'll be charging higher premiums for it. So, one thing that people need to look out for this year is if you don't think you're somebody that needs is likely to fall under the doughnut hole…

Benz: Which is spending about how much?

Miller: About $2,800 a year as when you fall into when you come back around 4,500 which is the so-called catastrophic level.

Benz: Right.

Miller: But if you don't think you're likely to get that high then a plan with gap coverage probably is more than you need. It's kind of…

Benz: Going to be more costly than you need.

Miller: Yeah, so you might elect to a cheaper plan without the gap coverage, so we'll give one example of how health-care reform is impacting the drug plans.

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