The Medicare Reform Act of 2003

Officially known as the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, legislation signed into the books as Public Law 108-173 revised several portions of the federal Medicare program, the health insurance program designed for senior citizens. The bulk of the new 2003 law involves prescription drug coverage. Other changes included adding some preventive care services to standard coverage as well as initiating guidelines for health savings accounts.

Prescription Drugs

• The Medicare Act of 2003 added provisions to assist eligible recipients with covering the costs of prescription drugs. The prescription drug card was made available to individuals eligible for Medicare Part A or Part B. Medicare participants could choose to enroll in a separate drug coverage plan or include it in a Medicare Advantage plan. The new drug coverage was set up on an annual enrollment period, like the existing parts of the program. Enrollees choose a plan for drug coverage with premiums that vary by location and coverage benefits.

Preventive Medicine

• Preventive services were added to the covered benefits under the Medicare Reform Act of 2003. Among the added services were cholesterol screenings every two years and diabetes screenings for patients with high-risk factors. In addition, new enrollees to Part B (medical insurance) of the Medicare program were entitled to receive a physical examination if they did so within six months from the date of their enrollment. Only those who enrolled in Part B after January 1, 2005 are eligible.

Part B Premium Increase

• As part of the 2003 Medicare legislation, new premium rates were set that began in 2007. Based on income, single enrollees with annual incomes exceeding $80,000 and married couples with incomes exceeding $160,000 had their portion of the Part B premium increased. Medicare beneficiaries with incomes above $100,000 paid yet a higher percentage of the premium rates. The law also stipulated that income levels would be adjusted annually using the Consumer Price Index.

Medicare Part C

• Medicare Part C, formerly referred to in Social Security Administration literature as "Medicare+Choice," took on the name of "Medicare Advantage" in the wording of the reform act. In addition, provisions were included to foster the participation of more private insurance companies as providers in the Medicare Advantage program.

Health Savings Accounts

• The implementation of health savings accounts (HSA) as a health insurance option for Americans began with the Medicare Act of 2003. A health savings account provision encourages U.S. citizens to set aside a portion of their income into a special tax-free account to be used for unforeseen health care expenses. The law stipulated that employers could contribute to the HSA without deducting the contributions from the employee's salary.