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Maneuvering though the Medicare Maze

Maneuvering though the Medicare Maze

Part 1: Overview

Medicare is health insurance for people 65 or older, people under 65 with certain disabilities, and people of any age with End-Stage Renal Disease (ESRD) but it works like no other insurance you have known.  Medicare is not a one-size-fits all system.  Rather, it is made up of several parts with each part covering different aspects of health care costs.  There are many decisions to be made and much to understand with regards to deciding if and/or when to sign up for the various parts of Medicare.  There are also various deadlines for enrollment for the various parts with potentially expensive and permanent penalties for failing to meet them.

A good place to start is an overview of the various parts and what they cover:

Medicare Part A (Hospital Insurance) helps cover:

  • Inpatient care in hospitals and certain limited skilled nursing facility care
    • Services of professional nurses
    • Semiprivate room
    • Meals
    • Other services provided directly by the hospital or nursing facility including lab test, prescription drugs, medical appliances and supplies and rehabilitation therapy
    • Hospice care
    • Home health care

Medicare Part A might more accurately be called coverage primarily for nursing care. It does not cover the services received from doctors, surgeons, or anesthetists while in a health care facility.  It also does not cover custodial or long-term inpatient care in a skilled nursing facility.

The vast majority of people in Medicare are eligible for Part A at no cost for premiums.  It is essentially paid for in advance by the Medicare payroll taxes contributed from earnings while working. It is “free” unless the enrollee or their spouse has not accumulated 10 years of work credits in Social Security.  Those without enough work credits will pay a premium for Part A coverage. However, Part A services are not free.  The patient is responsible for deductibles and co-payments for specific services.

Medicare Part B (Medical Insurance) helps cover:

  • Medically necessary services from doctors and other health care providers
  • Outpatient care
  • Some inpatient care when patients are placed under observation instead of being formally admitted
  • Approved Home health care not covered by Part A
  • Durable medical equipment
  • A wide range of preventive healthcare services (with little or no cost)

Unless income is low enough to qualify for assistance from the resident state, enrollees must pay a monthly premium to receive Part B services.  If modified adjusted gross income as reported on the enrollee’s IRS tax return 2 years ago was above a certain amount the enrollee may be required to pay more.

If yearly modified adjusted gross income in 2015 was:

File individual tax return File joint tax return File married & separate Monthly premium in 2017
$85,000 or less $170,000 or less $85,000 or less $134
Above $85000 up to $107,000 Above $170,000 up to $214,000 N/A $187.50
Above $107,000 up to $160,000 Above $214,000 up to $320,000 N/A $267.90
Above $160,00 up to $214,000 Above $320,000 up to $428,000 Above $85,000 up to $129,000 $348.30
Above $214,000 Above $428,000 Above $129,000 $428.60

 

In addition to the monthly premium the enrollee pays a share of the cost of most Part B service.  This amount is almost always 20% of the Medicare approved cost.

A person must be a U. S. citizen or be lawfully present in the U.S. to get Medicare-covered Part A and/or Part services.

Part A and Part B together form what is known as traditional or original Medicare.  The other parts make up fee-for-service Medicare.

The enrollee can decline Medicare B coverage if they have other health insurance that meets Medicare requirements.  If the other coverage is lost, he/she can enroll in Medicare Part B with no penalty if application is made on a timely basis.

Medicare Part C (Medicare Advantage):

Medicare Part C is also called fee-for service Medicare. This is a Health Maintenance Organization (HMO) type coverage.

  • Includes all benefits and services covered under Part A and Part B
  • Usually includes Medicare prescription drug coverage (Part D) as part of the plan
  • Run by Medicare-approved private insurance companies that follow rules set by Medicare
  • May include extra benefits and services for an extra cost

Medicare Part D (Medicare prescription drug coverage):

This is optional Medicare coverage and usually requires a premium.

  • Helps cover the cost of prescription drugs
  • Run by Medicare-approved private insurance companies that follow rules set by Medicare
  • May help lower prescription drug costs and help protect against higher costs in the future
  • Generally an HMO or PPO

Medicare Supplement Insurance (Medigap):

Original Medicare pays for many, but not all, health services and supplies.  Medicare Supplement Insurance policies, sold by private companies, can help pay some of the health care costs that traditional Medicare doesn’t cover, like copayments, coinsurance and deductibles.

Every Medigap policy must follow federal and state laws and must be clearly identified as “Medicare Supplement Insurance”.  Insurance companies can sell only a “standardized” policy.  All policies offer the same basic benefits, but some offer additional benefits so you can choose which one meets your needs.

  • The enrollee must have Part A and B
  • There are monthly premiums
  • Covers only one person
  • Can’t have prescription coverage in the Medigap plan and also have Part D
  • Costs can vary and may go up with age
  • Good all over the country when using doctors and other providers who accept Medicare payment

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