THE ABC’s (and D’s) OF MEDICARE

Medicare is a federally funded and managed health insurance program for people 65 or older, disabled individuals under the age of 65 and those with end stage renal disease.  It is an entitlement program.  To be entitled to participate one must have paid into the Social Security system a minimum number of quarters.  Those eligible for Medicare may choose the health insurance plan or plans most appropriate for them.

MEDICARE PART A  is hospital insurance.  It covers inpatient care in hospitals, limited, temporary care in a skilled nursing facility, hospice care and limited home health services.  Most people do not pay premiums for Part A because they paid Medicare taxes while working.

MEDICARE PART B is for outpatient care such as doctor’s services, durable medical equipment, emergency room services, diagnostic tests, treatment of medical conditions and preventative services.  Most people pay $96.40 per month for Medicare Part B.  Those with higher incomes may pay more.  The 2009 Medicare Part B premium will not change from the 2008 amount.

Certain services require the patient to pay co-insurance of 20% of the Medicare approved amount.  Other services may be subject to a deductible of $135 per year.  Many people purchase “Medigap” insurance to cover the co-pay and deductible amounts.

MEDICARE PART C is the Medicare Advantage Plan.  Private companies offer health plan options such as HMO’s and PPO’s that are approved by Medicare.  These plans provide all services otherwise covered by Part A and Part B and may cover extra benefits such as vision, hearing, dental, wellness programs and prescription drugs.

Monthly Medicare premiums go to the private company.  The plan may charge different premiums, co-payments and deductibles.  These plans usually restrict coverage to a network of providers.  Out of network costs are higher or not covered at all depending on the plan.

MEDICARE PART D is prescription drug insurance.  Medicare drug plans are run by insurance companies and other private companies approved by Medicare.  Each plan varies in cost and covered drugs.  Although everyone with Medicare is eligible for Part D coverage, Medicare charges a late enrollment penalty to those who do not enroll when first eligible.

Most Medicare D plans have a coverage gap each year (referred to as a “donut hole”).  During this gap, patients must pay all out of pocket costs for drugs.  Once the gap has passed, the plan will pay 100% of costs.  Beginning with each new calendar year, costs are again paid by the company subject to deductible and co-payment until the gap is again reached.

The Centers for Medicare and Medicaid Services provide an excellent annual handbook “Medicare & You”.  Additional information is also available at www.medicare.gov or 1-800-MEDICARE (1-800-633-4247).

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