2008 MEDICARE BENIFITS OVERVIEW
Medicare in General
Medicare was founded in 1965 to serve as a safety net to help cover some of the costs associated with health care for older Americans and those with certain disabilities.
It’s an insurance program administered by the Centers for Medicare and Medicaid Services, an agency of the federal government.
You are typically eligible for Medicare after 10 or more years of working and paying Social Security taxes. To begin receiving Medicare benefits, you must be age 65 and a U.S. citizen or permanent resident. If younger than 65, you can qualify for Medicare if you have end-stage renal disease or certain disabilities.
Medicare has two parts: Part A covers hospital benefits and Part B covers all other medical care.
Medicare Part A (Hospital Insurance)
Part A helps pay for services in Medicare-certified hospitals, skilled nursing facilities, hospice, and some home healthcare agencies. Most people do not have to pay an enrollment fee for Part A if they meet the qualifications
You can get Part A at age 65 without having to pay premiums if:
- You are already receiving retirement benefits from Social Security or the Railroad Retirement Board.
- You are eligible to receive Social Security or Railroad benefits but have not yet filed for them.
- You or your spouse had Medicare-covered government employment.
If you are under 65, you can get Part A without having to pay premiums if:
- You have received Social Security or Railroad Retirement Board disability benefit for 24 months.
- You are a kidney dialysis or kidney transplant patient (after 28 months).
Medicare Part B
Even if you qualify for Part A without paying a premium, you must pay for Part B if you want it. There is a monthly premium associated with Part B coverage. Part B covers care outside of hospitalization such as physician/surgeon services, outpatient services, ambulances, physical therapy, mental health, and some medical supplies and equipment. Part B does not cover routine checkups, hearing aids, or other “extras.”
As baby boomers reach their golden years, programs like Medicare may not be able to bear the strain of the sheer number of people requiring all types of medical care.
Medicare Part B Medical Insurance Premium
Part B: (Medical Insurance) Premium
Part B: (covers Medicare eligible physician services, outpatient hospital services, certain home health services, durable medical equipment)
- $135.00 per year. (Note: You pay 20% of the Medicare-approved amount for services after you meet the $135.00 deductible.)
Part B: $96.40 per month* (see Medicare Part B 2009 monthly premiums in our library for additional information)
Skilled Nursing Facility Coinsurance
$133.50 per day for days 21 through 100 each benefit period.
Medicare Part C Option
Medicare Part A and Part B roughly pay for 75% of all your medical cost. To cover the other 25% or so of your medical bills you will want to look at Part C. You have two different options to choose from as shown below.
Option 1: Medicare managed care plans
These “Medicare + Choice” plans are like HMOs and PPOs. In most cases, you can only go to doctors or hospitals that are part of the plan and you need a referral to see a specialist or you may not depending on the plan you choose. These plans must cover all Part A and Part B benefits, and some cover extras like prescription drugs, dental services and eye exams.
These plans are called by different names:
- Medicare managed care plans
- HMO and PPO plans for seniors
- Private Fee-for Service plans
- Medicare Advantage plans
These plans are typical to individual plans for those who are under 65.
Option 2: Medigap
You may also be able to purchase supplemental coverage called Medigap insurance. These plans are regulated by Congress and are the stronger option to go with since they cover more out of pocket when you are sick. Yes, the premium is higher than option 1, in general, but with better coverage.
Another name for Medigap: Medicare Supplement
These plans will cover you nationwide and the most popular plan on a Medicare Supplement option is Plan F.
Medicare Part D – Prescription Drug Basics
Program began January 1, 2006.
Coverage of Medicare Part D benefits is provided by private companies.
Medicare pays a share of the program costs.
Individuals entitled to Part A and/or enrolled under Part B are eligible to enroll in Part D plans.
Part D plan coverage is provided through network pharmacies in the Part D plan?s service area.
Part D plans commonly use a variety of prescription drug benefit management tools, including:
- A formulary: A list of drugs covered by the plan
- Co-pay tiers: A set amount for each prescription. Many plans group drugs into 3 or 4 tiers with lower tiers costing less than higher tiers, for example:
- Tier 1: Generic drugs
- Tier 2: Preferred brand-name drugs
- Tier 3: Non-preferred brand-name drugs
- Tier 4: High-cost drugs
By law, Part D plans are permitted to cover any prescription drugs and biologicals that:
- Must be covered by states that provide Medicaid prescription drug benefits
- Many Part D plans do not cover all of these drugs because in some cases several similar drugs are available to treat the same medical condition.
- Plans include the drugs they will cover on formularies that are developed by pharmacists, doctors, and other experts.
Part D plan formularies must include:
- At least two drugs in each therapeutic category
- Generic and brand-name drugs.
By law, Part D plans are not permitted to include the following under their Part D covered benefits:
- Drugs for weight loss or gain, fertility, cosmetic purposes, symptomatic relief of cough and colds
- Erectile dysfunction drugs (when used for sexual dysfunction)
- Non-prescription drugs
- Part B covered drugs
Part D plans are permitted to offer supplemental benefits that cover drugs not covered under Part D.
*At this time, plans must cover benzodiazepines and barbiturates if used to treat epilepsy, cancer, or a chronic mental health disorder
Medicare – When do premiums change?
New Medicare premium and coinsurance rates come out each fall and become effective in January.
If you get Social Security premiums or Railroad Retirement benefits, new rates are sent to you each year with your December cost of living adjustment notice. You can get new Medicare rates each fall on this website or by calling 1-800-MEDICARE (1-800-633-4227).