Medicare

Texas Licensed Medicare Specialist

Medicare is a government run, single payer insurance program passed into law by Congress in 1965 during the Lyndon B. Johnson administration. Former President Harry S. Truman and his wife Bess were the first two recipients of Medicare. The Medicare program grew out of a program designed to provide medical coverage for military families and came to cover all persons over 65 years of age. Since its passage, Medicare has come to include people younger than 65 who have been deemed by the federal government (SSA) to be disabled and others with certain health conditions such as End Stage Renal Disease (ESRD) and Amyotrophic Lateral Sclerosis (ALS). Medicare is funded by a combination of taxes (primarily payroll), premiums, and US General Revenue. Taken together, Medicare alone covers about half of a beneficiary’s medical expenses. The remaining is either covered by the beneficiary, a supplemental plan such as a Medicare supplement policy or a Medicare Advantage policy, or Medicaid (a program under various names for low income individuals run by individual states). The parts of Medicare are as follows:

Part A

This portion of Medicare covers hospitalization. Covered services are generally semi-private room, food, and testing. There is a deductible that is due upon admission ($1340 in 2018). After deductible is paid, Medicare covers all approved hospital costs for 60 days. Beginning on the 61st day of a continuous hospitalization, a daily co-insurance payment comes due ($335/day in 2108) and is required until the 90th day. Beginning on the 91th day of a continuous stay, a beneficiary starts using a period of “Lifetime Reserve Days”. These days can only be used once and come at a higher cost ($670/day in 2018). Once they are used, the beneficiary is responsible for all further hospital costs. Assuming the hospitalization is not continuous, the initial benefit pool of 90 days resets (along with applicable deductibles and co-insurance) after the beneficiary has had no hospitalization or skilled nursing paid by Medicare for a  period of 60 days.

Eligibility for most beneficiaries is age 65 or upon qualification before 65 based on a disability or certain diagnoses (determined by SSA). For most beneficiaries, there is no premium for Part A of Medicare as long as they worked at least 40 quarters and paid Medicare taxes. Non-working spouses will qualify for Medicare Part A by virtue of their working spouse’s record. Those who lack the 40 quarters of work and taxes, may buy into Part A and pay a monthly premium ($232/mo for 30-39 quarters; $422/mo  for fewer than 30 quarters in 2018).

Part B

Part B is Medical Insurance. Part B covers doctor visits, chiropractic care, lab and diagnostic testing, x-rays, limited ambulance services, durable medical equipment, most preventative care and tests, vaccines, home health care, blood transfusions, outpatient hospital services, and medication administered during a doctor visit.  After an annual deductible ($184 for 2018), Part B general covers 80% of the Medicare approved amount for the services.

Eligibility for most beneficiaries is age 65 or upon qualification before 65 based on a disability or certain diagnoses (determined by SSA). There is a monthly premium for Part B ($134/mo in 2018). This amount is adjusted higher or lower depending on your income level. This premium is typically deducted monthly from Social Security payments but, if person is still working and not yet receiving Social Security, can also be billed quarterly by Medicare. Enrollment in Medicare Part B is optional but, if certain criteria are not met while not enrolled, a late enrollment penalty can be applied to a late enrollee.

Part C

Part C is also called Medicare Advantage. Formerly known as Medicare+Choice and codified in Part C in 1997, Medicare Advantage was the name given officially in legislation passed in

2003. These plans are administered by private companies and are required to offer coverage that is meets or exceeds standards set by Original Medicare. These plans often offer extra benefits that are not general covered by Original Medicare such and routine dental, hearing, and vision services. Some plans even cover fitness memberships or transportation to and from a doctor visit. Premiums for these plans vary with many $0 premium options available in many areas. While most plans in force today are HMOs, beneficiaries can choose from PPOs, HMO-POS, 1876 Cost plans, Medicare Savings Accounts, and PFFS plans.

Eligibility for most beneficiaries is age 65 or upon qualification before 65 based on a disability or certain diagnosis. There may or may not be a premium required in a particular plan, but the Part B premium will continue to be required monthly ($134/mo in 2018). You must have Part A and B of Original Medicare to be eligible to apply for most Medicare Advantage options (although, there is an exception).

Part D

Party D is prescription drug coverage. This part went into effect in 2006. Part D coverage is available through both Original Medicare and Medicare Part C.  Part D is available direct from Medicare, but most elect to get Part D from private companies approved by Medicare to offer Part D coverage. Drug formularies can vary widely so it is important that a beneficiary compare their drug list against Part D coverages to choose the best plan. Beneficiaries can choose to utilize a local pharmacy or participate in a mail order service (if offered by the their plan). Generic drugs are generally the least costly and many “preferred” generics are made available with no deductible and, sometimes, even at no cost to encourage use. Other drugs will fall into certain “tiers” and will have varying co-pays corresponding to the “tier”. Generally speaking, the more expensive drugs will be placed in a higher “tier” and, thus, require a higher co-pay amount.

Eligibility for most beneficiaries is age 65 or upon qualification before 65 based on a disability or certain diagnoses (determined by SSA). Premiums are usually required for “stand-alone” Part D plans although premiums can be reduced or waived for those who qualify for Low Income Assistance (LIS). In Medicare Advantage, Part D coverage is usually included in the plan. Depending on the MA plan, there may or may not be a premium due. For those with current, creditable prescription coverage through another source, MA plans without Part D coverage are available. Like Part B, enrollment in Medicare Part D is optional but, if certain criteria are not met while not enrolled, a late enrollment penalty can be applied to a late enrollee. NOTE: Not all coverage outside Part D is acceptable. If you have prescription coverage outside of Medicare Part D, make sure it is considered “creditable” by Medicare to avoid being assessed a late enrollment penalty if and when you do apply.