Know the Medicare Basics
What is Medicare? - Medicare is health insurance for:
- People age 65 or older
- People under the age of 65 with certain disabilities
- People of any age with end-stage renal disease (ESRD: permanent kidney failure requiring dialysis or a kidney transplant)
- Run by the Federal Government
- Provides Medicare Part A and Medicare Part B coverage
- You have the option to join a Medicare prescription drug plan (Medicare Part D) to add drug coverage
- You can purchase a Medigap (Medicare supplement insurance) policy sold by private insurance companies to help fill the gaps in Medicare Part A and Medicare Part B coverage (such as coinsurance, copayments and deductible
Establising a strong, fundamental foundation of Medicare knowledge will help you to make informed decisions about your health coverage. Medicare has 4 primary components:
- Medicare Part A - Hospital
- Medicare Part B -Medical Insurance
- Medicare Part C - Medicare Advantage
- Medicare Part D - Prescription Drug Beneftis
Medicare Part A: Hospital Insurance
Medicare Part A pays for the services that hospitals provide, such as the room, nursing services, and supplies for an inpatient stay. In some cases, Part A may pay for a stay in a skilled nursing facility, as well as home health and hospice care. Fortunately, most people do not have to pay a monthly premium for Part A coverage. It is funded by a portion of the Social Security tax you and your employers have already paid.
Part A, however, will not cover all your hospital costs. There is a deductible of $1,068 per benefit period for 2009. You must pay your entire deductible before Medicare Part A will cover any hospital expenses. In addition, if you are hospitalized for an extended period, you will also have to pay a daily coinsurance fee. This is $267 per day for days 61 – 90, and it rises to $534 a day for your 91st day through 150th day.
These costs can build up. If you are hospitalized for 60 days, you’ll only be responsible for your Part A deductible. But if you are hospitalized for 100 days, you’ll pay almost $13,350.
Medicare Part B: Medical Insurance
Medicare Part B pays for the services that doctors provide, in the hospital or in their offices. It also pays for outpatient hospital services, long-lasting medical equipment like wheelchairs and walkers, and other medical services and supplies. Part B is optional. If you decide to enroll in Medicare Part B, you may also apply for a supplemental plan of your choice without answering health questions.
Part B works like most health insurance plans. You pay a monthly premium which is based on your income, that you can even have deducted from your Social Security check. For 2009, you must meet an annual deductible of $135.00. After that, Medicare generally pays 80% of the charges it approves. You typically are responsible for paying the remaining 20% or applicable co-payment, plus any charges that are higher than Medicare’s approved amounts if the provider does not accept Medicare assignment.
Medicare Supplement or “Medi-Gap” plans pay for many health care services and supplies, but original Medicare plans do not cover all. These costs are called “gaps” in Medicare coverage. A Medicare Supplement or “Medi-Gap” policy is designed to help cover these gaps. You pay a monthly premium for this additional coverage.
Medicare Part C: Medicare Advantage
Certain private insurance companies offer Medicare Advantage plans, also referred to as Medicare Part C. Medicare Advantage plans have a contract with Medicare that allows them to administer your Medicare benefits (Part A and Part B), so you have one source for your health care coverage. These plans may also provide enhanced benefits that go beyond those required by Medicare. To help you save more on the cost of your coverage, certain Medicare Advantage plans use provider networks (health maintenance organizations and preferred provider organizations) to reduce your share of the cost for covered services
Medicare Part D: Prescription Drugs
Anyone who is entitled to Medicare Part A or enrolled in Part B will be able to enroll in Medicare Prescription Drug coverage. Here’s how it works: The Centers for Medicare and Medicaid Services (CMS) have chosen a variety of private companies to offer Medicare Prescription Drug Plans (PDPs). Premiums and benefits may vary, based on your geographic region and on the company. However, average premiums are about $38 per month. This premium may be lower for those with limited income and resources. When Medicare designed its standard prescription drug benefit, it focused on providing solid coverage to the majority of people with Medicare. PDPs may offer Medicare’s standard benefit or plans with enhanced benefits.