What Are The Different Parts Of Medicare And What Do They Cover?
It is currently Open Enrollment season for Medicare. You may have seen this on the news or noticed a sudden increase in commercials about health insurance. Open enrollment pertains to signing up for private insurance plans, or for changing from one plan to another. For some reason everyone does this in November, not just those plans which are tied to Medicare. This includes Medicare Advantage plans under Part C of Medicare and prescription drug plans under Part D of Medicare, as well as Medicare supplemental plans, called Medigap plans, which pay for things which Medicare doesn’t, such as deductibles, coinsurance and other things.
Starting with the basics
1. If a wage earner isn’t already entitled to benefits, then he or she signs up for Medicare generally the month he or she attains age 65(*). Applications can be filed from 3 months before that month to three months after, but if the applicant files after that month, SSA will delay entitlement for Medicare. If one is already entitled to Retirement benefits, that person is automatically enrolled in Medicare the month after the month he or she attains age 65(*).
(*) If one’s birthday is the 1st, then SSA considers that he or she attained age 65 the prior month, so the month that actually contains his or her 65th birthday is the date of entitlement to Medicare, not the following month, as is usual.
2. If one is already entitled to either retirement or survivor benefits, or to disability benefits, (i.e., is already a beneficiary) the beneficiary is automatically signed up for Part A and Part B. If the beneficiary is receiving retirement or survivors benefits, he or she will automatically be enrolled with an entitlement date being the month following the month of attainment of age 65, as described above. If the beneficiary is already entitled to disability benefits, he or she will automatically be enrolled for Part A and Part B with an entitlement date being the 25th month of entitlement to disability benefits. In either case, the beneficiary has to make some decisions at this time.
Part A (otherwise known as Health Insurance, or HI): Part A helps covers the following. There are deductibles, like any health insurance.
* Inpatient care in hospitals
* Inpatient care in a skilled nursing facility (not custodial or long-term care)
* Hospice care services
* Home health care services
* Inpatient care in a Religious Non-medical Health Care Institution
Part A is free.
Part B (otherwise known as Supplemental Medical Insurance, or SMI): Part B helps cover medically necessary services such as:
* Doctor’s services and tests.
* Outpatient care
* Home health services
* Durable Medical Equipment (DME)
* Other Services and Preventive Services
There is an annual deductible amount for Part B.
There is a premium for Part B. In 2011, it is $96.40 per month, which is deducted from the Social Security check. The premium will increase to $99.90 in 2012. In most states, if a person is eligible for both Part B and Medicaid, the state will pay the Part B premium. This is called “State Buy-In”
Doctors who accept Medicare patients are required to accept Medicare’s determination of what they can charge. Medicare pays 80% of this and the beneficiary is responsible for the rest.
Part D, the Medicare Prescription Program.
This is administered for Medicare by private insurance companies approved by Medicare. They have differing premiums (in southern California, these range from about $30 per month up to about $115 per month, the average around $50 or so.) They also have differing rules about deductibles, copayments and or coinsurance, and degree of coverage during the coverage gap period, called the “donut hole.”
This program works as follows, in 2011.
The first $310 of drug costs are paid by the beneficiary. This is the Part D deductible. Some plans require the beneficiary to meet a lesser deductible or no deductible at all.
After this, the beneficiary pays a copayment an/or coinsurance and the plan pays the rest, until the total amount paid by both, including the deductible, if any, reaches $2,840. At that point, the coverage gap begins. Up through 2010, coverage stopped at that point, and did not resume until the beneficiary qualified for catastrophic coverage. This occurred when the beneficiary had spent $4,550 out-of-pocket for the year. After that, the beneficiary only had to pay a small copayment for each drug through the end of the year.
In 2011, during the coverage gap, the beneficiary gets a 50% discount on covered brand-name prescription drugs. This discount is considered to be part of the beneficiary’s out-of pocket-expenses, making it easier to get out of the coverage gap.
In 2012, during the coverage gap, the beneficiary will continue to get the 50% discount on covered brand-name prescription drugs. As in 2011, this discount is considered to be part of the beneficiary’s out-of pocket-expenses, making it easier to get out of the coverage gap. In addition, the beneficiary will pay 86% of the cost of covered generic drugs. These payments will also be part of the beneficiary’s out-of-pocket expenses. In 2012, the beneficiary qualifies for catastrophic coverage when he or she has spent $4,700 out-of-pocket for the year. This ends the coverage gap.
By 2020, the coverage gap will be eliminated. This is part of the 2009 Affordable Care Act, Obamacare to the conservative nitwits.
The various health care plans may offer some additional coverage during the coverage gap. Generally speaking the plans with higher premiums pay better benefits.
What Do I Need To Decide?
The first decision the beneficiary has to make either when his or her entitlement to Medicare begins or during the annual open season is whether to go with traditional Medicare or Medicare Advantage.
* Traditional Medicare consists of Part A and Parts B and/or D, if the beneficiary wants them, along with some kind of Medigap insurance if the beneficiary wants that. Part B will cost $99.90 per month in 2012. Part D premiums can vary quite a bit, as described above. Medigap insurance is something the beneficiary obtains on his or her own; Medicare has no part to play in this decision, although it does provide information about them. See below.
* Medicare Advantage, also referred to as Part C or MA, consists of Parts A and B, along with enrollment in a privately administered, Medicare approved plan. In southern California, most of these plans have little or no premiums, a few have premiums up to about $200 per month. Most of them cover prescription drugs using Part D rules, so there is no need to enroll separately in Part D, unless you pick a Medicare Advantage plan without prescription drug coverage. If you enroll in Medicare Advantage, you cannot buy a Medigap plan, and, according to Medicare, you don’t need it anyway. Most Medicare Advantage plans are either HMOs or PPOs (the great majority are HMOs.) There were only a couple of Fee For Service plans in southern California, and they were restricted to certain unspecified counties.
Medicare puts out a very good publication every year called “Medicare And You.” Newly enrolled Medicare beneficiaries get a copy automatically when they enroll. All Medicare beneficiaries get a copy each year. People who aren’t enrolled in Medicare can obtain a copy by calling 1-800-MEDICARE (633-4227) or view it online at this URL: Medicare And You. This document is about 150 pages long, but it is very informative and easy to read. The .pdf file does not have local price and coverage tables, but the prices and coverages are obtainable at Medicare.gov – The Official U.S. Government Site For Medicare.
This is the top of the home page. Right in the center is a section entitled “Finding Plans.” The first two choices are links to “Compare Drug And Health Plans” and “Compare Medigap Plans.” Click these and you will be taken to a page where you can obtain information about the drug and health plans, and the Medigap plans available in the local area, which it determines from the ZIP Code which you enter. The paper book has tables in the back for the area where the book is mailed to (although I don’t know if copies requested by non-beneficiaries have these tables.) They may just get a generic, national copy, but the information is on-line.