Medicare, officially known as Title XVIII of the Social Security Act, is the federal government's health insurance program, implemented in 1966 to provide health insurance coverage for people age 65 and older. Eventually the coverage was extended to include the legally blind, people with end-stage kidney disease and younger people who are disabled and who meet the criteria to collect Social Security Disability Benefits.
Enrollment in Medicare is automatic at age 65 for U.S. citizens and legal residents of the United States who have paid Medicare payroll taxes for a minimum of 10 years while employed or who have met other specific guidelines. Also eligible are those who qualify for Railroad Retirement Benefits, and federal, state and local government employees and their spouses. If you are not sure if you qualify for coverage, try Medicare's Eligibility Tool (www.Medicare.gov), call or visit your local Social Security office or call 1-800-772-1213 toll-free a few months before your 65th birthday.
Simple as A, B and C
Medicare consists of : Part A, which is hospital insurance, and Part B, which is medical insurance. In 1997 a new option was added, called Medicare+Choice. This is now known as Medicare Advantage, or MA for short and is commonly referred to as Part C, although the Medicare administration does not label it as such. Medicare Advantage offers expanded benefits for a fee through private health insurance programs such as health maintenance organizations and preferred provider organizations that have contracts with Medicare.
Part A
Most people are automatically enrolled in Medicare Part A, also referred to as “original Medicare,” at age 65. For Part A you don't have to pay any monthly premiums. It pays for inpatient hospital expenses and some other services, such as a skilled nursing facility, home health care, or hospice care. If you don't fully qualify for Part A because you or your spouse didn't work 40 or more quarters in Medicare-covered employment, you may still be able to buy into the plan. If you have 30 to 39 quarters covered, you can buy Part A for a discounted premium. If you have fewer than 30 quarters and you're not eligible for premium-free hospital insurance, you can still buy Part A through Social Security, but your rate will be somewhat higher than if you had 30-39 quarters.
Part B
Part B helps pay for doctors' and outpatient hospital services, physical and occupational therapists and some home health care when medically necessary. This is an optional plan, and you will have to pay a premium to participate. The monthly premium for Part B for 2005 has been raised to $78.20 per month, deducted from your Social Security, Railroad Retirement or Civil Service Retirement check. It has a $110 per year deductible and co-payments of 20 percent of approved services.
If you are 65 or older, still employed and still covered by your employer's health Insurance plan, you may not need Medicare Part B coverage (check with your employer's plan.) But if you are not covered through an employer plan and you don't sign up for Part B during the seven-month period that begins three months before you turn 65, the premium can go up 10 percent for each year that you could have had Part B but elected not to. And, you'll have to pay that extra 10 percent for the rest of your life.
Part C or Medicare Advantage Plans
You need to have Part A and Part B to qualify for Part C. These plans (usually HMO designs like Secure Horizons) which you obtain through a private health insurance company, may offer expanded benefits depending on the type of policy purchased. In most states, if you sign up for Part C the month you turn 65 or within a six-month window after your 65th birthday, you will qualify without having to answer medical questions. After that period, you will have will have to answer a medical questionnaire and can be turned down for health reasons. Medicare's Personal Plan Finder (www.Medicare.gov) is designed to help you narrow down your options and choose a plan.
Traditional Medi-gap Plans
Yet another choice is called Medigap, which is a health insurance policy sold by private insurers to fill the "gaps" in Medicare parts A and B. There are 10 standardized Medigap plans, each of which offer a different set of benefits. When you buy Medigap, you pay a premium to the insurance company in addition to the Part B premium. Similar to Medicare Advantage, you must be enrolled in Medicare A and B. You don't need a Medigap policy if you are in a Medicare Advantage plan, and may not have both Medigap and Medicare Advantage.
“The government will mail you a Medicare information packet, including the Medicare Handbook, before your 65th birthday. If you don't receive it, contact your local Social Security Office or call toll-free at 1-800-772-1213 to request the information.
The Centers for Medicare & Medicaid Services (CMS) have announced the following changes to the Medicare premiums, deductibles and coinsurance paid by beneficiaries that become effective on January 1, 2005. The changes are summarized in the chart below:
| Cost-Sharing Requirement |
2005 |
2004 |
Increase |
First-Day Part A Hospital
|
$912.00 |
$876.00 |
4% |
Daily Part A Coinsurance for the 61st through 90th
Day of a Hospital Stay* |
$228.00 |
$219.00 |
4% |
Daily Part A Coinsurance for Hospital Stays Longer
than 90 Days |
$456.00 |
$438.00 |
4% |
| Daily Part A Coinsurance for the 21st through 100th Day of a Stay in a Skilled Nursing Facility** |
$114.00 |
$109.50 |
4% |
| Monthly Part B*** Premium |
$78.20 |
$66.60 |
17% |
* There is no cost-sharing requirement for the 2nd through 60th day of a hospital stay.
** There is no cost-sharing requirement for the 1st through 20th day of stay in a skilled nursing facility.
*** Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items.
A large portion of the Part B monthly premium increase is attributable to increased payments to physicians and Medicare Advantage plans authorized by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).
Previously Announced Increases:
The MMA also authorized two other significant changes affecting Part B premiums and deductibles:
Effective January 1, 2005, the Medicare Part B deductible will increase from $100 to $110, and be indexed annually thereafter in the same way as the Part B premium (discussed in the next bullet).
Effective January 1, 2007, Medicare Part B premiums will be adjusted based on the beneficiary's income. Individuals with incomes over $80,000 ($160,000 for couples) will pay a significantly higher portion of the Medicare Part B premium. These increases will be phased in over five years.
