Medicare Basics

The Centers for Medicare & Medicaid Services (CMS) is the Federal agency responsible for administering Medicare, Medicaid and several other health-related programs. CMS is part of the U.S. Department of Health and Human Services.

Medicare is the Federal health insurance program for people age 65 or older, under age 65 with certain disabilities, and any age with End-Stage Renal Disease (ESRD is permanent kidney failure requiring dialysis or a kidney transplant).

 

Medicare currently has the following four (4) parts:

Part A (Hospital Insurance)

Part B (Medical Insurance)

Part C (Medicare Advantage Plans, like an HMO or PPO)

Part D (Medicare prescription drug coverage)

 

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Medicare Part A – Hospitalization Benefits

Medicare Part A helps cover inpatient care in hospitals. This includes critical access hospitals and inpatient rehabilitation facilities. It also helps cover hospice care and home health care, and skilled nursing facilities (not custodial or long-term care). You must meet certain conditions to get these benefits.

Cost: You usually don’t pay a monthly premium for Part A coverage if you or your spouse paid Medicare taxes while working. If you aren’t eligible for premium-free Part A, you may be able to buy Part A if you meet the citizenship or residency requirements, and you are age 65 or older. You may also be able to buy Part A if you are under age 65, disabled, and your premium-free Part A coverage ended because you returned to work.

 

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Medicare Part B – Medical Benefits

Medicare Part B helps cover medically-necessary services like doctors’ services,outpatient care, and other medical services. Part B also covers some preventive services. These include a one-time “Welcome to Medicare” physical exam, bone mass measurements, flu and pneumococcal shots, cardiovascular screenings, cancer screenings, diabetes screenings, and more.

Premiums:  The standard Medicare Part B monthly premium will be $99.90 in 2012.  This represents a $15.50 decrease over the 2011 premium, which was previously $115.40.  However, for those Medicare beneficiaries that were enrolled prior to 2011 and paying $96.40 per month, the 2012 premium represents a $3.50 increase.

Please note, some people may pay a higher premium based on their income. The premium adjustment amounts for higher-income beneficiaries will vary depending on their income level.  Please refer to the following tables for higher-income beneficiaries:

 

Table 1: Part B Monthly Premium

Beneficiaries who file an individual tax return:

Beneficiaries who file a joint tax return:

Your 2012 Part B Monthly Premium Is

If Your Yearly Income Is

$99.90

$85,000 or less

$170,000 or less

$139.90

$85,001-$107,000

$170,001-$214,000

$199.80

$107,001-$160,000

$214,001-$320,000

$259.70

$160,001-$214,000

$320,001-$428,000

$319.70

Above $214,000

Above $428,000

 

Table 2: Part B Monthly Premium
Beneficiaries who are married, but file a separate tax return from their spouse and lived with his or her spouse at some time:

Your 2012 Monthly Premium is

Beneficiaries who are married but file a separate tax return from his or her spouse

$99.90

$85,000 or less

$259.70

$85,001-$129,000

$319.70

Above $129,000

 

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Medicare Part C – Medicare Advantage Plans

(Note:  Texas Senior Benefits has made a business decision to NOT market or sale Medicare Advantage plans.  While we do acknowledge there are cases where a Medicare Advantage plan may be a sensible financial alternative, we strongly advise everyone to thoroughly research all available Medicare Advantage plans and carefully consider and fully understand the costs, potential out-of-pocket costs, benefits, coverage and access to providers offered by the plans.)

Medicare Part C or Medicare Advantage plans are private health plan options that are approved by Medicare, but run by private insurance companies. Although Medicare Advantage plans are generally required to cover the same services that Original Medicare covers, the private plans are not “standardized” and benefits and costs can vary greatly from company to company.

To join a Medicare Advantage Plan, you must have Medicare Part A and Part B. You will have to pay your monthly Medicare Part B premium to Medicare. In addition, you might have to pay a monthly premium to your Medicare Advantage Plan

If you join a Medicare Advantage Plan, your Medigap policy won’t work. This means the Medigap policy will not pay any deductibles, copayments, or other cost-sharing under your Medicare Health Plan. Therefore, you may want to drop your Medigap policy if you join a Medicare Advantage Plan. However, you do have a legal right to keep the Medigap policy.

 

There are several types of Medicare Advantage plans currently available:

1 -Medicare Health Maintenance Organization (HMOs) — You are able to visit doctors in the HMO network only. In most cases, you will be required to have a referral to visit a specialist.

2 – Preferred Provider Organizations (PPO) – You are able to see any doctor or specialist that you choose. If they are not in your PPO network, your cost will increase. You usually can see a specialist without a referral.

3 – Private Fee-for-Service Plans (PFFS) – You are able to see any doctor or specialist, but they must be willing to accept the PFFS’s fees, terms, and conditions. You do not have to have a referral to see a specialist.

4 – Medicare Special Needs Plans – These plans are designed for people with certain chronic diseases or other special health needs. These plans must include Part A, Part B, and Part D coverage.

5 – Medicare Medical Savings Account (MSA) – There are two parts to this type of plan:

 

General ADVANTAGES of Medicare Advantage Plans:

Lower Costs  – In some cases, largely dependent on good present and future health, Medicare Advantage overall out-of-pocket costs (premiums, co-pays, deductibles, co-insurance, etc.) can be lower than costs compared to Original Medicare + Medigap + Prescription Drug Plan.

Extra Benefits – Some Medicare Advantage plans may offer benefits not covered by Original Medicare (such as prescription drug coverage, wellness/preventive care, vision, hearing, etc.).

 

General DRAWBACKS of Medicare Advantage Plans:

Current Legislation – The Federal government is closely monitoring current Medicare Advantage programs, and in some cases reducing the subsidies paid to the private insurance companies. This reduction will generally result in changes to the Medicare Advantage plan varying from:

  • Elimination of the Medicare Advantage plan entirely.
  • Increased expenses to the policyholder (by means of increased premiums, co-pays, deductibles, co-insurance, etc.).
  • Plan benefits are reduced (oftentimes without the policyholder fully understanding what benefits were changed).

Higher Costs – In some cases, largely dependent on negative changes/declining health, Medicare Advantage overall out-of-pocket costs (premiums, co-pays, deductibles, co-insurance, etc.) can be higher than costs compared to Original Medicare + Medigap + Prescription Drug Plan.

Networks – Medicare Advantage plans generally have networks of hospitals and doctors that agree to accept the plan, else the policyholder may be faced with increased costs or possibly all costs.

Time Limitations – Medicare Advantage plan policyholders are usually allowed to make changes only during certain and limited time periods.

 

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Medicare Part D – Prescription Drug Plans

Medicare offers prescription drug coverage (Part D) for everyone with Medicare. This coverage may help you lower your prescription drug costs and help you protect against higher costs in the future. It can give you greater access to drugs that you can use to prevent complications of diseases and stay well. To get Medicare drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare.

Premiums:  Each plan can vary in cost and drugs covered. If you join a Medicare drug plan, you usually pay a monthly premium. Also for 2011, high-income beneficiaries need to be aware of a new surcharge on Part D premiums. High-income seniors who have a Medicare Part D prescription drug plan will pay an additional $12 to $69.10 per month on top of their regular Part D premiums, depending on their income. If you decide not to join a Medicare drug plan when you are first eligible, you may pay a penalty if you choose to join later. If you have limited income and resources, you might qualify for extra help paying your Part D costs. For more information about extra help with prescription drug costs and how to apply, visit www.socialsecurity.gov or call Social Security at 1-800-772-1213.

 

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Services Not Covered by Original Medicare (Parts A and B)

  • Long Term Care services – In certain instances Medicare only pays for limited and medically necessary skilled nursing facility or home health care. It does not pay for:
    • Custodial care, such as help walking, getting in and out of bed, dressing, bathing, toileting, shopping, eating, and taking medicine (these are referred to as activities of daily living)
    • More than 100 days of skilled nursing facility care during a benefit period following a hospital stay (the Medicare Part A benefit period begins the first day you receive a Medicare-covered service and ends when you have been out of the hospital or a skilled nursing facility for 60 consecutive days)
  • Homemaker services
  • Private-duty nursing care
  • Routine eye care and eyeglasses (with certain exceptions).
  • Acupuncture
  • Custodial Care
  • Dental Care
  • Dentures
  • Experimental Procedures
  • Routine hearing examinations and hearing aids
  • Routine Physical Examinations
  • Most Prescription Drugs
  • Convenience Items
  • Immunizations (with certain exceptions) See our article on Medicare Preventative Benefits
  • Routine Foot Care (with certain exceptions)
  • Services Received Outside of the U.S. (with certain exceptions)
  • Services Rendered by Relatives
  • Medically Unnecessary Services or Items

Note: Most of the information provided on this page is taken from resources published by CMS (Centers for Medicare & Medicaid Services).  CMS is the Federal agency responsible for administering the Medicare, Medicaid and several other health-related programs.