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Medicare Overview

Jacques Chambers, CLU
Benefits Consultant

Posted August 20, 2012

In addition to providing health coverage for persons age 65 and over, the federal Medicare program also covers persons who are collecting disability benefits from Social Security Disability Insurance (SSDI). However, a person collecting SSDI benefits does not become eligible for Medicare until he/she has collected SSDI benefits for 24 months. With the five month waiting period for SSDI benefits to begin, Medicare doesn’t start until 29 months after the Onset Date of the disability as determined by Social Security.

Just like SSDI, if you didn’t pay into the Medicare system through Med/F.I.C.A. payroll deductions, you will not be eligible for Medicare due to disability. Persons collecting SSI are not eligible for Medicare, although in most states, they will get Medicaid.

Medicare is divided into several parts, explained in more detail below.

For persons on SSDI, your Medicare card will arrive in the mail about two months before the eligibility date. Because Part B is considered such an important part of the coverage, you will be automatically enrolled in it. If you decide you do not need the Part B coverage, you should return your Medicare card and “disenroll” from the Part B coverage. The instructions come with the card.

You should be very careful before dropping Part B however, because there are severe penalties if you later find that you need to obtain the coverage. The only exception is when you are still covered under an employer-provided health plan because of the active employment of your spouse; you can refuse Part B and later enroll without penalty when you lose the employer coverage. Note that coverage under COBRA does NOT count as active employment coverage.

Just because you have other coverage does not mean that you don’t need Medicare Part B. Many individual plans reduce their benefits by what Medicare Part A and Part B would pay, whether or not you are actually enrolled in Part B. Before refusing Part B, talk to a knowledgeable person about your specific situation.

The actual benefits provided by original Medicare, also called fee-for-service Medicare, are, like most health insurance benefits, fairly complicated. You can obtain an excellent description of the Medicare benefits at: http://www.medicare.gov/

Traditional Medicare has four parts:

  • Part A – Hospital: This portion covers hospitalization, skilled nursing facilities, hospice, and some home health nursing.
  • Part B – Medical: This portion covers other medical charges, such as physicians, office visits, surgery, diagnostic testing, durable medical equipment, and other medical charges. It should be noted that under the Affordable Care Act, Medicare Part B now covers many preventive procedures in full without any deductibles or co-pays.
  • Part C – Medicare Advantage Plans are alternates to fee-for-service Medicare and discussed below.
  • Part D – Prescription Drug Benefit added 01-01-2006.

Part A is free assuming you paid the payroll taxes. Part B is considered voluntary and once coverage starts, $99.90 (in 2012) will be deducted from each monthly Social Security payment to pay for it.

Even with both parts of Medicare, not all medical bills will be covered or paid. While Part A covers most hospital charges, there is a $1,156 (in 2012) hospital deductible. After that hospital charges are covered completely for 60 days. There are copayments after that.

Medical charges under Part B are covered only up to 80% of physician’s charges and other covered medical expenses after a $140 annual deductible. However, Medicare pays only 80% of the Medicare Allowable Amount. If your doctor “accepts Medicare assignment,” then the doctor can charge you only 20% of the Medicare Allowable Amount, regardless of his or her regular fee. If your doctor does NOT accept Medicare Assignment, the doctor can bill you the 20% plus an additional 15% of the Medicare Allowable Amount; nothing more.

Part D Prescription Drug Plans are sold by insurance companies. Persons with low incomes may also apply for Extra Help (Low Income Subsidy) to supplement the drug coverage. You can find out which drug plan is best for you by entering your current prescriptions on the Comparison Page at www.medicare.gov. Note that the Part D plan also imposes surcharges if you do not enroll when first eligible.

There are several ways to augment the traditional Medicare coverage including some special programs for persons with limited income. Some of the ways to get assistance with what Medicare does not cover includes:

Trading Traditional Medicare for a Different Medicare Product. Private insurance companies offer alternative Medicare plans that you may join as a replacement to traditional Medicare. These are called Medicare Advantage Plans or Part C Medicare. When you join one of these plans, your regular Medicare stops and the federal government pays the insurance company to provide for your care. In some areas of the country, the insurance company may charge the member a premium as well, but it is usually low.

While the law permits many different types of these Medicare Advantage plans, the most common type available at present is the Health Maintenance Organization (HMO), although there are a few Preferred Provider Organization (PPO) plans in some states. By law, every Medicare Advantage must cover all that traditional Medicare covers, but many plans will offer additional benefits such as eyeglass coverage, hearing aids, some prescription drug coverage and other incentives to join their plan.

At the present time, virtually anyone who is enrolled in both Parts A & B of Medicare may switch their coverage to one of the Medicare Advantage products or back to traditional Medicare or switch drug plans each year. Open enrollment for changing your plans occurs each year from October 15 through December 7, and coverage is effective January 1.

Other Health Insurance Plans. If you have other health insurance, either an individual policy or are able to continue coverage under your employer’s policy, it will coordinate with your Medicare coverage to pay for what Medicare does not cover. This may be a good supplement to traditional Medicare but that varies by plan. Be sure you review your plan to make sure. The primary drawback to these plans is that the premiums are not discounted in cost; even though Medicare may pay most of the bill, and health insurance premiums can be expensive.

Medicare Supplement (Medigap) Plans. Insurance companies offer plans that are specifically designed to supplement traditional Medicare. There are ten different Medigap plan designs. They cover things such as the deductibles, 20% of doctor’s fees, coverage when out of the country, and other charges not covered by Medicare. Three of the plans provide a limited amount of prescription drug coverage as well.

Medicare requires that Medigap plans be offered during an open enrollment period when a person first gets Medicare at age 65. Unfortunately, there is no provision from the federal government for a similar open enrollment for persons under age 65 getting Medicare due to disability.

Some states, however, California and New York being two of the larger ones, have enacted legislation that mandates an open enrollment period for all persons getting Medicare under age 65. Call your state’s Department of Insurance to see what is available in your state.

Medicaid (called Medi-Cal, TennCare and other names in different states). The health program available in each state for the medically needy provides an excellent supplement to Medicare if you can meet the financial limitations to qualify. In addition to paying for what Medicare doesn’t cover, Medicaid will also pay the Part B Medicare premium for you.

Medicaid usually is automatic if you get any payment at all from SSI. If not, you may still be eligible for it, but you must apply for it directly. To enroll in Medicaid, contact your state or county Department of Social Services.

Other federal assistance. The federal government makes available several other programs to assist persons whose income is low, but not low enough to qualify for Medicaid directly. Even though these are federal programs, application must be made at your local Medicaid office.

To qualify for these programs, assets need to be less than $6,680 for a single individual and $10,025 for a couple. The maximum income to qualify varies by program. The primary programs are:

  • Qualified Medicare Beneficiary (QMB) – Maximum income: $931 per month for a single person ($1,261 for a couple). QMB benefits include paying the Part B Medicare premium plus the Medicare deductibles and 20% coinsurance.
  • Specified Low Income Beneficiary (SLMB) – Maximum income: $1,117 per month for a single person ($1,513 for a couple). SLMB pays the Part B Medicare premium.
  • Qualified Individual 1 (QI1) – Maximum income: $1,257 per month for a single person ($1,702 for a couple). QI1 pays the Part B medical premium.

If your income is close to any of the above figures, you should apply as certain types of income and assets may be disregarded for eligibility purposes.

Medicare is a very broad health insurance plan. Most hospitals are happy to serve Medicare patients. Although there have been articles lately about doctors dropping out of Medicare coverage, a great number still participate in it. It is possible to find participating doctors experienced in HCV in virtually all parts of the country.

Like most other health insurance plans, however, Medicare has some gaps that can have a major affect on your finances, so take advantage of whatever programs you may qualify for to help supplement Medicare’s payments.

 

Confused about applying for disability? Click here

[Jacques Chambers, CLU, and his company, Chambers Benefits Consulting, have over 35 years of experience in health, life and disability insurance and Social Security disability benefits. For the past twelve years, he has been assisting people with their rights, problems, and other issues concerning benefits and disability. He can be reached at jacques@helpwithbenefits.com or through his website at: http://www.helpwithbenefits.com.]

 

 

Copyright August 2012– Hepatitis C Support Project - All Rights Reserved. Permission to reprint is granted and encouraged with credit to the Hepatitis C Support Project.

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