The ABC's (and D) of Medicare

Medicare is the federal health insurance program for people 65 and older and for some younger adults with permanent disabilities and medical conditions. Prior to 1965, the year in which the Medicare program was established, about half of all seniors lacked health insurance. Today, virtually all people 65 and older have coverage under Medicare, and are eligible for this coverage without regard to their income or medical history. Medicare currently provides health insurance coverage for nearly 50 million Americans.

The Medicare program is comprised of four parts – Part A, Part B, Part C (also known as Medicare Advantage), and Part D. Together, these four parts provide coverage for basic medical services and prescription drugs.

 

Part A (Hospital Insurance): Part A covers inpatient hospital care, some skilled nursing facility stays, home health care, and hospice care.

 

Part B (Medical Insurance): Part B, or the Supplementary Medical Insurance (SMI) program, helps pay for physician services, outpatient hospital care, and some home health visits not covered under Part A. It also covers laboratory and diagnostic tests, such as X-rays and blood work; durable medical equipment, such as wheelchairs and walkers; certain preventive services and screening tests, such as mammograms and prostate cancer screenings; outpatient physical, speech and occupational therapy; outpatient mental health care; and ambulance services.

 

All people with Medicare pay a monthly premium for Part B. Most people who pay a Part B premium have it automatically deducted from their Social Security check. If your income is limited, you may qualify for programs that will pay the Part B premium on your behalf.

 

Part C (Medicare Advantage): Part C allows beneficiaries to enroll in a private insurance plan, called a Medicare Advantage plan. Medicare Advantage plans are managed care plans, such as Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs). Medicare Advantage plans must cover all Part A and B services and usually include Part D (prescription drug coverage) benefits in the same plan. These plans sometimes cover additional benefits not covered by traditional Medicare, such as routine vision and dental care. All plans have an annual limit on your out-of-pocket costs for Part A and B services, and once you reach that limit, you pay nothing for covered services for the rest of the calendar year. The out-of-pocket limit can be high but may help protect you if you need a lot of health care or need expensive treatment. Out-of-pocket costs include deductibles, copayments and coinsurance.

Although Medicare Advantage plans must cover Part A and B services, they can have different rules, costs and restrictions.

 

Part D (prescription drug coverage): In 2006, Medicare began offering outpatient prescription drug coverage under Medicare Part D. Medicare drug coverage is optional for most people with Medicare and is offered only through Medicare private plans. If you have Original Medicare and want Part D drug coverage, you can get a stand-alone prescription drug plan (PDP). There is a monthly premium for Part D. Premiums vary widely among plans, as do the drugs that are covered and the amounts charged for prescriptions.

 

What Medicare Does Not Cover

Medicare does not cover all health care services. For example, Medicare pays for a limited amount of long-term care services; it does not pay for home or community-based care, assisted living facilities, or nursing homes. Medicare also does not cover regular eye exams, most eyeglasses, hearing aids, routine dental care, or most care provided outside the United States.

Insurance to Supplement Original Medicare

To help cover gaps in Medicare coverage and cost sharing such as deductibles and coinsurance, most Medicare beneficiaries supplement their coverage in some way. There are several types of supplemental insurance that work with Original Medicare. Some options include insurance from a former employer, supplemental insurance policies such as Medigap, or programs for people with limited incomes.

 

For more information go to http://www.medicare.gov/Publications/Pubs/pdf/11219.pdf