Medicare FAQ

Who is eligible for Medicare and what medical coverage they'll receive.

What is Medicare?

Medicare is a federal government program that helps older folks and some disabled people pay their medical bills. The program is divided into two parts: Part A and Part B. Part A is called hospital insurance and covers most hospital stay costs, as well as some follow-up costs. Part B, medical insurance, pays some doctor and outpatient medical care costs.

Who is eligible for Medicare Part A coverage?

Most people age 65 and over are covered under Medicare Part A for free, based on their work records or on their spouse's work records.

People over 65 who are not eligible for free Medicare Part A coverage can enroll in it and pay a monthly fee for the same coverage. The premium base rate depends on the number of work credits you've earned. However, this rate increases by 10% for each year after your 65th birthday that you wait to enroll. If you enroll in paid Part A hospital insurance, you must also enroll in Part B medical insurance, for which you pay an additional monthly premium.

How much of my bill will Medicare Part A pay?

All rules about how much Medicare Part A pays depend on how many days of inpatient care you have during what is called a "benefit period," or spell of illness. The benefit period begins the day you enter the hospital or skilled nursing facility as an inpatient and continues until you have been out for 60 consecutive days. If you are in and out of the hospital or nursing facility several times but have not stayed out completely for 60 consecutive days, all of your inpatient bills for that time will be figured as part of the same benefit period.

Medicare Part A pays only certain amounts of a hospital bill for any one benefit period -- and the rules are slightly different depending on whether the care facility is a hospital, psychiatric hospital, or skilled nursing facility or whether care is received at home or through a hospice.

All people covered by Medicare Part A must pay an initial amount before Medicare will pay anything. This is called the hospital insurance deductible. The deductible is increased every January 1.

 

Who is eligible for Medicare Part B coverage?

The rules of eligibility for Part B medical insurance are simpler than for Part A: If you are age 65 or over and are either a U.S. citizen or a permanent resident who has been here lawfully for five consecutive years, you are eligible to enroll in Medicare Part B medical insurance. This is true whether or not you are eligible for Part A hospital insurance.

What kinds of costs does Medicare Part B cover?

Part B medical insurance is intended to help pay doctor bills for treatment in or out of the hospital. It also covers many medical expenses you incur when you are not in the hospital, such as the costs of necessary medical equipment and tests and services provided by clinics and laboratories.

The lists of services specifically covered and not covered are long, and do not always make a lot of common sense, but making the effort to learn what is and is not covered can be important. You may get the most benefits by fitting your medical treatments into the covered categories whenever possible.

Part B insurance pays for:

• doctor services (including surgery) provided at a hospital, a doctor's office, or your home
• mammograms, pelvic exams, bone density tests, and PAP smears for women
• an annual flu shot
• a one-time physical exam (called a "wellness exam") done within six months of when you enroll in Medicare Part B
• medical services provided by nurses, surgical assistants, or laboratory or X-ray technicians
• outpatient hospital treatment, such as emergency room or clinic charges, X-rays, injections, and lab work
• an ambulance, if required for a trip to or from a hospital or skilled nursing facility
• drugs or other medicine administered to you at a hospital or doctor's office (for other drugs, Medicare currently offers drug discount cards, until 2006 when it will begin providing partial drug coverage)
• medical equipment and supplies, such as splints, casts, prosthetic devices, body braces, heart pacemakers, corrective lenses after a cataract operation, glucose monitoring equipment, and therapeutic shoes for diabetics, and equipment such as ventilators, wheelchairs, and hospital beds
• some kinds of oral surgery
• some of the cost of outpatient physical and speech therapy
• a limited number of services by podiatrists and optometrists
• some care and counseling by psychologists, social workers, and daycare personnel
• some preventative screening exams, such as for cancer, glaucoma, and osteoporosis; as well as diabetes and heart disease, but only if your doctor says you're at risk for them 
• manual manipulation of out-of-place vertebrae by a chiropractor
• Alzheimer's-related treatments
• scientifically proven obesity therapies and treatments, and
• part-time skilled nursing care, physical therapy, and speech therapy provided in your home.

How much of my bill will Medicare Part B pay?

When all of your medical bills are added up, you will see that Medicare pays, on average, only about half the total. There are three major reasons why it pays so little.

First, Medicare does not cover a number of major medical expenses, such as routine physical examinations, medications, glasses, hearing aids, dentures, and a number of other costly medical services.

Second, Medicare pays only a portion of what it decides is the proper amount -- called the approved charges -- for medical services. When Medicare decides that a particular service is covered, it determines the approved charges for it. Part B medical insurance then usually pays only 80% of those approved charges; you are responsible for the remaining 20%.

Note, however, that there are now several types of treatments and medical providers for which Medicare Part B pays 100% of the approved charges rather than the usual 80%. These categories of care include home health care, clinical laboratory services, and flu and pneumonia vaccines.

Finally, the approved amount may seem reasonable to Medicare, but it is often considerably less than what doctors actually charge. If your doctor or other medical provider does not accept assignment of the Medicare charges, you are personally responsible for the difference.

 

What are the gaps in Medicare coverage?

If you're ill or seriously injured, Medicare won't cover all your expenses. Here's what you need to know about the policies designed to pick up the slack, called medigap insurance.

Even for those who have Medicare coverage, a serious illness or injury can cause financial havoc because of the bills Medicare does not cover. Responding to this risk, about two-thirds of all Medicare recipients aged 65 or over buy some kind of private health coverage -- called medigap insurance.

The term medigap comes from the notion that these insurance policies will cover the gaps in Medicare payments. Unfortunately, most medigap coverage is not nearly as complete as its advertising would lead you to believe.

Medicare Managed Care Plans HMOs and other managed care plans, an alternative way to cover these gaps, typically provide broader coverage at slightly lower cost than most medigap policies -- and many people opt for these forms of coverage instead of medigap. However, HMOs and other managed care plans restrict the doctors and facilities available to you in ways that most medigap policies do not. And in recent years, Medicare managed care plans have been dropping seniors in large numbers, adding an element of risk to the managed care option.

Before you buy a medigap insurance policy, consider not only the services covered, but the amount of benefits and the monthly cost of the policy. Also pay attention to two other factors: how much premiums may rise in the years to come and, assuming you are willing to pay those premiums, whether you will be allowed to keep the policy.

Premium Increases

It is one thing to find insurance coverage you can afford today. It may be quite another to find a policy that you can still afford in later years when your income and assets have decreased and the policy premium has increased -- as it is sure to do. In choosing a medigap policy, consider the terms on which the policy premiums will rise over time. If the current premium will be a significant strain on your financial resources, you may want to consider a less expensive policy.

Eligibility and Enrollment

If you enroll in Medicare Part B (which pays part of basic doctor and laboratory costs, while Part A pays for part of hospital or nursing home stays) when you turn 65, for the next six months federal law forbids insurance companies from denying you eligibility for medigap policies. This six-month period is called the open enrollment period.

If you do not enroll in Medicare Part B when you turn 65, you can sign up for it later, during the yearly general enrollment period -- January to March. You will then have a six-month open enrollment period for medigap policies beginning July 1 of that year.

If you did not sign up for Part B at age 65 because you were covered by an employment-related health insurance plan, you will have a six-month open enrollment period for medigap policies beginning the date your Part B coverage begins, regardless of when you sign up for it.

Eligibility After Open Enrollment

If you try to buy a medigap policy after your open enrollment period has ended, the insurance company might not sell it to you. Insurance companies try to identify in advance people who are likely to collect a lot of benefits, and then refuse to insure them. They do this by asking to examine your medical records over the previous few years and refusing to sell you a policy if you have had a significant amount of medical treatment or you have a condition that is likely to require extensive treatment in the near future. Almost all insurance companies require such initial eligibility reviews -- sometimes called medical underwriting -- for plans that provide the most extensive benefits.

Preexisting Illness Exclusion

Many policies contain a provision excluding benefits for any illness or medical condition for which you received treatment within a given period before your coverage began.

Six months is a typical exclusion period. Usually, the shorter the exclusion period, the higher the premium. However, if you have a serious medical condition that may require costly medical treatment at any time, and you have been treated for it recently, consider a policy with a short exclusion period or none at all.

Where the Gaps Are

Wondering whether you need medigap insurance at all? You probably do. Here's what Medicare doesn't cover:

During a hospital stay, Medicare Part A does not pay:

• the yearly deductible ($912 in 2005)
• the coinsurance amount for each day you are hospitalized more than 60 days and up to 90 days for any one benefit period ($228 in 2005) 
• the coinsurance amount ($456 in 2005) for each day you are hospitalized more than 90 days and up to 150 days for any one benefit period past a 150-day hospitalization
• anything past a 150-day hospitalization
• the cost of three pints of blood, unless replaced, or
• medical expenses during foreign travel.

During a stay in a skilled nursing facility, Medicare Part A does not pay:

• the coinsurance amount for each day you are in the facility more than 20 days and up to 100 days for any one benefit period ($114 in 2005), or
• anything for a stay of more than 100 days.

For home health care, Medicare Part A does not pay:

• 20% of the approved cost of durable medical equipment or approved non-skilled care, or
• anything for nonmedical personal care services.

For doctors, clinics, laboratories, therapies, medical supplies, and equipment, Medicare Part B does not pay for:

• the $100 yearly deductible
• 20% of the Medicare approved amount
• 15% above the Medicare approved amount if provider does not accept assignment
• preventive or routine examinations and testing
• treatment that is not considered medically necessary
• prescription medication that you can administer yourself (though it offers drug discount cards for such medications)
• general dental work
• routine eye and hearing exams, or
• glasses or hearing aids.

 

This and other information is available at http://www.nolo.com