NEED INFORMATION ON MEDICARE INSURANCE PLANS?
MEDICARE: WHAT IS IT?
History
Medicare is a health insurance program run by the Federal government. It provides low-cost hospitalization, medical, and prescription drug insurance for the elderly. It was created by Congress in 1965.
The basic idea is for the Government to provide health insurance as part of Social Security. Get a short history at the link below.
Medicare and Social Security
It is important to note that Medicare and Social Security are not linked. That is, you may qualify for Social Security but not for Medicare. In most cases, you must be 65 years old to qualify for Medicare. However, you can qualify for Social Security before age 65. So if you are thinking of taking early retirement and expect that you’ll also get Medicare, think again! You can access Social Security at the link below.
Original Medicare: Part A and Part B
The original Medicare program is administered directly by the government. It consists of separate hospital insurance called “Part A”, and; medical insurance called “Part B”. It also includes prescription drug coverage called “Part D.”
Original Medicare is traditional ‘fee for service’ insurance where you are not limited to a network like an HMO. However, not every doctor and hospital participates in Medicare, so your choice may be limited. Most people get Part A free of charge, but Part B is optional and generally requires that you pay a monthly premium.
Medicare Advantage: Part C
Medicare Advantage is called "Part C." It combines Part A and Part B into a single plan, along with Part D prescription drug coverage. It is administered by private companies under contract to Medicare. These are ‘managed care’ or ‘network’ plans like an HMO or a PPO. A Part C plan requires you to pay a monthly premium, but the ‘advantage’ is that the cost may be lower than getting each part separately.
Prescription Drug Coverage: Part D
Coverage for prescription drugs is known as Part D. Before 2006, Medicare only covered hospital and doctor expenses. While this included drugs you may have received while in the hospital, Medicare did not provide insurance coverage for prescription drugs you would buy at a pharmacy.
In 2006 Congress expanded Medicare to provide insurance for prescription drugs. However, there are currently over 1,800 different drug ‘plans.’ No one plan may cover all of the drugs you are taking, nor might it pay the full expense of the drugs that are covered.
Note that prescription drug coverage, like Part Bcoverage, is an optional plan. You do not have to choose it if you don’t want to. If you don’t choose Part D, it won’t affect your Part A or Part B coverage. If you do choose Part D, it probably will require that you pay a monthly premium. Note that if you choose a Medicare Advantage plan (Part C), you get combined coverage as if you selected Part A, Part B, and Part D separately.
Choosing The Right Drug Plan
Choosing the right drug plan can be confusing, so the government, commercial companies, and non-profit groups offer advice and counseling on this. Many consultants have group contracts with organizations to provide low cost help to their members, so check with nursing homes, assisted living, or community groups in your area to see if they offer such advice and counseling. See our Important Links page for more information.
Medicare and other government web sites provide free information on choosing a drug plan. The Kaiser Family Foundation* also offers a free report on the different Medicare drug plans that are being offered in 2007. It looks at premiums, cost of prescriptions, and other things that affect out-of-pocket costs and access to drugs for people with Medicare. You can get the free report at the link below.
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* The Kaiser Family Foundation is a non-profit, private operating foundation dedicated to providing information and analysis on health care issues to policymakers, the media, the health care community and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.
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For additional information, click on our other sections:
Can I Change My Medicare Plan After I Enroll?
You can change your Medicare plan, but when and how depends on the type of plan. For example, to make changes to your hospitalization (Part A) and/or medical (Part B), you can generally change at any time, and the change will be effective at the beginning of the next month.
However, if you want to make changes to your prescription drug plan (Part D), generally you can only switch plans between November 15 and December 31. In certain situations, you may be able to change your drug plan at other times, such as if you move out of state or go into a nursing home.
Deductibles and Co-Payments
Like any insurance, Medicare has a ‘deductible’, which is the amount you must pay before the insurance starts to pays. A ‘co-payment’ is different from a ‘deductible.’ A co-payment is a fee that you must pay each time you get a medical service or a prescription. This is usually a small set amount. For example, you may have to pay $10 or $20 each time you visit the doctor or get a prescription.
What’s Covered Beyond Hospitals, Doctors, and Drugs?
Medicare may cover the cost of medical products and services beyond hospitals, doctors, and prescription drugs. These may include home health care, hospice care, long-term care, outpatient care, rehabilitation services, nursing homes, and certain medical devices and equipment. See our section on Medicare benefits at the link below.
What's The Difference Between Medicare and Medicaid?
Medicare is insurance. It is not welfare or other types of government assistance. Medicaid is an assistance program for people of limited income. For information on assistance, go to our section on Medicaid at the link below.
‘Medigap’ and ‘The Donut Hole’
Medicare does not cover 100% of everything. This can often leave a ‘gap’ between what is being charged and what Medicare will pay for. Even if there is no gap between the charge and the coverage, you usually have to meet an annual deductible before Medicare begins to pay. Many private insurance companies offer so-called ‘Medigap’ insurance polices that supplement Medicare to cover this ‘gap.’
This gap also exists in the new prescription drug coverage plans. There are a wide number of different drug plans for Medicare, and none cover 100% of every drug. Further, the amount of coverage depends on the total annual cost of your drugs. In some cases, Medicare will cover 95% of the cost, and in other cases it won't cover anything! This can leave a large ‘hole’ in your coverage.
In essence, if your prescription drug costs are very low or very high, the coverage tends to be very good. But for those whose drug costs fall in the middle range, coverage can be more limited. This leaves the so-called ‘donut hole’ of drug costs that are not covered.
For more information, see our section on supplemental insurance at the link below.
Free Medicare Benefits Booklets
Medicare offers free copies of official publications that explain the program. You can access these by clicking on the English or Spanish title of the booklets you want.
NEED INFORMATION ON MEDICARE INSURANCE PLANS?
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