Medicare: Parts A, B, C, and D
Medicare benefits are available to the following: 1) individuals over the age of 65 who receive Social Security or Railroad Retirement benefits; 2) disabled individuals under the age of 65 who receive disability payments (Social Security Disability or SSDI); and 3) individuals with end-stage renal disease (ESRD). You can qualify for Medicare benefits if you or your spouse has worked forty quarters or more in Medicare-covered jobs. Medicare is a federal entitlement program. It is not based on financial need, your income, or the assets that you own. In the three month period before your 65th birthday, you have a seven month window to enroll in Medicare Part A, which covers most of the costs of hospitalizations. For outpatient services, such as doctor visits, physical therapy, and diagnostic tests (X-Rays, MRI’s, cancer screenings, EKG’s, etc.), you need Medicare Part B. Medicare Part B is optional. You must pay a monthly premium in order to get coverage. The premium is deducted from your monthly Social Security benefit. Part B doesn’t cover everything. It covers 80% of approved charges, as shown below. This means that you have to pay a co-pay for the remaining 20%, unless you have additional insurance, referred to as “Medigap insurance”, as described below. Medicare Part A is Hospital Insurance, and Part B is Medical Insurance. Medicare Parts A and B together are often called the Original Plan.
Following are the costs of Medicare Parts A and B, as of January 1, 2011:
Part A Hospital Insurance
| Part A Hospitalization monthly premium |
Most people do not pay a monthly premium for Part A because they paid Medicare taxes while they were working. However, if you or your spouse did not earn 40 credits (10 years) of Medicare-covered employment, you must pay a monthly premium of: $450 if you have less than 30 credits |
|
Part A Hospitalization deductible |
$1,132 per benefit period After you have paid your deductible, Medicare pays all additional-covered costs for hospital stays of 1 to 60 days. There are additional costs for longer hospital stays. |
| Hospitalization coinsurance | $0 for days 1-60 $283 per day for days 61-90 $566 per day for days 91-150 All costs beyond 150 days |
| Skilled nursing facility coinsurance | $0 per day for days 1-20 $141.50 per day for days 21-100 All costs beyond 100 days |
Part B Medical Insurance
|
Part B monthly premium |
$96.40 or $110.50 for most current Medicare recipients $115.40 for most new Medicare recipientsPart B monthly premiums are higher for individuals with incomes above $85,000 or couples with incomes above $170,000. If you did not enroll when you were first eligible, you may have to pay a surcharge. |
| Part B deductible | $162 per year |
| Part B coinsurance | 20% of costs after you meet the deductible (for most services) |
Part C Medicare Advantage Plans and Medigap Insurance
According to a recent study by Fidelity Investments, Medicare Part A and Part B together will pay for only seventy percent (70%) of the health coverage you will need in retirement. You have to plan to pay for the remaining thirty percent (30%), which the Fidelity study estimates will cost an average couple without insurance more than $260,000. For the remaining 30% of your health care costs, you should look at what Medicare Parts A and B don’t cover in order to figure out what additional coverage you need . Following are some health care services that Medicare Parts A and B do not cover: routine checkups, most prescription drugs, most immunizations, custodial care in nursing homes and rehabilitation facilities, most chiropractic services, acupuncture, cosmetic surgery, care outside of the United States (except hospital care in Canada), routine eye exams, eyeglasses, except after cataract surgery, dental care and dentures, and hearing aids.
Medicare Part C or Medigap plans fill the voids of Parts A and B . Medicare Part C allows you to choose an HMO or a PPO insurance policy from the plans approved by your State, based on the services that you need to suit your lifestyle, travel, and medical status. Although you will have to pay an additional premium to a private insurance company for this coverage, keep in mind how much you might have to pay without this insurance. Medicare Part C plans can cover prescription drugs, but not all of them do. The companies offering Medigap plans offer different services and options, so you should find out what services are covered before you sign up for a Medigap Policy. Medigap policies are offered by private companies, such as Blue Cross Blue Shield, but must follow certain rules set by Medicare. All Massachusetts Medigap policies must include hospital coinsurance coverage, 365 extra days of full hospitalization coverage, and payment of the 20% coinsurance costs for medical care under Medicare Part B. Medigap policies may also offer benefits not included in Medicare, such as routine check-ups or emergency care out of the country. New Medigap plans do not include prescription drug coverage. Not everyone with an Original Medicare Plan needs Medigap insurance. For example, some people have health insurance from a former job that offers more coverage than a Medigap plan. You should consider your finances and health care needs before making a decision. If you do not buy Medigap when you are first eligible, you can buy it later during an open enrollment period.
What Are Medicare Advantage plans?
Medicare Advantage plans are health plans offered by private companies under contract to Medicare. They are also called Medicare + Choice plans or Medicare Part C plans. In Massachusetts, you may enroll in a Medicare Advantage plan instead of the Original Medicare plan if you live in the plan’s service area. Enrollment is voluntary. People who join a Medicare Advantage plan do not need Medigap insurance. Most Medicare Advantage plans have more benefits than standard Medicare. For example, Medicare Advantage plans often include routine checkups, dental services, eye care, and hearing tests. Some Medicare Advantage plans include prescription drug coverage, and some do not.
Medicare Advantage plans usually charge a monthly fee in addition to the Medicare Part B premium. Depending on your health care needs, Medicare Advantage plans may be less expensive overall than the Original Medicare Plan. There are several types of Medicare Advantage plans. Not all types of plans are available in all areas.
Managed Care plans (HMOs): If you join a Medicare HMO, you must go to the doctors, hospitals, and pharmacies that are part of your plan’s network. You must choose a primary care doctor from your plan. You must get a referral to see a specialist or for hospitalization. Neither Medicare nor your HMO will pay for services outside of your plan’s network except for emergencies or urgently needed care. Your HMO may include additional benefits such as routine checkups, dental services, eye exams and eyeglasses, and hearing exams. Some HMOs include prescription drug coverage, and some do not. For most services, you pay a fixed copayment. Medicare HMO’s in Massachusetts include Fallon Health Care, Tufts Medicare Preferred, and Harvard Pilgrim First Seniority.
Medical Savings Account (MSA) plans: Medical Savings Account plans have two parts: a very high deductible health insurance policy that pays for Medicare-covered medical and hospital expenses after you meet the deductible; and a tax-exempt Medical Savings Account that you can use to pay for qualified medical expenses before you meet the deductible. Medicare deposits money into your Medical Savings Account each year. If you don’t spend all the money, it stays in your account for future expenses. MSAs give you direct control of your health care spending.
Preferred Provider Plans (PPOs): With a Preferred Provider Plan, such as Blue Cross/Blue Shield Medex, you may go to the doctors, hospitals, and pharmacies that are part of your plan’s network, or you may go to other Medicare-approved providers. You will pay extra if you get services outside of your plan’s network. You don’t need a referral to see a specialist, but you have to get plan approval for certain services. Your plan decides how much you must pay for services.
Private Fee-for-Service plans: With a Private Fee-for-Service plan, you may go to any Medicare-approved doctor or hospital that is willing to treat you and accepts your plan’s payment terms. You don’t need a referral to see a specialist, but you have to get plan approval for certain services.
Special Needs Plans (SNPs): These plans offer specialized care for people with special health care needs. For example, there are SNPs for people in long-term care facilities, and for people with certain diseases. Special Needs Plans include prescription drug coverage.
Part D Medicare Prescription Drug Plans
If you want prescription drug coverage through Medicare, you have to join a Medicare Prescription Drug Plan, or a Medicare Advantage or other Health Plan that offers this coverage, such as a Medicare HMO. These plans cost extra. Standard Medicare coverage (Part B) does not cover prescription drugs except in a few cases, like certain cancer drugs.
Enrollment in a Medicare Part D Prescription Drug Plan is voluntary. Medicare prescription drug coverage is sold by private insurance companies and costs extra. Different companies offer different plans. Monthly premiums and covered drugs vary from one plan to another. Prescription Drug Plans have monthly premiums, annual deductibles, coinsurance/copayments, and a coverage gap. People with low or moderate income can get assistance from Social Security or from Prescription Advantage to help pay these costs.
| Monthly premium | Prescription Drug Plans charge a separate monthly premium ranging from about $10 to $90 or more, depending on the coverage they offer. |
| Deductible | The annual deductible ranges from $0 to $310 depending on the plan you choose. |
| Coinsurance | Depending on the plan, you will pay a percentage of your prescription drug costs, or a flat fee per prescription. Fees are usually less for generic drugs. |
| Coverage gap | For many plans, you must pay 100% of drug costs after the retail cost of your covered prescription drugs reaches the $2,830 prescription drug limit. Coverage starts again once you have paid a total of $4,550 in out-of-pocket costs. |
What is Medicaid?
None of the above programs pay for long term custodial care in a nursing home or similar facility. “Custodial care” is the care needed by an individual with conditions such as advanced Alzheimer’s Disease, permanent disability from a stroke or heart attack, or other physical or mental disability that prevents the individual from performing activities of daily living without assistance. The program that provides benefits for long-term custodial care is the Medicaid program, a joint federal/State program that is administered in Massachusetts as the “MassHealth Program”. There are almost twenty different MassHealth programs for individuals of all ages. For seniors, eligibility for MassHealth benefits to pay for nursing home care is based on the value of the assets owned by the individual. If a MassHealth applicant is married, the value of the couple’s combined assets will determine whether the applicant is eligible. For more information about MassHealth, see the Article titled “Planning for Long Term Care and the Medicaid (MassHealth) Program“