Medicare

Medicare is a three-part federal health insurance program managed by the Social Security Administration. It helps pay hospital and medical costs for people who are 65 or older, and for some people with disabilities under 65.

Medicare Hospital Insurance is also called “Part A.” It usually covers a necessary stay in the hospital. It may cover skilled care in a nursing facility or certain health care in your home after you leave the hospital. “Part A” does not cover doctors’ services (see below).

Medicare Medical Insurance is called “Part B.” In order to get “Part B” coverage, you must choose it and pay a monthly premium. It covers doctors’ and outpatient services and medical supplies. It also covers home health services prescribed by a doctor even if you have not been in the hospital. Although Medicare does not currently have a prescription drug benefit, beginning in 2006 it will cover prescription drugs as a result of the Medicare Prescription Drug Improvement and Modernization Act of 2003. There will be many other changes in Medicare as a result of the new law. 

The new law also renamed Medicare+Choice plans. Now called “Medicare Advantage” or “Part C,” it includes managed care plans. It covers the same services and items that are covered under Parts A and B. You can elect to have either original Medicare, or you may elect to enroll in a Part C plan (HMOs).

Medicare Eligibility

You are eligible for Medicare if:

1. You are 65 or older and qualify for Social Security or Railroad Retirement benefits, even though you are not actually receiving them; or

2. You are a former federal employee who retired on or after 1983; or

3. You are disabled and have met the Social Security or Railroad Retirement disability requirements for two years; or

4. You have end-stage kidney disease and were treated on dialysis for three months or have Lou Gehrig’s disease.

If you are 65 or older but not eligible under the above requirements, you may still choose to enroll in the Medicare program. You must live in the United States and be a citizen or legal alien for at least five years. If you choose to enroll, you must pay monthly premiums that are generally higher than those charged to eligible beneficiaries.

How to Enroll

People who elect and receive Social Security retirement benefits before they are 65 will automatically be enrolled in Medicare at age 65. People who have been receiving Social Security Disability benefits for 24 months will also be automatically enrolled in Medicare. These people will receive a Medicare card in the mail from Social Security three months before their 65th birthday (or on the 24th month of disability) and a notice informing them of their Part A enrollment, and that they will be automatically enrolled in Part B, unless they refuse. If you are in one of these categories and do not receive the notice and card, contact Social Security.

If you have not chosen early retirement, apply for Medicare within three months before your 65th birthday, even if you do plan to continue working. If you do not apply by this time, you can still enroll in Part A any time after that, but you can only sign up for Part B between Jan. 1 and March 31 of each year.

There is a 10 percent penalty added to the premium for each year an individual is late in enrolling for Part B, so it is important that you enroll as soon as you are eligible (unless you are still covered by your own or your spouse’s employee health plan).

Your monthly Part B premium will be deducted from your Social Security check. If you are not yet receiving Social Security, you will be billed for these premiums.

Medicare Benefits Covered

Benefits covered under Part A are:

1. Hospital Services (considered reasonable and necessary by Medicare):

• Semi-private room and board, including special care units

• General nursing services

• Inpatient drugs

• Supplies

• Use of equipment normally furnished by the hospital

• Operating and recovery room costs

• Blood transfusions after the first three pints

• Diagnostic, therapeutic or rehabilitative services and items the hospital normally furnishes.

2. Limited Skilled Nursing Home Services:

• Skilled nursing care

• Semi-private room and board

• Physical, occupational and speech therapy

• Medical social services

• Inpatient drugs

• Use of durable medical equipment

A nursing facility may also furnish intermediate and custodial care, which are not covered. Medicare pays only if you receive skilled services and pays only under specific circumstances.

3. Medicare Benefits covered for Part A may pay for hospice services. Hospice care is care for a terminally ill person. Its purpose is to help make the patient and his or her family comfortable. The patient must request hospice care in writing instead of other Medicare benefits. This request can be cancelled later. Hospice services in a person’s home include:

• Skilled nursing care

• Physical and speech therapy

• Medical social services

• Home health aide and homemaker services

• Medical supplies and appliances

• Physician services

• Counseling

• Short-term inpatient care only

Benefits covered by Part A and Part B:

1. Medicare Benefits Covered by Part A and Part B pay for home health care ordered by a doctor and given by a certified public or a private home health care agency.

Covered home health services include:

• Part-time skilled nursing care

• Physical therapy

• Part-time services of home health aides

• Medical social services

• Medical supplies

• Equipment provided by the agency

• Some speech and physical therapy

Medicare Benefits Covered by Part B:

Part B covers the following medically necessary services and items:

• Physicians’ services

 

• Services in an emergency room, outpatient clinic or surgery center

 

• Some hospital outpatient services and supplies (such as diagnostic x-ray tests, and radium and radioactive isotope therapy)

 

• Outpatient physical therapy and speech pathology

 

• Some preventive screening tests at specified intervals for mammograms, PAP smears, prostate cancer, bone density, colorectal cancer, diabetes education, glaucoma, vaccinations (flu shot)

 

• Surgical dressings, splints and casts

 

• Rental or purchase of durable medical equipment

 

• Limited chiropractic care

 

• A percentage of the cost of oxygen and equipment

 

• Ambulance services

 

• Prosthetic devices

 

• Home health services

 

• Dialysis Services

 

Services and Supplies NOT Covered By Medicare Parts A or B:

Although Medicare has broad coverage, it does not pay for many services

and supplies. These non-covered services include:

• Medicine you buy with or without a doctor’s prescription (benefit

begins1/1/06)

 

• Custodial care in a nursing facility or at home

 

• Services not “reasonable or necessary,” as defined by Medicare

 

• Services the patient has no legal duty to pay for

 

• Services paid by a governmental agency

 

• Personal comfort items

 

• Routine check-ups

 

• Homemaker services

 

• Hearing aids/examination

 

• Eyeglasses/examination

 

• Most chiropractic services

 

• Cosmetic surgery

 

• Dental care

 

• Optional private hospital rooms

 

• Orthopedic shoes

 

 

Medicare Benefits Covered by Part C Medicare+ Choice:

If you are entitled to benefits under Medicare Part A and are also enrolled under Part B, then you may choose to receive Part C Medicare from a Medicare Advantage plan. Part C plans must provide the service currently available under Medicare Parts A and B. The plans may offer supplemental benefits, for which a separate premium may be charged. Part C provides beneficiaries with alternatives to original fee-for-service Medicare.

Medicare Advantage plans may include: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and private fee for service plans.

Currently in Colorado, HMO’s are the only type of Medicare Advantage plan available to Medicare beneficiaries. (See Chapter 3 for information on Medicare HMOs).

Medicare’s Basic Payment Policies

As with private insurance policies, Medicare Parts A and B have deductibles you must pay before Medicare pays anything. Part B also has a monthly premium, which is deducted from your Social Security check. Parts A and B also have co-insurance payments that go into effect after certain Medicare payments are made. You must then share some of the costs with Medicare.

Part A

Medicare measures your use of Part A hospital insurance with benefit periods called “spells of illness.” Your first benefit period begins the first day you enter a hospital after your insurance goes into effect. A new benefit period begins when you enter the hospital again, if it is at least 60 days after your last discharge from a hospital or skilled nursing facility. Each period is called a “spell of illness,” and there is no limit to the number of spells of illness you may have.

Hospital Care

With Part A, you can receive up to 90 days of hospital care for each spell of illness. The following is what you must pay:

• For the first 60 days, you pay the deductible. Medicare pays the remaining covered expenses.

• For the next 30 days, you pay a co-payment for each day you are in the hospital. Medicare pays the remaining covered expenses.

• After 90 days, you may use some of your 60 lifetime reserve days. For each used lifetime reserve day, you pay a portion of the cost. Medicare pays the remaining covered expenses for each day up to a 60-day lifetime day maximum reserve.

Skilled Nursing Care

Medicare will pay for the first 20 days of covered skilled nursing care in a Medicare-certified facility if you are discharged from a hospital, following a stay of at least three days. For days 21 through 100, you will pay a portion of each day’s charges, and Medicare will pay the remaining covered expenses. After 100 days, you pay the full amount and Medicare pays nothing. However, you may be eligible for Medicaid payment for long-term care (see section on Medicaid). The level-of-care requirements for skilled nursing facility coverage are very restrictive. Rarely do individuals receive the full 100 days of coverage.

Home Health Visits

Parts A and B pay for the full approved cost of home health visits by a licensed home health agency following a treatment plan prepared by a physician. However, strict requirements limit the coverage of home health services. For example, the person receiving services must be “home bound,” meaning it would take considerable effort to leave home. The person may be able to leave home for doctor appointments, an occasional walk or drive, or other limited trips outside the home. Another requirement is that the services are needed only on a part-time or intermittent basis, rather than continually. If Medicare refuses to cover you for these types of services, you have a right to appeal this decision. You may want to ask an attorney or someone else knowledgeable about Medicare to help you through the appeal process.

Hospice Care

The usual deductibles and co-payments do not apply to hospice care. You pay five percent of the cost for prescription drugs, up to $5 per prescription. You also pay five percent of the cost of respite care (see Chapter 4, “Options to Supplement Care”), up to a maximum equal to the yearly inpatient hospital deductible.

Part B

Under Medicare Part B payment rules for covered medical services:

1. Services must be reasonable and necessary, as defined by Medicare; and

2. Medicare pays 80 percent of the approved charge after you pay the first $100 each year. You pay the remaining 20 percent, plus any difference between the doctor’s charge and the approved charge.

The approved charge is the amount that Medicare considers to be the value of the services you received. It is not always the same as the amount that the provider bills you for the services.

Medicare Payment Methods

Under Medicare Part A, you do not have to send in any bills you receive from a participating hospital, skilled nursing facility or home health agency. The provider will make the claim for you, and Medicare will pay its share directly to the provider. You will then receive a notice explaining what Medicare paid.

Payment is made two ways under Medicare Part B medical insurance:

1. Assigned Claims: Participating physicians who accept assignment bill Medicare directly. You are responsible only for 20 percent of the approved charge, not for any additional amount above the approved charge. If the doctor is a participating physician who has agreed to take Medicare assignment, then he or she has agreed not to charge above the Medicare approved rate, and to accept the Medicare approved rate as payment in full. The simplest way to find out is to ask in advance.

2. Non-Assigned Claims: With this method, the doctor sends in a completed claim form, but the payment from Medicare is paid directly to you. You are then responsible for paying the doctor the full amount of the bill for the services the doctor provided to you. Under this method, a doctor may bill you for the full charges, even if it is more than the Medicare-approved charge. If that happens, you must pay the difference between the approved charge and the actual charge. For example, if the bill was $100, and the Medicare approved charge was $90, you would be responsible for the difference of $10, plus 20 percent of the approved charge ($18) for a total of $28. The doctor cannot charge more than 115 percent of the approved charge.

Under either payment system, you must pay at least 20 percent of the approved charge, plus any unpaid part of the $100 annual deductible. You pay your share directly to the doctor or health care provider.

Right to Appeal

Part A

If Medicare denies your claim, you may ask for an informal review of the decision. You must ask for that review within 60 days of the date of the decision. If you still disagree with Medicare’s decision, you then have 60 days from the date you receive a denial of payment to request a review. Your request must be in writing. If you disagree with the review, and the amount in dispute is $100 or more, you may ask for a formal hearing. You must do so within 90 days of Medicare’s review decision. You can appeal then to the federal courts if the amount in dispute is $1,000 or more.

To appeal a denial of Medicare approval for a hospital admission or continued hospital stay, call the Colorado Foundation for Medical Care, at (303) 695-3333, or (800) 727-7086 outside Denver.

Part B

If you disagree with Medicare’s decision, you have four months to request a review. The request must be in writing. If the amount in question is $100 or more, you may ask for a carrier hearing. You must ask for this formal hearing within six months of the day you received the review decision. If you still disagree, and the amount in dispute is $500 or more, you can ask for a hearing before an Administrative Law Judge. If you disagree with that decision, and the amount in dispute is $1,000 or more, you can appeal to federal court.

If You Need More Help

For more detailed information concerning Medicare, call the Medicare help line, (800) 633-4227. Social Security sends free booklets, providing detailed information on Medicare, when you enroll. Also, Social Security provides periodic updates to information concerning Medicare Part A and Part B, as these programs are subject to change and review by Congress and the Health Care Financing Administration.

Supplemental Health Insurance (MEDIGAP)

Since Medicare does not pay all your medical or long-term care expenses, private insurance companies sell insurance to supplement Medicare, which is known as “Medigap” coverage. (See Chapter 3 for information on Medigap coverage).

Health Maintenance Organizations (HMOs)

Some Medicare beneficiaries choose to enroll in Medicare HMOs, due, in large part, to the fact that monthly premiums are usually lower and additional services are provided at a lower cost to the consumer. Before enrolling in a Medicare HMO, you should make sure it will meet your particular health care needs (see Chapter Three for information on Medicare HMO’s).

Medicare Approved Drug Discount Card Program:

Medicare has contracted with private companies to offer Medicare-approved drug discount cards. These companies negotiate drug prices. Anyone with Medicare can get one of the drug discount cards except those who have outpatient prescription drug coverage from Medicaid when they apply. Enrolling in a Medicare-approved drug discount card is your choice. If you’re paying for the full cost of your prescription drugs yourself, a Medicare-approved drug discount card can help you save on your outpatient prescription drug costs. This is a temporary program to help with your prescription costs until Medicare prescription drug plans start in 2006. You can have only one Medicare-approved drug discount card at a time. If you have non-Medicare-approved drug discount cards, you may use these and your Medicare-approved drug discount card, but not on the same prescription at the same time.

The drugs that are discounted and the amount of the discount offered vary among different cards and can change, so you should compare the Medicare-approved drug discount cards carefully. Each drug discount card has a list of pharmacies where the discount card can be used, to help you compare. You must go to a pharmacy that accepts your Medicare-approved drug discount card to get the discounted price. Companies offering the discount cards can charge an enrollment fee of no more than $30 each year.

Enrollment in the Discount Card Program

Enrollment in Medicare-approved drug discount cards started May 3, 2004. If you are eligible and haven’t enrolled yet, you can enroll anytime until Dec. 31, 2005. Enrolling is your choice. To enroll in the program, you’ll need to know: your ZIP code, your medicines and doses (you can find this information on your pill bottles), and your total monthly income (if you are interested in the $600 credit for people with Medicare who have lower incomes). Next you can enroll on the Internet or by phone. If using the Internet, go to http://www.medicare.gov and select “Prescription Drug and Other Assistance Programs.” By phone, call (800) MEDICARE (633-4227), and ask about “drug cards.” Once your enrollment form has been processed and accepted, the company will send you its Medicare-approved drug discount card. You can start using the card the first day of the month after the month in which you enroll.

$600 Credit for People with Lower Incomes

If you choose a Medicare-approved drug discount card and have a low income, you might qualify for up to a $600 credit on your discount card in 2005, to help pay for your prescriptions. If you qualify for the $600 credit, you won’t have to pay the annual enrollment fee. To qualify, you must meet ALL of the following conditions: 

• You have Medicare Part A and/or Part B.

 

• You don’t have any outpatient prescription drug coverage through an employer group health plan or other health insurance (except through veteran’s benefits, a Medicare Advantage Plan, or a Medigap policy).

 

• Your monthly income in 2004 is no more than $1,048 ($12,569 a year) if you are single, or no more than $1,406 ($16,862 a year) if you are married (if you live in Alaska or Hawaii, income limits are higher).

 

In addition, you can’t get the $600 credit if you already have outpatient prescription drug coverage from any of the following:

• Medicaid

 

• TRICARE for Life (military health insurance)

 

• FEHB (health insurance coverage for Federal employees and retirees)

 

• Employer group health plan or other health insurance (except through veteran’s benefits, Medicare Advantage Plans, or a Medigap policy)

 

• Medicare Managed Care Plan that isn’t a Medicare Advantage Plan, and offers an outpatient prescription drug benefit to its members.

 

Note: If you don’t qualify for the $600 credit, you can still choose a Medicare-approved drug discount card.

The New Prescription Drug Plan (in 2006): Part D (under Title 16 of the Social Security Act):

On Jan. 1, 2006, Medicare-approved drug discount cards will begin to phase out. The new Medicare prescription drug plans will begin. Medicare will contract with private companies to offer this drug coverage. These companies will most likely offer a variety of options, with different covered prescriptions and different costs. Medicare prescription drug plans are voluntary. If you want to participate, you must choose a plan offering the coverage that best meets your needs and then enroll. In most cases, there is no automatic enrollment to get a Medicare prescription drug plan.

 

Medicare prescription drug plans might vary, but in general, this is how they will work. When you join, you will pay a monthly premium (cost varies, but is estimated at about $35) in addition to any premiums for Medicare Part A and Part B. Medicare prescription drug plans can offer coverage like this or more generous coverage for higher premiums. Joining is your choice. However, just as described above for enrollment in Part B, if you don’t join when you are first eligible, you may have to pay a higher premium if you choose to join later. You will have to pay this higher premium for as long as you have a Medicare prescription drug plan.

 

Enrollment

To enroll, you must have Medicare Part A or Part B. You can first enroll from Nov. 15, 2005 through May 15, 2006. This is called the “initial open enrollment period.” Enrolling is your choice. Medicare’s official Web site is http://www.medicare.gov. You can find the most up-to-date Medicare information and answers to your questions anytime. You can also call (800) MEDICARE (633-4227). This toll-free helpline is available 24 hours a day, seven days a week to answer your questions. Note: After the “initial open enrollment period,” you can change your plan during the “open enrollment period,” which will be from Nov. 15 through Dec. 31, each year. Your Medicare prescription drug plan will begin Jan. 1 of the following year. 

 

Plan Costs to You (this is tricky, so read carefully):

1) If your yearly drug costs are $250–$2,250, you pay 25 percent of your yearly costs and your plan pays the other 75 percent;

 

2) If your yearly drug costs are $2,251–$3,600, you pay 100 percent of your drug costs; then

 

3) After you have spent $3,600 out-of-pocket, you pay 5 percent of your drug costs for the rest of the calendar year, and your plan pays the rest.

 

Additional Low-Income Assistance

If you have a low income and limited assets, there will be extra help to pay for your prescriptions. The exact income limits will be set in early 2005. If you have a low income, you can get a head-start on enrolling. The Social Security Administration (SSA) and local Medicaid offices will begin accepting applications from people with low incomes as early as summer 2005. By submitting your application early, you can ensure that the assistance with your Medicare prescription drug plan premiums and deductibles will start when the program begins on Jan. 1, 2006, and you won’t miss a single day of your prescription coverage. Look for more details in the mail from Medicare and from SSA during 2005.

More Information on Medicare in General

If you need help or more information, you can look at http://www.medicare.gov. This is Medicare’s official consumer Web site. You can find the most up-to-date Medicare information and answers to your questions anytime. You ca.n also call (800) MEDICARE (633-4227). This toll-free helpline is available 24 hours a day, seven days a week to answer your questions. You can speak to a Customer Service Representative in English or Spanish.