On July 30, 2015 we celebrated the 50th anniversary of Medicare, the medical insurance program for the elderly and persons with disabilities. In 1963, when President John Kennedy signed the Senior Citizens Act (later renamed the Older Americans Act by President Carter), there were 17.5 million Americans over age 65. Thirty-three percent of those older Americans lived under the federal income poverty limit. At the 2010 census, only 9% of the approximately 39 million Americans over age 65 lived under the poverty limit. A major reason for the great improvement in the standard of living of older adults was the implementation of Medicare to cover health care costs.
Medicare is a medical insurance-type program developed to pay medical costs for retired or disabled persons who have paid into the Social Security system. Medicare is also available to adult children whose parent becomes eligible (or dies after becoming eligible) for a payment from Social Security Retirement or Disability. Medicare Part A pays for hospitalization costs and Part B pays for doctor visits, outpatient therapies, medical equipment, home health care, etc. Any recipient of Social Security Retirement or railroad retirement benefits is eligible for Medicare Part A coverage beginning at age 65. The beneficiary should apply for Medicare and will elect either original Medicare or Part C (Medicare Advantage). Medicare Part C allows eligible individuals to elect coverage from approved Medicare Advantage plans through private companies (HMOs, PPOs, etc.) as an alternative to traditional fee-for-service Medicare.
A person who continues working past age 65 is still eligible for Medicare benefits provided a Medicare application has been filed. A person who does not apply for Social Security or Medicare Part A benefits until after age 65 is entitled to Part A (hospital) benefits retroactive for 6 months prior to the month of application. Medicare coverage is not dependent upon the income or assets of the recipient.
Medicare Part B is a voluntary program for individuals who are eligible for Part A and who enroll in the program and pay the monthly premiums. Enrollment occurs either by written application or automatically by establishing entitlement to Social Security benefits or Part A coverage. Notice of automatic enrollment is sent to eligible individuals and may be declined by sending a signed statement to the local SSA office stating that they do not wish such insurance. A person may voluntarily enroll during the “initial enrollment period”, which begins three months prior to the month when all the eligibility requirements are first met (typically the 65th birthday) and extends seven months thereafter. Since the beginning date of coverage depends on the date of application, it is important to file early to avoid the gap in insurance coverage that could occur when private medical insurance expires at age 65 without immediate continuing coverage under Medicare. Those who fail to enroll during the initial enrollment period may do so only during a “general enrollment period”, which is the first quarter of each calendar year. Failure to enroll for Part B when first eligible will result in a higher monthly premium for the rest of the recipient’s life.
Also, persons under age 65 who are receiving or are entitled to receive Social Security disability or railroad retirement disability benefits for not less than 24 months become eligible for Medicare Part A benefits in the 25th month of disability.
Contrary to popular belief, Medicare only pays part of the first 100 days of nursing home care for qualified nursing home residents, and only the first 20 days in full. Such Medicare coverage requires that the individual be admitted to a nursing home within thirty (30) days after a hospital stay of at least three (3) days.
There are premiums, deductibles and co-payments for Medicare coverage. These premiums, deductibles and co-payments may be paid by Medicaid for individuals whose income and assets are below certain poverty level limits (known as “Qualified Medicare Beneficiaries” or “QMBs”), or by private “Medigap” insurance policies.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 implemented the new Medicare Part D Prescription Drug Benefit. Medicare recipients may voluntarily join a drug plan run by a private company. Those who do not sign up for a plan within 6 months after becoming Medicare-eligible will have to permanently pay a higher premium for late enrollment (1% increase for each month delayed). Each participant may pay a monthly premium for the plan (average approximately $35, set by each company). The participant must then pay up to the first $310 in prescription drugs costs (the “deductible”) during the year. After this is paid, the recipient will pay part of the cost of drugs until the total paid by the plan and participant reaches $2,850 (the “initial coverage limit”). If you exceed the initial coverage limit, you pay 47.5 percent of your plan’s price for brand-name drugs and 72 percent for generic drugs in the “coverage gap” (“donut hole”) unless you have other coverage. The doughnut hole phase ends when out-of-pocket costs reach a level set by law ($4,550 in 2014). After the participant has paid $4,550 in total out-of-pocket costs (not including premiums), Medicare will then pay up to 95% of drug costs (the “catastrophic benefit”), and the participant must pay the greater of 5% of cost or a $2.65 generic/$6.60 brand-name co-pay for each drug. Contact Medicare (800-633-4227), Mississippi Medicaid (800-421-2408), AARP (601-206-1848), or go to their websites (www.medicare.gov or www.aarp.org) for assistance to determine the best plan for you and to learn how to request an application form from the selected plan company.
Persons with Medicare and Medicaid coverage, with annual incomes below approximately $17,235 (individual) or $23,265 (married couple), and countable assets less than $13,300 (single) or $26,580 (married) may be eligible for “extra help” in paying for drugs. This generally means the participant will pay no premium, will have no “coverage gap,” and will pay no or reduced deductibles and co-payments. “Countable” assets are generally all assets except the home, car, burial plot, $1,500 burial funds, term life insurance and cash value life insurance with a face value not more than $1,500.
To arrange a meeting to discuss your rights and options, contact our office online or call us at 601-987-3000.