The Who, What, When and How of Medicare

The Who, What, When and How of Medicare

What is it?  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 Part A pays for hospital 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.
Who gets it?  A person who continues working past age 65 or who does not begin taking Social Security at 65 is still eligible for Medicare benefits provided a Medicare application is 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.
Also, persons under age 65 who have received Social Security disability or railroad retirement disability benefits for 24 months become eligible for Medicare Part A benefits.
When can you get it?  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.
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.
What is the cost?  There are deductibles and co-payments for Medicare Parts A and B, as well as a monthly premium for Part B.  These premiums, deductibles and co-payments may be paid by Medicaid for individuals whose income and assets are below poverty level limits (known as “Qualified Medicare Beneficiaries” or “QMBs”), or by private Medicare Supplement or “Medigap” insurance policies.
Persons with Medicare and Medicaid coverage, with annual incomes below approximately $15,889.50 (individual) or $21,505.50 (married couple), and countable assets less than $8,780 (single) or $13,930 (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.
What about prescriptions?  On January 2006, the Medicare Part D drug benefit went into effect. 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). The participant may then be required to pay no more than $400 in prescription drug costs (the “deductible”) during the year.  After the plan and participant have paid $3,700 in drug costs, the participant must pay 100% of the cost (the “coverage gap” or “doughnut hole”).  After the participant has paid $4,950 in total out-of-pocket drugs 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 $3.30 generic/$8.25 brand-name co-pay for each drug.  Many plans charge co-payments instead of 25% coinsurance, and 40% of plans charge no deductible.  Part D enrollees will receive a 55% discount on the total cost of their brand-name drugs purchased while in the donut hole.  The 50% discount paid by the brand-name drug manufacturer will apply to getting out of the donut hole, however the additional 5% paid by your Medicare Part D plan will not count toward your total out-of-pocket costs.  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/prescriptiondrugs) for assistance to determine the best plan for you and to learn how to request an application form from the selected plan company.
For a consultation about Medicare or other retirement-related benefits you may be entitled to, please contact one of the experienced MS elder law attorneys at Courtney Elder Law Associates. We will be happy to answer your questions and help you through the process.