Continuing with our blog on “What You Need To Know About Medicare,” this week we will discuss what is covered by original Medicare, Parts A and B and offer and overview of Medicare Parts C and D.
As mentioned in the Medicare General Overview, Medicare Part A covers hospitalization and Medicare Part B covers providers care costs. Since these are both pretty broad subjects, let’s look into each part of Medicare and what is covered under each.
Medicare Part A covers inpatient hospital care and is a part of the Medicare and Medicaid law that was signed into effect by President Lyndon B. Johnson on July 30, 1965. Ninety-nine percent of Part A recipients do not pay a monthly premium. Part A benefits are paid through the Health Insurance tax, payroll withholding tax, deductibles and copays.
Inpatient hospitalization and skilled nursing benefits are paid by ‘benefit periods.’ The benefit begins on Day 1 of hospitalization and ends when the patient is discharged or when hospitalization reaches Day 60. Then each benefit period begins with a new benefit period and benefits are refreshed or renewed at each new benefit period. The only exceptions to this are “Lifetime Reserve Days” or psychiatric hospital benefits. There are no limits to the number of benefit periods for inpatient hospitalization or skilled nursing facility.
Medicare Part B is the part of Medicare that covers your provider’s services: office visits to your primary care physician or specialists, diagnostic tests, out-patient hospital care, home health care services, outpatient physical, speech and vocational therapies, durable medical equipment and other similar services. Services must be medically necessary and are approved services by Medicare guidelines. There is an annual $140 deductible (2012) that must be met prior to services being paid. Some Medicare Supplement or Medigap policies also cover the annual deductible.
Part B is a part of original Medicare and the premium per month is $99.90 (2012). Many Medicare recipients have the premium deducted from their Social Security checks. There is an increased premium for people with single incomes in excess of $85,000 (2012) per year. For couples, the increased combined income limit is $170,000 (2012) annually. Medicare B does not cover routine foot care, eye exams, eyeglasses fittings, hearing exams, hearing aids or hearing aid fittings, dental care or cosmetic services.
Medicare Part C is often referred to as Medicare Advantage. To be eligible, you must be enrolled in Parts A and/or B. Part C was enacted during the Medicare Modernization Act (MMA) in 2003. Medicare Advantage plans are set up as an HMO or a PPO plan. Medicare Advantage are area, county and provider-specific plans. You must live in a certain area, certain county and use Network providers. Most services are covered by copays therefore there is no need to submit claims forms to the insurance carrier.
Many Medicare Advantage plans do not charge any premiums beyond what is paid for by Medicare. Most Med Adv plans encompass prescription drugs, eye exams, hearing tests and other items that Original Medicare does not normally cover. * Note: When choosing a Medicare Advantage (Part C), make sure your physician(s) is listed as a network provider and check to see on which tier (generic, brand, preferred brand or specialty) your prescriptions will be covered.
Medicare Part D is prescription drug coverage for Medicare-eligible individuals. Part D is an optional, stand-alone prescription drug policy which was enacted as a part of the Prescription Drug Improvement and Modernization Act of 2003 and became effective on January 1, 2006. To be eligible for Part D, one must have Medicare Parts A and B. Prescription Drug Plans (PDP) can be purchased as a stand-alone policy for those with Medicare Supplement policies or imbedded prescription coverage offered in some Medicare Advantage plans. Those with a Medicare Supplement policy, would need to choose a prescription drug plan (PDP) offered by private Rx companies that are contracted through Medicare. Each contracted insurance carrier offers at minimum, the Rx standard benefit, as set forth by the Centers for Medicare and Medicaid Services (CMS).
The standard benefit is defined in terms of the benefit structure and not in terms of the drugs that must be covered. In 2012, the standard benefit requires payment of a $320 deductible, then 25% coinsurance of drug costs up to an initial coverage limit of $2,930 (the full cost of prescriptions). Once this initial coverage limit is reached, the beneficiary must pay the full cost of his/her prescription drugs up until the total out-of-pocket expenses reach $4,700 (excluding premiums and any expense paid by the insurance company), which is called catastrophic coverage. This coverage gap existing between the initial coverage limit and the catastrophic coverage limit is referred to more commonly as the “Donut Hole”. Once the beneficiary reaches catastrophic coverage, he or she pays the greater of 5% coinsurance, or $2.50 for generic drugs and $6.30 for brand-named drugs. The catastrophic coverage amount is calculated on a yearly basis, and a beneficiary who reaches catastrophic coverage by December 31 of one year will start his or her deductible anew on January 1. (Medicare: A Primer,” Kaiser Family Foundation, April 2010.)
Medicare is one of the most complicated concepts in the insurance world today. It is our job at Fogle Insurance to help our clients make a good, solid decisions about their Medicare coverage. No one should walk away from us feeling confused about their Medicare coverage. We are here for YOU!
Next blog post will address enrollment and change guidelines and issues…