Medicare Explained

by Brian Johnson on January 8, 2010

medicareFrom time to time, we are sent relevant information from other sources hoping to use Wallet Blog as a way of getting important information out there to American consumers.  We were sent this explanation of Medicare benefits by David Colgren, the media relations counsel to CalCPA and thought it might be of interest to our readers. Here is his explanation:

Step 1. Understand how Medicare works.
Medicare is a federal program that provides health insurance to retired individuals, regardless of their medical condition. Here are some basic facts about Medicare that you should know.

Medicare coverage consists of two parts: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). A third part, Medicare Part C (Medicare Advantage), is a program that allows you to choose among several types of health-care plans.

Medicare Part A (hospital insurance)
Generally known as hospital insurance, Part A covers services associated with inpatient hospital care. These are the costs associated with an overnight stay in a hospital, skilled nursing facility, or psychiatric hospital, including charges for the hospital room, meals, and nursing services. Part A also covers hospice care and home health care.

Medicare Part B (medical insurance)
Generally known as medical insurance, Part B covers other medical care. Physician care–whether you received it as an inpatient at a hospital, as an outpatient at a hospital or other health-care facility, or at a doctor’s office–is covered under Part B. Laboratory tests, physical therapy or rehabilitation services, and ambulance service are also covered.

Medicare Part C (Medicare Advantage)
The 1997 Balanced Budget Act expanded the kinds of private health-care plans that may offer Medicare benefits to include managed care plans and private fee-for-service plans. The new Medicare Part C programs are in addition to the fee-for-service options available under Medicare Parts A and B.

What is not covered by Medicare Parts A and B?
Some medical expenses are not covered by either Part A or B. These expenses include:

•Your Part B premium
•Deductibles, coinsurance, or co-payments that apply
•Most prescription drugs
•Routine physical exams
•Dental care
•Hearing aids
•Eye care
•Custodial care at home or in a nursing home

Medicare Part C may cover some of these expenses, or you can purchase a supplemental Medigap insurance policy that will help cover what Medicare does not.

Medicare Part D covers prescription drug benefits.  http://www.medicare.gov/pdphome.asp

Most people age 65 or older who are citizens or permanent residents of the United States are eligible for Medicare Part A (hospital insurance) without paying a monthly premium. You are eligible at age 65 if:

•You receive or are eligible to receive Social Security or Railroad Retirement Board benefits based on your own work record or on someone else’s work record (as a spouse, divorced spouse, widow, widower, divorced widow, divorced widower, or parent), or
•You or your spouse worked long enough in a government job where Medicare taxes were paid
In addition, if you are under age 65, you can get Part A without paying a monthly premium if you have received Social Security or Railroad Retirement Board disability benefits for 24 months, or if you are on kidney dialysis or are a kidney transplant patient.

Even if you’re not eligible for free Part A coverage, you may still be able to purchase it by paying a premium. Call the Social Security Administration (SSA) at (800) 772-1213 for more information.

Although Medicare Part B (medical insurance) is optional, most people sign up for it. If you want to join a Medicare managed care plan or a Medicare private fee-for-service plan, you’ll need to enroll in both Parts A and B. And Medicare Part B is never free–you’ll pay a monthly premium for it, even if you are eligible for premium-free Medicare Part A.

Medicare costs the same for any eligible individual. This means that everyone who is eligible for Medicare will pay the same amount for coverage, regardless of medical condition.

Any individual who is receiving Social Security benefits will automatically be enrolled in Medicare Parts A and B at age 65 when he or she becomes eligible. If you are not receiving Social Security benefits before age 65, you will be automatically enrolled when you apply for benefits at age 65. But if you decide to delay retirement until after age 65, remember to enroll in Medicare Parts A and B at age 65 anyway, because your enrollment won’t be automatic. If you’re going to be automatically enrolled in Medicare, you’ll receive an initial enrollment package by mail from the SSA, usually three months before your 65th birthday.

Step 2: Understand how the Medicare Advantage program works.

Medicare Advantage permits Medicare beneficiaries to receive health care through managed care plans (e.g., HMOs) and private fee-for-service plans. When you join a Medicare Advantage plan (also known as Medicare Part C), you may be able to save money on your health-care costs, and you may get additional benefits not found in original Medicare. To enroll in Medicare Advantage, you must be covered under both Medicare Part A and Medicare Part B.
Unfortunately, not all plans are available in all areas. To learn about what options are available in your region, call (800) MEDICARE or visit the Medicare website at www.medicare.gov.

Step 3: Review multiple plans carefully.
Terms can change annually, so it plays to shop around and compare value.

Step 4: Ask Questions.
Before you choose which Medicare prescription drug plan that works best for you, seniors may want to ask providers the following questions?
Have my health care needs changed?
What is the total cost of the plan, including premiums, deductibles and co-pays?
How much will you save if you decide to get your medication by mail? Is it offered by your plan?
Is the plan offered in my state?
Can you go to any pharmacy?
Is it convenient?
Are all your medications covered?

Step 5: Do additional research.

Experts advise Medicare participants to review each plan carefully and be mindful of overall costs. Participants can go to the Medicare Web site to find their monthly and annual price tags and which drugs are covered. This web site can be access at: www.Medicare.gov or call 1-800-633-4227

Discussion

Kathleen
Thank you. It was very helpful
September 16 at 23:59 pm
Esmael
Very comprehensive information about medicare. But I think it will be even more transparent if you can provide the cost of each package.
September 12 at 09:29 am
miumiu wallet
Very clear!
August 25 at 05:56 am
Carol
Thank you for this very helpful information. I would like to add another important point which I was reminded of when I did my annual Medicare enrollment at http://www.PlanPrescriber.com. If you are switching Medicare plans and wish to keep your current doctor, be sure to check with your doctor’s office first to see if they will accept the new plan.
PlanPrescriber.com
January 12 at 11:11 am
bsb
This is a great synopsis. I would only add that you are not as much enrolled in Medicare Part A as entitled at 65. You are enrolled in Part B and may enroll in Part D. There is a discrete distinction of enrolling in A - and this is when you dont have enough work credits or are not otherwise entitled.
January 8 at 16:53 pm

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