Having recently navigated this spiderweb myself, this is probably the most important blog that I have written to date. Sadly, Medicare, Medicaid, and Social Security were purposely designed to be complex with many pitfalls. This blog will seek to both explain these programs and warn/protect you, and your loved ones, from what the U.S. Government does not go out of its way to tell you.
Medicare was enacted in 1965 under the Johnson administration. The primary purpose of Medicare is to provide medical insurance for people over 65 years of age. Medicare also provides coverage to people under 65 years of age if they qualify as disabled under the Social Security Act, and/or if they suffer from end stage renal disease or ALS (Lou Gehrig’s disease). When it comes to insurance, Medicare is just that. Like private insurance, Medicare has both premiums (taken from your paycheck), disallowances, and deductibles. Overall, Medicare covers about 50% of healthcare expenses, and it is broken down into four parts (A-D). Parts A and B are part of basic Medicare, and Parts C and D are optional.
You are eligible for premium-free Medicare Part A and Part B if you are at least 65 years of age and worked at least 10-years in the U.S. paying Social Security and Medicare taxes. All Federal Employees employed after January 1, 1983, and state employees employed after March 31, 1986 are also eligible for premium free Medicare when they reach the age of 65.
Low-income families may also be eligible. Otherwise, if you want Medicare benefits and do not meet the conditions above, then you must enroll and pay the premiums shown below.
$240 per month if you or your spouse worked between 7.5 – 10 years in the U.S. paying Social Security and Medicare taxes.
$437 per month if you or your spouse worked less than 7.5 years in the U.S. paying Social Security and Medicare taxes.
If you are not eligible for premium-free Medicare, and you do not enroll at age 65, and wish to enroll later, then you will incur a late enrollment penalty of 10%, which must be paid for twice as many years as you failed to enroll since your 65th birthday.
PART A: COVERAGE
If you are admitted to a hospital that accepts Medicare. This includes hospital care, skilled nursing, lab tests, and surgery. At the time of this writing, these expenses are covered as follows:
$1,408 deductible for each benefit period .
Days 1–60: $0 coinsurance for each benefit period.
Days 61–90: $352 coinsurance per day of each benefit period.
Days 91 and beyond: $704 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime).
Beyond lifetime reserve days : All costs.
HOSPICE, END STAGE RENAL DISEASE, AND ALS
Part A covers hospice care, end stage rental disease, and ALS at 100%, keeping in mind that it will not cover room and board in a long-term care facility, nursing home, or hospice.
PART B: COVERAGE
Physician visits, outpatient hospital charges, and most professionally administered drugs (drugs administered while at the doctor’s office). The coverage includes preventive services, like the flu vaccine. If your provider accepts 100% Medicare assignment (good luck finding one who does), then there is no out of pocket cost for most Part B services. Part B also covers ambulance services, mental health services, and limited outpatient prescription drugs.
DURABLE MEDICAL EQUIPMENT
Part B covers durable medical equipment if prescribed by your caregiver. This includes hospital beds, wheelchairs, walkers, power scooters, and portable oxygen equipment.
Part B covers prosthetic devices that replace all or part of an internal bodily organ, and prosthetics like artificial legs, arms, eyes, etc.
Part B covers orthotic devices like arm, back and neck braces.
HOSPICE CARE SUPPLIES
Part B covers at 100% for all medications used for comfort of dying as well as supplies for incontinence and basic level home care.
PART C: WHAT IS IT?
Medicare Part C is called Managed Medicare or Medicare Advantage. If you elect to have Part C, then you are basically replacing your Medicare coverage with a private healthcare insurance plan. In this case, Medicare pays the private company a fixed monthly fee, which typically costs less than the direct coverage for your medical needs.
You must be enrolled in Parts A and B before you can enroll in Part C. Once enrolled in Part C, by choosing a plan from an authorized Part C provider, then your Part A and Part B coverage is covered by the private insurance plan. The benefit of Part C is that the private company is able to manage costs better than the government. As a result, Part C coverage usually provides at least the same care as Part A and Part B and most often more – like dental, vision, hearing, and some prescription drugs. Sadly, this extra coverage typically comes with additional premiums, penalties, and deductibles. Another negative is that you are limited to the private insurance company’s local network of providers.
Basically, Medicare Part C is an HMO where you are limited to their network of providers and you cannot see a specialist without the prior recommendation from your primary care physician. Then there are the hidden costs. In a nutshell, the sicker you are, then the more likely you are to pay higher out of pocket expenses vs. Medicare Part A and Part B.
If you enroll in Part C and are unhappy, then you must wait until the next open enrollment period (October 15 – December 7 of each year) before you can switch back to Part A and Part B.
PART D: PRESCIPTION DRUGS
Medicare Part D was devised as a benefit for prescription drug coverage. Basically, you must enroll in, and pay a premium to, a private healthcare insurance plan specific to prescription drugs, or you can have the Part D included in your Part C plan. The idea being that the plan heavily discounts prescription drugs.
If you are considering Part D, then you should take a number of factors into consideration, and you should certainly compare costs. If you are taking routine medicines, then chances are that Part-D will be far more costly that simply using discount coupons. For instance, I now care for my 95-year-old mother. For years she belonged to a Medicare Part-D. Her out of pocket cost for both the Part D premium and copay was $145 per month ($1,740 per year). It turned out that the cost of my mother’s meds with a GoodRx coupon (not using Medicare Part-D) came to less than her copay while on Medicare Part-D. In other words, my mother was paying a copay of about $20 per med under Medicare Part D and $12.80 without Medicare Part D. Dropping Part D amounted to an annual savings in the ballpark of $1,200 per year. If you or your elderly loved one have no savings and are on limited income, then you can contact Medicare to enroll in an 'Extra Help' Part D program. This program, which is limited to those with limited income, will enroll you in a Part D program that does not charges monthly premiums and guarantees a co-pay of no more than $4 per prescription. The 'Extra Help' plans are the least costly of all options including GoodRx.
Before enrolling in Part D, take a look at what your meds would cost with GoodRx or similar coupons vs. the Part-D premiums and copays. If you find that the non-Part D price is better, then skip Part-D. If you are already on Part-D, then you must remain there until the open enrollment period (October 15 – December 7 of each year). If you wind up taking specialized meds in the future that are less costly under Part-D, then you can always sign up for Part-D later. Keep in mind, however, that there is a $3 per month premium surcharge should you wish to get on, or back on, Part-D any time after you first enroll in Medicare and every time after you leave Part-D.
Part 2: Medicaid - Coming Next Month
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