Medicare is a program started in 1965 by the United States government to provide health insurance to Americans over 65, the disabled, and people with end-stage renal disease. Medicare is a four-part insurance program that allows enrollees to choose between the traditional, open-network single payer plan, or a network plan. As of 2010, Medicare provided health insurance to 48 million people in the U.S.
Medicare benefits are split up into four parts, with each part of the program covering a different area of health care.
- Part A helps cover inpatient hospital care, as well as skilled nursing facilities, hospice, and home health care.
- Part B is the basic medical insurance portion of Medicare, and helps cover the services of doctors and other health care providers, outpatient care, home health care, and durable medical equipment. Part B also covers preventative medicine.
- Part C is known as "Medicare Advantage," offering health plans from private insurance companies that are paid for by the government. Medicare Advantage provides the same coverage as Medicare Part A and Part B, and most plans also cover prescriptions, as well (Medicare Part D). Extra benefits may be available at additional cost with some Medicare Advantage plans.
- Part D helps cover prescription drug costs, and is run by private insurance companies. Not only can Part D coverage lower your out-of-pocket cost for prescriptions, but it also can protect against cost increases in the future.
Plan OptionsWhen enrolling in Medicare, the first decision you must make is whether to enroll in the original Medicare plan or Medicare Advantage. Here is how they differ:
- Original Medicare includes Part A and Part B for hospital and regular medical coverage. On this plan, you may choose any doctor, hospital, or other provider as long as they accept Medicare. You will have to pay a deductible and coinsurance, unless you have supplemental coverage that covers them. You will also pay a monthly premium for Part B.
- Medicare Advantage (or Medicare Part C) includes both hospital and medical coverage through Medicare-approved private insurance companies. You will be required to use doctors, hospitals, and other providers that are included in the plan. Medicare Advantage usually includes a monthly premium (in addition to your Part B premium), plus a copayment or coinsurance for covered services.
For prescription drug coverage, you will need to enroll in Medicare Part D, which usually includes a monthly premium. With the Original Medicare Plan, you have the choice to buy supplemental insurance that fills in the gaps in coverage--this type of insurance is called Medigap and is provided by private insurance companies. You may also be eligible for similar gap coverage through your employer or union.
Prescription drug coverage is normally offered as part of whatever plan you are enrolled in through Medicare Advantage. For plans that do not offer prescription drug coverage, you can enroll in Medicare Part D. If you have Medicare Advantage, you cannot have Medigap supplemental insurance as well.
EnrollmentThere are a few rules that apply to Medicare enrollment. For example, you must enroll within 7 months of becoming eligible for Medicare. If you are turning 65, this means you can enroll anytime during the 3-month period prior to your 65th birthday, the month of your 65th birthday, or the 3-months following your 65th birthday. Coverage will begin between 1 and 3 months after you sign up, depending on your birth date and timing of enrollment.
If you miss the enrollment window, you can also sign up for Part A and/or Part B during the General Enrollment Period, which runs from January 1 to March 31 of each year. Coverage for the General Enrollment Period begins on July 1. It's important to keep in mind that, even though you are allowed to enroll during the General Enrollment Period, you can be financially penalized for late enrollment. If you don't sign up for Medicare Part A or Part B when you are eligible, your monthly premium may be 10% higher for a period of time, depending on how late your enrollment is. Some people may qualify for a Special Enrollment Period, such as if you are covered under your or your spouse's employee health plan, or if you are volunteering abroad during your regular enrollment period.
Medicare Summary NoticeFor Original Medicare, the law requires that doctors and suppliers file claims on your behalf. Only in very rare instance will you have to file your own claim. In Medicare Advantage, Medicare pays the private insurance a set amount each month, so there are no claims to file. To see the claims that have been filed on your behalf, you will receive a Medicare Summary Notice (MSN) every 3 months that shows your services and supplies that were billed to Medicare, what Medicare paid, and what you owe, if anything. Your provider or supplier will bill you directly for any unpaid claims. If you wish to dispute a claim, you have the right to appeal, as well.
Medicare Savings ProgramsIf you cannot pay your Medicare premiums or medical and drug costs, there are several Medicare Savings Programs that may help. There are four different Medicare Savings Programs that differ in terms of income limits and coverage. They include:
- Qualified Medicare Beneficiary (QMB) Program - Helps cover Part A premiums, Part B premiums, deductibles, coinsurance, and copayments.
- Specified Low-Income Medicare Beneficiary (SLMB) Program - Helps cover Part B premiums.
- Qualifying Individual (QI) Program - Helps cover Part B premiums. You must apply for the QI Program each year. Applications are granted on a first-come, first-served basis, with priority on those who received QI benefits the previous year. You may not apply to the QI Program if you qualify for Medicaid.
- Qualified Disabled and Working Individuals (QDWI) Program - Helps cover Part A premiums. This program is for working disabled people under 65 who lost their premium-free Part A Medicare upon returning to work, who aren't receiving state medical assistance, and who meet state income and resource limits.