Medicare and its additional Health Insurance Coverages

Medicare health insurance is part of the Social Security Act that was signed into law in 1965. As part of payroll tax, Medicare payments are set aside. Medicare health insurance is part of the Social Security Administration system. It addresses certain class and categories of individuals to obtain health insurance controlled and regulated by Department of Health and Human Services: Centers for Medicare and Medicaid Services.​
Introduction

Medicare health insurance is part of the Social Security Act that was signed into law in 1965. As part of payroll tax, Medicare payments are set aside. Medicare health insurance is part of the Social Security Administration system. It addresses certain class and categories of individuals for eligibilities to obtain health insurance controlled and regulated by Department of Health and Human Services: Centers for Medicare and Medicaid Services.

Eligibility of Medicare Health Insurance

You are above 65…

  • When you have earned Social Security credits: When you get past 64 to 65th year of your age, you are entering into the celebratory mode of life of senior citizenship. If you worked for at least 10 years paid Social Security and Medicare taxes, are a U.S. citizen or permanent resident of the United States, you are qualified for Medicare health insurance for the rest of your life. You will be getting material in your mailbox congratulating you for your upcoming 65th birthday that you and they have been waiting for. One of the mailer coming will be from Department of Social Security about your eligibility for Medicare insurance which will give you respite that you could technically announce yourself as retiree, or non-retiree for the love of work either by choice or compulsion. If you have been postponing learning about Medicare health insurance privileges that are being bestowed on you when you are going-on-65 may be year of learning to take stock of how you plan to take care of your health and happiness for years to come for the segment of your life which may run for another 30 – 35 years. Believe in the fact that people are living longer now than ever before! This aging phenomenon appears to continue.
  • When you have not earned Social Security Credits: When you are 65 or older, and you have not paid into Social Security for 10 years [40 credits], you still have the privilege to get Medicare health coverage, if…
    •   Your spouse worked for a least 10 years, is older than 65, and has paid Social Security and Medicare taxes.
    •  You can purchase Medicare health insurance by subscribing to Medicare premiums for Part A and Part B.

You have disability…

  • When you are under 65 and if you have…
    •  Certain defined disabilities by Social Security, and you have received get Social Security benefits [Social Security Disability Income: SSDI] for 24 months. The window to sign up for Medicare health coverage opens between 21st month and 28th month.
    •  Certain disability benefits from Railroad Retirement Board for 24 months qualify for Medicare health coverage.
    •  End-Stage Renal Disease (ESRD – permanent kidney failure requiring dialysis or transplant). You are eligible for Medicare after a 3 months’ waiting period.
    •  Lou Gehrig’s Disease or Amyotrophic Lateral Sclerosis (ALS); you are eligible for Medicare coverage the first month of diagnosis.
  • You have Medicare disability health coverage and you turn 65: You are eligible for initial enrollment window that opens 3 months before and 3 months after your birth month. You may switch over from your current plan to another plan from current plan.
  • It is best to call Medicare [1-800-MEDICARE] or preferably visit Social Security office and have ‘red-and-blue’ Medicare card issued.

Composition of Medicare Insurance and its Enrollment Features

There are four components of Medicare Insurance and its enrollment features as follows:

Part A

  • For coverage of hospitalization, skilled nursing facility, hospice, and home health services.
  • Social Security Administration/Medicare pays premium to the insurance company if subscriber has signed up with a private insurance carrier for Medicare Advantage plan.
  • Enrollment to Part A: If you are eligible, Social Security Administration/Medicare will automatically notify you of enrollment in Part A about three months before your birth month. If you have been taking social security benefits preceding to age 65, Social Security Administration will auto-enroll you in Part B along with Part A. You will see one date of enrollment on the ‘red-and-blue’ Medicare card that will arrive in your mailbox.

 

Part B

  • For professional services of physicians, surgeons, and other healthcare providers in any facility of healthcare providers.
  • Enrollment in Part B can be involuntary which Medicare does along with issue of Part A, or voluntary when you get choice to enroll or not to enroll.
  • Standard monthly premium is $104.90 a month. For individuals with income over $85,000 or filing joint income tax return having income over $170,000: premiums range is from $104.80 to $389.80 a month.
  • Enrollment to Part B: When you have Medicare Part A coverage, you have following options to enroll in Part B:
    •  You may enroll in Part B with Medicare when eligible first time, viz. in time window of three months preceding and three months succeeding your birth month of age 65, and pay monthly premium related to your income. This is termed as ‘Initial Coverage Enrollment Period’ [ICEP] in parlance of Medicare industry. If you enroll before the month you turn 65, coverage starts on first of your birth month.
    •  If you delay enrolling in Part B, you pay late enrollment penalty of 10% of monthly premium for each 12 months’ delay for life of enrollment. The only exception for waiver of this late enrollment penalty is if you can show that you had coverage under a good group health insurance plan from your employer or from your spouse’s employer. In such case, you have a wide window of 8 months for enrollment after termination of your group coverage by obtaining an exception termed as ‘Special Enrollment Period’ [SEP].
    •  If you missed the preceding two conditions of enrollment, you may enroll only during General Open Enrollment Period from January 01 – March 31, for the effective insurance from July 1st.

Part C

  • Part C is combination of Part A and Part B. This is termed as Medicare Advantage [MA] plan. Medicare Advantage plan [MA] when combined with Part D, the prescription drugs coverage of Medicare insurance, the plan is called Medicare Advantage with Prescription Drugs [MAPD] plan. Private insurance carriers sponsor these plans to the Department of Health and Human Services: Centers for Medicare and Medicaid Services, and enter into annual contracts.
  • When you have ‘red and blue’ Medicare card in your hand, verify the effective dates of entitlement to Part A and Part B. If you do not read Part B, it is decision time for you to enroll in Part B or not to enroll in Part B. Having weighed the features of Part B and Part D enrollment, you may call Medicare [1-800-633-4227] or go online to  https://www.medicare.gov/  and enroll.

Part D

  • This prescription drugs part of Medicare insurance. This of offered by private insurance companies. Like delay in sign up for Part B, if there is delay in signing up for Part D insurance and you did not have equally good or better coverage from any other insurance plan, the penalty of 1% for every 12 months delay will kick in.
  • Private companies who contract with Medicare sell all Prescription Drugs Plan. Medications are grouped in categories of purpose and are listed in formularies. Each medication is assigned its tier level that points to generic, brand name, and pricing.
  • Enrollment to Part D: Enrollment in Part B is pre-requisite to enrollment in Part D prescription drug benefits.

Annual Enrollment Periods for Making Changes

  • October 15 – December 7: This is open season for switching from one type of plan to another without you having to give any reason to make changes to your current plan. Changes with take effect on January 1st.
  • January 1 – February 14: This is the disenrollment period from Medicare Advantage plan to revert only to Original Medicare plan. You can add Medicare Prescription Drugs Plan coverage to Original Medicare plan. This will take effect on first of the following month. You cannot do….
    •  Switch from Original Medicare to a Medicare Advantage
    •  Switch from one Medicare Advantage to another Medicare Advantage
    •  Switch from one Prescription Drugs Plan to another
    •  Join, switch, or drop a Medicare Medical Savings Account Plan

 

Special Enrollment Period [SEP]

When there are circumstances and events in your life that compel you to make changes to your Medicare health coverage, Medicare accommodates you to initiate and make changes to your existing Medicare health plans. In parlance of Medicare, such ‘Qualifying Events’ trigger Special Enrollment Period [SEP]. It is best to call Medicare at 1-800-633-4227 and find out if you can have this Special Enrollment Period [SEP] approval to make changes. Make note of the reference number that you get and its applicability timeframe within which you can initiate changes in your health coverage plan. Such qualifying events are categorized as follows:

  • Changes in where you live: If you have moved out of service are of your current plan; moved back to the U.S. from living abroad; moved to or moved out of an institution like nursing facility, etc.
  • Losing current coverage: This could be due to a number of reasons like you lost your Medicaid coverage, you are not eligible for Extra Help any more, you left coverage from your employer or union, you lost your drugs coverage that was as good as Medicare standards, etc.
  • Changes in Your Current Plan: If either the carrier pulls out plan from its service area, or the plan terminates with Medicare, you may initiate for new enrollment option with Medicare by calling 1-800-633-4227.
  • Changes Due to Special Situations: There may be circumstances that compel you to make changes to your Medicare health plan. Some typical changes in your situation can be:
    •  You become eligible for both Medicare and Medicaid.
    •  You qualify for Extra Help paying for Medicare prescription drugs coverage.
    •  You are enrolled in State Pharmaceutical Assistance Program [SPAP] and you lose this eligibility.
    •  You have severe or disabling medically chronic condition that and there is a Medicare Chronic Care Special Needs Plan (SNP) available that will serve you better.
    •  If there has been an error in your enrollment to the plan.

Financial and Functional Support of Medicare Health Insurance Plans

Health Insurance industry is the organizer of flow of money by way of insurance premiums as inflow from the insured, and satisfies the claims of the healthcare providers as outflow for the services rendered. The healthcare insurance carriers enter into contracts with subscribers, providers, and the support people involved. Federal government and state governments regulate this huge industry.

Medicare Costs and Services by Original Part A, Part B, and Part D Coverage

  • Part A covers Hospital Inpatient Stay which has following limitations in each benefit period of 12 months:
    •  You pay $1,288 deductible and no coinsurance for days 1 – 60.
    •  You pay $322 per day for your hospital stay for days 61 – 90.
    •  You pay $608 per day out of your lifetime reserve of 60 days above from 91 – 150 days. Thereafter, you pay flat hospital charges for stay.
    •  If you need Skilled Nursing Facility Care, you pay $0 for first 20 days, and $152 per day for days 21 – 100. After 100 days, you pay full charges.
    •  If you are back to hospital within 60 days of discharge, your stay days are counted in same benefit period.
  • Part B helps pay for a variety of medically necessary care such as hospital inpatient and outpatient, clinical, and doctors’ office. This includes services by physician, surgery, nursing, laboratory, diagnostic, medical support equipment, emergency, urgent room services, skilled nursing care, mental health care as outpatient, necessary drugs administered by doctors, and hospital medications etc.  Your copayment and coinsurance are as follows:
    •  Your deductible is $166. You must pay this basic expense before your coinsurance.
    •  Your coinsurance is generally 20%, and may be more on some services; Part B. pays the rest of costs.
    •  The amount Part B will pay for any service or procedure is called Medicare approved amount. Most doctors agree to take Medicare approved amount as full payment, termed as ‘accepting assignment’. However, doctors who do not agree to Medicare approved amount are permitted to charge up to 15% additional.
    •  There is no limit or cap on your ‘out-of-pocket’ expenses of cost sharing coinsurance. If you are hospitalized and undergo some surgery or procedures; or you have a chronic condition that requires lot of care; or you have a serious illness; your cost sharing can be sudden, substantial, and financially draining.
  • Part D helps pay for prescription drugs for your health care. Prescription drugs coverage is an insurance policy you buy from private insurance companies. You can buy a standalone separate policy just for drugs, called prescription drugs plan. Alternatively, you can buy Medicare Advantage plan that includes drugs coverage. Medicare has issued guidelines for the type of drugs that must be covered by drug plans and the minimum standards of benefits. Insurance companies design different plans, which conform to or exceed minimum standards set by Part D. These plans vary by cost and by their formulary, or list of specific drugs covered. Drug plans have preferred and non-preferred pharmacies to choose from and the geographical area they are offered. Medicare Advantage plans with prescription drugs coverage have network of pharmacies that go with the plan and set their own pricing structure. Cost sharing of prescription drugs is designed based on deductible, copayment, coinsurance, and coverage gap above certain expense incurred. Typically, the annual cost share expenses are as follows:
    •  Deductible … $360, which is updated annually and may vary with the plan.
    •  25% of prescription drugs costs between $360 and $3,310 = $738. This makes enrollee’s initial ‘Out-of-Pocket’ expense limit as $360 + $738 = $1,098.
    •   The next slot of coverage is when “Out-of-Pocket’ expense above $1,098 to $4,850 corresponding to total drug expenditure of $7,515. This is coverage gap, also termed as Donut Hole, has mixture of what plan pays, what enrollee pays, and what manufacturer’s discount is given for brand name drugs.
    •  Above ‘Out-of-Pocket’ expenditure of $4,850, enrollee enters into ‘catastrophic coverage’ slot, in which the plan pays 95% of costs, and the enrollee pays 5%.
    •  Note that for a heavy user of prescription drugs, this is substantial expenditure. It is important that the enrollee shops for enhanced prescription drugs a plan, which not only has all the drugs that enrollee takes, but it also gives the projected annual expenditure.

Innovative Solutions for Uncovered Medicare Insurance

Insurance carriers have come up with innovative solutions and plans to reduce the financial risks of coverage gaps in original Medicare coverage of Part A, Part B, and Part D.

Considerations to Compose Medicare Plan

It is important to compose different components of Medicare, Part A, Part B, and Part D having shortages of coverage to make the plan wholesome to minimize financial risks to meet your health and medical needs. Some points of consideration are as follows:

  • Your personal health care needs
    • How is your health?
    • Do you take prescription drugs daily? Which ones? How much are you spending?
    • What doctors do you regularly see? How would you like to see new doctors?
    • How much do you travel?  Where all?
    • Are you eligible for any health care coverage besides Medicare?
    • How much did you spend on medical care last year? How does health care fit into our budget?
  • How you would like to combine Medicare components with Medicare Supplement, or Medicare Advantage with or without Prescription Drugs. Having decided on what suits you the best, look for the available plans in the area you live in.
  • If you are in low-income bracket, and you believe you need financial help to take care of your health, you should visit Social Security office and get to know what ‘extra help’ may be available to you.
  • When you enter 65th year, and the window opens for Initial Enrollment, act quickly and make sure your coverage begins when you want it to.  You can make changes during Annual Enrollment Period.

 

Tips for Your Medicare Benefits

  • Keep your Medicare card safe along with other additional Medicare related cards in your wallet.
  • Keep track of your bills. If you suspect unfair, erroneous, or wrongful billing, you must ask for explanation and report to your insurance carrier or Medicare. This will help prevent fraud.
  • Choose your health care providers carefully. The quality of care may vary among doctors, hospitals, and other providers.
  • Understand how Medicare and related coverage by Medicare Advantage, Medicare Supplement, and Prescription Drugs Plans work.
  • Must know how the plan you purchase defines the ‘in-network’ and ‘out-of-network’ services of providers. You may run into situation where there could be ‘out-of-network’ providers like surgeons anesthesiologists under the same roof of a facility who can spring ‘surprise billing’ on you.
  • For non-emergency procedures that you may plan to undergo in a provider’s facility or hospital, make sure that you get the estimate of services and get pre-approval from your insurance carrier.
  • When you get statement of services in the mail, called Medicare Summary Notice, look it over and ensure you got the services that were billed on your behalf.
  • You have the right to know and right to complain.

 

Educational Material

  • The most significant educational material you may get in the mail about 3 – 4 months before your 65th birthday is ‘Medicare and You’ booklet. If you missed it, click here to download and browse over,This booklet gives you sufficient information to get started.
  • The other route plan for you is to visit the authoritative website https://www.medicare.gov and wind your way to navigate through to learn what you should do when.
  • You may prefer to call the Help Lines at 1-800-MEDICARE (1-800-633-4227), and ask them how best you can go about getting Medicare health insurance.

 

​Conclusion

Most people find Medicare insurance to be exhaustive, confusing, and are disillusioned when they discover that they have to buy additional coverage over and above the Original Medicare coverage to reduce financial risks of uncovered portion of Medicare insurance. These premiums are Part B, Part D, and Medicare Advantage plan if you enrolled in it or Medicare Supplement insurance if you enrolled in it.

Please do not hesitate to contact us for your questions, comments, and clarifications.

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