What You Need to Know About Medicare
Gavin Magor
07/16/08 - 11:09 AM EDT
The Medicare bill awaiting approval by the president at one time had payments to physicians that were to be cut by 10.6%, but are now going to remain the same. The reductions will now, instead, be substantially paid for through cuts in Medicare Advantage funding.
Medicare, of course, is the U.S. government-run health care plan. Medicare Advantage is private insurance with different coverage.
Everyone who reaches age 65 becomes eligible for Medicare, which provides basic medical services for the elderly in two ways. Part A provides coverage for hospital care and Part B provides coverage for medical insurance. You are liable for deductibles under both parts of the insurance.
You can access the benefits of Medicare Part A and Part B one of two ways: Original Medicare or Medicare Advantage.
Original Medicare
Most seniors get program benefits under original Medicare, also known as traditional fee-for-service Medicare. You sign up directly with the Medicare program, with benefits provided by the federal government.
Under original Medicare, you can visit any physician or hospital that accepts Medicare payments, and the government will reimburse the health care provider or yourself. You are responsible for paying the amounts not covered by the Medicare program. You will not need to complete any forms for reimbursement.
Medicare provides basic services and has various limitations. The gap between what is covered and what is not covered is becoming larger and larger. It was never designed to cover prolonged medical treatment nor chronic conditions and consequently it does not meet all seniors' needs.
In addition to the deductibles that you will be liable for, there are co-payments that will be your responsibility, such as the fee for your share of the daily costs of hospital care once your stay reaches 60 days.
In some cases where a physician does not accept Medicare, you might find that the fees exceed those approved by Medicare, and you might be liable for more than you would otherwise.
Finally, there are payments that are simply not included under Medicare, such as hearing aids or treatment abroad.
Medicare Advantage
The other way to receive Medicare benefits is through private insurers that operate health plans, known as Medicare Advantage plans. These private insurers receive funding from the government to provide you Medicare Parts A and B, and some additional coverage. Medicare Advantage, "Part C" of the Medicare program, represents one-stop shopping.
These offerings come in different designs, with the "Advantage" being that the insurer provides you additional hospitalization and medical coverage above what Medicare mandates, such as hearing aids or coverage abroad, at little or no extra cost. The plans can include dental and vision services at a price more competitive than Medigap. (See below for more on Medigap.)
Although you might be restricted in your choice of medical providers, you will most likely be limited to the plan's network, and referrals might be required for specialists, but you will not need to file forms for reimbursement with Medicare Advantage.
If you decide to go with Medicare Advantage, make sure you understand the plan that you're signing on for, and that it provides what you need.
Remember that this is private coverage, and after the contract period expires you can have your benefits discontinued and need to seek a different provider or return to original Medicare.
Medigap
You can get additional hospitalization and medical coverage by purchasing a private insurance policy called Medicare Supplement Insurance or Medigap. Some beneficiaries have retiree health benefits from a former employer that helps to fill Medicare's gaps in Part A and Part B coverage.
To make comparing policies from one insurer to another easier, Congress standardized and simplified Medigap plans so that there were just 10 to choose from. All the plans are known by letters, with Plan A being the most basic and Plan J being the most comprehensive. Wisconsin, Massachusetts and Minnesota offer different plans, but they follow the same principle.
In 2006, two new plans, K and L, were introduced. These plans are intended to have lower monthly premiums with higher deductibles, and can be attractive to seniors unwilling or unable to pay higher monthly premiums or to those who have expectations of low health expenses and are prepared to pay a higher deductible with a cap to costs.
Prescription Plans
Medicare now offers insurance coverage to help you pay for prescription drugs. Medicare prescription drug coverage, commonly referred to as Medicare Part D, works differently from other Medicare coverage.
Medicare prescription drug coverage is available only from private companies that have been approved by Medicare. All private companies that are approved to offer Medicare's prescription drug benefit must offer a minimum level, known as the Standard Medicare Drug Benefit.
While plans have to offer prescription drug coverage at least as good as that standard benefit, many have designed their offerings differently, generally offering more benefits.
There are two ways to access prescription drug benefits paid for by Medicare: by enrolling in either a stand-alone prescription drug plan or a Medicare Advantage plan.
1) Stand-alone Prescription Drug Plans (or PDP) -- These are Medicare-approved plans that provide coverage only for prescription drugs. Upon enrolling in a PDP, you will receive your Medicare prescription drug benefits and pay a separate Part D premium to the plan. (The plan also receives funding from the government.) You then combine this coverage with your original Medicare benefits and any other health care coverage.
2) Medicare Advantage Prescription Drug Plans (or MA-PDP) -- In addition to your medical and hospital coverage, these provide you with prescription drugs (Part D). Some plans will charge you a premium, others won't.
