Medicare Overview

The Medicare Program¹ was enacted through Title XVIII of the Social Security Act, and became effective July 1, 1966. Medicare is our country’s health insurance program for people age 65 or older. Certain people younger than age 65 can qualify for Medicare, too, including those who have disabilities and those who have permanent kidney failure or amyotrophic lateral sclerosis (Lou Gehrig’s disease). The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care. The Centers for Medicare & Medicaid Services (CMS) is the agency in charge of the Medicare program.

Medicare Part A – Hospital Insurance²

The Medicare Part A benefit covers care in an acute care hospital or long term care hospital, and follow up care in a skilled nursing facility, home health agency or hospice.

• Payment is based on a model known as the Prospective Payment System (PPS), and the amount of payment is determined by pre determined criteria by care setting.
• Part A and Part B together are also referred to as Original or Traditional Medicare.

Part A Deductibles and Co-payments³

• Acute Care Hospital (Click here to read more) or Long Term Care Hospital (Click here to read more): The Medicare beneficiary is responsible for a deductible and co-payments for inpatient hospital care. The beneficiary may purchase a Medigap or supplemental insurance policy to cover the deductible and co-payments.
  • The deductible is payable at the beginning of each benefit period and is adjusted annually ($1132/benefit period for 2011)
  • Co-payment for days 61 through day 90 (1/4 the deductible amount - $283/day for 2011)
  • Co-payment for Lifetime Reserve Days (1/2 the deductible amount - $566/lifetime reserve day in 2011)
• Skilled Nursing Facility (Click here to read more): The Medicare Skilled Nursing Benefit is a maximum of 100 days per benefit period.
  • Medicare requires a co-payment  for days 21 through 100 (Adjusted annually - $141.50 in 2011)
• Home Health Care (Click here to read more): No deductible or co-payment.

Medicare Part B – Medical Insurance⁴

Anyone who is eligible for Medicare hospital insurance (Part A) can enroll in Medicare medical insurance (Part B) by paying a monthly premium. Medical insurance helps pay for doctors’ services and many other medical services and supplies that are not covered by hospital insurance.

• Medical insurance premiums and deductibles are increased annually every January 1^st.
• Beneficiaries may purchase a separate Medigap policy that covers costs not covered by Part B medical insurance.

Durable medical equipment and medical supplies are provided by Retail Suppliers (Click here to read more), and payment is based on an allowable fee, where Medicare pays 80% and the beneficiary is responsible for the remaining 20%. Medicare has established a coverage policy, also called a Local Coverage Determination (LCD), for all product categories covered under the Part B benefit, including: Ostomy (Click here to read more).

Medicare Part C – Medicare Advantage

The Medicare Advantage program allows Medicare beneficiaries to receive their Medicare benefits from private plans rather than from the Original (Medicare Part A and Part B) programs.

• Under the Medicare Advantage programs, Medicare buys insurance coverage for its beneficiaries from private plans with monthly payments from Medicare.
• The Medical Insurance (Part B) monthly premium is deducted from the beneficiary’s Social Security payment.
• The Medical Insurance benefits are provided through the beneficiary’s Medicare Advantage plan.
• Plan coverage must include all Medicare Part A and Medicare Part B benefits except hospice.