Medicare 101: Understanding the basics

“…Medicare has been a boon to the elderly and their children. Surveys show that beneficiaries are overwhelmingly satisfied with their care. Before Medicare, only 56 percent of the elderly had hospital insurance; the program has contributed to an increase in life expectancy and a sharp reduction in poverty among the elderly.”

Quote from Robert Pear, Walt Bogdanich, Some Successful Models Ignored as Congress Works on Drug Bill, NY Times, p.1 (9/4/2003)

Medicare is a federal government managed healthcare plan offered to eligible seniors over 65 and a certain disabled segment of the population. Medicare can significantly help manage or lower your overall healthcare expenses. 95% of seniors, 65 years or older have Medicare coverage. Seniors over 65 year’s old and disabled individuals that have Medicare coverage is 44.8 Million people in 2008 per the CMS data Compendium. Medicare is a wonderful help for the majority of American seniors and disabled individuals.

Medicare has different parts, such as Part A, which is hospital coverage. This is for the most part provided to seniors at no monthly premium cost because they or their spouse paid Medicare taxes while working. A deductible applies to hospital charges before Medicare will provide coverage. The current Part A deductible is $1024 per illness for 2008. This covers a percentage of hospital incurred expenses such as hospital stay charges, meals while in the hospital, some long term care facilities, hospice and home health care. For longer hospital stays there is a Part A copayment. The deductible covers the first 60 days of a Medicare-covered hospital stay. Then the recipient must pay $265 a day for days 61-90. After the 90th day, the co-pay for lifetime reserve days is $512 a day.

Part B is a Medicare supplemental plan in addition to the Part A. There is a monthly premium charge for Part B and this is usually deducted from your social security check. Part B provides coverage for Doctor’s charges. This would include inpatient doctor’s visits, office visits and some other services that Part A doesn’t cover such as lab work, radiology, and some procedures and supplies. Some exclusions do apply. These can be determined by calling the Medicare hotline at 1-800-MEDICARE or online at Part B is also subject to a deductible which is $135 for 2008 and then covers eligible charges at 80% in most cases.

Part C is coverage provided by Medicare through Advantage plans (similar to HMOs and PPOs), which are privately managed health plans that offer network plans. These plans cost a monthly premium and have been approved by Medicare. Advantage plans manage your Part A and Part B Medicare plan with network providers to bring discounted services and benefits to eligible seniors. Medically necessary services are usually covered and out-of-pocket charges are often less on these plans because your provider choice is limited to the plan’s network of providers and cost’s are negotiated with these doctors or facilities.

Part D is the prescription plan for Medicare. This is a fairly new addition to the Federal Medicare plan. You must be enrolled in Medicare before you can apply for Part D coverage. Most recipients will pay a monthly premium for this and it is offered through a private health plan that you choose. If you have Part A or B you are then eligible for Part D. The enrollment period is November 15 until December 31st each year. At that time you can enroll in a new plan or switch plans. Part D Prescription coverage may help you to lower your prescription drug. An initial $265 deductible applies, then, the enrollee must pay 25% of the drug’s cost with a total out-of-pocket expense of $3850 annually. This includes the deductible and coinsurance. If the out-of-pocket total is met then a generic drug will cost $2.15 and a branded drug will be $5.35, or a flat 5% co-insurance, whichever of the two is greater.

Although Medicare coverage may be a bit complicated at first, there are resources to aid you in understanding the choices and plans available to you. For any additional questions you may have about Medicare plans or coverage please call the toll-free Medicare hotline at 1-800-MEDICARE or visit online at