Medicare can seem overwhelming. But if you are a caregiver, it's important to understand how it works, as it will likely be the primary insurance coverage for your loved one.
Medicare is a federal program that provides health insurance for people over age 65, as well as some younger people with disabilities and people with end-stage kidney disease or Lou Gehrig's disease (ALS). By learning about enrollment, benefits and out-of-pocket costs, you can help your parents make informed heath care coverage decisions.
Like most other insurance, Medicare does not pay for all health care costs. Patients are responsible for deductibles, premiums and coinsurance or co-payments.
Medicare also doesn't cover:
- long-term or custodial care (such as help with bathing and dressing);
- an extended stay in a nursing home;
- health care when you travel outside the country.
Medicare has several plans and the choice affects how much you pay and what is covered.
Original Medicare Plan (also known as traditional)
- Is set up as fee-for-service.
- Patients can choose any doctor or hospital that accepts Medicare.
- Part A helps pay for inpatient hospital care, limited nursing home and home health care, and hospice care.
- Part B helps pay for doctor visits, some outpatient home health care, medical equipment, some preventive services, outpatient hospital care, rehabilitation therapy, laboratory tests, x-rays, mental health services, ambulance services and blood.
- Part A has no premiums. There is an annual deductible and coinsurance payments.
- Part B coverage is optional. There is a monthly premium for Part B, plus an annual deductible and a coinsurance payment of 20 percent of approved charges.
- Some people wait to sign up for Part B, but those who wait may have to pay a late enrollment penalty if they enroll after the period when they are first eligible.
- Medicare Advantage Plans (also known as Medicare Health Plans or Medicare Part C)
- Plans vary widely and include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Private-Fee-For-Service (PFFS) plans.
- Plans are run by private companies that decide the rules for covering benefits and payments.
- Each year, the company can change benefits, premiums and other costs.
- In most plans, patients can only go to doctors, specialists and hospitals on the plan's list.
- Going out of network usually costs more out-of-pocket.
- Most plans offer at least one option with drug coverage.
- Each year, patients can decide whether to stay in their current plan, switch to another Medicare Advantage plan or return to Original Medicare.
Medicare Prescription Drug Coverage (also known as Part D)
- There is no single Medicare drug plan.
- They are run by private companies that have been approved by Medicare to offer prescription drug coverage.
- Benefits and costs vary among sponsors and drug plans.
- Medicare drug plans are not required to cover every prescription drug, but they must provide choices within each category of drugs.
- Plans do not cover over-the-counter medicines.
- Like other insurance, Part D plans have premiums, co-payments and/or coinsurance, and sometimes deductibles.
- Costs will depend on what drugs you take and which plan you choose.
Paying for Medicare
Medicare Part D Extra Help Program
- For people who have limited incomes and resources to pay for most of their Medicare Part D premiums, co-payments and deductibles.
- Provides continuous drug coverage throughout the year.
- Seniors who are enrolled in Medicaid, Supplemental Security Income (SSI) or a Medicare Savings program automatically get Extra Help with paying for Part D. Otherwise, seniors need to first apply for Extra Help and then enroll in a private Medicare approved prescription drug plan.
Medicare Savings Programs
- These programs help pay out-of-pocket Medicare costs for people with Medicare who have limited incomes and resources.
- Programs are known as the Qualified Medicare Beneficiary (QMB), the Specified Low-Income Medicare Beneficiary (SLMB) and the Qualifying Individuals (QI).
Medigap or Medicare Supplemental insurance
- Sold by private companies, this coverage pays for some of the health care services and supplies not covered by Original Medicare such as your share of doctor and hospital services.
Originally published May 15, 2012