Medicare, Medigap and Medicaid

The ABCs of Medicare: Medicare is a federal health insurance program, enacted by Congress in 1965, to benefit people 65 years of age and older as well as some disabled people under 65 years of age. It is managed by the Centers for Medicare & Medicaid Services, which is part of the Department of Health and Human Services.

Part A: The basic Medicare coverage is also referred to as Part A compulsory hospitalization insurance. It's financed through payroll taxes that are shared by employers and employees alike. It's provided free to anyone who qualifies for Medicare benefits.

Part B: The next layer of coverage, referred to as Part B supplementary medical insurance, covers most of what isn't covered by Part A and is paid for by the insured individual via an enrollment program. For 2014, the basic monthly premium is $104.90, or higher if you are in a high income bracket. The income thresholds may increase annually by indexing to the Consumer Price Index (CPI).

Part C: Medicare + Choice is a newer program initiated in 1997 and referred to as Part C. If a beneficiary chooses Part C, it takes the place of Parts A and B. Part C is basically a Medicare HMO or PPO plan.

Part D: The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MIMA) made a number of significant changes to the Medicare law. Medicare Part D (the permanent drug assistance program) began January 1st, 2006. This part of the new law is intended to give everyone equal access to prescription medication via a means test and participation of the private insurance industry.

Medigap: While Medicare provides extensive benefits, there are nonetheless significant gaps in coverage. The private insurance industry has created special policies designed to supplement Medicare coverage and these have been dubbed Medigap policies.

Medigap policies (including Medicare SELECT) can only be sold in standardized plans plus a couple of hybrids and include certain basic benefits.

For more information regarding choosing a Medigap policy, consult the government's publication. Also, you can use this handy link to learn what specific Medigap plan options are available to you in your local area.

Who is eligible?

Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment, you are 65 years old, and you are a citizen or permanent resident of the United States. You might also qualify for coverage if you are a younger person with a disability or with End-Stage Renal disease (permanent kidney failure requiring dialysis or transplant).

What does it cost?

Part A (Hospital Insurance) Premium: Most people do not pay a monthly Part A premium because they or a spouse have 40 or more quarters of Medicare-covered employment.

Part B (Medical Insurance) Premium: For 2014, the monthly premium is $104.90. If your income is above $85,000 (single) or $170,000 (married couple), then your Medicare Part B premium will be higher than $104.90 per month. At the end of each year, Social Security should notify you if your Part B premium will increase based on the level of your income two years prior to the current year.

What are the deductibles and/or co-insurance?

Part A (Hospital Insurance):

1. Deductible is currently $1,216 per benefit period in 2014.
2. Coinsurance
   • $304 a day for the 61st - 90th day each benefit period.
   • $608 a day for the 91st - 150th day for each lifetime reserve day (total of 60 lifetime reserve days - non-renewable).
3. Skilled Nursing Facility Coinsurance is $152 per day for days 21 through 100 in each benefit period.

Part B (Medical Insurance): Deductible is $147 per year plus 20% of the Medicare approved amount for services after you meet the deductible.

More information and health care reform. The government's Medicare website is an excellent resource for updated Medicare-related information, including the impact of health care reform on Medicare coverage.

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