Understanding Medicare

What Is Medicare?

Medicare is a national, tax-supported health insurance program for people 65 and over and some persons with disabilities. If you or your spouse have worked full time for 10 or more years over a lifetime, you are probably eligible to receive Medicare Part A (Hospital Insurance) for free. Medicare Part B (Medical Insurance) is available at a monthly rate set annually by Congress ($110.50 in 2010 for incomes $85000.00 or less for an individual). Some seniors are eligible to receive the medical insurance portion (Part B) free as well, depending on their income and asset levels. For more information, inquire about the Qualified Medicare Beneficiary (QMB), Special Low Income Medicare Beneficiary (SLMB), and Qualifying Individual programs through your county social services office.

How Does Medicare Work?

Medicare is actually two separate types of insurance--hospital and medical. It is not intended to cover all your medical expenses. Hospital insurance (Part A of Medicare) covers medical treatment and surgical procedures performed in a hospital. It also covers hospice, home health, and limited skilled nursing care. Medical insurance (Part B of Medicare) covers part of the cost of doctor bills, outpatient care, medical equipment, and lab and diagnostic tests. With the Medicare modernization act of 2003, Medicare Part C (Medicare Advantage) and Medicare Part D (Prescription Coverage), also became available, through private insurance companies.

How Do I Get Medicare?

If you are receiving Social Security benefits prior to turning 65, you should automatically receive notification of your enrollment in Medicare shortly before your 65th birthday. Other individuals must apply by calling or visiting their Social Security office to receive Medicare. If you are not yet receiving Social Security or if you have not received a Medicare enrollment notice, you should contact the nearest Social Security office for information. Applications for Medicare can be made during a seven-month period beginning three months prior to the month of your 65th birthday. IT IS BEST TO APPLY DURING THE THREE MONTHS PRIOR TO THE MONTH OF YOUR 65TH BIRTHDAY. If an application is made during that time, coverage will begin on the first day of your birth month. Applying later will delay the start of your benefits. You can also apply for Medicare from January 1 through March 31 every year after your 65th birthday. Your coverage then starts July 1 of the year you signed up and you will pay a 10 percent surcharge on the Part B premium for each 12 months you were eligible but not enrolled.

What If I Am Still Working? If you continue to work after age 65 or your spouse is working and you are covered by an employer group health plan (EGHP), you may want to delay enrollment in Part B of Medicare. Enrolling in Medicare Part B will trigger your open enrollment for Medicare supplement insurance at a time when you do not need supplemental coverage. The penalty for late enrollment in Part B does not apply if you are covered by an EGHP because of your or your spouse's current employment. If you do work after age 65, you may apply for Medicare Part B at any time prior to retirement, but you must apply no later than eight months after your formal retirement in order to avoid paying a premium penalty. Even if your employer offers a retirement health plan, you will want to sign up for Medicare Part A and probably for Medicare Part B when you retire. Most retirement plans assume you are covered under Medicare and will not pay for services that Medicare would have covered. Veterans may be eligible for special medical programs. However, eligibility and benefits are very restrictive and are subject to change. The Department of Veterans Affairs advises veterans to apply for both Parts A and B of Medicare to ensure adequate medical coverage.

What About Costs Medicare Does Not Cover? Medicare pays for only a portion of hospital and medical bills. As with many private insurance plans, the government expects beneficiaries to pay a share of their bills. Medicare Parts A and B both have deductible and coinsurance requirements. The deductibles for 2010 are $1100.00 per Benefit Period, for Part A. The Part B deductible is $155.00 per year. Private insurance is available to cover all or some of these out-of-pocket costs. These insurance plans are called Medicare supplements (also called Med Sup or Medigap plans).

Medicare Supplement Insurance

Medicare Supplements are standardized by the Federal Government. They are lettered A, B, C, D, F, G, K, L, M & N. Each standardized Medigap policy must offer the same basic benefits no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies. Plan A pays the Medicare hospital and physician coinsurance, the first three pints of blood, and 365 days of hospitalization beyond Medicare. Plans B through N provide these benefits and add further benefits such as coverage for Medicare deductibles, excess charges and limited preventive care, and foreign travel. ONLY ONE MED SUP PLAN IS NECESSARY. You should only buy one Med Sup plan. No one should try to sell you an additional Med Sup plan unless you decide you need to switch policies.

Open Enrollment in Medicare Supplement Insurance At age 65, all consumers - including those already receiving Medicare due to disability - have a six-month "open enrollment" period. For six months beginning when you are both age 65 or older and enrolled in Medicare Part B, companies must sell you any Medicare supplement plan they offer. After this limited open enrollment period, companies can pick and choose whom they will cover. Other Options If you have an individual or "bank group" insurance policy, becoming Medicare eligible does not require you to cancel it and purchase a Medicare supplement. Doing so may save premium costs but it is important to compare benefits before deciding what will work best. If you are eligible for employer retirement insurance, review the plan carefully to understand what benefits are available and how it works with Medicare. Be aware that employer plans are not standardized and are not subject to the requirements governing standardized Medicare supplement policies. Some Texas residents are eligible to enroll in approved Medicare Advantage plans. These plans are offered by private insurance companies. Each year Medicare Advantage companies decide where they will offer their plans, what benefits will be offered, and what the premiums will be. There are several Medicare Advantage plans available in several counties in East Texas. Depending on plan choice, a member may be responsible for paying co-payments for certain covered services.

Should I Purchase Long-Term Care Insurance?

In the past, families often stepped in to help when older family members were no longer able to care for themselves. Today, with older people living longer, families often living long distances apart and more women working outside the home, fewer families are able to provide this care. A wide range of long-term care services is now available--day care, respite care, home care, and nursing care. These services are expensive and often exceed a person's ability to pay. People often mistakenly assume that Medicare will cover their long-term care costs. MEDICARE ONLY COVERS LONG-TERM CARE UNDER VERY, VERY LIMITED CIRCUMSTANCES.

Many Texas residents are eligible for Medicaid payment of their long-term care bills. Medicaid is a medical assistance program for people with limited income and assets. Eligibility is determined by the local county social services office. Private long-term care insurance is an option for people to consider, particularly if they have assets they wish to protect. You should not buy this type of insurance unless you can afford to pay the premiums every year. Remember, long-term care insurance premiums can and often do go up. Long-term care plans are not standardized like Med Sup plans. Therefore, it is very important to shop around and compare benefit options and cost.

David Hecker is a Licensed Insurance Agent based in Longview TX. He specializes in Medicare Products. He is licensed in Texas, Louisiana and Arkansas. He can be reached at (903) 918-9091. E-mail: dhecker@cablelynx.com or on the web at: http://www.tx-medicaresupplement.com To receive your "Free" e-mail newsletter about Medicare Supplements, send an e-mail request to: dhecker@tx-medicaresupplement.com Not connected with or endorsed by the United States government or the federal Medicare program.