Medicare only pays for 80 percent of a standardized amount for procedures

Many of those over 65 who saved for retirement have retained greater economic flexibility than those hit by layoffs while still trying to amass savings. That makes seniors a very desirable market for several industries. In fact, senior marketing is the fastest growing marketing segment today.

In sharp contrast, one of the biggest marketing failures that can have seriously harmful complications for those over 65 surrounds Medicare. With multiple parts, two deductibles, partial coverage (only 80 percent) for doctors' services, no coverage at times (such as when you travel outside of the U.S.) and no reconciliation when doctors charge above what Medicare will pay, Medicare is a maze of contradictions. How do seniors calculate and plan for their health care costs?

In truth, both people under and over age 65 find Medicare often to be obscure and some simply give up in confusion. It's a sad comment on the "information age" that we haven't explained Medicare's coverage in a way that allows many seniors to estimate their expected health care costs and plan accordingly.

Medicare Supplement Plans Help to Translate Medicare's Coverage

Private insurers marketing Medigap insurance must explain Medicare, at least in part, to show the need for their plans to protect seniors from all the health care charges that Medicare won't cover. For many, private insurance companies discuss Medicare in ways that are more direct and more comprehensible to give seniors a better overall understanding of where the holes in Medicare's coverage put them at risk. The risk is real because hefty doctor and hospital bills far too often devour retirement savings forcing seniors to reduce their standard of living. Health care costs may be the single biggest concern for many seniors because their need for health care grows as they age and because health care prices are spiraling out of control.

A Medicare Supplement Can Cut Seniors' Medical Bills down to Size

With existing Medicare benefits in jeopardy (Medicare was extended beyond it's predicted bust in just eight years), baby boomers and seniors are exploring alternatives, such as Medicare Advantage plans and Medicare Supplement plans.

In the face of the new health care laws, Advantage plans are beginning to lose their subsidies. It's expected that these plans will become increasingly expensive with the decline of government subsidies. Medigap insurance, often called Medicare supplement insurance, is a viable alternative. With 10 different plans, each one fills the gaps in Medicare in a slightly different way so seniors are free to choose only the benefits they need without paying for any extras. Medigap plans cover Medicare's Part A and Part B deductibles to make seeing the doctor and going to the hospital when you need more affordable. These plans can also cover Medicare's co-pays and co-insurance charges, and certain plans expand Medicare's coverage to services beyond Original Medicare, such as emergency medical care when you're out of the country.

Confusion over Medicare Has Left Seniors Unprepared for Health Care Debt

Although millions are now enrolled in Medicare in order to pay for their health care needs, many remain unprotected simply due to a lack of understanding about the intricacies of the Medicare system. One of the biggest misunderstandings involves the Medicare "pre-approved" amount. Medicare only pays for 80 percent of a standardized amount for procedures. That doesn't stop doctors from charging more; it just shifts the burden of payment onto the patient. Doctors can continue to charge their regular fee, Medicare can continue to pay its standard payment and it's up to you to make those ends meet. Getting the right information is crucial to getting the most out of Medicare, and Medicare supplement insurance is one key to bridging the gaps in Medicare coverage.

Benefits Of A Medicare Supplement Policy

There is a lot of debate regarding Medicare, Medicare supplement policies, and their funding. The Medicare program has been around since the 1960s, when President Lyndon B. Johnson signed it into law. At that time, only about one quarter of the American elderly population was covered by insurance.

Currently, the elderly are the only age group that basically has universal coverage. Medicare supplement policies came about more recently than that. However, there is a lot of concern that the Medicare funds are running out, that Medicare supplement policies are not doing enough to help the elderly, and that there is not enough incoming money to continue to meet the program's financial needs.

Many people do benefit from Medicare, even though it does not cover 100% of all medical costs. Many people purchase Medicare supplement policies to help offset the costs that are not covered by traditional Medicare. These premiums will also go towards funding Medicare. To offset these gaps in coverage, many American older adults will also purchase Medicare supplement policies that will help them pay some additional costs.

Other people get their Medicare benefits from Medicare Advantage Plans through a private health insurance company. This is another way the Medicare program is trying to share costs and risks, by allowing private health insurance companies to also offer Medicare benefits. The insurance carriers get paid from Medicare to offer benefits to older Medicare-eligible adults.

A member who buys a Medicare Advantage Plan cannot also purchase a Medicare supplement policy because that would be considered being eligible to have double benefits for the same things. Medicare Advantage Plans include many of the benefits of a Medicare supplement policy.

Will Health Care Reform Kill Medicare Advantage?

It has been six months since the highly contested Patient Protection and Affordable Care Act, also called health care reform, became law. Polls show that people remain worried about how the law will affect their health care. There is a lot of talk about big cuts in Medicare, and seniors are worried their coverage will be reduced or that their doctors will no longer accept Medicare. Should they be worried?

The worst news is for people who love their Medicare Advantage plans. This program pays private insurance companies to enroll seniors in managed-care networks. Many plans offer more benefits than "plain" Medicare, such as dental and vision coverage and health club memberships.

The problem with Medicare Advantage is that taxpayer's aren't getting their money's worth from the program. Much of the recent increases in Medicare costs can be traced to overpayments to insurance companies offering the subsidized plans.You've heard that Medicare is going broke? Well, Medicare Advantage is a big reason for that.

A Medicare Advantage benefit costs the government 14 percent more than exactly the same benefit offered through regular Medicare. In some parts of the country, the difference is as high as 20 percent. That extra money is being eaten up in marketing and administrative costs, and in profits to the insurance companies.

According to the U.S. Department of Health and Human Services, all Medicare beneficiaries, including those enrolled in regular Medicare, are paying for these overpayments through higher premiums. HHS says that this year these subsidies are adding about $3.60 per month to premiums.

But there is no proof that the program is providing better health care than regular Medicare; just that it's more expensive. And for this reason, most of the cuts to Medicare provided in the health care reform law are cuts to Medicare Advantage, not regular Medicare.

These cuts won't go into effect all at once. In 2011, the subsidy going to private insurance companies will be frozen at 2010 levels. After that, the payments will be reduced an average of 12% per year, until costs are more in line with the cost of regular Medicare. Beginning in 2014, the private insurers offering Medicare Advantage plans must maintain a "medical loss ratio" of at least 85%, which is a fancy way of saying that 85 percent of the subsidies and premiums they receive must be paid out in benefits. On the other hand, companies that meet certain benchmarks for quality of service are eligible for a bonus.

Bottom line: according to the Congressional Budget Office, by 2019 the private insurance companies offering these plans will receive $136 billion less than they would have received at the current level of subsidy.

Naturally, the private insurance companies do not like this one bit, and they say they will drop out of the program if these cuts aren't repealed. And when those Medicare Advantage taxpayer subsidies stop being a cash cow for those companies, they might very well drop out of the program. Companies that stay in the program probably will eliminate some of the extra benefits that make Medicare Advantage popular.

Some seniors will be unhappy about this, but it's important for them to understand why it is happening -- Medicare Advantage as it is has been dragging the entire Medicare program closer and closer to bankruptcy.

Before the Medicare program began in 1965, only 56 percent of people over age 65 had any health insurance. Today, without Medicare, the percentage of seniors with health insurance would be very tiny, indeed. It's a sad fact that in our autumn years, nearly all of us will suffer increasing problems with our health. Some ailments -- arthritis, heart disease -- are common, and some are rare, such as mesothelioma cancer, rarely diagnosed before the patient is 50. Either way, senior health care is expensive, and private insurance companies don't want seniors as customers -- unless taxpayers are supplying the profits.

In 2009, while health care reform was being hotly debated in Congress and town hall meetings all over America, some insurance companies deliberately misinformed their customers about what the bill would do to their Medicare Advantage Plans. One major Medicare Advantage provider sent out a letter to its Medicare Advantage customers claiming that Congress and President Obama would cut "important benefits and services" provided by Medicare.

Remember the stories about silver-haired grandmothers marching in protests with signs saying "Keep Government Out of My Medicare"? People laughed at them, but it's possible those were misinformed Medicare Advantage customers.

But the Patient Protection and Affordable Care Act is not cutting any benefit from Medicare. In fact, it is adding a few new benefits. Beginning this week, Medicare patients will not have to pay a co-payment to the doctor for preventive care or for an annual checkup. The health care reform law also will gradually close the infamous "doughnut hole," the gap in Medicare Part D prescription drug coverage that costs some Medicare patients thousands of dollars every year.

Last year, the trustees of the Medicare program announced that by 2017, the part of Medicare that pays hospital bills would be out of money, and Medicare would have to stop paying those bills. This year, the same trustees said the hospital fund should be good until 2029, thanks mostly to the health care reform bill. This tells us the struggle to save the program isn't over, but we're moving in the right direction.

As we get closer to the November midterm elections, watch out for politicians citing the cuts to Medicare Advantage as a reason to repeal the health care reform bill. Without those cuts, Medicare itself is in grave danger.

Barbara O'Brien is a concerned citizen who writes the popular political blog, The Mahablog.

SSDI & Medicare - A Beginner's Guide

Figuring out how the Social Security Disability Insurance (SSDI) and Medicare programs are related can be confusing to anyone who isn't currently enrolled in these programs. This article provides basic information on SSDI and Medicare eligibility and benefits. In addition, this guide will show you how to apply for and receive the right benefits for your situation.

Defining the Programs

SSDI is a payroll tax-funded, federal insurance program that was established in 1954. A portion of the FICA taxes taken out of your paycheck are set aside for this disability insurance program, which provides monthly income to people who are unable to work due to a severe disability.

Medicare is another federal insurance program, but is health insurance instead of disability insurance. It is available to all individuals age 65 and older as well as those who have been receiving SSDI cash benefits for 24 months. The program is made up of many parts - Medicare Part A consists of hospital benefits; Medicare Part B is medical benefits; Medicare Part C (Medicare Advantage) provides extra coverage and is provided by private insurance companies; and Medicare Part D is voluntary prescription drug coverage.

Determining Eligibility - How to See if You Are Entitled to Benefits

Eligibility for each program depends on several factors. For SSDI, there are three general qualifying criteria: 1) you must have worked and paid into the program (through your payroll taxes) for five of the last 10 years, 2) you also must have been disabled before reaching the full retirement age of 65-67, and 3) you must meet Social Security's definition of "disability." The Social Security Administration (SSA) has a process to determine who's eligible for benefits. By evaluating your income, limits of your disability, past job history and more, the SSA determines whether or not you're qualified to receive disability insurance.

There are several ways people can become eligible for Medicare. Anyone who turns 65 is automatically eligible for benefits. If you get Social Security retirement benefits or receive benefits from the Railroad Retirement Board (RRB), you will be considered eligible as well. Additionally, if you're awarded SSDI benefits for something other than Lou Gehrig's disease (ALS), you will become eligible for coverage 24 months after the date of entitlement to cash benefits. If you are awarded SSDI and have ALS, you will automatically be eligible for Medicare once you begin receiving SSDI benefits, and if you have kidney failure, you'll be able to enroll in Medicare three months after starting dialysis.

Specific Benefits You Can Receive

Social Security Disability Insurance allows you to receive a regular monthly income, results in eligibility for Medicare benefits (as explained earlier), and allows possible extension of your COBRA benefits, protects your retirement and long-term disability benefits, plus allows for dependent benefits and return-to-work incentives.

Medicare has many parts to cover specific healthcare costs. Medicare Part A covers inpatient care in hospitals and provides patients with a stay in a semi-private room, complete with meals, general nursing, and drugs. Part A also covers the cost of a blood transfusion if the hospital must purchase blood for you, up to 100 days per each benefit period in a skilled nursing facility, and hospice care for those with a life expectancy of six months or less due to a terminal illness. Part A coverage costs nothing, except for your deductibles or copayments, and coverage gaps must be paid by you or covered by other insurance.

Medicare Part B covers doctors' visits and services, outpatient care, rehabilitative care under a physical therapist, occupational therapist, or speech-language pathologist, and some preventative services like flu shots and mammograms. The monthly cost (or premium) for Part B coverage is tied to your annual income and adjusted each year. Most will pay the standard Part B premium of $96.40 per month in 2009 (if your annual income is not more than $85,000 as a single taxpayer or $170,000 if filing a joint tax return).

Medicare Advantage (Part C) plans at a minimum cover everything offered by traditional Medicare (Parts A and B). They also may offer additional benefits not covered by traditional Medicare like dental care, vision screening, prescription drugs and other services that would otherwise need to be provided under a supplemental insurance policy (Medigap).

Your out-of-pocket costs are likely to be less with a Medicare Advantage plan than if you use traditional Medicare and a Medigap policy. Everyone in a Medicare Advantage plan pays at least the same monthly premium as those enrolled in Medicare Part B. Your premiums may cost more depending on the benefits provided by the plan.

Medicare Part D (prescription drug coverage) provides brand-name and generic prescription drug coverage. These plans are provided by private companies that are approved by Medicare. Part D coverage is optional and available to those enrolled in traditional Medicare (Parts A and B) or Medicare Advantage plans that don't offer prescription drug coverage. Costs, extra benefits and details vary by plan.

Work With a SSDI & Medicare Advisor Service to Maximize Your Benefits

Don't stay confused trying to figure out the complex rules of these programs on your own - let those who understand it best help you maximize your benefits. Medicare & SSDI programs can be confusing with all of the different program requirements and eligibility criterion. Working with an SSDI expert and Medicare Advisor Service can help you determine the best coverage for your specific needs to ensure you get all of the benefits you are entitled to receive.

Jim Allsup writes for Allsup, a nationwide provider of Social Security Disability, Medicare and workers' compensation services for individuals, employers and insurance carriers. Allsup provides a Medicare Advisor service to help you select the Medicare plans that are right for you.

Medicare Advantage Plans Draw Attention

News outlets examine several issues dealing with Medicare Advantage plans.

The Boston Globe: "Harvard Pilgrim Health Care has notified customers that it will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage." The reason is that federal reimbursements for such plans have been frozen, and Harvard's particular Advantage product, a private fee-for-service plan, would have to develop a network of contracted providers for the first time under the new rules (Weisman, 9/28).

Also in Advantage news, PolitiFact examines a claim by former New York governor and health overhaul repeal advocate George Pataki that Florida seniors get a special deal on planned Medicare Advantage cuts. The conclusion: Pataki is wrong. "Congress is scaling back the payments to Medicare Advantage plans to bring them more in line on average to what is paid in Medicare. But it's too soon to say what that means for the average senior in various parts of the country while the reductions are being phased in over a few years" (Sherman, 9/28).

In other Medicare news, Crain's Detroit Business reports, "A pilot project begun last year to reduce hospital readmissions is being expanded this month to all of Michigan's 144 hospitals, according to the Michigan Health and Hospital Association. The purpose of the four-year study — called the State Action on Avoidable Rehospitalizations, or MISTAAR — is to reduce avoidable readmissions by 30 percent, save millions of dollars in unnecessary costs and improve quality and patient safety" (Greene, 9/27).

This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from more than 300 news organizations. The full summary of the day's news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.

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