Medi­care A, B, C, D – What you need to know

Record Observer - - News - By MIKE ZIM­MER

Medi­care was cre­ated through Ti­tle XVIII of the So­cial Se­cu­rity Act in 1965 and be­came ef­fec­tive in 1966. This pro­gram, ad­min­is­tered by the fed­eral gov­ern­ment, was orig­i­nally cre­ated to pro­vide med­i­cal cov­er­age for qual­i­fy­ing in­di­vid­u­als 65 and older and the dis­abled. How­ever, I sus­pect that no one at that time pre­dicted the med­i­cal ad­vance­ments which were to come and the longer life ex­pectan­cies which en­sued. In this ar­ti­cle, we’ll dis­cuss the var­i­ous parts of Medi­care, some of its his­tory, and the pro­vi­sions of Medi­care Parts A, B, C and D. The His­tory (and Side Ef­fects)

of Medi­care In the be­gin­ning, Medi­care was a bit more than a so­cial health in­surance pro­gram. It also played a role in the racial de­seg­re­ga­tion of Amer­ica be­cause pay­ment to med­i­cal providers was con­di­tional. In short, if the med­i­cal provider re­fused to ac­cept mi­nori­ties, the gov­ern­ment re­fused to pay the provider.

Over the past 48 years, Medi­care has added sev­eral ill­nesses to its cov­er­age in­clud­ing hos­pice care in 1982 (made per­ma­nent in 1984); speech, phys­i­cal and chi­ro­prac­tic ther­apy in 1992; and ALS (i.e.; Lou Gehrig’s dis­ease) in 2001, to name but a few. How­ever, as men­tioned, with the longer life ex­pectan­cies ex­pe­ri­enced by the pop­u­la­tion since its in­cep­tion, Medi­care and Med­i­caid (i.e.; state in­surance for the poor) have be­come the largest item (com­bined) in the fed­eral bud­get to­day, with an es­ti­mated cost of over $900 bil­lion per year and ris­ing. Medi­care alone cost about $492 bil­lion in 2013.

In 1967 when the House Ways and Means Com­mit­tee pub­lished its pro­jected cost of Medi­care in 1990, it fig­ured it would be $12 bil­lion. The ac­tual cost that year? A stag­ger­ing $98 bil­lion.

How to Qual­ify Medi­care cov­ers those aged 65 and older, along with younger per­sons with dis­abil­i­ties and end-stage re­nal fail­ure. To qual­ify at age 65, a per­son must have been a U.S. res­i­dent for at least five years and they or their spouse must have paid Medi­care taxes for at least 10 years.

Medi­care Part A cov­ers in­pa­tient hos­pi­tal ex­penses (with lim­its); skilled nurs­ing care and nurs­ing home care (un­der cer­tain cir­cum­stances and with lim­its), and hos­pice care. As for the lim­i­ta­tions to cov­er­age, there is a limit of 90 days per stay in a hos­pi­tal, plus a coin­sur­ance. For the first 60 days there is a $1,288 de­ductible but no coin­sur­ance. How­ever, from day 61 to 90, the in­di­vid­ual is re­spon­si­ble for a co-pay of $322 per day. From the 91st day on, the coin­sur­ance is $644 per each “life­time re­serve day” up to a max­i­mum of 60 days to­tal over the in­di­vid­ual’s life­time.

To clar­ify, a life­time re­serve day is any day over the first 90 days of an in­di­vid­ual’s life­time. For ex­am­ple, if a Medi­care pa­tient were in the hos­pi­tal for 100 days dur­ing one hos­pi­tal stay, the last 10 days would be con­sid­ered “life­time re­serve days” leav­ing the per­son with 50 of these days to use over their life­time. The point here is that Medi­care Part A has some po­ten­tially ex­pen­sive gaps which is why a per­son should pur­chase a Medi­care sup­ple­ment plan (or see Medi­care Part C be­low).

Medi­care Part B Medi­care Part B is op­tional and cov­ers out­pa­tient ex­penses such as lab tests, out­pa­tient surg­eries, doc­tor vis­its and lim­ited out­pa­tient pre­scrip­tion drugs (typ­i­cally not drugs you would ad­min­is­ter your­self). Cov­er­age be­gins af­ter meet­ing an an­nual de­ductible of $166 (2016). Af­ter meet­ing the de­ductible, the in­di­vid­ual must also pay a coin­sur­ance of 20 per­cent of the Medi­care– ap­proved charges for ser­vices and drugs.

Medi­care Part C Medi­care Part C is not ac­tu­ally a sep­a­rate cov­er­age, but is the part of Medi­care which al­lows pri­vate health in­sur­ers to cre­ate Medi­care re­place­ment poli­cies. In short, an in­di­vid­ual may elect to pur­chase one of these plans in lieu of Medi­care and a sup­ple­ment.

In the past, an in­di­vid­ual with Medi­care would of­ten buy a Medi­care sup­ple­ment to cover pro­ce­dures or ill­nesses which Medi­care did not cover. How­ever, when Congress passed the Bal­anced Bud­get Act of 1997 it in­cluded a pro­vi­sion to al­low what was orig­i­nally called Medi­care+Choice or Part C plans. When Congress passed the Medi­care Pre­scrip­tion Drug, Im­prove­ment, and Mod­ern­iza­tion Act of 2003, the name of these plans was changed to Medi­care Ad­van­tage plans. There­fore, Medi­care Part C cre­ated the Medi­care Ad­van­tage plan which is an op­tion that can be pur­chased in lieu of tra­di­tional Medi­care. Nor­mally, these plans are fairly com­pre­hen­sive in cov­er­age.

Medi­care Part D This is the new­est part of the Medi­care pro­gram and cov­ers pre­scrip­tion drugs. More­over, it is also avail­able to any­one with Medi­care. There are two ways to ob­tain Medi­care Part D cov­er­age. They are:

1) Join a plan run by an in­surance com­pany or other pri­vate com­pany ap­proved by Medi­care; or

2) Pur­chase a Medi­care Ad­van­tage plan which cov­ers pre­scrip­tion drugs (see Medi­care Part C above.)

Con­clu­sion Medi­care has be­come an in­te­gral part of the Amer­i­can fab­ric. Mil­lions of in­di­vid­u­als rely on it to pay for what has be­come a sig­nif­i­cant ex­pense in their bud­get. As health care costs con­tinue to rise, and life ex­pectan­cies lengthen, it’s clear that some ac­tion will need to be taken to pre­serve this im­por­tant pro­gram.

Once again, there are some po­ten­tially ex­pen­sive gaps with Medi­care Part A and Part B which is why a per­son should con­sider pur­chas­ing a Medi­care sup­ple­ment plan.

Have questions re­gard­ing Medi­care or Medi­care Sup­ple­ment In­surance? Give me a call.

Mike Zim­mer is pres­i­dent of Bay State In­surance Agency Ltd. in Centreville. He may be reached at 410758-1680.

MIKE ZIM­MER

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