Fre­quently asked ques­tions about Medi­care

Lodi News-Sentinel - - BUSINESS - Dale Im­mekus is the owner of Ded­i­cated Fi­nan­cial Ser­vices and an ac­cred­ited wealth man­age­ment ad­vi­sor. Reg­is­tered Representa­tive of­fer­ing se­cu­ri­ties and ad­vi­sory ser­vices through In­de­pen­dent Fi­nan­cial Group, LLC (IFG), a reg­is­tered bro­ker-dealer and inves

Medi­care is a very com­pli­cated pro­gram. To help clar­ify for Medi­care ben­e­fi­cia­ries here are some FAQ’s re­gard­ing Medi­care in­sur­ance:

What is Medi­care?

Medi­care is a fed­eral health in­sur­ance pro­gram for people who are age 65 and older and for oth­ers with cer­tain dis­abil­i­ties. Part A is for hos­pi­tal cov­er­age, skilled nurs­ing and hospice; and Part B is for doc­tor vis­its and out­pa­tient ser­vices. This pro­gram is reg­u­lated by Cen­ter for Medi­care and Med­i­caid Ser­vices (CMS). Medi­care is not Med­i­caid which is a fed­eral pro­gram im­ple­mented at the state level to help low in­come fam­i­lies and in­di­vid­u­als. In Cal­i­for­nia Med­i­caid is called Med­i­CAL. Medi­care and Med­i­caid may work to­gether.

What will Part A and Part B cost me once I en­roll?

For people who have worked for ten years or more and paid taxes into the sys­tem there will be no premium for Part A. Those who do not meet those pa­ram­e­ters may be able to ob­tain Part A at a premium de­ter­mined by CMS. There are de­ductibles and co-pay­ments which a ben­e­fi­ciary will be re­spon­si­ble. The de­ductible is $1,364 for the first 60 days of hos­pi­tal­iza­tion. This de­ductible re­sets ev­ery 60 days for ex­am­ple, a ben­e­fi­ciary is ad­mit­ted into the hos­pi­tal and then re­leased two days later and then is read­mit­ted again a week later, the orig­i­nal de­ductible cov­ers the read­mit­tance. If a ben­e­fi­ciary is re­leased and read­mit­ted more than 60 days later the de­ductible of $1,364 is again the re­spon­si­bil­ity of the ben­e­fi­ciary. In ad­di­tion to the de­ductible there are per day co-pay­ments be­gin­ning af­ter 60 days of hos­pi­tal­iza­tion.

For Part B there will be a premium which is re­quired to be paid by the ben­e­fi­ciary. This premium is cur­rently $135.50 for most ben­e­fi­cia­ries but there is also an ad­just­ment made based on in­come. CMS will go by your most re­cent tax fil­ing and in­crease pre­mi­ums for higher in­come earn­ers us­ing a for­mula called In­come Re­lated Monthly Ad­just­ment Amount (IRMAA), or pos­si­bly re­duced for low in­come earn­ers. There is also an an­nual de­ductible of $185 for Part B. Af­ter a ben­e­fi­ciary meets the de­ductible then they will typ­i­cally pay 20% of ser­vices re­ceived.

There is also a Part B Ex­cess Charge which ben­e­fi­cia­ries need to be aware. CMS de­ter­mines prices which providers may charge ben­e­fi­cia­ries for Medi­care ap­proved ser­vices. Providers may charge up to 15% over these es­tab­lished prices for ser­vices. Ben­e­fi­cia­ries are re­spon­si­ble for these charges.

There is no max­i­mum out of pocket costs for ben­e­fi­cia­ries who only have Part A and Part B cov­er­age. There are ad­di­tional in­sur­ance pro­grams of­fered by pri­vate in­sur­ance com­pa­nies to help mit­i­gate the de­ductibles and co-pay­ments and we will cover those op­tions in a fu­ture Money Talk col­umn.

Will Medi­care cover Long Term Care ex­penses?

Medi­care will not cover these ex­penses. This is a mis­con­cep­tion many people have. Medi­care will cover the first twenty days of skilled nurs­ing at no cost to ben­e­fi­cia­ries. Days twenty-one through one hun­dred are cov­ered with a co-pay­ment to the ben­e­fi­ciary of $170.50 per day. All days af­ter that are one hun­dred per­cent the re­spon­si­bil­ity of the ben­e­fi­ciary.

Is a Medi­care ben­e­fi­ciary re­quired to en­roll in a Part D pre­scrip­tion drug plan?

No, you do not be­cause it is con­sid­ered op­tional ac­cord­ing to CMS. How­ever, if you do not en­roll af­ter 63 days of be­com­ing el­i­gi­ble you will be­gin to in­cur a late en­roll­ment penalty. This penalty is 1% of the na­tional av­er­age premium of Part D pre­scrip­tion drug plans for ev­ery month af­ter 63 days in which you do not have cred­i­ble cov­er­age. This penalty con­tin­ues to in­crease un­til you get cred­i­ble cov­er­age. Note that this is a life­time penalty which will be added to the premium of your pre­scrip­tion drug plan once you do en­roll. Cur­rently the low­est premium for a drug plan is $12.90 per month and there are 30 plans to choose from. Cred­i­ble cov­er­age is de­ter­mined by CMS and for the vet­er­ans out there, VA cov­er­age is con­sid­ered cred­i­ble cov­er­age, but you must sign up for your VA ben­e­fits for this to be ef­fec­tive.

If I keep work­ing be­yond age 65, will I be re­quired to sign up for Medi­care?

Maybe. It de­pends on whether you have cov­er­age through your em­ployer and whether that cov­er­age is con­sid­ered cred­i­ble by CMS stan­dards. If it is cred­i­ble cov­er­age than no and if not, then yes. If you do not have cred­i­ble cov­er­age and do not sign up for Part B ser­vices when you be­come el­i­gi­ble then you may in­cur a late en­roll­ment penalty. This penalty is cal­cu­lated for ev­ery 12 months you de­lay en­rolling in Part B you will in­cur a 10% penalty of the stan­dard Part B premium. You may also have to wait un­til the Gen­eral En­roll­ment Pe­riod for Part B which is from Jan­uary 1 to March 31st ev­ery year and cov­er­age would be­gin on July 1st of that year.

This is just the tip of the ice­berg when it comes to the Medi­care pro­gram. We will con­tinue to keep you in­formed about this pro­gram and op­tions avail­able to you so stay tuned for fur­ther in­for­ma­tion. Un­til we talk again, be well.

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