A Medicare Primer

At 65 we’re confronted with both an opportunity and a dilemma. The opportunity, for most of us, is to sign-up for Medicare. The dilemma involves dealing with a series of choices in connection with our sign-up. Before we get to choices, or even to questions in connection with choices, let’s go through a basic orientation to Medicare.

Medicare consists of four programs – parts A, B, C & D

Parts A, B  & D make up traditional Medicare

Part C is where we deal with a commercial alternative to traditional Medicare

We pay premiums for our Medicare coverage

Medicare Parts A, B, C and D (and Medigap) *

Medicare is a federal health insurance program. It covers most people age 65 or older, some people younger than 65 with disabilities, and people with end-stage renal disease, often referred to as ESRD.

Medicare does not provide complete coverage for all health care needs. Even though it pays for some preventive services and covers most medically necessary services, Medicare doesn't pay for many routine services like annual physicals, or things like glasses, hearing aids, or long term care at home or in a nursing home.

Part A: Hospital Insurance

Part A pays for most inpatient hospital care, some inpatient skilled nursing home care, some home health care, and hospice care. You are automatically enrolled in Part A when you join Medicare. If you qualify automatically for Medicare (through your own or your spouse's Social Security record), you do not have to pay a monthly premium for Part A coverage.

If you have 30-39 Medicare-covered employment quarters, you may buy Part A for $216 per month (2006). If you have fewer than 30 quarters, you may purchase Part A for $393 per month (2006).

Part B: Medical Insurance

Part B pays for doctors' services, outpatient hospital care, outpatient physical and speech therapy, some home health care, ambulance services, and some medical equipment and supplies.

Part B coverage is voluntary. The monthly premium ($96.40 in 2009) is automatically deducted from your Social Security check every month. If you don't receive Social Security benefits, you will be billed for Part B.

Part C: Also called Medicare Advantage or All-in-One Plans (combines A, B and D into an HMO or a PPO with a private insurer)

Part C governs the way Medicare benefits are provided by companies that contract with the Medicare program. Someone with Medicare who enrolls in a Medicare Advantage plan generally gets all of their medical services through that plan. Health Maintenance Organizations (HMO's) and Preferred Provider Organizations (PPOs) contract with Medicare to provide Medicare benefits in a managed care setting, that since 2006 includes the new Medicare Part D benefit in all but a few HMOs.  People enrolling in one of those plans without Part D benefits would need to buy separate coverage for that benefit.

You must pay the Part B premium in order to qualify for a Medicare Advantage Plan.

Part D: Medicare Prescription Drug Coverage (Stand-Alone Plans with a private insurer)

Part D offers coverage choices from private insurance companies to pay for prescription drugs. The coverage is voluntary and the monthly premium varies depending on how much coverage you have.

Medigap: (Also called "supplemental insurance") A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn’t cover. If you are in the Original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will pay both their shares of covered health care costs. Generally when you buy a Medigap policy you must have Medicare Part A and Part B. You will have to pay the monthly Medicare Part B premium. In addition, you will have to pay a premium to the Medigap insurance company.

*Adapted from information available at www.seniorark.com and on the Medicare website, www.medicare.gov.