Understanding Medicare

Medicare is a social insurance program that is providing medical coverage for several Americans. If you are a health insurance agent and plan on working with older adults or an individual approaching age 65, it is very important to understand this government program.

Medicare is a federal health insurance program that is composed of two parts. It provides medical coverage for older adults and for those who qualify with a disability. Medicare has Part A – Basic Hospital Insurance and Part B – Supplementary Medical Insurance.

All individuals age 65 or older, who are entitled to Social Security or Railroad Retirement Benefits are automatically eligible for Medicare benefits. These benefits are available to the individual on the first day of the month, in which the individual turns age 65. It should also be noted that individuals under age 65 who have qualified for Social Security disability payments for at least two years and those who have end stage renal disease are also eligible for Medicare. Part A provides coverage for inpatient hospital services for up to 90 days in each benefit period. Benefits also include payment for prescription drugs only while in the hospital. No coverage is provided for the first three pints of blood that may have been received while in the hospital.

Under Part A, skilled nursing care is provided for up to one hundred days, in which the first twenty days are fully paid after the deductible is met. The next 80 days fall under the coinsurance amount of coverage. Home health services are provided for medically necessary home health visits as well as hospice care. Psychiatric hospital care is covered up to one hundred ninety days during the individual’s lifetime.

Part B is a voluntary medical insurance plan available to all who are entitled to Part A. Part B pays benefits for physician and surgeon fees, medical services and supplies, outpatient hospital services, x-rays, lab tests, and other services such as ambulance service and durable medical equipment. For Part B benefits, individuals pay a monthly premium and have an annual deductible. Straight Medicare Part B has a coinsurance of 20%, however, individuals may purchase private plans that may not have coinsurance. Under this plan, there are certain exclusions such as: eye and hearing examinations, routine physical exams, foot care, immunizations and private nurses.

Part C are Medicare Advantage plans, which allow participants to opt out of the traditional Part A and B and enroll in a coordinated care HMO, PPO, PSO or a private fee for service plan. Health Maintenance Organizations (HMOs) require services to be provided by its own providers, except in an emergency. Preferred Provider Organizations (PPOs) allow beneficiaries to receive services from providers outside the plan, but with higher cost sharing. Provider Sponsored Organizations (PSOs) are similar to PPOs, but they are operated by a group of physicians and hospitals. Private fee for service plans are like PSOs but they may pay providers more than Medicare recognizes and can charge beneficiaries additional premiums and cost sharing payments.

If you are an individual approaching qualification for Medicare it is best to contact a health insurance agent that specializes in Medicare products. You may also want to contact your Medicare office or contact your local Area Agency on Aging.