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Thinking about retirement, brings a whole slew of new issues to contend with, some pleasurable and some stressful, and one of the most stressful is likely Medicare. Deciphering all the fine print on when to apply, what to apply for and what coverage will best suit ones needs, can easily turn into a formidable task.
Medicare is health insurance that is available to most residents of the United States who are over the age of 65 or disabled, regardless of their income. US residents who have lived in the states for a minimum of five years and have paid social security taxes for 40 annual quarters (10 years), can apply for full Medicare coverage, while some that do not meet this criteria may have the option to pay extra premiums to obtain the benefit.
Medicare is divided into four parts; Parts A, B, C and D. Original Medicare, (Parts A and B), offers the same benefits throughout the United States, and one is not limited to a particular state or region for their care. Conversely, Medicare Parts C and D, vary from state to state and even from county to county.
If one delays signing up for Medicare after becoming eligible, one may pay higher premiums in some cases.
Medicare Part A is hospital insurance, which helps pay for care that involves an inpatient stay in the hospital, a short-term stay in a skilled nursing facility (SNF) as a follow-up to a 3-day inpatient hospital stay, some home health care and hospice care for the terminally ill.
In general, Part A covers:
• Hospital care
• Short-term skilled nursing facility care
• Short-term home health services
• Hospice care
Medicare Part B is medical insurance, which helps pay for doctor’s care for a medical condition. This includes outpatient hospital services, doctor’s office visits, doctor care for an inpatient hospital stay, some skilled nursing home care, as well as, preventive care like annual wellness exams and other preventive screenings.
In general, Part B covers:
• Doctor’s office visits and doctor’s inpatient hospital care
• Outpatient services and some outpatient prescription drugs
• Clinical research and getting a second opinion before surgery
• Ambulance services, partial hospitalization, and durable medical equipment
• Some mental health services
Note: Medigap and Supplemental policies:
These policies are designed to help offset the cost of copays, coinsurance and deductibles of original Medicare.
Medicare Part C is Medicare Advantage plans which are run by private insurance companies that are contracted with Medicare. These plans combine coverage for hospital stays (Plan A) with coverage for doctor visits (Plan B). Most will also include prescription drug coverage (Plan D) and some other services.
In general, Part C covers:
• All the benefits of Part A (except hospice care)
• All the benefits of Part B
• Prescription drug coverage (Part D)
• Eye and hearing care, and other wellness services
Medicare Part D is a stand-alone prescription drug plan (PDP), which is purchased directly from a private insurance company. An alternative to paying for this coverage would be purchasing Medicare Plan C that may also include prescription drug coverage (see above).
Insurance companies that offer Medicare Part D plans must meet federal guidelines for the types of drugs covered and minimum benefit standards, but not all plans are the same. In general, one pays a monthly premium and may also have to pay a small annual deductible.
Understanding the coverage gap in Part D plans:
Once the part D beneficiary and the plan has paid out $2,960 for covered drugs, the recipient will enter the coverage gap. The beneficiary is then responsible to pay 45% of the plan’s cost for brand-name prescription drugs and 65% of the plan’s cost of generic drugs. Once the beneficiary has spent $4,700 out-of-pocket for the year s/he will only pay a small co-insurance or co-payment for each covered drug until year end.
(Note: These figures are for 2015).
Medicare has limited coverage for home care, and generally does so through a Medicare-certified home health care agency. The agency will proceed according to protocol and send personnel to provide homemaking and personal care-giving services.
For those that are seeking home care for the long term, most states offer Medicaid assistance to the homebound on an ongoing basis. Your state/ county welfare agency can help you navigate the application process and direct you to a Medicaid certified home health care agency.
Medicare covers short-term rehabilitation at a skilled nursing facility (SNF) as a follow-up to a 3-day inpatient hospital stay. Coverage and procedures are as follows:
The first 20 days are covered 100% by Medicare. After the first 20 days, a Medicare nurse will evaluate the resident and determine whether or not s/he qualifies for additional Medicare-sponsored care.
If the nurse determines that the individual is eligible for additional care, Medicare will pay for days 21 -100, after a co-pay of $157.50/day is paid. After the100 days are up, Medicare will no longer pay for any portion of the nursing home stay.
The resident will then have two options only, if they would like to remain at the SNF:
• Pay the monthly nursing home rate out of pocket, or;
• Apply for Medicaid to cover the stay, which pays for 100% of the expense.
Note: Some nursing homes accept Medicare for short-term rehabilitation, but do not accept Medicaid-sponsored long-term care.
Inpatient services are services administered once one is formally admitted to the hospital with a doctor’s order. Outpatient services are hospital services provided when the doctor has not written an order to admit the patient to a hospital as an inpatient.
An individual’s inpatient/outpatient status, affects how much s/he will pay for hospital services and whether Medicare will cover the care s/he receives in a SNF following the hospital stay.
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