Health Insurance for People with Medicare

Health insurance can be very confusing. Most people have questions such as:

• What does it cover?
• When are services covered?
• How much do services cost?
• How do you submit a claim?

Most of us assume we will sort out the answers if and when we need medical care. But older people and people who have an ongoing illness cannot afford confusion about this. We all need to understand how our health insurance works and our rights and our duties.

What is Medicare?

Medicare is a federal government program. It provides health insurance for people age 65 and older and for people of any age who have certain disabilities or end-stage kidney disease.

Medicare is divided into 2 parts: Part A and Part B. Each part covers different services. Both parts pay some of the costs for needed medical services. Both parts pay toward home healthcare if certain conditions are met.

People who get Social Security or Railroad Retirement when they turn 65 are automatically enrolled in Medicare Part A. If you will not get Social Security at age 65, you need to apply for Medicare 3 months before you turn 65.

Medicare has a deductible that must be paid each year. The amount of the deductible usually goes up each year. Medicare Part A covers:

• inpatient hospital care
• skilled nursing facilities
• home healthcare
• hospice care.

Medicare Part B is optional. If you want Part B, you must pay a monthly premium. The premium varies and there is an annual deductible. After the deductible is met, Medicare B will pay 80% of Medicare-approved charges for covered services. You are responsible for the other 20% of the Medicare-approved charges. Medicare Part B covers:

• doctor visits (other than routine physical exams)
• lab and X-ray services
• durable medical equipment, such as wheelchairs, hospital beds, and oxygen tanks
• ambulance services
• home healthcare
• outpatient hospital care.

Rules about what Medicare covers can be confusing. Rules also change from time to time. The premium (monthly payment) for Medicare Part B can change every January. The deductible (what you must pay before Medicare begins to pay) and your co-payments (the percentage of costs you must pay) may also change. Your local Social Security office can answer your questions about Medicare.

Medicare has helped many people pay for healthcare after they retire. However, Medicare does not cover all types of medical services and equipment. Some examples of healthcare not covered by Medicare are:

• most types of nursing facility care (unless you are receiving skilled care, such as IV medicines or complicated wound care)
• most types of dental care
• most prescription drugs taken outside of a hospital.

What is a Medigap policy?

Medigap is health insurance. Its formal name is Medicare supplement insurance. It helps cover the difference between what Medicare pays and what you owe. It is sold by private insurance companies to people who have Medicare. In general, if Medicare does not pay anything for a service, then Medigap will not either.

There are many Medigap plans. The plans differ in how much they pay toward medical costs, under what conditions, and how much they charge. In general, the more the Medigap plan agrees to pay, the more it costs. You must weigh the risk of paying medical costs yourself against paying for Medigap insurance.

You may be able to choose from up to 12 different standardized Medigap policies (Medigap Plans A through L). Medigap policies must follow federal and state laws. A Medigap policy must be clearly identified on the cover as "Medicare Supplement Insurance." Each plan, A through L, has a different set of basic and extra benefits. Most experts agree that one Medigap policy per person is enough. If you want to buy more health insurance, consider a different type.

What is long-term-care insurance?

Long-term-care usually means medical and physical care. For example, you may need help with bathing, dressing, grooming, and eating for an extended time. Most insurance policies limit the number of years or the amount they will pay toward long-term care. Some long-term-care policies pay only when a nursing facility provides the care. Other plans will also pay for care given in your home. Before you buy long-term-care insurance, it is important that you understand:

• what is covered and what is not covered
• in what settings
• under what conditions.

Long-term-care insurance is sold to adults of all ages, not just adults over age 65. Some long-term-care policies are not sold to people who have reached a certain age (for example, age 75). Some policies are not sold to people with certain illnesses, such as Alzheimer's disease. The younger you are when you buy long-term-care insurance, the less it costs. However, you will probably pay for it for many years before you are likely to need it.

What is Medicaid?

Medicaid provides medical insurance for people with low incomes or limited assets. It is paid for by federal and state governments. The states set their own rules about what is covered.

Medicaid may be called Medical Assistance or Title 19. You may qualify for Medicaid if your medical costs are higher than your income, even if you are not poor.

Living in a nursing facility is expensive. Nursing facility care costs $50,000 to $75,000 per year. The amount you pay depends on where you live, your medical needs, and the type of room you have (private or semiprivate). Most people cannot afford these costs for very long. When they have spent all of their money, many need government help to pay for nursing facility costs. The Medicaid program pays for most of the nursing facility costs in the US.

To get Medicaid, you must prove that you have few assets. If you are single, you must have few or no assets. The level of assets varies by state. If you are married, the spouse at home is allowed to have about $60,000 in assets, not counting a house. Even with Medicaid, part of your income will go toward the cost of nursing facility care.

You can have both Medicare and Medicaid. In fact, some people in nursing facilities have Medicare, Medigap, and Medicaid. Each pays for different costs under certain conditions. Long-term-care insurance may stop paying after a number of years, depending on the policy. You will then need to spend your own money to pay for the nursing facility until you qualify for Medicaid.

Medicaid rules change. Also, the Medicaid program can be different from state to state. Check with your state social services agency for more information.

Where can I get more information?

The most important thing to understand about health insurance for people age 65 or older is Medicare coverage. Once you understand what is and is not covered by Medicare, you will have a better idea of what to look for in a Medigap insurance plan, a long-term-care insurance plan, or a different type of health insurance. You will have a better idea about your chances of needing Medicaid (Title 19) and how to qualify for it.

For more information, you might want to talk with:

• your healthcare provider
• a lawyer
• a social worker at a hospital or nursing facility
• a private care manager
• other people who have experiences with nursing facilities.

These agencies can help you understand health insurance and your options:

• Social Security or US Department of Health and Human Services for Medicare information

  Visit your local Social Security office, call the national Social Security toll-free phone number (1-800-772-1213), or visit the Web site http://www.ssa.gov. Or call Medicare toll free at 1-800-633-4227 or visit the Web site http://www.medicare.gov.

  • Request copies of the free Medicare booklet (updated every year).
  • Get information about when and how to apply for Medicare.
  • Find out how to get a Medicare card.
  • Ask other Medicare questions.
• State insurance department or state insurance counseling center for information about Medigap and long-term-care insurance
• Local area agency on aging for general information on Medicare. It may also have general information on private health insurance, Medigap insurance, long-term care insurance, or Medicaid. Call 1-800-677-1116 to find an agency near you.
• The social work department at a local hospital for Medicare and Medicaid information
• Senior citizen centers, which may bring in expert speakers or have information booklets. They may be able to put you in touch with other people who are facing the same decisions.
• American Association of Retired Persons (AARP), which publishes excellent booklets about health insurance. You do not have to be a member to ask for free booklets. Call 1-800-424-3410.
• National Council on Aging, which sells booklets about Medicare, Medigap, and long-term-care insurance. Some free downloads are also available on their Web site (click on Publications at https://www.ncoa.org). The phone number is 1-800-373-4906.

If you are 65 or older, employed, and get health insurance through your employer, check with your employer about what is covered by your employer's plan.