An Introduction to Medicare

Medicare – Overview

Signed into law by President Lynden B. Johnson in 1965

Expanded in 1972 to include those under age 65 that are disabled

Overseen by the Centers for Medicare and Medicaid Services, commonly referred to as CMS

Initially covered 19 million people; has grown to cover an estimated 43 million people today

Who is Eligible for Medicare

•Must have paid (or spouse paid) into Social Security for at least 40 quarters

People age 65 years or older

•Permanent kidney failure requiring dialysis or kidney transplant

People of all ages with End Stage Renal Disease

•Immediately upon getting disability benefits for Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig’s Disease)

People of all ages with ALS

•After 24 months of Social Security Disability Income

People Under 65 with Disabilities

Medicare is an Alphabet Soup!

• E

• A

• C•C • D• A

• B

•B

• D F

G

H

I

J

K L

M

N

Original Medicare Part A - CoverageInpatient Facility Services

Inpatient Hospital

Skilled Nursing Facility

Home Health Care

Hospice Care

Med

icar

e Pa

rt

A

Original Medicare Part A – Does Not CoverMedicare Part A only covers facility inpatient room and board expenses…

• Does not cover extra charges such as:• Telephone expenses• Television access• Personal care items• Or other such expenses

• Does not include physician or professional services

Original Medicare Part A – PremiumsEntitleme

nt• No

premiums for those who have paid into Social Security for at least 40 quarters

Purchase

• Can be purchased for $450 a month if less than 40 quarters have been earned

Assistance

• Patients with limited resources can apply for assistance from the state

$1,132 $1,132 $1,132

$8,490 $8,490

$33,960

Days 1-60Total: $1,132

Days 61-90Total: $9,622

($283.00)

Days 91-150Total:

$43,582($566.00)

Original Medicare Part A – What You Pay Per Benefit Period

*What you pay based on 2011 amounts

Original Medicare Part A – Benefit Period

Facility inpatient deductibles and copays are based on benefit periods rather than a single annual expense

• A benefit period begins with admission to the hospital and ends 60 days after discharge

• A four day hospital stay in March and another in August are two different benefit periods and two separate $1,132 deductibles

Original Medicare Part B - CoverageOutpatient & Physician Services

Physician feesSome preventive

servicesEmergency room

Outpatient surgeries

Outpatient medical and surgical supplies

Rehabilitative therapies (PT, OT &

ST)Diagnostic tests &

LabsDurable Medical

EquipmentSome drugs

administered in outpatient setting

Med

icar

e Pa

rt

B

Original Medicare A & B: Does Not Cover

Routine Vision

Routine Hearing Screening

Alternative Healthcare

Routine Chiropractic Care

Prescription Drugs

First 3 Pints of Blood

You Pay 100%

Original Medicare Part B - Premiums

.

2011 Yearly Income (CMS Pub #11218)File Individual

Tax ReturnFile Joint

Tax ReturnYou Pay

$85,000 or less $170,000 or less $115.40$85,001 - $107,000 $170,001 - $214,000 $161.50$107,001 - $160,000 $214,001 - $320,000 $230.70$160,001 - $214,000 $320,001 - $428,000 $299.90Above $214,001 Above $428,001 $369.10

Optional coverage but penalties may apply if enrollment is delayed—10% for each 12 month period without coverageNo penalty applies if you enroll within 8 months of you or your spouse’s retirement or termination of employer’s health coverage, whichever comes first.

Original Medicare Part B – What You PayDeductible

• 2011 Part B Annual Deductible-$162.00

20% Coinsurance

• Most Doctor Services

• Outpatient Surgical Procedures

• Outpatient Therapies

• Most Preventive Services

• Durable Medical Equipment

45% Coinsuranc

e • Mental Health

Services

Medicare80%

Bene-ficiary20%

Original Medicare Part B - Cost Sharing

*Assumes $162 deductible has already been paid

Original Medicare – Provider Compensation

Medicare AssignmentIf Provider accepts

Medicare Assignment• Accepts Medicare fee

schedule + coinsurance as payment in full

• Provider may limit Medicare patients to those only within a Medicare Advantage Plan

If Provider does not accept Medicare

Assignment• Patient pays coinsurance

based on Medicare fee schedule + balance bill up to allowable charge (15% higher than Medicare fee schedule)

• Provider may opt not to see Medicare patients and force beneficiaries to go elsewhere

Medicare Supplement Insurance Provides coverage for the “gaps” in Medicare

Offered by private companies that are approved by CMS

Helps cover some of the “gaps” in Medicare such

as the deductible, coinsurance and copays

Policies are standardized and referred to as letters

from A though N but premiums can vary between companies

Effective June 1, 2010 Medigap policies E, H, I & J

can no longer be sold

Med

igap

Pol

icie

s

Medigap Policies – Basic Plan- ”A”

All Medigap Policies Cover:

•Covers Part A (hospital) coinsurance--not the $1,132 deductible•Covers Part B (outpatient/physician services) coinsurance-not the $162 deductible•Provides an additional 365 days of hospital care, beyond the Medicare lifetime reserve days•Covers the first three pints of blood

Medigap Policies – Do Not Cover

No Medigap Policies Cover:

•Days in a skilled nursing facility beyond the 100 days that Part A covers•Long-term care (like nursing home care), routine vision, dental, or hearing care, hearing aids, eye glasses, or private-duty nursing or gym memberships•Prescription drugs

Medigap Policies – Premiums & Other Costs

2011 Part B monthly premium based upon income level

Monthly premium for the Medigap policy you purchase**

100% of any costs that Medicare and the Medigap policy do not cover

** note that while these policies are guaranteed renewable, the premium amounts can be increased as you age

Medigap Policies – Keep in Mind

Policies A though N will vary in what they cover

Policy A from one company will provide the exact same coverage as Policy A from another

company

Policy A Premiums will differ from company to

company

If you do not enroll in the first 6 months of turning 65, you can be denied a

Medigap policy

Although guaranteed renewable, Premiums can

be increased annually

Not all Medigap plans are available in all states

Medicare Part C = Medicare Advantage Plans

Health Maintenance Organization (HMO)

PlansPreferred Provider

Organizations (PPO) Plans

Special Needs Plans (SNP)

Private Fee For Service (PFFS) Plans

Medical Savings Account (MSA) Plans

Med

icar

e Adv

anta

ge

Medicare Part C / Medicare Advantage

Medicare Advantage Basics

Combine Medicare

Parts A & B into a single plan through companies

approved by CMS

Cannot turn anyone

down as long as they have

Medicare Parts A & B and do not have ESRD

Must provide the same Medicare

benefits, but typically

provide more

May or may not include

Medicare Part D

(Prescription drug

coverage)

Medicare Part C / Medicare Advantage Premiums

Beneficiary continues to pay

the Medicare Part B premium via SSA

deduction

Medicare Advantage plan

premiums will vary by plan and

product

Many Medicare Advantage

plans offer a $0 premium option

Medicare Part C / Medicare Advantage What To Watch For

Plans vary widely on what you pay out of pocket depending

on:•Premium amounts•Type of plan (i.e. PPO, HMO, MSA, etc.)•Annual out-of-pocket maximum levels

Typically all plans will have some out-of-pocket costs in

the form of:

•Deductibles•Coinsurance•Copays

Medicare Part C / Medicare Advantage Additional Benefits Medicare Advantage Plans May OfferLower Out of Pocket Expenses

Predictable Costs

More Preventive Services Covered

Vision Exams & Hardware

Benefits

Hearing Exam

Benefits

Fitness Benefits (health club

memberships)

Alternative Care

Benefits

Dental Coverage

Less Paperwork

Medicare Part D = Prescription Drug Coverage

Voluntary benefit for prescription drugs—1%

penalty applies for late enrollment

Offered by private companies approved

by CMS

Monthly premiums will vary by Plan and

ProductBenefit Plan must be at least equal to the Standard Medicare

Benefit Design defined by CMSM

edic

are

Part

D

Medicare Part D / Prescription Drugs2011 Standard Medicare Benefit Design

Deductible

Patient pays

100% of the bill

until the total

reaches$310

Initial Coverage Period

Patient pays Copay or

Coinsurance until the total of

what the plan &

patient pay equals $2840

Coverage Gap

Patient pays

100% of the bill until the

total out of pocket reaches $4550

Catastrop

hic Coverage

Patient pays 5%

or a small Copay

until year ends

Medicare Part D / Prescription Drugs Options for Coverage

Employer Group Plans

• Plan must be creditable to avoid penalties when choosing a Part D plan later (Contact your HR dept)

Military Plan Coverage

• Provides creditable coverage

• Can have both VA & Medicare Part D coverage

Medicare Part D Plans

• Stand Alone Prescription Drug Plans (PDP)

• Medicare Advantage Prescription Drug Plans (MAPD)

Medicare Part D / Prescription Drugs What To Watch For

Plans vary widely on what you pay out of

pocket depending on:

•Formularies – what drugs are covered and which are not•Tiered Pricing – what drugs fall into what tier•Costs for Generics vs. Brand Name vs. Specialty Drugs•90 day mail order supply options•If there is any kind of coverage in the “donut hole”•What level of cost sharing the plan has

Typically all plans will have some cost

sharing in the form of:

•Deductibles•Coinsurance•Copays

Medicare Part D /Prescription Drugs Assistance

Medicaid• Dual-eligible

(covered by Medicare & Medicaid)• Reduced

copayments & coinsurance

Part D Assistance• Low-income subsidy

• Reduced Part D premiums

• Reduced copayments & coinsurance

Initial Medicare Enrollment Periods • Any time after you are 64 years and 9

months old or otherwise become eligible for Medicare. Enrollment will be automatic if you are already receiving Social Security benefits; otherwise, you’ll have to enroll at your local Social Security office.

Medicare Part A

• 7 month window: Any time from 3 months before you become eligible for Medicare until 3 months after your eligibility month.

Medicare Part B

• 7 month window: Any time from 3 months before you become eligible for Medicare until 3 months after your eligibility month.

Medicare Advantage

• 7 month window: Any time from 3 months before you become eligible for Medicare until 3 months after your eligibility month.

Medicare Part D

• 6 month window for guaranteed right: When you turn 65 AND enroll in Medicare Part B, you have a guaranteed right to buy a Medigap policy for 6 months. You cannot be refused if you sign up during this open enrollment period.

Medigap Policies

• 7 month window: Any time from 3 months before you become eligible for Medicare until 3 months after your eligibility month

Ongoing Medicare Enrollment Periods

•Starts October 15th and continues though December 7th•Permits changes to Medicare coverage to begin January 1st of the next year•The only opportunity other than the Initial Enrollment Period to add or delete Medicare Part D

Annual Enrollment Period

•Starts January 1st and continues though February 14th•Permits Medicare Beneficiaries to revert back to traditional Medicare Parts A & B

Annual Disenrollment

Period

•No definitive time period•Permits changes to Medicare Coverage based on life events such as moving out of a plans service area, or leaving a medical facility

Special Election Period

Medicare Review

Medicare Review

Medicare Part A

•Covers inpatient facility services such as Hospitals & Skilled Nursing Facilities•Beneficiary responsible for deductible and copays depending on number of days in the facility•Benefit period “re-sets” after 60 days

Medicare Review

Medicare Part B

•Covers Physician and other Outpatient Services •Beneficiary responsible for 20% of Medicare covered services after paying $162 deductible •Beneficiary responsible for 100% of non- Medicare covered services

Medicare Review

Medigap Polices

• Different levels of coverage (identified by letters A through N)

• Cover various combinations of your portion of medical bills

• Administered by companies approved by CMS

Medicare Review

Medicare Part C / Medicare Advantage

• Medicare Advantage plans• Combines Parts A & B and sometimes

Part D into a single plan• Administered by companies approved

by CMS

Medicare Review

Medicare Part D / Prescription Drugs

• Provides prescription drug coverage• Often offered with a Medicare

Advantage plan• Administered by companies approved

by CMS

Moral of the Story

Medicare is not all inclusive coverage and can potentially leave you holding a sizable medical bill

Options are available to help ‘round out’ Medicare coverage & provide

the extra protection you need

Find a plan that works for you!

SHIBA-Statewide Health Insurance Benefit Advisors

• www.insurance.wa.gov• 1-800-562-6900

Medicare Online Tools

• www.medicare.gov• Personal Plan Finder

Washington State Aging and Disability Services

• www.aasa.dshs.wa.gov• Local Senior Services offices

References & Resources

QUESTIONS?

This presentation has been brought to you by:

Puget Sound Health Partners32129 Weyerhaeuser Way S Suite 201

Federal Way WA  98001

1-866-789-PSHP (7747)

(TTY/TTD 1-866-264-4141)

www.OurPSHP.com

King County Representative:

Darlynn Bailey

206-724-3069