UNDERDOG: MEDICARE ! THE BASICS !

Medicare 101: Do You Know the Basics ?

Part 1 in a Series

Medicare has become one of the most discussed issues in recent days given Rep. Paul Ryan’s budget proposals. Beyond the sound bites, what do we know about Medicare? Read on to find out the basics of the program and watch for more information to come in this multi-part series.

Medicare is our nation’s health care insurance for all people ages 65 and older, regardless of income. It also covers people under the age of 65 who have certain disabilities as well as those with end state renal disease and Lou Gehrig’s disease. Prior to the enactment of the program in 1965, about half of America’s seniors lacked healthcare coverage. Today, nearly all have coverage, with almost 50 million Americans currently benefitting from the program. Medicare has four parts. Parts A and B are considered “traditional” or “original” Medicare. Recent changes to the program are in italics.

Part A (Hospital Insurance) helps cover inpatient care in hospitals, skilled nursing facilities, home health care and hospice. If you or your spouse worked 40 quarters or more (10 years), you pay no monthly premium for Part A. Deductibles and coinsurance (paying a percentage of the cost of care) apply.
Part B (Medical Insurance) helps cover doctor and other health care provider services, outpatient care, durable medical equipment, and some home health care not covered under Part A. Part B also covers a number of preventative services. The monthly premium for Part B in 2012 is $99.90. Premium costs go up somewhat for those earning in excess of $85,000 as an individual. Assistance is available for those who are low income. Deductibles and coinsurance apply to Part B services. The Affordable Care Act (also known as “Obamacare”) did away with many deductibles and coinsurance costs for preventative care. Nearly 33 million people have already experienced this benefit.
Part C (“Medicare Advantage”) was enacted in 1997 so that Medicare beneficiaries could have the option of receiving their benefits through private health insurance plans. Under Part C, also known as “Medicare Advantage,” private insurers run plans that Medicare approves. Costs and restrictions vary by plan. Approximately one quarter of Medicare beneficiaries choose Medicare Advantage plans. Costs from the Medicare accounts to pay for Part C have been outpacing costs for traditional Medicare. The Affordable Care Act will bring the costs back in line and provide incentives for the best-quality and best-value plans.
Part D (Prescription Drug Coverage) was enacted in 2003 to help cover the cost of prescription drugs. It is run by Medicare-approved private insurance companies. Beneficiaries choose their plan and pay a monthly premium that varies (for those using Medicare Advantage, Part D premiums are part of the overall premium). Deductibles and copayments may apply and vary depending on the plan that is selected. Part D has what is referred to as a “doughnut hole” meaning that after a certain amount is spent on drugs, there is a gap in coverage until a catastrophic level is reached. The Affordable Care Act offered a one-time $250 benefit to those in this coverage gap and phases out the “doughnut hole” by 2020. Approximately 3.6 million seniors have seen costs go down to date.