Medicare Benefits: An Important Understanding Unfolded

Medicare is an important provision for people all around the US because it provides for their health care-related needs. Support, especially for healthcare, is extremely important as an aspect of the well-being and life of many American citizens.

Insurance companies, healthcare providers, hospital systems, and independent providers are among the various entities that provide health care in the United States. The majority of health-care institutions are owned and run by private companies. In the United States, 58 percent of community hospitals are non-profit, 21% are government-owned, and 21% are for-profit.

According to the World Health Organization (WHO), the United States spent $9,403 per capita on health care in 2014, and 17.9% of GDP on health care. Private health insurance and governmental health insurance are used to provide healthcare coverage (e.g., Medicare, Medicaid). Unlike most other industrialised countries, the United States does not have a universal healthcare system.

In 2013, the government paid for 64 percent of health spending through programmes like Medicare, Medicaid, the Children’s Health Insurance Program, and the Veterans Health Administration. People under the age of 65 either have insurance through their or a family member’s work, buy health insurance on their own, receive government and/or other help based on income or another condition, or are uninsured. The government, in its capacity as an employer, is largely responsible for providing health insurance to public sector employees. Managed care, in which payers adopt a variety of approaches to improve quality while lowering costs, has become commonplace.

Medicare is a health-insurance programme for persons over the age of 65 in the United States. People under the age of 65, such as those with disabilities or those who have permanent kidney failure, may be eligible for Medicare.

The programme assists with health-care costs, although it does not cover all medical bills or most long-term care costs. You can receive Medicare coverage in a variety of ways. You can purchase a Medicare Supplement Insurance (Medigap) policy from a private insurance provider if you opt to have Original Medicare (Part A and Part B) coverage.

When it comes to Medicare, you have a lot of options for how you want to acquire your coverage. You’ll need to pick how you’ll get your Medicare coverage once you’ve enrolled. There are two main approaches:

  • Original Medicare
  • Medicare Advantage

What is Medicare?

Medicare is a United States national health insurance programme that was established in 1965 by the Social Security Administration (SSA) and is now administered by the Centers for Medicare and Medicaid Services (CMS). It mostly covers Americans aged 65 and above, although it also covers some younger persons with disabilities as established by the Social Security Administration, such as those with end-stage renal illness and amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease).

According to the 2019 Medicare Trustees Report, Medicare provided health insurance to over 59.9 million people in 2018, including more than 52 million seniors and over 8 million younger people.

Medicare covers nearly half of individuals enrolled in healthcare spending, according to annual Medicare Trustees reports and study by the government’s MedPAC committee. Most enrollees cover the remaining costs by purchasing supplementary commercial insurance and/or enrolling in a public Medicare Part C or Part D health plan. The US federal government will spend $776.2 billion on Medicare in 2020.

Beneficiaries face other healthcare-related costs regardless of which of those two options they choose—or if they choose to do nothing extra (about 1% according to yearly Medicare Trustees reports over time).

Deductibles and copays; the costs of uncovered services—such as long-term custodial, dental, hearing, and vision care; the cost of annual physical exams (for those not on Part C health plans that include physicals); and the costs associated with basic Medicare’s lifetime and per-incident limits are all examples of additional so-called out of pocket (OOP) costs. Medicare is funded through a combination of a particular payroll tax, beneficiary premiums and surtaxes, co-pays and deductibles, as well as general Treasury revenue.

A, B, C, and D are the four parts of Medicare.

Part A includes inpatient (officially admitted only) hospital, skilled nursing (only after being formally admitted to a hospital for three days and not for custodial care), and hospice services.

Outpatient services, including some providers’ services while inpatient at a hospital, outpatient hospital expenses, most provider office visits even if the office is “in a hospital,” and most professionally administered prescription medications, are covered by Part B.

Part C, also known as Managed Medicare or Medicare Advantage, allows patients to choose from a variety of health plans that include at least the same service coverage as Parts A and B (and often more), often the benefits of Part D, and always an annual out-of-pocket expense limit that Parts A and B lack. Before enrolling in Part C, a beneficiary must first enrol in Parts A and B.

Part D mostly covers self-administered prescription medications.

Eligibility for Medicare

Medicare is available to everyone 65 or older who has lived in the United States for at least five years and has been a lawful resident for at least five years. People under the age of 65 who receive Social Security Disability Insurance (SSDI) benefits may also be eligible. Specific medical issues may also make it easier for people to qualify for Medicare.

If the following circumstances apply, people are eligible for Medicare coverage and their Medicare Part A premiums are completely waived:

  • They are 65 years old or older, US citizens or permanent legal residents for the previous five years, and they or their spouses (or qualifying ex-spouses) have paid Medicare taxes for the previous ten years.
  • They must receive one of these benefits for at least 24 months from the date of entitlement (eligibility for first disability payment) before becoming eligible to enrol in Medicare. They are under 65, disabled, and have been receiving either Social Security SSDI benefits or Railroad Retirement Board disability benefits; they must receive one of these benefits for at least 24 months from the date of entitlement (eligibility for first disability payment) before becoming eligible to enrol in Medicare.
  • End-stage renal illness necessitates ongoing dialysis or a kidney transplant.

If they or their spouse have not paid the qualifying Medicare payroll taxes, those 65   and older who wish to participate in Part A Medicare must pay a monthly premium to stay enrolled in Part A Medicare.

People with impairments who receive SSDI remain eligible for Medicare as long as they continue to receive SSDI payments; but, if they cease receiving SSDI, they lose their disability-based Medicare eligibility. The coverage does not begin for another 24 months after the SSDI application is approved. The 24-month exclusion means that unless they have one of the conditions specified, persons who become incapacitated must wait two years before receiving government medical insurance.

The 24-month period begins on the date that an individual is judged to be eligible for SSDI benefits, not on the date that the first payment is made. Many new SSDI users receive “back” disability pay, which covers a six-month period between the start of disability and the first monthly SSDI payment.

Some people are qualified for both benefits. As a result, they are eligible for both Medicare and Medicaid. In some areas, Medicaid will cover the beneficiaries’ Part B premium (most beneficiaries have worked long enough and have no Part A cost), as well as some of their out-of-pocket medical and hospital expenses if they earn less than a specific amount.

Benefits and parts of Medicare

Part A, or Hospital Insurance, is the most basic of the four elements of Medicare. Medical Services Insurance is covered under Part B. Many prescription medications are covered by Medicare Part D, however some are covered by Medicare Part B. The distinction is made in general depending on whether or not the medicines are self-administered, however this is not a complete distinction. Part C Medicare health plans, the most popular of which are branded Medicare Advantage, are an additional means for Original Medicare (Part A and B) members to get their Part A, B, and D benefits; simply put, Part C is a capitated fee while Original Medicare is a fee for service.

Medical necessity is required for all Medicare benefits.Parts A and B were included in the original programme. Part-C-like plans have existed under Medicare as demonstration projects since the early 1970s, but the Part was formally established by legislation in 1997. Part D was enacted in 2003 and went into effect on January 1, 2006.

Previously, private insurance or a public Part C plan might provide coverage for self-administered prescription medications (if wanted) (or by one of its predecessor demonstration plans before enactment).

CMS began mailing new Medicare cards with new ID numbers to all enrollees in April 2018. Previously, ID numbers on cards contained recipients’ Social Security numbers; now, ID numbers are produced at random and are not linked to any other personally identifiable information.

What is Medicare Part A?

Part A: Insurance for hospitals and hospices

Part A covers inpatient hospital stays, including semi-private rooms, food, and diagnostics, where the beneficiary has been legally admitted to the hospital. Medicare Part A had a $1408 inpatient hospital deductible, a $352 coinsurance per day after 61 days of confinement within one “spell of sickness,” and a $704 per day coinsurance for “lifetime reserve days” (basically, days 91–150 of one or more stays of more than 60 days) as of January 1, 2020.

In a Skilled Nursing Facility (after a medically required hospital stay of three nights or more), the coinsurance structure is different: $0 for days 1–20; $167.50 per day for days 21–100. Part B covers several medical services that are covered under Part A (e.g., some surgery in an acute care hospital, some physical therapy in a skilled nursing facility).On the first day of each year, these coverage amounts rise or decrease.

In most cases, the maximum duration of stay covered by Medicare Part A in a hospital admitted inpatient stay or series of stays is 90 days. The first 60 days would be funded in full by Medicare, with the exception of a $1340 cost (sometimes known as a “deductible”) at the start of the 60 days in 2018. As of 2018, a $335 co-payment is required for days 61–90. In addition, the beneficiary is given “lifetime reserve days,” which can be used after 90 days. As of 2018, the beneficiary must pay a copayment of $670 a day for these lifetime reserve days, and they can only use 60 of them in their lifetime.

Some “hospital services” are offered as inpatient services, which are reimbursed under Part A, and others are delivered as outpatient treatments, which are reimbursed under Part B rather than Part A. Which is which is determined by the “Two-Midnight Rule.” The Centers for Medicare and Medicaid Services released a final rule regulating hospital inpatient services eligibility in August 2013, which took effect on October 1, 2013. According to the new rule, Medicare Part A payment is “usually appropriate” if a physician admits a Medicare beneficiary as an inpatient with the assumption that the patient will require hospital care that “crosses two midnights.” However, if the patient is expected to be in the hospital for fewer than two midnights, Medicare Part A payment is often not suitable; instead, payment will be made under Part B.

Outpatient time is the time a patient spends in the hospital before an inpatient admission is legally ordered. However, while considering whether a patient’s care will reasonably be expected to cross two midnights to be covered under Part A, hospitals and physicians might take into account the pre-inpatient admission period. The number of days a person is technically deemed an admitted patient affects eligibility for Part A skilled nursing services, in addition to determining which trust fund is utilised to pay for these distinct outpatient versus inpatient expenditures.

Hospitals are penalised by Medicare for readmissions. If an above-average number of patients are readmitted within 30 days after receiving initial payments for hospital stays, Medicare will demand these payments back from the hospital, plus a penalty of 4 to 18 times the initial payment.

These penalties apply following treatment for pneumonia, heart failure, heart stroke, COPD, knee replacement, and hip replacement, to name a few. In 2011, the Agency for Healthcare Research and Quality (AHRQ) showed that 1.8 million Medicare patients aged 65 and older were readmitted within 30 days of their original hospital stay, with the most common diseases being congestive heart failure, sepsis, pneumonia, and COPD and bronchiectasis.

Hospitals are penalised the most following knee or hip replacements, with $265,000 each excess readmission. The goals are to promote better post-hospital care and more referrals to hospice and end-of-life care in lieu of treatment, while reducing coverage in hospitals that treat poor and vulnerable patients. In 2013, the total penalty for above-average readmissions was $280 million, or $40,000 per readmission above the US average rate, for 7,000 excess readmissions.

Part A fully covers brief stays in a skilled care facility for rehabilitation or convalescence and up to 100 days per medical necessity with a co-pay if specific requirements are met:

  • A previous hospital visit must have lasted at least three days as an inpatient, including three midnights, not including the date of discharge.
  • The stay in a skilled nursing facility must be for a diagnosis made during the hospital stay or for the primary reason for the hospital stay.
  • The nursing home stay would be covered if the patient is not receiving rehabilitation but has another ailment that necessitates competent nursing monitoring (e.g., wound treatment).
  • The nursing home’s care must be of the highest quality. Part A of Medicare does not cover stays that simply provide custodial, non-skilled, or long-term care activities, such as personal hygiene, cooking, and cleaning.
  • The treatment must be medically essential, and progress against a predetermined plan must be made on a doctor-determined timeframe.

As of 2018, Medicare would cover the first 20 days in full, with the next 80 days requiring a co-payment of $167.50 a day. In the indemnity insurance policies they sell or the health plans they sponsor, many insurance companies include a provision for supplementary coverage of skilled nursing care in their retiree, Medigap, and Part C insurance plans. The 90-day hospital clock and the 100-day nursing home clock are reset and the person qualifies for new benefit periods if a beneficiary utilises some of their Part A benefit and then goes at least 60 days without getting facility-based skilled care.

Hospice benefits are also available under Medicare Part A for terminally ill patients with less than six months to live, as determined by their physician. The terminally ill person must sign a declaration stating that hospice treatment has been prioritised over other Medicare-covered services (e.g. assisted living or hospital care). Pharmaceutical medicines for symptom control and pain alleviation are supplied, as well as other therapies not covered by Medicare, such as grief counselling. Medicare Part A covers hospice completely, with no copays or deductibles, with the exception that patients must pay a copay for outpatient medications and respite care, if necessary.

How to enroll in Medicare if you are turning 65?

When most persons reach the age of 65, they are eligible for Medicare. Whether or not you are receiving retirement benefits when you enter your Initial Enrollment Period will affect the steps you take to enrol in Medicare (IEP).

You should be automatically enrolled in both Medicare Part A and Part B if you receive Social Security retirement payments or Railroad Retirement benefits.

You must actively enrol in Medicare if you are not receiving Social Security retirement benefits or Railroad Retirement benefits.

You should not need to contact anyone if you are eligible for automatic enrollment. Three months before your coverage begins, you should receive a package in the mail including your new Medicare card. A letter describing how Medicare works and that you were automatically enrolled in both Parts A and B will also be included.

If you receive Social Security retirement payments, the Social Security Administration will send you a gift and a card (SSA). If you are eligible for Railroad Retirement benefits, the Railroad Retirement Board will send you a package and a card.

Unless you or your spouse have insurance based on your or your spouse’s present work, you should not decline Part B. (job-based insurance). If you do not have employer-sponsored insurance and decline Part B, you may face a premium penalty if you need to enrol in Medicare in the future. Also, if your job-based insurance would pay secondary once you reach Medicare eligibility, you should enrol in Medicare to get main coverage and pay less for your care. If you are 65 years old and do not get Social Security or Railroad Retirement benefits, you must actively enrol in Medicare.

Enrolling in Medicare

If you need to enrol in Medicare, follow the instructions below.

If you elect to join up for Parts A and/or B of Medicare during your Initial Enrollment Period, you can do so by:

  • Visiting a Social Security office in your area
  • Calling the Social Security Administration at 800-772-1213
  • Sending a signed and dated letter to Social Security with your name, Social Security number, and the date you want to enrol in Medicare.
  • Alternatively, you can apply online at www.ssa.gov.
  • Enroll in Medicare if you are eligible for Railroad Retirement benefits by contacting the Railroad Retirement Board (RRB) or your local RRB field office.

To avoid paying a Part B premium penalty if your application is misplaced, save a record of when you sought to enrol in Medicare.

  • Take down the names and contact information for any representatives you communicate with, as well as the time and date of the conversation.
  • Use certified mail and request a return receipt if you enrol via mail.
  • Request a written receipt if you enrol at your local Social Security office.
  • Print and save your confirmation document if you apply online.

Conclusion

Original Medicare is enrolled in you by Social Security (Part A and Part B). Part A (hospital insurance) of Medicare helps pay for inpatient care in a hospital or for a short period of time in a skilled nursing facility (following a hospital stay). Medicare is a federal health-insurance programme for anyone aged 65 and up. a group of disabled people in their twenties and thirties. End-stage renal disease patients (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).Part A also covers some home health and hospice services.

The enrollment check at Medicare.gov can be used to check the essentials of Medicare benefits. Medicare can be reached at 1-800-633-4227. Members can review their coverage in person at a local office. In general, people should apply for Medicare benefits three months before they turn 65. Remember that Medicare benefits can’t start until you’re 65 years old. If you currently receive Social Security, you will be registered in Medicare Parts A and B without having to fill out a separate application.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.