Medicare, Medigap and Medicaid
The ABCs of Medicare: Medicare is a federal health insurance program, enacted by Congress in 1965, to benefit people 65 years of age and older as well as some disabled people under 65 years of age. Managed by the Centers for Medicare & Medicaid Services, which is part of the Department of Health and Human Services, the program currently covers about 40 million people.
Part A: The basic Medicare coverage is also referred to as Part A compulsory hospitalization insurance. It's financed through payroll taxes that are shared by employers and employees alike. It's provided free to anyone who qualifies for Medicare benefits.
Part B: The next layer of coverage, referred to as Part B supplementary medical insurance,covers most of what isn't covered by Part A and is paid for by the insured individual via an enrollment program. For 2008 the basic monthly premium is $96.40. The income-related Part B premiums for 2008 will be $122.20, $160.90, $199.70, or $238.40, depending on the extent to which an individual beneficiary’s income exceeds $82,000 (or a married couple’s income exceeds $164,000), with the highest premium rates only paid by beneficiaries whose incomes are over $205,000 (or $410,000 for a married couple). The income thresholds increase annually by indexing to the Consumer Price Index (CPI).
Part C: Medicare + Choice is a newer program initiated in 1997 and referred to as Part C. If a beneficiary chooses Part C, it takes the place of Parts A and B. Part C is basically a Medicare HMO plan. In 2000 several carriers ceased offering this type of coverage and those individuals who had elected to go with a Medicare HMO had to backtrack and re-enroll in the original Medicare fee-for-service program (Parts A and B).
Part D: The Medicare Prescription Drug , Improvement, and Modernization Act of 2003 (MIMA) made a number of significant changes to the Medicare law. Medicare Part D (the permanent drug assistance program) began January 1st, 2006. This part of the new law is intended to give everyone equal access to prescription medication via a means test and participation of the private insurance industry.
Medigap: While Medicare provides extensive benefits, there are nonetheless significant gaps in coverage. The private insurance industry has created special policies designed to supplement Medicare coverage and these have been dubbed Medigap policies. There are 10 standard Medigap policies designated by the letters A through J.
Medigap policies (including Medicare SELECT) can only be sold in 10 standardized plans plus a couple of hybrids. This chart gives you a quick and easy look at all Medigap plans and what benefits are in each plan.
Basic Benefits: Included in All Plans.
- Inpatient Hospital Care: Covers the Part A coinsurance and for the cost of 365 extra days of hospital care during your lifetime after coverage ends.
- Medical Costs: Covers the Part B coinsurance ( generally 20% of the Medicare- approved payment amount).
- Blood: Covers the first 3 pints of blood each year.
Chart of Ten Standardized Medigap Plans A through J
(from the Medicare.gov web site) |
| |
A |
B |
C |
D |
E |
F* |
G |
H |
I |
J* |
| Basic Benefit |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Skilled Nursing Coinsurance |
|
|
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Part A Deductible |
|
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| Part B Deductible |
|
|
√ |
|
|
√ |
|
|
|
√ |
| Part B Excess |
|
|
|
|
|
√ (100%) |
√ (80%) |
|
√ (100%) |
√ (100%) |
| Foreign Travel Emergency |
|
|
√ |
√ |
√ |
√ |
√ |
√ |
√ |
√ |
| At-Home Recovery |
|
|
|
√ |
|
|
√ |
|
√ |
√ |
| Drug Benefit |
|
|
|
|
|
|
|
√ (Basic $1,250 Limit) |
√ (Basic $1,250 Limit) |
√ (Extended $2,500 Limit) |
| Preventive Care |
|
|
|
|
√ |
|
|
|
|
√ |
* Plans F and J also have a "high deductible option." If you choose the "high deductible option" on Medigap Plans F and J, you will first have to pay a $1,860 deductible in 2007 before the plan pays anything. This amount can go up every year. High deductible policies have lower premiums, but if you get sick, your costs will be higher.
There are also basic benefits plans K and L which include similar services as plans A-J, but the cost-sharing for the basic benefits is at different levels. The annual out-of-pocket limit increases each year for inflation.
Note: This chart does not apply if you live in Massachusetts, Minnesota, or Wisconsin. Call your State Insurance for more information on the policies that are offered in these states. Use this handy link to learn what specific Medigap plan options are available to you in your local area.
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Who is eligible?
Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment, you are 65 years old, and you are a citizen or permanent resident of the United States. You might also qualify for coverage if you are a younger person with a disability or with End-Stage Renal disease (permanent kidney failure requiring dialysis or transplant).
What does it cost?
Part A (Hospital Insurance) Premium: Most people do not pay a monthly Part A premium because they or a spouse have 40 or more quarters of Medicare-covered employment.
Part B (Medical Insurance) Premium: As of 2008, the monthly premium is $96.40.
What are the deductibles and/or co-insurance?
Part A (Hospital Insurance):
- Deductible is currently $1,024.00 per benefit period in 2008.
- Coinsurance
- $256.00 a day for the 61st - 90th day each benefit period.
- $512.00 a day for the 91st - 150th day for each lifetime reserve day (total of 60 lifetime reserve days - non-renewable).
- Skilled Nursing Facility Coinsurance is up to $128.00 a day for days 21 through 100 in each benefit period.
Part B (Medical Insurance): Deductible is $135.00 per year plus 20% of the Medicare approved amount for services after you meet the $135.00 deductible.
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