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Medicare
Medicare is a social insurance program administered by the United States Government, providing health insurance coverage to people who are aged 65 and over, or who meet other special criteria such as a disability. Medicare operates as a single-payer health care system. It was originally signed into law on July 30, 1965, by President Lyndon B. Johnson as amendments to Social Security legislation. At the bill-signing ceremony President Johnson enrolled former President Harry S. Truman as the first Medicare beneficiary and presented him with the first Medicare card.

The Centers for Medicare and Medicaid Services (CMS), a component of the Department of Health and Human Services (HHS), administers Medicare, Medicaid, the State Children's Health Insurance Program (SCHIP), and the Clinical Laboratory Improvement Amendments (CLIA). Along with the Departments of Labor and Treasury, CMS also implements the insurance reform provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The Social Security Administration is responsible for determining Medicare eligibility and processing premium payments for the Medicare program.

The Chief Actuary of CMS is responsible for providing accounting information and cost-projections to the Medicare Board of Trustees in order to assist them in assessing the financial health of the program. The Board is required by law to issue annual reports on the financial status of the Medicare Trust Funds.

Since the beginning of the Medicare program, CMS has contracted with private companies to assist with administration. These contractors are commonly already in the insurance or health care area. Contracted processes include claims and payment processing, call center services, clinician enrollment, and fraud investigation.

Eligibility

In general, individuals are eligible for Medicare if they are a U.S. citizen or have been a permanent legal resident for 5 continuous years, and they are 65 years or older, or they are under 65, disabled and have been receiving either Social Security benefits or the Railroad Retirement Board disability benefits for at least 24 months from date of entitlement (first disability payment), or they get continuing dialysis for end stage renal disease or need a kidney transplant. Roughly 25 to 30% of people with MS rely on Medicare as their primary source of health coverage.

Before age 65, you are eligible for Medicare hospital insurance if you:
• Get Social Security disability benefits and have amyotrophic lateral sclerosis (Lou Gehrig's) disease; or
• have been a Social Security disability beneficiary for 24 months; or
• have worked long enough in a federal, state, or local government job and you meet the requirements of the Social Security disability program.

Many beneficiaries are dual-eligible. This means they qualify for both Medicare and Medicaid. In some states for those making below a certain income, Medicaid will pay the beneficiaries' Part B premium for them (most beneficiaries have worked long enough and have no Part A premium), and also pay for any drugs that are not covered by Part D.

In 2007, Medicare provided health care coverage for 43 million Americans. Enrollment is expected to reach 77 million by 2031, when the baby boom generation is fully enrolled.

Waiting Period

When an individual qualifies for Social Security, there is a 24 month waiting period before Medicare begins. This becomes a big problem for those who can't work. They typically can't afford COBRA coverage and or private insurance during the waiting period. Those who have a spouse that has health insurance through their employer are fortunate but are typically the exception.

As with many ill-conceived programs that the government operates, some things don't quite make sense. It doesn't make sense that the government program that an individual paid into can find you disabled and eligible for SSDI, yet make you wait for 2 years before medical coverage for the very same disability is available. Treatments and medications are needed, but they become impossible to pay for and typically given up during this time. If an insurance policy has been paid into, Social Security and Medicare, and the qualifications have been met, then any policy should begin at that point.
Benefits
As in the sample Medicare card above, there are separate lines with for Part A and Part B, each with its own effective date. There are no lines for Part C or D, as a separate card is issued for those benefits by the private insurance company. The original Medicare program has two parts: Part A (Hospital Insurance), and Part B (Medical Insurance). Only a few special cases exist where prescription drugs are covered by original Medicare, but as of January 2006, Medicare Part D provides more comprehensive drug coverage. Medicare Advantage plans are another way for beneficiaries to receive their Part A, B and D benefits. All Medicare benefits are subject to medical necessity.

Part A: Hospital Insurance

Part A covers inpatient care in hospital and including critical access hospitals and rehabilitation facilities. The deductible and 20% copay applies to most services. Covered services for Part A include blood, home health services, hospice care, hospital stays, and skilled nursing facility care. The amount and length of coverage varies and is listed in the Medicare 2009 benefits guild.

If a beneficiary uses some portion of their Part A benefit and then goes at least 60 days without receiving facility-based skilled services, the 100-day clock is reset and the person qualifies for a new 100-day benefit period.

These benefits are basic, however, but do cover a broad amount of hospital costs. The Part A benefit is not meant to act as a long-term coverage, but rather as a short-term "get in & get out" coverage.

Part B: Medical Insurance

Part B medical insurance helps pay for some services and products not covered by Part A, generally on an outpatient basis. Part B is optional and may be deferred if the beneficiary or their spouse is still actively working. There is a lifetime penalty (10% per year) imposed for not enrolling in Part B unless actively working or covered by another health plan that has equal or better benefits. The deductible and 20% copay applies to most services.

Part B coverage includes physician and nursing services, x-rays, laboratory and diagnostic tests, influenza and pneumonia vaccinations, blood transfusions, renal dialysis, outpatient hospital procedures, limited ambulance transportation, immunosuppressive drugs for organ transplant recipients, chemotherapy, hormonal treatments such as lupron, and other outpatient medical treatments administered in a doctor's office. Medication administration is covered under Part B only if it is administered by the physician during an office visit such as those given by IV.

Part B also helps with durable medical equipment (DME), including canes, walkers, wheelchairs, and mobility scooters for those with mobility impairments. Prosthetic devices such as artificial limbs and breast prosthesis following mastectomy, as well as one pair of eyeglasses following cataract surgery, and oxygen for home use is also covered.

Complex rules are used to manage the benefit, and advisories are periodically issued which describe coverage criteria. On the national level these advisories are issued by CMS, and are known as National Coverage Determinations (NCD). Local Coverage Determinations (LCD) only apply within the multi-state area managed by a specific regional Medicare Part B contractor, and Local Medical Review Policies (LMRP) were superseded by LCDs in 2003. Coverage information is also located in the CMS Internet-Only Manuals (IOM), the Code of Federal Regulations (CFR), the Social Security Act, and the Federal Register.

Part C: Medicare Advantage Plans

With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). These programs are known as "Part C" or "MA Plans". Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, these plans are often more attractive to Medicare beneficiaries by the addition of prescription drug coverage.

Medicare has a standard benefit package that covers medically necessary care members can receive from nearly any hospital or doctor in the country. For people who choose to enroll in a Medicare Advantage health plan, Medicare pays the private health plan a capitated rate, or a set amount, every month for each member. Members typically also pay a monthly premium in addition to the Medicare Part B premium to cover items not covered by traditional Medicare (Parts A & B), such as prescription drugs, dental care, vision care and gym or health club memberships.

Medicare Advantage plans are required to offer coverage that meets or exceeds the standards set by the original Medicare program, but they don't have to cover every benefit in the same way. If a plan chooses to pay less than Medicare for some benefits, like skilled nursing facility care, the savings may be passed along to consumers by offering lower copayments for doctor visits. Medicare Advantage plans use a portion of the payments they receive from the government for each enrollee to offer supplemental benefits. Some plans limit their members' annual out-of-pocket spending on medical care, providing insurance against catastrophic costs over $5,000, for example. Many plans offer dental coverage, vision coverage and other services not covered by Medicare Parts A or B, which makes them a good value for the health care dollar.

For those living with severe or disabling chronic conditions, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) will start Medicare Advantage Special Needs Plans (SNPs) beginning in 2010. This is another add-on to Medicare that should help those with more severe or greater disabling conditions.

Part D: Prescription Drug Plans

Medicare Part D went into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D. It was made possible by the passage of the Medicare Prescription Drug, Improvement, and Modernization Act. In order to receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plans (PDPs) or Medicare Advantage plans (MA-PDs) with prescription drug coverage. These plans are approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies.

Unlike Original Medicare (Part A and B), Part D coverage is not standardized. Plans choose which drugs (or even classes of drugs) to cover, at what level (or tier) they wish to cover it, and are free to choose not to cover some drugs at all. Plans that cover excluded drugs are not allowed to pass those costs on to Medicare, and plans are required to repay CMS if they are found to have billed Medicare in these cases.

The biggest problem with this plan is the coverage gap for "donut hole" that exists. There is currently a 25% co-pay for prescriptions up to the current $2,700 ceiling. Once Medicare has paid that amount, the individual has to pay 100% of the cost of all medications until it goes up to the current catastrophic coverage amount of $6,154. The co-pay for the catastrophic coverage is 5% of the prescription cost.

For the disease modifying drugs the MS patients need, the first month will use the 1st ceiling of coverage and will cost $725 out-of-pocket, then $3,454 before hitting the catastrophic coverage threshold. So once the catastrophic coverage point hits, the individual will pay $4,179 somewhere around 2 to 3 months into the year. Average MS treatment costs would add on around $2,500 in out-of-pocket costs for the rest of the year giving a total amount of $6,679 that has to be paid just for medications.

Most people find that first $4,179 a bit difficult or impossible to find in this short amount of time and will skip or delay treatments because of this. How lawmakers arrived with these numbers and expected the individuals living on SSDI to pay for it will never be known, but for those who actually live in the "real world," it's difficult or nearly impossible to accomplish.
Out-of-Pocket Costs & Premiums
Neither Medicare Part A nor Part B pays for all of a covered person's medical costs. There are premiums, deductibles and coinsurance, which the covered individual must pay out-of-pocket. Some people may qualify to have other governmental programs (such as Medicaid) pay premiums and some or all of the costs associated with Medicare. The deductible amount for 2009 is $135 and a 20% copay applies to most services.

Most Medicare enrollees don't pay a monthly Part A premium, because they (or a spouse) have had 40 or more quarters in which they paid Federal Insurance Contributions Act taxes. Medicare-eligible persons who don't have 40 or more quarters of Medicare-covered employment may purchase Part A for a monthly premium of up to $443 for 2009.

All Medicare Part B enrollees pay an insurance premium for this coverage. The standard Part B premium for 2009 is $96.40 per month. Your premium may be higher if you are single and your modified adjusted gross income is greater than $85,000 for 2009 also if you are married and your a modified adjusted gross income is greater than $170,000 for 2009.

Medicare Part B premiums, whatever amount they may be, are typically deducted from beneficiaries' monthly Social Security check

Deductible and coinsurance

Part A — For each benefit period, a beneficiary will pay:

• A Part A deductible of $1,024 (in 2008) for a hospital stay of 1-60 days.
• A $256 per day co-pay (in 2008) for days 61-90 of a hospital stay.
• A $512 per day co-pay (in 2008) for days 91-150 of a hospital stay, as part of their limited Lifetime Reserve Days.
• All costs for each day beyond 150 days.
• Coinsurance for a Skilled Nursing Facility is $128.00 per day (in 2008) for days 21 through 100 for each benefit period.
• A blood deductible of the first 3 pints of blood needed in a calendar year, unless replaced. There is a 3 pint blood deductible for both Parts A & B.

Part B — After a beneficiary meets the 2009 yearly deductible of $135.00, they will be required to pay a co-insurance of 20% of the Medicare-approved amount for all services covered by Part B. They are also required to pay an excess charge of 15% for services rendered by non-participating Medicare providers.

The deductibles and coinsurance charges for Part C and D plans vary from plan to plan.

Medicare supplement (Medigap) policies

You can elect to purchase a type of supplemental coverage, called a Medigap plan, to help fill in the holes or coverage gaps in the Original Medicare (Part A and B) plans. These Medigap insurance policies are standardized by CMS, but are sold and administered by private companies. Some Medigap policies sold before 2006 may include coverage for prescription drugs. Medigap policies sold after the introduction of Medicare Part D on January 1, 2006 are prohibited from covering drugs.

Other Health Insurance

When you have other insurance, Medicare has rules to determine which pays first. The first to pay is the "primary payer" and pays up to the coverage limits. The second to pay is the "secondary payer" and usually pays any of the remaining uncovered amount.

The basic rule is that when you are retired, Medicare will be primary and the private healthcare will be secondary. If you are under 65, generally the private healthcare is primary and Medicare is secondary. There are some instances that can change this order, but generally this is how it stands.


Social Security Planner
http://www.ssa.gov/dibplan

Centers for Medicare & Medicaid Services (CMS)
http://www.cms.hhs.gov/

Centers for Medicare Advocacy
http://www.medicareadvocacy.org/

CMS Internet-Only Manuals
http://www.cms.hhs.gov/Manuals/IOM/list.asp