In general, individuals are eligible for Medicare if they (or their spouse) worked for at least 10 years in Medicare-covered employment and are at least 65 years old and are a citizen or permanent resident of the United States of America.
Individuals who are under 65 years old can also be eligible if they are disabled or have end stage renal disease. People under 65 and disabled must be receiving disability benefits from either Social Security or the Railroad Retirement Board for at least 24 months before Medicare automatic enrollment occurs.
Many beneficiaries are dual-eligible. This means they qualify for both Medicare and Medicaid. In some states and for those with 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 any drugs that are not covered by Part D.
Part A: Hospital Insurance
Part A covers hospital stays (including stays in a skilled nursing facility) if certain criteria are met:
- The hospital stay must be at least three days, three midnights, not counting the discharge date.
- The nursing home stay must be for something diagnosed during the hospital stay or for the main cause of hospital stay. For instance, hospital stay for broken hip and then nursing home stay for physical therapy would be covered.
- If the patient is not receiving rehabilitation but has some other ailment that requires skilled nursing supervision, then the nursing home stay would be covered.
- The care being rendered by the nursing home must be skilled. Medicare part A does not pay for custodial, non-skilled, or long-term care activities, including activities of daily living (ADLs) such as personal hygiene, cooking, cleaning, etc.
- The maximum length of stay that Medicare Part A will cover in a skilled nursing facility per ailment is 100 days. The first 20 days would be paid for in full by Medicare with the remaining 80 days requiring a co-payment (as of 2008, $128.00 per day). Many insurance companies have a provision for skilled nursing care in the policies they sell.
- If a beneficiary uses some portion of their Part A benefit and then goes at least 60 days without receiving skilled services, the 100-day clock is reset and the person qualifies for a new 100-day benefit period.
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 taking Part B if not actively working.
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.
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.
As with all Medicare benefits, Part B coverage is subject to medical necessity. 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.
Medicare Supplement Insurance (Medigap)
A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn’t cover. If you are in the Original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will pay both their shares of covered health care costs.
Insurance companies can only sell you a “standardized” Medigap policy. These Medigap policies must all have specific benefits so you can compare them easily.
You may be able to choose up to 12 different standardized Medigap policies (Medigap Plans A through L). Medigap policies must follow Federal and State laws. These laws protect you. A Medigap policy must be clearly identified on the cover as “Medicare Supplement Insurance.” Each plan, A through L, has a different set of basic and extra benefits.
It’s important to compare Medigap policies because costs can vary. The benefits in any Medigap Plan A through L are the same for any insurance company. Each insurance company decides which Medigap policies it wants to sell.
Generally, when you buy a Medigap policy you must have Medicare Part A and Part B. You will have to pay the monthly Medicare Part B premium. In addition, you will have to pay a premium to the Medigap insurance company.
You and your spouse must each buy separate Medigap policies. Your Medigap policy won’t cover any health care costs for your spouse.
Medicare Advantage Plans
Medicare Advantage Plans (also known as Medicare Part C) are health plan options that are part of the Medicare program. If you join one of these plans, you generally get all your Medicare-covered health care through that plan. This coverage can include Medicare Part D prescription drug coverage or you can enroll in a separate Medicare Part D prescription drug coverage plan. Medicare Advantage Plans include:
- Medicare Health Maintenance Organization (HMOs)
- Preferred Provider Organizations (PPO)
- Private Fee-for-Service (PFFS) Plans
- Medicare Special Needs Plans (SNP)
- Medicare Medical Savings Accounts (MSA)
Please refer to the Centers for Medicare and Medicaid Services Booklet for a complete outline of the Medicare Advantage Program.
Part D: Prescription 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 Plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD). 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) they wish to cover, at what level (or tier) they wish to cover it, and are able to choose not to cover some drugs at all. The exception to this is drugs that Medicare specifically excludes from coverage, including but not limited to benzodiazepines, cough suppressant, and barbiturates. 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.
It should be noted again for beneficiaries who are dual-eligible (Medicare and Medicaid eligible) that Medicaid will pay for drugs not covered by part D of Medicare, such as benzodiazepines and other restricted controlled substances.