Basics About Medicare, the Nation’s Largest Health Insurance Plan

Medicare, the nation’s largest affordable health insurance plan, is a government health plan that insures citizens age 65 and over, qualifying disabled persons and persons with end stage kidney disease.

Centers for Medicare and Medicaid Services

Medicare pays 80 per cent of the allowable health care charge.  Medicare has agreement with participating providers for a lower allowable charge for each medically necessary medical procedure reducing the charges for Medicare allowed reimbursement.  You are responsible for the remaining 20 per cent.  For this reason, many purchase another health insurance plan known as the tie-in plan to pay for the 20 per cent remaining bill. Important note:  If your provider is not a participating Medicare provider, he is not obligated to accept reduced Medicare fees and you can be liable for a higher amount.

Types of Medicare coverage:

·         Part A-The part of the insurance health plan that pays for hospital charges.  All Medicare eligible persons are automatically enrolled in this.

·         Part B- The part of the insurance health plan that pays physicians and other outpatient providers including medically necessary ancillary procedures such as physical therapy, home health care and some preventive services.  You pay a monthly premium for this service which is a set amount each year plus additional amount depending upon your last two year income tax return.  Those whose income fall below a certain amount are eligible for government subsidy of all or part of their Part B premium.

·         Part C- Also called Medicare Advantage,  are private health insurance plans which provide Medicare mandated services and usually other services such as preventive and health education programs.  They are required by law to provide at least all services provided by the Original Medicare plan.  Some also offer dental, vision and prescription insurance. You may choose to participate in either the Original Medicare or in a Medicare Advantage plan.

·         Part D- The part of Medicare which pays for prescription drugs.  You may participate in this through 1. Medicare Prescription Drug Plans (PDP)  or 2. Medicare advantage mentioned above.  Again, you pay a monthly premium for this and the government subsidizes the premium for those who fall below a certain income bracket. 

Beware of the Donut Hole

Beware of the Donut Hole: Medicare prescription drug plans pay for prescriptions up to $2830 in 2010 and $2840 in 2011.  Once you hit this spending mark, you are in the coverage gap or “donut hole.”  You become liable for your medicine purchase until you have spent $ 4,550 for the year at which point catastrophic coverage kicks in and the health insurance picks it up again.

Medicare remains the largest affordable personal health insurance plan.  For more detailed information request the free Medicare and You 2010 handbook through www.medicare.gov or call the 24 hour interactive phone line at 1-800 Medicare (1-800-633-4227) and TDD users at 1-877-486-2048. Download the pdf version at http://www.medicare.gov/publications/pubs/pdf/10050.pdf