1201 - Medicare in General
Medicare is the health insurance program under the auspices of the Centers for Medicare & Medicaid Services, referred to as CMS, a branch of the Department of Health and Human Services. Medicare is no longer under the jurisdiction of the Social Security Administration, although SSA is a primary source of information, applications and claims for Medicare. Questions on Medicare can be answered by contacting CMS at a toll-free number - 1-800-MEDICARE. The CMS website is found at www.medicare.gov .
Original Medicare is divided into two parts: Hospital Insurance (Part A) and Medical Insurance (Part B). In many areas of the country you may choose a Medicare Advantage Plan that allows you to participate in Health Maintenance Organizations (HMOs), Preferred Providers Organizations (PPOs) and other arrangements that may provide additional benefits and coverage, including prescription drug coverage. This is referred to as Part C. You may also enroll for drug coverage under the Prescription Drug Coverage Plan Part D.
Under Part D you enroll directly with a private prescription drug provider company. You may select from hundreds of different plans depending on where you live, each providing different benefits. But under the law, certain minimum coverage amounts must be provided. You apply to the insurance company, and pay the monthly premium directly to the company, although you may have it deducted from your social security check in some plans.
If you have a low income and limited resources you may be eligible for subsidies for the premiums and deductible. Application for the low income assistance is made to the Social Security Administration.
Hospital Insurance is financed through a portion of the FICA payroll deduction from the paychecks of workers. Medical Insurance is partially financed through the collection of monthly premiums. These are either deducted from Social Security checks or paid directly by covered individuals. See Appendix 11 for the amount of the premiums.
Many private insurance companies also offer coverage of hospital and medical expenses that are not covered by Original Medicare Parts A and B. This is commonly called Medigap Coverage. This coverage does not work with Part C Medicare Advantage Plans.
Section 1202 - Hospital Insurance- Part A
Hospital insurance pays for four basic areas of medical care: in-patient care in a hospital; medically necessary in-patient care in a skilled nursing facility immediately following hospitalization (most nursing homes are not skilled nursing facilities); home health care; and hospice care.
All hospital insurance claims are paid on the basis of benefit periods. The first benefit period begins with the first hospitalization, but ends 60 calendar days after the termination of medicare services (hospitalization, a skilled nursing facility or rehabilitation services). There is no limit to the number of benefit periods an individual can have under hospital insurance.
Medicare hospital insurance does not pay for the entire stay in the hospital. In each benefit period, Medicare pays for all covered services for the first through the sixtieth day, except for the average cost of one day’s hospitalization. For the sixty-first through ninetieth day in the hospital, Medicare pays for all covered services except for one-quarter of the average cost of each day in the hospital. In addition, every Medicare beneficiary is entitled to 60 life-time reserve days. For life-time reserve days, Medicare pays for all covered services except for the cost of one half of the average cost for each day in the hospital. See Appendix 11 for these co-payment amounts.
Section 1203 - Medical Insurance- Part B
Medicare medical insurance pays for six basic areas of medical care:
1. Doctor’s services, both in his office and in the hospital.
2. Out-patient hospital care.
3. Out-patient physical and speech therapy.
4. Home health care.
6. Medically necessary durable medical equipment, such as wheelchairs.
All payments under Medicare Part B are based on reasonable charges, not the current charges made by the physicians. Reasonable charges are determined by comparing the customary charge made by each doctor in the previous calendar year for each service with the “prevailing rate” for each service. The prevailing rate is the amount which will cover the customary charge in seventy-five percent of the bills submitted to Medicare in the previous year.
Medicare medical insurance pays eighty percent of the reasonable charge, after a predetermined deductible has been met, based on covered services, i.e., what Medicare would have paid which may be different from the doctor’s fee. All deductibles for Medicare Part B are based on the calendar year.Medicare Part B also covers certain preventive services such as flu shots and cancer screenings. Below is a chart of services covered as of 2007.
PREVENTIVE SERVICES COVERED (2007)
|Service||Who and what is covered||How often||Coinsurance or deductible|
||All people with Medicare||Once a flu season, or more frequently if medically necessary
||No coinsurance or deductible |
|Pneumococcal Shot||All people with Medicare
||Once in a lifetime
||No coinsurance or deductible |
|Hepatitis B Shots
||People with Medicare who are at medium to high risk
||One series if ordered by a doctor
||Coinsurance and deductible|
|Initial Preventive Physical Examination
(The “Welcome to Medicare” physical exam)
|All new enrollees in Medicare Part B may receive an exam that includes medical and social history review, and physical examination and electrocardiogram (ECG), with counseling, referral and a written plan for additional preventive services that are needed
NEW - In 2007, people with Medicare who are at risk for abdominal aortic aneurysms may get a referral for a one-time screening ultrasound at their Welcome to Medicare Physical Exam
|One time only within the first 6 months you have Medicare Part B
||Coinsurance and deductible|
You pay 20% of the Medicare-approved amount with no Part B deductible for the Abdominal Aortic Ultrasound screening
|Cardiovascular Disease Screenings
||All people with Medicare Part B may receive assessment of blood lipid levels
||Every 5 years
||No coinsurance or deductible|
||Those with Medicare with 2 or more of the following: age 65 or older, overweight, family history of diabetes, or a history of gestational diabetes or delivery of a baby weighing more than 9 pounds
Those with Medicare who have high blood pressure, dyslipidemia, obesity, or history of high blood sugar may receive a test for elevated blood glucose
|1 screening per year if you were never tested or if you were previously tested, but not diagnosed with pre-diabetes
2 screenings per year if you are diagnosed with pre-diabetes
|No coinsurance or deductible|
|Pap Test and pelvic screening exams
||All women with Medicare
||Every 24 months
Once every 12 months if you are high-risk or if you are of childbearing age and have had an abnormal Pap test in the past 36 months
|Coinsurance but no deductible for the pelvic exam. Beneficiary pays nothing for the lab analysis|
|Coinsurance; no deductible|
|Colorectal Cancer Screening
||People with Medicare age 50 or older except there is no minimum age for a screening colonoscopy or barium enema as an alternative to colonoscopy
||Fecal occult blood tests once every 12 months
Flexible sigmoidoscopy- every 48 months or once every 120 months after having a screening colonoscopy
Screening colonoscopy- every 24 months if you are at high risk; every 120 months if you are not at high risk
Barium enema - every 24 months if you are at high risk; every 48 months if you are not at high risk
|No coinsurance or deductible for fecal occult blood tests|
All other tests, coinsurance and deductible
NEW: Starting in 2007, Medicare will waive the Part B deductible for the colorectal screening benefit. Coinsurances still apply
|Prostate Cancer Screening
||All men with Medicare over age 50
||Digital Rectal Exam: once every 12 months
Prostate Specific Antigen (PSA) Test: once every 12 months
|Coinsurance and deductible for digital rectal exam. |
No coinsurance or deductible for Prostate Specific Antigen Test
|Bone Mass Measurements
||People with Medicare whose doctors say they are at risk for osteoporosis
||Every 24 months (more often if medically necessary
||Coinsurance and deductible|
||People with Medicare who have diabetes, a family history of glaucoma, are African American and age 50 or older, or are Hispanic-American age 65 and over
||Once every 12 months
||Coinsurance and deductible |
You must pay a monthly premium for Medical Insurance. Premiums are now adjusted based on your income, see Appendix 11 for the amounts. If you do not elect to be covered by Medical Insurance when you are first eligible, you can enroll only during a General Enrollment Period (see §407). If more than 12 months have passed since the close of your Initial Enrollment Period, you must pay an extra 10% for each full 12 month period beginning with the first month after the Initial Enrollment Period and ending with the last month of the General Enrollment Period in which you apply.
Example: John became 65 and otherwise eligible for Medical Insurance in January, 2006, but he does not enroll for Part B until January 15, 2008, during a General Enrollment Period. His Initial Enrollment Period closed April, 2006, the third month after his 65th birthday (see §407). The months considered for the premium increase are May 2006 through March, 2008. There are 23 months in this period, which is only one full 12 month period. His monthly premium will be increased by 10% (rounded to the nearest 10 cents).
For purposes of figuring the extra premium, you do not count any months during which you were covered both by Hospital Insurance (Part A) and an employer group health plan (§1204).
Section 1203.1 - Prescription Drug Coverage- Part D
Prescription Drug Benefits under a program called Part D are covered by Medicare beginning in 2006. Drug benefit coverage you may have under other plans, such as through your employment or your spouse's employment, may be affected if you enroll in Part D. If you are covered by a Medicare Advantage Plan you must enroll in Part D through that plan. If you enroll in Part D through another plan you will be disenrolled from the Medicare Advantage Plan. Medigap plans (private plans other than Medicare Advantage Plans) will no longer cover drug benefits in the future. Incarcerated beneficiaries are not eligible for the Medicare Part D. If you become incarcerated after enrolling you will be disenrolled.
Under Part D you buy drug coverage insurance from a private company that is approved by Medicare and agrees to provide certain minimum levels of coverage. The monthly premium is deducted from your social security check, electronically withdrawn from your bank account, or billed to you to pay. In exchange, Medicare subsidizes the costs the companies pay for the drugs. You have your choice of any plan that offers coverage in your region. There are 48 geographic versions of plan coverages. There are over a thousand different plans cover different amounts for different drugs and work with different pharmacies, so it is important to choose a plan that will cover your particular drugs in your own area pharmacies.
It is virtually impossible to select the best plan for you without using a computer program that allows you to put in a list of your prescription drugs and the area where you live to compare the various premiums, deductibles and savings. This computer program is available on the internet at the Medicare website. Go to www.medicare.gov and look for the link that says "Compare Medicare Prescription Drug Plans." This will allow you to find and compare drug plans available in your area that provide the best benefits for the particular prescription drugs you take.
If you are not able to work well on the internet, and cannot find someone who can help you, you will have to call Medicare or a state government run assistance office designed for helping people work through this process. Each state has set up an office for this purpose. See the chart below.
Listing Of Telephone Number For State Health Insurance And Assistance Programs (Ship)
1-800-432-4040 (Az Only) Or
1-800-434-0222 (CA Only) Or
1-303-894-7499 (Ext. 356)
|DIST. OF COLUMBIA |
1-800-247-4422 ( Boise)
1-800-488-5431 ( Twin Falls)
1-800-488-5725 ( Lewiston)
1-800-488-5764 ( Pocatello)
1-800-243-3424 (MD Only)
1-573-893-7900 (Ext. 137)
1-800-332-2272 (MT Only)
|NEW HAMPSHIRE |
|New Mexico |
1-212-869-3850 ( New York City Only)
|NORTH CAROLINA |
|Northern Mariana |
|Rhode Island |
|South Dakota |
1-605-773-3656 ( Pierre)
1-605-336-2475 ( Sioux Falls)
1-605-342-3494 ( Rapid City
In State: 800-642-5119
Out Of State: 802-748-5182
|Virgin Islands |
1-809-778-6311 Ext. 2338
|West Virginia |
TIP! All questions regarding enrollment or choosing a prescription drug plan should be made to the state office in your state or to 1-800-MEDICARE. All questions regarding premiums should be referred to the drug plan insurance company. Do not call the Social Security Administration because they will refer you to Medicare or the insurance company. But you should call Social Security for low income assistance for the Part D premiums and co-pays discussed below.
If you enroll in Part D you pay a small monthly premium, which varies by plan, and a yearly deductible which also can vary by plan and changes from year to year (between $0- $265 in 2007, to $275 in 2008). You also pay a co-payment or coinsurance, which again varies by plan. Then Medicare pays 75% of the costs between the deductible and the initial benefit limit, $2,400 (2007), or $2510 (2008) in drug spending. You pay 25% of these costs. You pay 100% of the drug costs above $2,250 until you reach the "catastrophic threshold" of $3,850 (in 2007), or $4,050 (in 2008) in out-of-pocket spending. This level between the initial benefit limit and the catastrophic threshold is called a coverage gap, or "donut hole." Some drug plans may offer options to help you pay the out-of-pocket costs.
After you have spent the out -of-pocket amount Medicare will pay about 95% of the costs . This is referred to as "catastrophic coverage." The approximately 5% you pay is by way of co-payments and co-insurance. You will pay $2.15 in 2007, $2.25 in 2008 for a generic or preferred drug and $5.35 in 2007, $5.60 in 2008 for other drugs, or a flat 5% coinsurance, whichever is greater. The out-of-pocket amount is paid annually. You must reach the out-of-pocket threshold each year.
For updated information click to the Latest Updates page.
TIP! If you have low income and limited assets you may receive subsidies. If you qualify, you will only pay a small co-payment for each prescription and you may also get help paying the premiums and the deductible. Low income means less than 150% of the Federal Poverty Level. For 2007 this comes to $15,315 for a single person household, and $20,535 for a two person family, and you can add $5,220 to the limit for each additional person in the family. The amounts are somewhat higher in Alaska and Hawaii. You may qualify for the extra help if your combined savings, investments, and real estate - not counting your home - are worth less than $11,710, if you are single, or $23,410 if you are living with your spouse. These amounts change each year. The rules are complex and cannot be discussed fully here. You should call Social Security to apply for a subsidy so that you may not have to pay a premium or deductible. Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) or visit the website at www.socialsecurity.gov to apply online. The Social Security Administration handles the applications for Part D low income subsidies.
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Section 1203.2 - Part D Enrollment Periods
All enrollments in Part D are processed by the plan companies, not by Social Security. You may enroll when you first become eligible for Medicare during the Initial Enrollment Period for Part B (see §407), and each year after that from November 15 - December 31, called the Annual Enrollment Period. There are also Special Enrollment Periods if you who lose employer-based coverage, or move from the drug insurance company's service area, or if it goes out of business or is de-certified by Medicare.
If you apply when you are first eligible for Medicare your coverage will be effective the month after the application is given to the drug insurance company, but not before Medicare begins. If you miss you first enrollment period and apply during the Annual Enrollment Period (Nov. 15 - Dec. 31) then coverage is effective January 1 st of the following year. If you apply during a Special Enrollment Period coverage will be effective with the month after the month the enrollment form is completed. If you are eligible for both Medicaid and Medicare coverage will be effective the month the application is given to the insurance company.If you do not enroll when first eligible and you do not have "creditable prescription drug coverage" (a drug plan that provides at least as good coverage as Part D) or you do not qualify for a special enrollment period, you are subject to a penalty.
Examples of creditable coverage may include:
If your creditable drug coverage ends, you have to enroll in Part D within 63 days to avoid the late enrollment penalty fees.
The late fee is 1% of the National base premium ($27.35 for 2007, for a penalty of $0.27 per month) for each month after May 2006 for which you are eligible for Part D but are not enrolled. This penalty fee is a permanent increase to the premium.
You may change to another plan once a year without penalty during the Annual Enrollment Period (Nov. 15- Dec. 31) with the change being effective January 1st of the following year. You may want to change coverage plans if the drugs you need change, or you move to a different area. The plans may also change their co-pays and premiums from year to year, as well as the drugs that are available under the plan.
TIP! Even if you do not need coverage because you have not been prescribed drugs, you may want to enroll in a plan that has a very small premium. This way, if you need expensive prescription drugs in the future you will be able to switch over to a better plan without paying a late-filing penalty.
For years after 2007, beneficiaries who are eligible for the low income subsidy will be responsible for a portion of late fees as well. NOTE: If you are eligible for a low-income subsidy you may enroll at any time in 2007 without a penalty.
Section 1204 - Private Health Insurance
Medicare is designed to provide basic protection against the very high cost of health care, but it will never pay all of your medical expenses. Because of this, many private insurance companies offer different protection in their policies. You should shop and compare different companies to determine which policy would be best for you.
For example, if you have need for several prescriptions, perhaps a company which covers prescription costs would be more advantageous. Other plans may offer eyeglass or dental plans. There is no one supplemental health plan which is best for everybody.
If you are over age 65 and you (or your spouse) work for an employer who has 20 or more employees, your employer is required to offer you the same health insurance benefits that he is offering to his young workers. If you continue working after 65 you have a choice of either accepting or rejecting your employer’s health plan. If you accept it, Medicare will become a secondary health insurance plan for you; your employer’s health plan would be the primary insurance plan (the first payer). If you drop Part B because you are covered by the private plan, you may re-enroll when the private coverage ends, see §407.
You have the option of rejecting your employer’s health plan and if you do, Medicare will become the primary health insurance plan.
Section 1205 - What is Not Covered
Medicare hospital insurance pays for all routine care in a hospital, including semi-private room, all your meals and regular nursing service, lab tests and X-rays. It does not cover other items which are purely for personal convenience, such as the television, a radio, or a telephone. It will not pay the charge for private duty nurses or extra charges for a private room unless it is determined to be medically necessary, for example, to isolate a contagious disease.
Medicare medical insurance will not pay for the following services:
The above sections are by no means a comprehensive list of what is or is not covered by Medicare. For more complete information you may obtain a copy of the Medicare Handbook published by Social Security, or visit the Medicare website at www.medicare.gov .
Section 1206 - Assignment of Benefits
Assignment of benefits is a procedure by which the doctor agrees to accept direct payment from Medicare for services he provided to you. If a doctor accepts an assignment, he agrees to accept the amount that Medicare approves as his full charge for the service. Medicare would then pay eighty percent of that amount. You are still responsible to pay the twenty percent that Medicare does not pay.
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Section 1207 - When to File Claims
Virtually all services rendered by hospitals and skilled nursing facilities are submitted directly to Medicare by the hospital. They will receive payment directly. You will receive only a notice of how much was paid and what the covered services are.
Some physicians, whether or not they accept assignment, will forward the claim for reimbursement to Medicare. If the physician does forward the claim to Medicare and has accepted assignment, you will receive an explanation of how much money was paid to the physician.
If the physician does not accept assignment, you will receive an explanation of how much Medicare pays along with a check.
You may forward your bills to Medicare as soon as you receive them, or you may save and submit them all at once. Since many people have a tendency to save their bills until the deductible is met or to save up their bills for the entire year and submit them all at once, the last three months of the year and the first three months of the year are very busy for Medicare and may result in a substantially longer time to process your request for reimbursement.
It is generally advisable to submit your Medicare claims on a “flow” basis. As soon as you receive the service, submit the bill.
Section 1208 - Processing of Claims
Claims for Medicare medical insurance benefits are not processed by either the Social Security Administration or the Health Care Financing Administration. These are processed by various private health insurance companies throughout the country. These companies are known as Medicare carriers. For example, all Medicare Part B claims for services provided by doctors in Alabama will be forwarded to Medicare Blue Cross/Blue Shield of Alabama in Birmingham. Claims in the State of Hawaii are sent to Medicare Aetna Life and Casualty Company in Honolulu. You are told who your carrier is when you become entitled to Medicare.
If you do forward the Medicare claim to the wrong office, that office will forward it to the correct one.
Section 1209 - The Medicare Card
Everyone entitled to Medicare hospital insurance or medical insurance is issued a red-white-and-blue card which is entitled “Health Insurance Social Security Act.” This is known as the “Medicare card.” The information on the card includes your name, your Social Security claim number and your sex. It indicates whether you are entitled to hospital insurance benefits only, medical insurance benefits only, or both. It also shows the effective date.
You are issued only one Medicare card which is good for as long as you are entitled. Social Security will issue replacements only if your card is lost or stolen. It normally takes about four to six weeks after your initial application for Medicare is processed to receive the card. If you need to use Medicare before you receive it, the Social Security office can issue you a temporary letter of eligibility which will contain the information on the Medicare card. This can be used instead by the doctors and hospitals.