Medicare & Its Four Parts

Medicare is a federal health insurance designed for American citizens or permanent residents whom are sixty-five and older, with a few notable exceptions. American citizens with end-stage renal disease (failing kidney), amyotrophic lateral sclerosis (ALS) or other disabilities may qualify to Medicare assistance. Anyone who has paid Medicare taxes, usually through income taxes, for at least ten years is automatically eligible for Medicare after turning sixty-five. Those eligible to receive Social Security disability benefits prior to turning sixty-five are also qualified for Medicare. Enrollment in the program is free for the first seven months following sixty-five and fees are incurred thereafter.

Medicare is funded by a federal trust fund, paid for by Americans are charged 2.9% of their adjusted gross income. However, generally the 2.9% is split between employer and employee so as each party pays 1.45%; self-employed laborers or independent contractors usually deduct half the 2.9% on their income taxes.

Medicare is split into four basic sections: A, B, C, D.

Medicare Part A is also designated as Medicare Hospital Insurance (HI). It is, in the professional vernacular, “premium-free.” Former tax-paying Americans, or Americans with tax-paying spouses, are automatically eligible after turning sixty-five.

Medicare Part A covers inpatient hospital care in health centers such as critical access hospitals, nursing facilities, long-term hospitals and home health care centers. The caveats stack up high, however. Inpatient hospital stays cover supplies, equipment usage fees, a semi-private room, meals etc. Posh amenities like room telephone lines or private-duty nursing is not included. Medicare only pays for home health care if the agency is certified and the patient shows continual improvement. Morbidly, terminally ill patients in hospice care must prove they have less than six months to live.

Medicare Part B is labeled “Supplementary Medical Insurance.” Users pay a monthly fee ($96.40 in 2009) and must meet an annual deductible ($135.00). For the money, patients are covered by twelve standardized plans under Federal law – theoretically. Not all states offer all twelve programs and not all providers offer all available plans in their respective states. Generally, those under Medicaid’s insurance do not need Part B.

Medicare Part B covers two types of services: those designated as medically-necessary and those labeled as preventive services. Medically necessary services are those required to diagnose or treat a condition and those to meet required medical standards. Preventive services are used for those conditions in which early diagnose and treatment is likely to get the best response, such as treatments for HIV, Hepatitis B, diabetes and breast cancer.

Medicare Part C masquerades until several different names: Medicare + Choice, Medicare Advantage, MA Plans, etc. Part C helps patients get a personalized plan under the provision of private insurance providers, such as Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Special Needs Plans (SNPs), and more. A Medicare Part C plan covers all services usually covered by Part A and Part B, and may cover extra amenities. But as the economists say, “TANSTAFL: there are no such things as free lunches.” A Medicare Part C plan is paid by the Part B premium plus an extra monthly premium for out-of-pocket expenses.

The finale: Medicare Part D, alias Prescription Drug Plan, enacted in 2003 and in affect as of January, 2006. To qualify for a Part D program, a patient must be enrolled under Part A and/or Part B, or Part C. Part D offers two prescription drug coverage programs: PDPs and Medicare Advantage Plans. Both programs pay for prescription drugs. Initial coverage extends to $2,830. The patient then strikes out on his own until $4,550 is reached, in which Medicare foists the most of the financial burden onto its own shoulders. These plans are administered by private insurance companies, and are paid for by a monthly premium and annual deductible.

Medicare is a befuddling labyrinth and an expensive government hobby. But feed Medicare well, and it usually returns the favor. That’s why 44 million seniors have it; that’s why millions more will.