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Medicare Basics

What is Medicare?
Medicare is a federal health insurance program for people age 65 and older, people of any age with permanent kidney failure, and certain disabled people under age 65. Medicare is managed by the Centers for Medicare & Medicaid Services, which is part of the Department of Health and Human Services.

Medicare Part A (Hospital Insurance)
Hospital insurance that pays for inpatient hospital stays, care in a skilled nursing facility, home health care, and hospice care.

Medicare Part B (Medical Insurance)
Medicare Part B helps pay for doctor's services, outpatient hospital services (including emergency room visits), ambulance transportation, diagnostic tests, laboratory services, some preventive care like mammography and Pap smear screening, outpatient therapy services, durable medical equipment and supplies, and a variety of other health services. Part B also pays for home health care services for which Part A does not pay.

Medicare Part B pays 80 percent of approved charges for most covered services. Patients who are eligible are responsible for paying a $100 deductible per calendar year and the remaining 20 percent of the Medicare approved charge. Patients will have to pay limited additional charges if the provider who cares for the patient does not accept assignment. This means the provider does not agree to accept the Medicare approved charge for services.

Services Medicare Part B does not cover
Medicare Part B usually does not pay for most prescription drugs, routine physical examinations, or services not related to treatment of illness or injury. Part B does not pay for dental care or dentures, cosmetic surgery, routine foot care, hearing aids, eye examinations, or eyeglasses. Except for certain limited cases in Canada and Mexico, Medicare does not pay for treatment outside the United States.

The Original Medicare Plan
This is the traditional payment-per-service arrangement. Patients have been enrolled automatically in this option. This plan includes all Medicare covered services.

Carriers and Fiscal Intermediaries
Private insurance organizations called Medicare carriers and fiscal intermediaries handle claims under the Original Medicare Plan. Carriers handle medical insurance (Part B) claims. Fiscal intermediaries handle all hospital insurance (Part A) claims. The Social Security Administration does not handle claims for Medicare payment.

The Original Medicare Plan with a Supplemental Policy
Many private insurance companies sell Medicare Supplemental Insurance Policies (Medigap or Medicare SELECT) to help fill the coverage "gaps" in the Original Medicare Plan. If patients remain in the Original Medicare Plan, they may consider buying one of these standard policies for extra benefits. These policies help pay Medicare's co-insurance amounts and deductibles, and other out-of-pocket costs for health care.

The federal government does not sell supplemental policies. Patients initially enrolling in Part B at age 65 or older, have a six-month Medigap open enrollment period. During that time their health status cannot be used as a reason either to refuse a policy or to charge more than all other open enrollment applicants. (The insurer may make patients wait up to six months for coverage of a pre existing condition.) If a patient tries to enroll later, they may be denied a policy or charged a higher rate. At age 65, Medigap open enrollment is available to beneficiaries who are enrolled in Part B. Patients who are under age 65, should contact their state insurance department for information about open enrollment.

Other Medicare Health Plan Choices
In addition to the plans explained above, patients may have other Medicare health plan choices available to them. To be eligible for these other health plan choices Medicare beneficiaries must:

• Have both Part A (hospital insurance) and Part B (medical insurance).
• Continue to pay the monthly Part B premium.
• Live in the plan's service area (the counties in which the plan is offered).
• Not have permanent kidney failure (End-Stage Renal Disease).

The following types of plans may be options for some patients:

Medicare Managed Care Plans
Patients may choose to get their Medicare+ coverage through a managed care plan. Medicare Managed Care Plans may include Health Maintenance Organizations (HMOs), HMOs with a Point-of-Service option (POS), Provider Sponsored Organizations (PSOs), and Preferred Provider Organizations (PPOs). These types of plans involve a specific group of doctors, hospitals and other providers who provide your care as a member of the plan.

Medicare Managed Care Plans provide all services covered by both Part A and Part B.
Most offer a variety of additional benefits, like preventive care, prescription drugs, dental care, hearing aids, eyeglasses and other items not covered by the Original Medicare Plan. Costs for these extra benefits vary among plans.

Other Choices
In addition to the Original Medicare Plan and Medicare Managed Care Plans, other Medicare health plan choices may be available to patients in their local areas. These include Private Fee-for-Service Plans, Medicare Medical Savings Account (MSA) Plans, and Religious Fraternal Benefit Plans. These plans provide all services covered by both Part A and Part B. Some offer a variety of additional benefits.

For more information about the Medicare Program, visit http://www.medicare.gov.