Understanding Your Elderly Parents’ Medicare Coverage

Published In Government Programs

September 13th, 2015

Most people over 65 know all about Medicare, what it costs, what it does and doesn’t pay for, even why it makes financial sense to pay extra for a Medigap or supplementary insurance policy to help with deductibles and co-payments. These policies are sold by private insurance companies, but exactly how these policies supplement the costs depends on the specific plan.

The upcoming Medicare population, that growing number of Baby Boomers whose aging parents may already be on Medicare, needs to pay attention to what Medicare does and doesn’t cover for their parents, and as they approach the magic enrollment age of 65 themselves, when they should apply for Medicare and why, and how they can best protect themselves from future expenses even if they are in great health.

They also need to recognize that, even though Medicare is now more than 50 years old, the landscape is hardly stable in this era of governmental cost cutting. Dramatic cuts in reimbursements to health providers means that, in growing numbers, physicians are either dropping Medicare patients or retiring early to avoid dealing with ever-changing rules and regulations and stripped down reimbursements.

That means your aging parents along with those approaching their 65th birthday (see a discussion of the enrollment age for Medicare in Why You Should Sign Up for Medicare When You Hit 65) may have a hard time finding a physician who accepts Medicare, and that is happening at a time when they are most likely to need care, either now or in the near future.

The Essentials to Get You Started

With this somber reminder, here are some of the basics about Medicare you need to know, both for your parents and for yourself, and some links to sites where you can find even more detailed information:

Medicare provides health insurance for people 65 and older and for those with disabilities. Everyone is eligible, regardless of income, and Medicare covers most–but not all– services a beneficiary needs. The government runs Medicare, but private insurance companies offer the insurance to cover the out-of-pocket costs of Original Medicare.

Traditional, or Original, Medicare, which many doctors and most hospitals accept, has three parts.

Medicare Part A:  Part A covers inpatient hospital care, inpatient care in a skilled nursing facility, some home health care and hospice care, but all with defined care and reimbursement limits. Part A is free to those who have 10 years of work history with Social Security but can be purchased for a monthly fee for those who don’t qualify. Part A has a deductible of $1,260 (2015) with a $315 per day co-pay for days 61-90 and $630 for days 91-150. For care in a skilled nursing facility, the co-pay is $157.50 per day for days 21-100.

Medicare Part B:  Part B covers physician services, preventive care, durable medical equipment, such as wheelchairs, walkers and oxygen tanks, home nursing services, X-rays, laboratory expenses and ambulances, as well as a defined number of visits for physical therapy, speech therapy and occupational therapy.

In 2015, the deductible for Part B was $147 with an average monthly premium of $104.90–with higher income beneficiaries paying a higher premium. Medicare pays 80 percent of Medicare-approved services provided by doctors, and beneficiaries pay the 20 percent co-insurance, with the exception that certain specified preventive services have no deductible or co-pay.

Medicare Part D:  Added to Medicare in 2006, but not run by the government, Part D covers outpatient prescription drugs and is offered only under private drug plans, approved by the government. All beneficiaries qualify for Part D once they are enrolled in Medicare Parts A and/or enrolled in Part B. Some beneficiaries may not need or want Part D if they have credible coverage for prescription drugs. Premiums, deductibles, coinsurance, copays and covered medications vary according to plan and change every year, even in the same plan.

The All-in-One Approach

Another option, known as Part C or Medicare Advantage, was added to traditional Medicare in 1997.

Medicare Part C:  Part C, otherwise known as Medicare Advantage, combines Medicare Parts A, B and D in one plan. These private health plans are offered through a number of companies, including some health maintenance organizations (HMOs), preferred provider organizations (PPOs), private fee for service plans, special needs plans, and HMO point of service plans. Though a number of different companies can offer Medicare Advantage Plans, the plans are region-specific. Very few of these plans may be offered in some locations.

A Medicare Advantage plan must offer the same benefits as the original Medicare, but the plan can decide how and when a beneficiary can access them. That means beneficiaries may be limited to using doctors and hospitals in the plan’s network, but the Medicare Advantage plan also can offer additional benefits not covered under the original Medicare. Each plan can charge different out-of-pocket costs and have different rules, such as whether you need a referral to see a specialist. Charges and rules may change every year but the plan should notify you of any changes. Read our article on whether it makes sense to switch to a Medicare Advantage Plan.

More Than the Essentials

As you are concerned about finding the best coverage for your parents and, looking ahead, as you approach the enrollment age of 65 and want more detailed information about Medicare, you will find too many sources and far too much material to assimilate. Each year, Medicare sends beneficiaries an Official U.S. Government Medicare handbook—“Medicare and You.” Running a tad over 150 pages, you can download it from the internet or order a mailed printed version by calling Medicare at 1-800-633-4227.

For even more information, consult the official federal government site at Medicare.gov. A number of other sites–among them the Medicare Rights Center and AARP — may offer slightly different approaches to the same materials with their own sets of questions and answers. If you want guidance on how to sign up, especially when trying to decide on your best choice for Part D coverage, consult a licensed insurance agent. The services should be free.

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