Medicare Chapter 4 Employee Benefit & Retirement Planning Copyright 2009, The National Underwriter...

Copyright 2009, The National Underwriter Company 1

Medicare Chapter 4Employee Benefit & Retirement Planning

What is it?

Federal health insurance program that covers

- most people age 65 and older

- those who have permanent kidney failure

- those disabled under strict Social Security rules



What is it?

4 parts:

(1) Hospital (Part A)

(2) Medical Insurance (Part B)

(3) Medicare Advantage (Part C)

(4) Prescription Drug Insurance (Part D)



Hospital Insurance (Part A)

provides institutional care

inpatient hospital care

skilled nursing care

post-hospital home health care

hospice care, under certain conditions



Medical Insurance (Part B)

VOLUNTARY program of health insurance

physician’s services

outpatient hospital care

physical therapy

ambulance trips

medical equipment

prosthetics

other services not covered under Part A



Medicare Advantage (Part C)

contracts with private managed care and fee-for-service organizations

choose benefits through Medicare fee-for-service OR through

Medicare Advantage plans:– coordinated care plans (HMO, PPO, PSO)– religious fraternal benefit society– private fee-for-service



Prescription Drug Insurance (Part D)

Prescription drug insurance program added to Medicare by the Medicare Prescription Drug,Improvement, and Modernization Act of 2003

voluntary program began in 2006

covers portion of prescription drug costs not generally covered by other Medicare programs

offered through private health plans

can stay with traditional Medicare and enroll in a drug-only plan or choose Medicare Advantage plan with comprehensive benefits



Medicare Supplement Insurance

“Medigap” insurance

helps pay deductibles and co-insurance incurred under Medicare Parts A and B

may pay for items or services not covered by Medicare

will NOT cover out-of-pocket expenses



Eligibility and Enrollment Hospital Insurance (Part A)

Available to

all > 65 entitled to monthly Social Security or Railroad Retirement cash benefits

disabled under Social Security > 24 months

certain dependents or survivors

those with end stage renal disease



Eligibility and Enrollment Medical Insurance (Part B)

Potential enrollees include– all persons entitled to Hospital Insurance (Part A)– citizens or lawful aliens > age 65

Enrollment period– seven full calendar months after first eligible– late enrollments, re-enrollments pay higher premium



Eligibility and Enrollment Medicare Advantage (Part C)

Potential enrollees include– all persons entitled to Hospital Insurance (Part A) and– enrolled in Medical Insurance (Part B)

Enrollment period– first three months of eligibility– first three months of the year



Eligibility and Enrollment Prescription Drug Insurance (Part D)

Potential enrollees include– all persons entitled to Hospital Insurance (Part A) and– enrolled in Medical Insurance (Part B)

Enrollment period– open enrollment November 15 to December 31– if new Medicare beneficiary, Part D initial enrollment is

same as for Part B



Eligibility and Enrollment Medicare Supplement Insurance

Potential enrollees include– all persons age 65 and older

Enrollment period

– open enrollment six months after age 65 and enroll in Medicare Part B; pre-existing conditions may be excluded for first six months



Benefits: Hospital Insurance (Part A)

Inpatient hospital care– up to 90 days each ‘benefit period’– patient pays

• deductible of $1,068 (2009) for first 60 days

• coinsurance of $267 a day (2009) for each

• additional day up to a maximum of 30 days

– each person has non-renewable lifetime “reserve” of 60 additional hospital days with coinsurance of $534 a day (2009)




Post-hospital extended care in a skilled nursing facility

– up to 100 days in each “benefit period”

– patient pays nothing first 20 days

– after 20 days, patient pays coinsurance of $133.50 a day (2009) for each additional day up to a maximum of 80 days




First 100 post-hospital home health service visits– after a hospital or skilled nursing facility stay– services must be under treatment plan established by

physician– patient pays 20% cost-sharing for durable medical

equipment




Hospice care for terminally ill patients




Inpatient hospital care– except for deductible and coinsurance amounts, Medicare

helps pay for inpatient hospital service for up to 90 days in each benefit period

– first benefit period starts the first time the patient receives inpatient care after Hospital Insurance

– coverage begins




Inpatient hospital care– benefit period ends when patient out of hospital or skilled

nursing or rehabilitative services for 60 days in a row (including day of discharge)

– after one benefit period has ended, another will start when patient again receives inpatient care




Skilled nursing facility care - must meet 5 conditions

1. need daily skilled nursing or rehab. Services that can only be provided in skilled nursing facility

2. in hospital for at least 3 days in a row before admitted to skilled nursing facility

3. admitted to skilled nursing short time after leaving hospital (usually 30 days)

4. care in skilled nursing facility is for condition treated in hospital or that arose while receiving care in the skilled nursing facility for condition treated in the hospital

5. medical professional certifies that patient needs and receives skilled nursing or skilled rehab. services daily




Skilled nursing facility care

– no lifetime limit on amount of skilled nursing facility care under Hospital Insurance

– except for coinsurance, plan can pay cost of up to 100 days’ post-hospital care in each benefit period, regardless of number of benefit periods

– after 100 days of coverage in a benefit period, patient must pay full cost of skilled nursing facility care




Home health care – Hospital Insurance pays for first 100 days in “home health spell of illness” if all 6 of the following conditions are met 1. care is post-institutional home health service

2. care includes intermittent skilled nursing care, physical therapy, or speech therapy

3. person is confined at home4. person under care of physician who determines need

for home heath care and sets up home health plan5. home health agency participates in Medicare6. services delivered in home or skilled facility




Home health care

“home health spell of illness” means consecutive days– beginning with first day person furnished post-institutional

home health services (when entitled to Part A benefits)– ending with close of first period of 60 consecutive days person

was NOT hospital inpatient NOR provided home health services




Hospice care

– focus on pain relief vs. cure

– Medicare pays for home care, inpatient care (when needed) and other services such as homemaker services and counseling

– care covered under Hospital Insurance when beneficiary eligible for Hospital Insurance benefits

– doctor certifies terminally ill

– statement filed electing to limit benefits (can revoke later)




Hospice care

– no deductibles

– beneficiary pays only small coinsurance

• outpatient drugs – lesser of 5% of drug cost or $5

• inpatient respite care – 5% of amount paid by Medicare for respite care day



Benefits: Medical Insurance (Part B)

• Medicare usually pays 80% of approved charges for doctor’s services after patient pays first $135 (2009)

• Medicare also covers

1. medical and surgical services

2. diagnostic tests and procedures that are part of treatment

3. radiology and pathology services

4. treatment of mental illness (limited)

5. X rays




• Medicare also covers

6. services of doctor’s office nurse

7. drugs and biologicals that cannot be self-administered

8. transfusions of blood and blood components

9. medical supplies

10. physical / occupational therapy and speech-language pathology services




• Medicare does NOT cover

1. most routine physical exams and related tests

2. most routine dental and foot care

3. exams to prescribe and fit eyeglasses and most hearing aids and eyeglasses and hearing aids

4. immunizations except annual flu or those required because of injury or immediate risk of infection




• Medicare does NOT cover

5. cosmetic surgery, except if accidental injury or needed to improve function

6. most prescription drugs

7. custodial care at home or nursing home

8. orthopedic shoes




• Major outpatient hospital services covered by Medicare1. emergency room or outpatient clinic, including same day

surgery

2. lab tests billed by hospital

3. mental health care in certain circumstances

4. X-rays and other radiology services billed by hospital

5. certain medical supplies

6. drugs and biologicals that cannot be self-administered

7. blood transfusions administered to patient as out-patient




• payments made by Medicare can be made directly to

– doctor or supplier: “assignment”

doctor or supplier agree to accept amount approved by Medicare carrier as total payment for covered services

– patient




• 115% limit

– if doctor does not accept assignment, the most that can be charged is 115% of what Medicare approves

– 115% limit applies to fees for services billable under physician fee schedule (e.g. physical and occupational therapy, suppliers, injections, etc.)



Benefits: Medical Advantage (Part C)

• required to provide current Medicare benefit package except hospice services

• may offer supplemental services

• may select providers if benefits available to all enrollees

• required to pay for emergency services without prior authorization



Benefits: Prescription Drug Insurance (Part D)

• standard benefit for most participants

• if income below 150% poverty, have no cost-sharing for expenses above $5,726.25 (2009)

• co-pays:

– $2.40 generic and $6.00 if name brand drugs if income between 135% and 150% poverty (2009)

– 5% if income above 150% poverty



Benefits: Prescription Drug Insurance (Part D)

• sponsoring organizations may offer alternative coverage if certain specific criteria are met

• Part D plans may also provide supplemental coverage if certain specific criteria are met

• discount cards offer opportunity to get negotiated discounts, but not all drugs covered and not all pharmacies accept the cards



Benefits: Medicare Supplement Insurance

• Congress established federal standards for Medigap policies in 1990

• most states limit sale to no more than 12 standard policies, designated by letters A through L

• Plan A is basic policy offering “core package of benefits” that, in general, extend coverage for Hospital Insurance




• Plans B through J each have different combination of benefits, but all include the core package

• In 2006 and later years

– some Medigap plan participants may enroll in Part D or maintain drug coverage through Medigap policy

– two new standard plans (K and L) are available that do not include entire core benefit package, but instead offer catastrophic coverage




• Medicare SELECT is similar to Medigap EXCEPT

– SELECT may limit Medigap benefits to items and services provided by certain selected health care professionals

– may pay only partial benefits when patient gets health care from other health care professionals



Taxation and Financing: Hospital Insurance (Part A)

• financed by payroll tax paid by

– workers, employers, and self-employed subject to Social Security or Railroad Retirement

– all federal, state, local government employees

• hired after 1986

• not covered by state retirement system



Taxation and Financing: Hospital Insurance (Part A)

• tax rate 1.45% for employee and employers; 2.90% for self-employed

• federal income tax deduction for 1/2 of the Hospital Insurance self-employment tax



Taxation and Financing: Medical Insurance (Part B)

• financed through premiums paid by

– Most persons enrolled pay the basic premium ($96.40 / mo, 2009; designed to cover 25% of costs)

– Funds from federal government (covers remaining costs)

– Higher income taxpayers (greater than $85,000 income for single taxpayers or $170,000 for married filing jointly) pay a greater share of the total cost

• Annual premiums announced in fall of previous year by Centers for Medicare & Medicaid Services (CMS)



Taxation and Financing: Medicare Advantage (Part C)

• financed through same taxes and premiums as traditional Hospital insurance and Medical Insurance programs

• plan may charge additional premiums for additional benefits offered through plan



Taxation and Financing: Prescription Drug Insurance (Part D)

• partly financed through premiums paid by participants (average $28 per month for 2009)

• late enrollment penalty may be charged

• those with other sources of prescription drug coverage may be able to retain without penalty



Taxation and Financing: Medicare Supplement Insurance

• Medigap insurance is private insurance funded through premiums paid by plan participants



True or False?

1. Participation in all parts of Medicare is voluntary.

2. The new Medicare Part D is a voluntary program that pays for all prescription drug costs.

3. A person who retires at age 62 can join Medicare by paying an additional premium.

4. Under Medicare Part A, Medicare pays for all inpatient hospital costs up to 90 days each benefit period.



True or False?

5. Hospice care focuses on relief from pain versus on finding a cure.

6. Medical Insurance (Part B) does not cover routine physical exams and most immunizations.

7. All the various Medigap policies must contain the same core package of benefits.

8. All of Medicare is financed with payroll tax imposed on most employers and employees.



Discussion Question

Discuss the pros and cons of having the federal government involved in the provision of health insurance for the elderly.

Medicare Chapter 4 Employee Benefit & Retirement Planning Copyright 2009, The National Underwriter...

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