Medicare, which began in 1965, is the national health insurance program for senior citizens and people with disabilities. Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment and you are 65 years old and a citizen or permanent resident of the United States. You may also qualify for coverage if you are a younger person with a permanent disability and have received Social Security benefits for 24 months. Individuals receiving railroad retirement benefits and individuals with End Stage Renal Disease (ESRD) are also eligible to receive Medicare benefits.

Coverage under Medicare is similar to that provided by private health insurance companies. Like health insurance, Medicare pays a portion of the cost of some, but not all, medical care. Deductibles and co-insurance (partial payment of initial and subsequent costs) may be required of the beneficiary. Medicare helps pay for certain health care that is medically necessary to treat or diagnose an illness or injury. It usually does not pay for preventive services, for eyeglasses or hearing aids, or for convenience items such as private rooms or private duty nurses.


COVERAGE OPTIONS

Medicare Part A: Generally known as hospital insurance, Part A covers services associated with inpatient hospital care (i.e., the costs associated with an overnight stay in a hospital, skilled nursing facility, or psychiatric hospital, such as charges for the hospital room, meals, and nursing services). Part A also covers hospice care and home health care. There is no cost for Part A coverage assuming the enrollee has worked for 40 quarters (10 years). If the enrollee does not have 40 working quarters, there will be a charge for Part A coverage. The fee is based upon the number of working quarters. If an enrollee continues to work after age 65 and earns 40 working quarters, they will no longer have to pay for Part A.

Medicare Part B: Generally known as medical insurance, Part B covers other medical care. Physician care, whether it was received while an inpatient at a hospital, at a doctor's office, or as an outpatient at a hospital or other healthcare facility, is covered under Part B. Also covered are laboratory tests, physical therapy or rehabilitation services, and ambulance service. The standard monthly Part B premium is $99.90 for 2012. Some people will pay a higher premium based on their modified adjusted gross income. The monthly premium will be higher if an individual files a tax return and the annual income is more than $85,000, or if married (file a joint tax return) and the annual income is more than $170,000.

Learn more about Medicare Part A and B at Medicare.gov

Medicare Part C (Medicare Advantage): The 1997 Balanced Budget Act expanded the kinds of private healthcare plans that may offer Medicare benefits to include managed care plans, medical savings accounts, and private fee-for-service (FFS) plans. The new Medicare Part C programs are in addition to the FFS options available under Medicare Parts A and B. Individuals do not have to enroll in Part C coverage. They can continue Medicare FFS plans as they have previously using a Medigap supplement for non-covered charges.

The primary MedicareAdvantage plans currently offered include:

• Coordinated care plans, which include health maintenance organizations (HMOs), provider-sponsored organizations (PSOs), preferred provider organizations (PPOs), and other certified coordinated care plans and entities that meet the standards set forth in Medicare regulations.
• Private, unrestricted FFS plans, which allow beneficiaries to select certain private providers.
• Medical savings account (MSA) plans, which are available to enrollees in a High Deductible Medicare Advantage plan. An MSA provides benefits after a single high deductible is met. Medicare makes an annual deposit to the MSA, and the beneficiary is expected to use the money in the MSA to pay for medical expenses below the annual deductible.

Except for MSA plans, all MedicareAdvantage plans are required to provide at least the current Medicare benefit package, excluding hospice services. Plans may offer additional covered services and are required to do so (or return excess payments) if plan costs are lower than the Medicare payments received by the plan.

Click here to investigate locally available Medicare Advantage plans by state or zip code

Medicare Part D: The Medicare Prescription Drug, Improvement and Modernization Act of 2003 created a new drug benefit called Medicare Part D. The drug benefit began on January of 2006, which allows Medicare beneficiaries ton remain in traditional fee-for-service plans while enrolling separately in private prescription drug plans or they can enroll in integrated MedicareAdvantage plans for all Medicare-covered benefits, including prescription drugs. In 2012, the standard benefit requires payment of a $320 deductible, then 25% coinsurance drug costs up to an initial coverage limit of $2,930. Once this initial coverage limit is reached, the beneficiary must pay the full cost of his/her prescription drugs up until the total out-of-pocket expenses reach $4,700 (excluding premiums). This coverage gap existing between the initial coverage limit and the catastrophic coverage limit is referred to more commonly as the "Donut Hole". Once the beneficiary reaches catastrophic coverage, he or she pays the greater of 5% coinsurance, or $2.60 for generic or preferred drugs and $6.50 for brand-named drugs. Health Care Reform added an additional subsidy for drugs in the “Donut Hole”. There is a 50% discount on brand name drugs and a 14% discount on generic drugs. However the full 100% of the retail price will be applied to meeting the “Donut Hole” limit. The catastrophic coverage amount is calculated on a yearly basis, and a beneficiary who reaches catastrophic coverage by December 31 of one year will start his or her deductible anew on January 1.The defined standard benefit is not the most common benefit offered by Part D plans.

ELIGIBILITY

Most people become eligible for Medicare upon reaching age 65. In addition, those who are disabled or have ESRD may also be eligible.

Any individual who is receiving Social Security benefits will automatically be enrolled in Medicare at age 65 when he or she becomes eligible. If a person is not receiving Social Security benefits prior to age 65, they will be automatically enrolled when they apply for benefits at age 65. Individuals who will be automatically enrolled in Medicare will receive notification by mail from the Social Security Administration, usually three months before their 65th birthday.

Medicare coverage for individuals with End Stage Renal Disease (ESRD):

• If an individual undergoes dialysis at home or administers it him or herself, they can be eligible for Medicare the first month dialysis begins.
• If treatments are received at a dialysis center, individuals are eligible for Medicare starting the fourth month of dialysis.
• If receiving a kidney transplant before having dialysis, the individual will be eligible for Medicare coverage the month the transplant is done or up to two months before the transplant, if pre-transplant testing has begun.

Medicare eligibility for people with ESRD may be terminated if their condition improves. When dialysis is no longer needed, Medicare coverage will end 12 months after the month of the last dialysis treatment. Following a successful kidney transplant (a transplant that lasts for 36 months without rejection), Medicare coverage ends 36 months after the month in which the operation was performed.

Beneficiaries who once had Medicare coverage because of ESRD and later get ESRD again can resume Medicare coverage without the three-month waiting period usually applied when getting treatment at a dialysis facility. Medicare coverage starts the first of the month that dialysis treatment resumes or the subsequent kidney transplant occurs.

Amyotrophic Lateral Sclerosis (ALS): Individuals who have been diagnosed with ALS, commonly known as Lou Gehrig's Disease, are eligible for Medicare the first month they start receiving Social Security Disability Insurance (SSDI).

ENROLLMENT

Medicare has three distinct enrollment periods.

Initial Enrollment Period: This period begins three months prior to and continues three months after the month of the enrollee's 65th birthday. If Medicare will be the primary insurance, the individual should enroll in both Medicare Part A and B during this period or there will be a premium penalty for subsequent Part B coverage.

Special Enrollment Period: An individual who is over 65 and has coverage from an employer with over 20 employees (over 100 employees if the beneficiary is disabled), can delay enrollment in Medicare without a penalty. When the employer coverage ends, the individual qualifies for a special enrollment period lasting for eight months from the date the individual or spouse loses employer coverage or retires. Generally your monthly Part B premium is not increased when you sign up for Part B during the special enrollment period.

General Enrollment Period: If an individual misses both the initial and special enrollment periods, they may enroll in Medicare between January and March of each year. Coverage will begin the following July and there will be a 10% premium penalty for each year that enrollment was delayed. The penalty will be applicable for the entire time Medicare is in force.

Medicare Part D enrollment and Creditable Coverage: If a Medicare eligible individual has Employer sponsored Drug coverage that is not as good as Medicare Part D, he or she must enroll in Part D or face a late enrollment penalty when they do enroll.

MEDIGAP COVERAGE

Individuals enrolled in an original Medicare plan may want to buy Medicare supplemental insurance, also called Medigap insurance. This is health insurance that helps pay for some of the costs in the original Medicare program and for some care it doesn't cover.

Beneficiaries may purchase Medigap policies from private insurance companies at any time in accordance with the state laws that regulate these companies. Beneficiaries will pay additional premiums and co-payments for services covered by Medigap insurance policies. These premiums and co-payments will differ depending on the state in which the beneficiary resides, the company providing the insurance and the services covered by the company.

Private insurance companies sell Medigap insurance. Medicare does not subsidize Medigap plans. There are 10 standard Medigap insurance plans, named A-J (least to most comprehensive as defined by standards common to most states). If an individual signs up for a Medigap policy within 6 months of becoming eligible for Medicare, insurers must accept them regardless of health status. After the 6-month period, some Medigap plans, particularly those with the richest benefits, have an underwriting requirement that must be met prior to obtaining coverage.

Click here for a listing of the specific coverage available in plans A-N

INTEGRATION WITH EMPLOYER SPONSORED HEALTH PLANS

Primary Coverage:

Medicare is considered primary coverage unless the individual or their spouse is working. If the individual or spouse is working in a company with 20 or more employees, the employer group health plan will be the primary insurer. An employee is defined as any individual employed by an employer. There is no distinction made between full-time and part-time employees for the determination of employer size. Medicare is typically primary if the individual is disabled.

Secondary Coverage:

If the individual is disabled and less than 65 years of age, and the individual or spouse works for a company with 100 or more employees, Medicare is secondary to the employer group health plan. Medicare is also secondary in the following situations:

• Worker's compensation pays for a work-related injury or illness.
• Auto/liability insurance pays claims related to an accident.
• Black Lung benefits pay claims related to black lung illness or injury.
• In ESRD situations, Medicare is secondary until after a coordination period; generally 30 months.

When employer insurance is primary and the individual is nearing retirement, the individual has two options: enroll in Medicare Part B during the initial enrollment period and get extra benefits or delay enrollment in Medicare Part B until the employer coverage ends.

If you have employer provided health insurance and your company employees fewer than 20 employees, Medicare Secondary payer rules apply. Your employer plan will be secondary to Medicare and you must enroll in Medicare Part A and B or risk losing primary insurance.

COBRA benefits do not count as employer coverage. If an individual already has existing group health coverage under COBRA when initially enrolling in Medicare, COBRA may end. COBRA is always secondary to Medicare. If an individual elects COBRA coverage after enrolling in Medicare, the individual can keep COBRA continuation coverage. If the individual has only Medicare Part A when group health plan coverage based on current employment ends, the individual can enroll in Medicare Part B during a Special Enrollment Period without having to pay a Part B premium penalty. The individual needs to enroll in Part B either at the same time as enrolling in Part A or during a Special Enrollment Period after group health plan coverage based on current employment ends. However, if the individual has Medicare Part A only, sign-ups for COBRA coverage, and waits until the COBRA coverage ends to enroll in Medicare Part B, the individual will have to pay a Part B premium penalty. There is not a Part B special enrollment period when COBRA coverage ends.

MEDICAID

Both Medicare and Medicaid are federal government programs. The federal government administers Medicare and Medicaid is a state-run program. It provides health care coverage for people with low or limited incomes.

If an individual meets Medicaid's income and asset limits, they can have both Medicare and Medicaid. Medicare would be the primary payer and Medicaid would be secondary, meaning it would cover Medicare out-of-pocket expenses, such as premiums, coinsurance and deductibles. Depending on the state of residence, Medicaid may also cover prescription drug costs and some additional benefits not covered by Medicare.

Medicaid income and asset limits vary from state to state. Each state sets limits for the specific Medicaid eligibility groups and determines what types of income count toward the limit. Call your local Medicaid office or your State Health Insurance Assistance Program (SHIP) for more information. Families who earn too much to qualify for Medicaid may be able to qualify for health insurance plans for their children aged 19 or younger. Every state offers a State Children's Health Insurance Program (SCHIP). In Connecticut, the plan is called HUSKY, in New York it is called Child Health Plus and in New Jersey the plan is called NJ Family Care.

Click here to find information about an individual state's SCHIP

RESOURCE INFORMATION

AARP Online or 888-687-2277

Medicaid.gov or 877-267-2323

Medicare.gov or 800-633-4227

Medicare Rights Center or 212-869-3850

HUSKY Health (Connecticut) or 877-284-8759

NJ Family Care (New Jersey) or 800-701-0710

Child Health Plus (New York) or 800-698-4543