Long Term Care: Medicare

Long Term Care: Medicare

The Medicare program has three parts. Part A is Hospital Insurance (HI), Part B is Supplemental Medical Insurance (SMI), and Part D is the Prescription Drug Plan (PDP). Part A is financed by payroll taxes based on covered work before and after eligibility for Medicare. Part B (SMI) is partly financed by premiums and partly by the general tax revenues of the government. Medicare becomes available at the beginning of the month in which an individual reaches age 65, whether you are retired or still working. It is also available if one has been receiving Social Security disability benefits for two years or has a chronic kidney disorder.

Part A. Hospital Insurance

The amounts you pay for hospitalization change every year, depending on the increases in hospital costs. Amounts shown reflect those in effect for 2017. However, you never have to pay more than the actual charges.

Monthly Premium: Most people don’t pay a Part A premium because they paid Medicare taxes while working. In 2017, you pay up to $413 each month if you don’t get premium-free Part A. If you pay a late-enrollment penalty, this amount is higher.

Hospital Stays: On immediate admission the client must pay a deductible of $1,316 per stay. After the first 60 days you must pay $329 per day. After 90 days the co-insurance amount is $658 for each “lifetime reserve day.” After 150 days, you pay all costs. With each admission, you will need to pay another deductible charge.

Skilled Nursing Facility Care: You may qualify for nursing facility benefits if both your situation and the facility meet Medicare’s strict standards. Skilled nursing facility care is available only after a hospital stay of at least three days. It is important to note that custodial care is not covered. If you qualify, you pay nothing for the first 20 days of covered expenses, and for the next 80 days, you pay $164.50 per day. Benefits stop after 100 days.

Home Health Care: Care such as part-time or intermittent skilled nursing care, physical therapy, medical social services, medical supplies, durable medical equipment and some rehabilitation equipment may be covered if prescribed by a doctor. You pay 20% of the approved amount for durable medical equipment. A hospital stay prior to these benefits is not required.

Hospice Care: The patient can be charged $5 per prescription and 5% of the Medicare Payment per day for respite care, for no more than 5 days. However, if hospice is selected, all other Medicare benefits stop.

Part B. Supplemental Medical Insurance Benefits

In 2017 you pay for the first $183 of qualified charges for covered medical services. This is the deductible. After that, Supplemental Medical Insurance will pay 80% of covered expenses, subject to the maximum of the standard charges recognized by Medicare.

Monthly Premium: $134 – Premium will be higher if your yearly income is greater than $170,000 for those who file a joint tax return and $85,000 for those who file an individual tax return. If you pay a late-enrollment penalty, the monthly premium is higher.

Covered Services: Medicare Part B helps cover what is medically necessary including medical and other services, clinical laboratory services, home health care, outpatient hospital services and blood. In addition, Medicare Part B offers preventive services to help you stay healthy. See Medicare & You for a complete list of covered services.

Part C. Medicare Advantage Plans

A Medicare Advantage Plan (like an HMO or PPO) is another Medicare health plan choice you may have as part of Medicare. Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D).

Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. However, each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how you get services.

Part D. Prescription Drug Plan (PDP)

Medicare offers prescription drug coverage for everyone with Medicare. Medicare will provide coverage to help you pay for both brand-name and generic drugs you need. To get Medicare prescription drug coverage, you must choose and join a Medicare drug plan. 

Medicare drug plans will be offered by insurance companies and other private companies approved by Medicare. There are two types of Medicare plans. 

• There will be Medicare Prescription Drug Plans that add coverage to the Original Medicare Plan, Medicare Private Fee-for Service Plans that don’t offer Medicare prescription drug coverage, and Medicare Cost Plans.

• There will also be prescription drug coverage that is a part of Medicare Advantage Plans (like a HMO, PPO, or a PFFS Plan) and other Medicare Health Plans. You would get all of your health care, including prescription drug coverage, through these plans.

If you have limited income and resources, you may get extra help to pay for your Medicare drug plan costs.

Your costs will vary depending on your financial situation and which Medicare drug plan you choose. All Medicare drug plans will offer at least the standard level of coverage below. Medicare drug plans may design their plans differently as long as what their plan offers is, on average, at least as good as the standard coverage described below. Some plans may offer more coverage for higher premiums.

Standard Coverage (the minimum coverage drug plans must provide):

If you join in 2017, for covered drugs you will pay:

• A monthly premium (varies depending on the plan you choose).

• The first $400 per year for your prescriptions. This is called your “deductible.”

After you pay the $400 deductible, here’s how the costs work:

• You pay 25% of your yearly drug costs from $400 to $3,700, and your plan pays the other 75% of these costs, then

• When your total costs exceed $3,700, your cost sharing is 45% of covered brand name drugs and 65% of covered generics, then:

• You pay 5% of your drug costs (or a small copayment) for the rest of the calendar year after you have spent $4,950 out-of-pocket. Your plan pays the rest.

Some plans may be called standard plans but may be designed so that the deductible is lower and the coinsurance is slightly higher. Other plans may charge copayments or set amounts instead of coinsurance.

In general, your out-of-pocket costs should work out to be about the same under these plan designs.

Source: Medicare & You 2017, U.S. Department of Health and Human Services and www.medicare.gov

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