I recently had to help a elderly relative who was taken to the hospital after falling down and not being able to get up. Luckily she did not break anything, and this experience was before Covid hit. Also very luckily she already had signed up properly for Medicare and Medicare Advantage. For me this was a first, I had no idea what was what, which part covered what, nor how to distinguish between Medicare and Medicaid.
Isn’t it odd that in their declining years, elderly people are expected to master an incredibly convoluted and contradictory program in order to get the help that they desperately need? I thought I would put the hard earned learning that I had to do over the past several months and hopefully spare others the same pain that I went through. Here is what I found out.
A Quick Summary
For those of you who do not want to read a long article, I’ll summarize it here:
- Medicare is for the elderly or disabled. Coverage is divided between four different parts and includes both the US government and private insurers. Medicare is managed by the federal government
- Medicaid is a start run program for lower income people. It will pay some of expenses that Medicare does not and differs from state to state.
I would also highly recommend Medicare for Dummies for a deeper explanation of both programs. You should also consult the Medicare.gov site for specific details about the programs.
What is Medicare?
Medicare is a program run by the United States federal government. It is for:
- People who are 65 or older
- Certain disabled people
- People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)
The program consists of four parts that can be very confusing. Medicare also includes a program called Medicare Advantage in which private insurers get involved and provide an variety of options to their beneficiaries. (See below for a longer description of the different parts of Medicare.)
What is Medicaid?
Medicaid on the other hand provides health coverage to:
- Low-income adults,
- Pregnant women,
- Elderly adults, and
- People with disabilities.
Unlike Medicare, Medicaid is administered by the individual states, and eligibility rules differ from state to state. It is funded jointly by the states and federal government.
Medicaid has two general types of coverage: Community Medicaid and Medicaid nursing home coverage.
- Community Medicaid helps people who have little or no medical insurance.
- Medicaid nursing home coverage helps pay the cost of living in nursing homes of those who are eligible.
Some states have a Health Insurance Payment Premium (HIPP) program that allows Medicaid recipients to have private health insurance paid for by Medicaid. Early and Periodic Screening, Diagnostic and Treatment (EPSDT) is a Medicaid program for children that focuses on prevention, early diagnosis, and treatment of medical conditions.
Similarity and Differences Between Medicare and Medicaid
Below is chart outlining the ways Medicare and Medicaid are similar and how they differ.
A person can benefit from both Medicare and Medicaid at the same time.
The Different Parts of Medicare
Medicare is bizarre quilt that has been amended and adjusted over many years. Originally Medicare consisted of hospital insurance and some additional coverages, what is now called Part A and Part B. Over time, private insurers were allowed in as Part C and prescriptions drugs were covered as Part D.
Part A: Hospital Insurance
Medicare Part A (hospital insurance) helps cover a variety of services, including the following:
- Inpatient hospital care: May include semi-private rooms, meals, nursing services, and prescription drugs needed for your treatment. Medicare Part A hospital coverage may include inpatient care you receive in long-term care hospitals, inpatient mental health hospitals, acute care hospitals, and critical access hospitals.
- Skilled nursing facility care: May include semi-private room, meals, skilled nursing care, prescription medications, medical supplies and equipment, and ambulance transportation (if medically necessary). You may be covered if your doctor has decided that daily skilled nursing care is medically necessary.
- Nursing home care: This care may be covered for a limited time if deemed medically necessary and given in a skilled nursing facility. Medicare Part A only covers nursing care if skilled care is needed for your condition. You must require more than just custodial care (help with daily living tasks, such as bathing, dressing, etc.).
- Hospice care: May include doctor services, nursing care, durable medical equipment, medical supplies, and more if you are terminally ill and your doctor has determined that you have six months or less to live.
- Home health services: May include at-home skilled nursing care, physical therapy, occupational therapy, and more for a limited time when intermittent skilled nursing care or therapeutic services are medically necessary. Medicare Part A may cover part-time home health care if you’re homebound and you get these services through a Medicare-certified home health agency.
Medicare Part A cost-sharing amounts (for 2021) are listed below.
Inpatient hospital care:
- Medicare Part A deductible: $1,484 for each benefit period
- Medicare Part A coinsurance:
- $0 coinsurance for the first 60 days of each benefit period
- $371 a day for the 61st to 90th days of each benefit period
- $742 a day for days 91 and beyond per each lifetime reserve day of each benefit period (you get up to 60 lifetime reserve days)
- After lifetime reserve days are used up: You pay all costs
Skilled nursing facility care:
- $0 for days 1 to 20 for each benefit period
- $185.50 a day for the 21st to 100th days (skilled nursing facility coinsurance of each benefit period)
- Days 101 and beyond: all costs
Part B: Medical Insurance
As long as you meet certain requirements, Part B covers many health-care services and supplies. Here’s a partial list (a complete list would go on for several pages). Your care must come from providers who accept Medicare assignment.
- Doctor visits
- Certain cancer screenings
- Certain lab tests
- An annual wellness visit with your primary care provider
- A one-time Welcome to Medicare visit with your primary care provider
- Diabetes screening, supplies, and certain services
- A diabetes prevention program for those who qualify
- Alcohol abuse screening and counseling for those who qualify
- Flu shots
- Pneumonia shots
- Depression screenings
- Second opinions when your doctor decides you need surgery
Medicare Part B generally pays 80% of approved costs of covered services, and you pay the other 20%. Some services, like flu shots, may cost you nothing.
Most people pay a monthly premium for Medicare Part B. Many people do not realize that they are paying this premium as it is deducted directly from the Social Security payment. The standard premium is $148.50 in 2021. You could pay more than that if your income is higher than a certain amount, and less if you qualify for state-based help.
Part D: Prescription Drug Plans
Medicare beneficiaries with Part A and B coverage are also eligible for the Part D which covers prescription drugs. To be covered by Part D, however, you must enroll in a stand-alone Prescription Drug Plan (PDP) or a Medicare Advantage Plan. What specific drugs are covered varies depending upon which plan you choose.
The Part D Donut Hole
Are you still with me? As if four parts and long lists of what is and is not included were not enough, there is also the Medicare Part D Donut Hole problem. Here’s how it works, under Part D, Medicare will pay for your prescription drugs only up to a certain limit. Once you have hit this annual limit, then you start paying for the drugs yourself up to another point where Medicare kicks back in. This “donut hole” is slowing being closed. Before 2021, people in the middle had to pay 100% of costs now you pay only 25% of the cost for your drugs until you reach your maximum spending limit. For 2021, the hole begins after $4,130 in costs and then closes when you reach $6,550 in costs. Or, $605 maximum out of pocket.
Part C: Medicare Advantage
Did you notice that I skipped Part C above? I did that because Part C is a something all together different. Part C, or Medicare Advantage, basically creates a different approach to consuming Medicare benefits.
With Part C, private insurers like Aetna, USAA, Humana, and many others are paid a monthly fee by Medicare to administer and pay for the service that Medicare would typically pay for. The private insurers act as a wrapper around Medicare making it easier to access the benefits. They also typically provide expanded coverage including dental, vision, and other items. Each insurer offers slightly different options some with larger or smaller doctor networks. You may have anticipated, Medicare Advantage can also come with a small monthly fee which is fairly low.
I strongly advise you to consider enrolling in a Medicare Advantage plan when you. You can compare Medicare Advantage plans offered in your area by going to >>>.
Here are a few things to look out for:
- You can change plans yearly during the Open Enrollment Period. As your needs change you should regularly review your options.
- You can only enroll during the Open Enrollment Period, with certain exceptions for people just entering Medicare. Make sure to be aware of this.
- Different programs offer different networks of doctors and different benefits just like with regular health insurance with less expensive plans being more restrictive.
- Drug coverage varies considerably between providers. Be sure to check how much you will be charged for the prescription drugs that you are taking or may take in the next year. There are huge differences in what you may ultimately have to pay from one provider to another. Luckily on the Medicare.gov site it will help you to calculate these costs.
So, this is just scratching the surface on the issue. It took me weeks of trial and error to wrap by head around these issues. I hope my work will help make it easier for others that are facing the same confusing mess.