A-9100, Medicare Benefits

Revision 18-1; Effective March 1, 2018

Medicare is a federal program under Title XVIII of the Social Security Act and is administered by the Social Security Administration (SSA). Medicare provides health care benefits for individuals age 65 or older, under age 65 with certain disabilities, and any age with permanent kidney failure (called end-stage renal disease).

Those younger than 65 will receive Medicare after getting Social Security disability benefits for at least two years.

There are exceptions to the two-year waiting period, including:

• a chronic renal disease that requires a kidney transplant or maintenance dialysis (SSA determines if an individual with a chronic renal disease diagnosis meets the requirements for the exception to the waiting period); or
• Lou Gehrig's disease (amyotrophic lateral sclerosis).

Medicare is available to an individual who has paid into the Medicare trust account through payroll taxes sometimes called the Federal Income Contributions Act (FICA). Most employers are required to withhold FICA taxes, but there are some exceptions. Federal government employees have been eligible to participate in Social Security only since 1984. As a result, some older employees have opted to remain with the former Civil Service Retirement System. Some state and local government employee retirement plans also are not covered by Social Security.

If an individual receives Medicare, they are either:

• 65 years old or older; or
• determined disabled by SSA.

Medicare is divided into four parts:

• Medicare Part A (Hospital Insurance) – Helps pay for inpatient care in a hospital, skilled nursing facility or hospice, and for home health care if certain conditions are met. Most people do not have to pay a monthly premium for Medicare Part A because they or a spouse paid Medicare taxes while working in the U.S. If the Part A premium is not automatically free, an individual still may be able to enroll and pay a premium.
• Medicare Part B (Medical Insurance) – Helps pay for medically necessary doctors’ services and other outpatient care. It also pays for some preventive services (like flu shots), and some services that keep certain illnesses from getting worse. Most individuals pay the standard monthly Medicare Part B premium.
• Medicare Part C (Medicare Advantage Plans) – Individuals must be enrolled in both Part A and Part B. These plans are available through Medicare-approved private insurance companies. The plans cover all of the Part A and Part B services and, in most cases, include Part D Prescription Drug Coverage as well. Some plans offer additional services, such as vision, hearing, dental, and health and wellness programs. Individuals pay a monthly premium and co-payments that are usually lower than the coinsurance and deductibles under the original Medicare. Actual costs and benefits vary by plan.
• Medicare Part D (Medicare Prescription Drug Coverage) provides prescription drug coverage. Individuals can add Part D by joining a Medicare Prescription Drug Plan (PDP). Individuals must pay a deductible and usually pay coinsurance each time services are received. The PDPs are available through private insurance companies approved by Medicare. Costs and benefits vary by plan.

Premiums

In most cases, the Part B and Part D premiums are deducted from the Social Security or Railroad Retirement check. The recipient is responsible for calendar-year deductibles and co-pay liabilities for both Parts A and B.

The Part C premium is handled by the private company that offers the benefit as a Medicare Advantage Plan. The Medicare Advantage Plan has its own benefits and coverage that differs from the traditional Medicare benefits. Medicare pays a fixed amount 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 one gets services.

Extra help for Part D (Medicare Prescription Drug Coverage) is available for people with Medicare who have limited income and resources. If eligible for extra help, Medicare will pay for almost all prescription drug costs. Extra help provides a subsidy based on the amount of income and resources an individual has.

Full Subsidy Benefits from Extra Help:

• Full premium assistance up to the premium subsidy amount
• Nominal cost sharing up to out-of-pocket threshold
• No coverage gap

Other Low Income Subsidy Benefits from Extra Help:

• Sliding scale premium assistance
• Reduced deductible
• Reduced coinsurance
• No coverage gap

Individuals who have Medicare and Medicaid or who are eligible for the Medicare Savings Program (MSP) do not need to apply for extra help through the SSA.

Individuals can apply for extra help or get more information about extra help subsidy by calling Social Security at 800-772-1213 (TTY 800-325-0778) or visiting www.socialsecurity.gov.