Revision 12-3; Effective September 1, 2012
Note: This document is effective Jan. 1, 2010.
Medicare is health insurance for people age 65 or older, under age 65 with certain disabilities and any age with permanent kidney failure (called end-stage renal disease). An individual must have entered the U.S. lawfully and have lived here for five years to be eligible for Medicare. Medicare has several 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 people pay the standard monthly Medicare Part B premium.
See Appendix XXXI, Budget Reference Chart, for the current Medicare Part B premium amount.
- Medicare Part C, called Medicare Advantage Plans – An individual must have both Part A and Part B to join one of these plans. The plans provide all of the Part A and Part B services, and generally provide additional services as well. An individual usually pays a monthly premium, and co-payments that likely will be less than the coinsurance and deductibles under the original Medicare. In most cases, these plans offer Part D Prescription Drug Coverage as well. These plans are offered by private insurance companies approved by Medicare. Costs and benefits vary by plan.
Prescription Drug Coverage
Medicare Prescription Drug Coverage, called Medicare Part D – An individual can add Part D by joining a Medicare Prescription Drug Plan (PDP). An individual must pay a deductible and usually is charged coinsurance each time services are received. Insurance companies and other private companies approved by Medicare offer PDPs. Costs and benefits vary by plan.
Enrollment is voluntary. Beneficiaries who have other sources of drug coverage (former employer, union, etc.) may stay in that plan. If their coverage is at least as good as the new Medicare drug benefit (creditable coverage), they will avoid higher premium payments if they later sign up for Medicare Rx.
Medicare drug coverage will help by covering brand-name and generic drugs. Like other insurance, after the individual is enrolled, the individual generally will pay a monthly premium, which varies by plan. The individual also will pay a yearly deductible, which is between $0-$310 in 2010. The individual also will pay a part of the cost of prescriptions, including a co-payment or coinsurance. Costs will vary depending on which drug plan the individual chooses. Some plans may offer more coverage and additional drugs for a higher monthly premium. If the individual has limited income and resources, and the individual qualifies for extra help, the individual may not have to pay a premium or deductible.
For questions about Medicare or the Medicare health and prescription drug plans, visit www.medicare.gov online or call 1-800-MEDICARE (800-633-4227). TTY users should call 877-486-2048.
Extra Help for Prescription Drug Coverage
Extra help for 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 a person 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
An individual who has Medicare and Medicaid does not need to apply for extra help from Social Security. An individual who is eligible for the Medicare Savings Program (MSP) does not need to apply for extra help from Social Security. The MSP-eligible individual's information is sent to CMS automatically for the extra help.
Eligibility specialists ask, "Can I screen you for eligibility for Medicare Savings Program (MSP) since certification would include eligibility for extra help?"
If the caller does not want to be screened for MSP, refer the caller to the Centralized Benefit Services, 1-800-248-1078, for completion of subsidy application.
If an individual thinks personal information is being misused, call 1-800-MEDICARE (1-800-633-4227).
Apply for extra help or get more information about extra help subsidy by calling Social Security at 1-800-772-1213 (TTY 1-800-325-0778) or visiting www.ssa.gov.