Medicare, Medicaid, Medigap

Insurance Q.& A. : Health Insurance, Medicare - Medicaid - Medigap

What is the difference between Medicare Part A and
Medicare Part B?

Medicare, the federal government's health care program for older people, is split into two parts. Everyone is eligible for Medicare's Part A, which covers 150 days of your annual hospital bills and pays for skilled nursing care (but not for custodial care, such as help with daily dressing, eating or bathing). You have already paid for this coverage in your Social Security taxes, so you're automatically entitled to it at age 65. Medicare's Part B is optional, so you have to pay extra for it. Part B covers some or all of a doctor's bill, out-patient surgery, emergency room treatment, X-rays, laboratory tests and some medical supplies. You can only sign up for Part B coverage during specific enrollment periods. You should sign up for Medicare during the three months before you reach 65 to avoid any waiting period for Part B coverage.

What is the prospective payment system (PPS) for Medicare?

Hospitals that treat Medicare patients do so on a prospective payment system (PPS). Under this system, Medicare sets a limit on the price it will pay for a patient's stay in the hospital and the hospital agrees to accept that amount, even if the treatment it provides costs more.

When am I eligible for Medicare?

Medicare is the federal program designed to provide medical coverage for older Americans. When you reach the age of 65, you're eligible. You automatically qualify for Medicare coverage if you have met the work requirements to receive Social Security benefits. You can also qualify if you can claim benefits on the account of someone else, such as a spouse or deceased spouse who worked long enough to qualify for Social Security. Although most people must wait until they turn 65 to become eligible for Medicare, exceptions are made for those who have been receiving Social Security disability payments for at least two years and for those who have lost the use of their kidneys.

Will Medicare pay the bills for a patient who must stay in a nursing home?

Medicare is the federally funded insurance program that's automatically available to most people when they turn 65. The program will pay for a participant's stay in a nursing home, but only for a limited amount of time. If you are discharged from a hospital but continue to need skilled nursing care at an approved nursing home, Medicare will pay for the first 20 days' stay in the home. It will pay a portion of the cost if up to 80 more days are needed. After that, neither Medicare nor a Medigap policy will pay for any services. If you go directly into a nursing home without first staying in the hospital, neither Medicare nor Medigap will cover any of the cost. You might be eligible for assistance from Medicaid, the program for low-income elderly people who have few assets. But failing that, the cost of your stay will likely have to be paid out of your own pocket.

What are peer review organizations and how can they help in Medicare disputes?

Peer review organizations are groups of doctors and other health care workers who review the quality and type of care that is provided to Medicare patients in hospitals, outpatient clinics and some health maintenance organizations. All 50 states have peer review organization, and members are paid by the federal government. If you have a dispute with Medicare, a peer review organization can assess your complaint and approve or deny payment for various services.

Can I lose my Medicare coverage if I get divorced?

If you qualify for Medicare coverage based on your own work record, the coverage can never be canceled. But if the insurance is based on your spouse's work history, you might lose it if you get divorced. The key factor Medicare will consider is the length of the marriage. If you qualified for coverage based on your spouse's work and remained married for at least 10 years, the coverage will stay with you even after you are divorced. But if you were married for less than 10 years and didn't work long enough to qualify for you own insurance, Medicare can drop you from its program.

Are Medicare premiums tax-deductible if I'm a senior citizen?

Premiums paid for medical insurance are deductible if they provide for reimbursement for hospitalization, surgical fees, other medical or dental expenses, drugs, or lost or damaged contact lenses. If you are over age 65 and not entitled to Social Security benefits, you may also deduct the premiums voluntarily paid for Medicare A coverage. Medicare B premiums (the premiums paid or withheld from Social Security benefits for supplementary Medicare coverage) are also deductible. However, since medical expenses are deductible only to the extent they exceed 7.5% of your adjusted gross income, many senior citizens find that they are better off utilizing the standard deduction. The additional standard deduction for taxpayers 65 or older who file as Single or Head of Household is $1,000; it is $800 for taxpayers who are married or who are qualifying widow(er)s.

How do reverse mortgages affect income tax, Social Security and Medicare benefits?

If you take out a reverse mortgage, you don't have to worry about the loan affecting your ability to collect Social Security or Medicare benefits. (However, if you are receiving Supplemental Security Income payments, you must spend the proceeds from the reverse mortgage and not accumulate the payments.) Nor will the mortgage have much effect on your income taxes. According to "Wealth Enhancement & Preservation" (The Institute Inc., Denver, Colo.), "Reverse mortgage advances do not affect eligibility for Social Security and Medicare benefits and will not affect SSI benefits as long as the recipient spends the advances within the month they are received. The loan advances from a reverse mortgage are not taxable, and the interest which is credited on a reverse mortgage is not deductible for income tax purposes until it is paid. This does not occur until all the reverse mortgage debt is paid."

Will Medicaid pay for care in an adult day-care center?

Adult day care centers are one of the fastest growing types of facilities that provide help for older people. They work much like a day care center for children. Someone (usually a son or daughter) drops the parent off in the morning and the day care staff provides meals and basic assistance until the end of the day, when the parent is picked up and taken home. If a person is impoverished, Medicaid will pay for adult day care services. Or, it can cover the cost involved in having a home-care provider visit the patient at home to provide assistance with bathing, cooking and medication.

What is Medigap insurance?

Medigap policies pay for some or all of the medical expenses that Medicare doesn't. You can tailor your policy to cover deductibles, outpatient prescriptions or the cost of extremely long hospital or skilled nursing home stays. Although most people qualify for federal Medicare benefits at age 65, Medicare won't cover all the medical expenses you're sure to encounter as you get older, so it's wise to have a Medigap policy. When shopping for one, make sure the insurer you're considering is highly rated. Companies with lower ratings might be able to charge less, but there's no guarantee they'll have the cash needed to pay your future claims.

What are some alternatives to Medigap plans?

Medigap insurance supplements Medicare benefits. Although most all Medicare recipients also buy Medigap coverage, there are other alternatives to fill the gap left by shortfalls in the Medicare program. Another type of Medigap policy is called Medicare SELECT. Retirees who purchase a SELECT plan rather than traditional Medigap coverage are restricted to visiting certain doctors and hospital facilities. In exchange, premiums for a SELECT policy are usually lower than those for Medigap plans. A handful of states-including Massachusetts, Minnesota and Wisconsin-have their own laws governing Medigap plans, and these policies are regulated by each state's insurance department.