Posts Tagged ‘Medicare’

How does Medicare work?

Wednesday, March 31st, 2010

The Medicare statute has four large sections: Parts A, B, C and D.

Part A is paid for by the Medicare tax you pay while working. It covers hospitalization.

Part B covers your doctor visits, home health care, physical and occupational therapy and various medical tests. You pay for it by the premium deducted from your social security check.

Parts A and B are considered “standard” Medicare. Part C is HMO or PPO medical insurance. The government pays subsidies to various private insurers who offer Medicare insurance that meets statutory criteria. The policies are called Medicare Advantage and some are specialty plans that have been more heavily subsidized than “standard” Medicare. These special policies are the policies whose subsidies are being cut back to the standard amount under the new Health Care law. For the most part it is these subsidies that the Republicans tried to protect and complained about when they argued that the “Obama” Health Care Bill made cuts to Medicare.

Part D is the prescription plan that began during President Bush’s presidency. Prescription coverage can be purchased through a Part D policy or a Part C Medicare Advantage plan.

Medicare coverage normally begins when you retire at age 62 or later and start taking Social Security benefits. The initial enrollment period for Part A begins in the third month before your 65th birthday. The enrollment period lasts for seven months. Your Part B coverage normally is started with your Part A coverage and social security.

During this initial enrollment period you may purchase a Medicare supplemental policy, sometimes called Medigap.

You cannot be denied coverage under a supplemental policy if you enroll during this initial period. You have a choice of coverage level or benefits that are standard in every policy by law. Historically the levels were A through J. The most comprehensive coverage paid all of your medical expenses not covered by Medicare.

Standard Medicare for most care pays 80% of the medical bill and the balance is paid by the beneficiary and/or the Medicare supplemental insurance carrier.

Failure to purchase the supplemental policy during your initial enrollment period creates a 1% penalty for every month you fail to enroll.

Enrollment opens again each year November 15 through December 31st. The same enrollment periods apply for Part D policies if not purchased during the initial application period.

Part B policies general enrollment period is January 1 through March 31 of each year with the coverage beginning July 1 of that year.

Failure to enroll for Part A during the initial enrollment period will require an application to enroll in Medicare.

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Obama Health Care Bill Are we Changing Medicare?

Wednesday, March 31st, 2010

The short answer is that the changes to Medicare are mostly fringe changes. Even so, since so many of us live on tight budgets the changes made may well be important to you. Mostly the changes should extend coverage and make health care more affordable, unless you have a high income.

Some things are too big or too new to get a handle on easily.   This statute is one of those things. There are lots of good news articles about the bill. The biggest expectation I have is that there are going to be lots of issues to work out. Anytime substantial change is made to the law, there will be parts of it that are contested in court until we learn how the law will actually apply.

Many parts of the statute are going to be filled in by regulations prepared by Federal agencies. It is going to take time for the administrative structure to be built so the the changes can be put into effect.

I expect that the statute will extend the time that Medicare is solvent.  Due to the many disagreements about the statute no one will know what will result until all the regulations are published and the court fights settled–and I suppose the political ones too. Your guess is just as good as mine when it comes to politics.

First, each Medicare insured who reaches the Part D coverage gap will receive $250.00 this year to apply to the costs of prescriptions.

Next year, 2011, the drug manufacturers must discount every prescription for a brand name drug by half that is filled while you are in the coverage gap. This coverage gap is commonly called the Donut Hole.

Beginning in 2013 there will be a subsidy on brand name drugs purchased in the coverage gap. The subsidy will be phased in over the period 2013 to 2020 so that by 2020 the subsidy will be 25% of the cost in addition to the manufacturer discount.

On the other hand the discount on generic prescriptions purchased while in the coverage gap of 75% will be phased in beginning next year.

Medicare will cover an annual wellness exam in full, no co-payment or deductible.

A new Medicare tax will be applied to persons with an income of more than $200,000.00, and married couples with incomes of more than $250,000.00.

The Part D premium will be tied to income. More beneficiaries of both Part B and Part D will be moved into higher income categories, and will thus have to pay higher premiums.

Medicare Advantage is a program Congress started to get the insurance companies to provide more services for people with chronic conditions or illnesses. It has been very popular. These policies received a large subsidy that was about $135.00 per month per beneficiary more than standard Medicare. Under the new statute that subsidy will be eliminated over a period of time. Enough for now I will blog soon on other changes to Medicaid, long term care and the health system in general.

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Points to ponder before signing a Will.

Monday, February 15th, 2010

Most people who say they want a new Will tell me they only want a “simple” will.  Few of us can lay claim to living a simple life.   As part of your “estate plan” I have the following questions for you to think about.     Be honest with yourself, your attorney and your family.   If the truth is unpleasant admit it so we can work to make the situation better.

Denial does no one any good.   You cannot fix a problem until you admit a problem exists.    There are solutions for almost every problem if we think about what needs to be done before it comes about.     This article is not meant to provide solutions so much as to help determine what issues should be dealt with.

1.   Do I have children from more than one relationship?

2.   Do my children enjoy being with one another and share willingly?

3.   Do I have any children with psychological, emotional or other behavior problems?

Telling your lawyer before the documents are prepared about possible disagreements among your children allows for planning to reduce disagreement and to appoint the persons who can best deal with any disagreements that might happen.     A Trust is often a good tool to reduce the ability of a “problem” child to cause problems, but it is not the only tool.   Healing emotional wounds now is far more effective and cheaper than letting the family go war in court after we die.   Dispute resolution can be built into our documents if small arguments are likely.

4.  Do I own land in more than one state?

5.   Do I have existing health problems or am I likely to develop health problems?

6.   Do I have adequate savings and/or insurance to pay for any possible health care that I may need after retirement?    (consider Medicare supplemental policies, long-term care insurance,  Medicare prescription policies,  life insurance to fund a trust for spouse or child with special needs,  annuities, etc.)

7.   Do I know how much health care is likely to cost in the future?

8.    Do I have a child or spouse who relies on governmental benefits such as Social Security  (SSI or SSDI),  Medicaid or Medicare for health care?

9.   How many people do I trust who would be willing to accept the responsibility of making health care decisions for me?   Have I actually spoken to these people to make sure they are willing to do so?

10.   How many people do I trust who would be willing to accept the responsibility of paying my bills for me and investing my money or assets?   Have I actually spoken to these people to make sure they are willing to do so?

11.    If  I no longer have family members who are able and willing to help me, do I know how to find trained and bonded professionals to help me with my health care and financial decisions.

12.    If I have a child with severe disabilities do I have an existing care plan  with enough detail and explanation that someone else can step in and take care of my child as I do now or better?    Am I  making adequate plans to fund a special needs trust or  to otherwise provide for more than governmental benefits will provide my child?

If you do not get your wishes down in writing now, how is your family going to know just what you want?   Frequently the planning needs of a family with modest means is greater than for a family with significant insurance or other assets.   There is far more to an estate plan than reducing taxes.   Most of us have far less than one million dollars and do not have the spare money to pay for any medical emergency that may arise.   We need “asset protection planning” more than the wealthy millionaire who can afford to spend money we do not even have.

A good elder law attorney can help guide you through the available solutions to each of the potential problems listed above.   A little planning can go a long way.

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