Paying For Healthcare

Medicare Parts A, B, and D

Medicare is a federally-funded health insurance program that typically serves as the primary insurance for people over age 65, as well as people with certain disabilities or health conditions. In general, Medicare covers 80% of outpatient services (medical services provided in the community) and all hospitalizations (minus a deductible).

Medicare has three parts, Part A, B and D.

Part A covers inpatient hospital care, skilled nursing facility care, home health care and hospice care. Most people do not have to pay a monthly premium for Part A because either they or their spouse paid Medicare taxes while they were working. There are deductibles and co-payments which a patient is responsible for paying during each benefit period. A benefit period begins when you are admitted to the hospital or skilled nursing facility and ends when you are discharged, and 60 consecutive days have passed. In the year 2004, for each benefit period you pay:

  • A total of $1,024 for a hospital stay of 1-60 days
  • $256 per day for days 61-90 of a hospital stay
  • $512 for days 91-150 of a hospital stay
  • Nothing for the first 20 days of skilled nursing facility care
  • $128 per day for days 21-100 of skilled nursing facility care

Part B covers medical care and services provided by physicians, durable medical equipment and a variety of outpatient care services. Each year, the beneficiary must pay the first $100 in approved medical charges before Part B starts to pay, in addition to the regular monthly premium of $66.60.

Frequently Asked Questions:

Who is eligible for Medicare benefits?
Persons 65 or older who are entitled to Social Security or Railroad Retirement benefits; persons under 65 who have been entitled to Security Disability Insurance benefits or Railroad Retirement Disability benefits for 24 months; and persons of any age who have end-stage renal disease.

Is there any limit on income and resources?
No, there is no limit on income and resources.

Is US citizenship required?
All applicants for Medicare must be either US citizens or legally present aliens who have had continuous residence in the United States for at least 5 years.

Where can I apply for Medicare?
For additional information or to apply for Medicare, contact the Social Security Administration at 1-800-772-1213, or online at www.medicare.gov or www.ssa.gov.

What documentation is required for the interview?
Proof of age, such as a birth certificate, baptismal certificate, etc. Proof of citizenship or lawful entry into the U.S. and Social Security number.

Part D

In December 2003, President Bush signed H.R. 1, the Medicare Prescription Drug, Improvement and Modernization Act of 2003. This bill establishes a new Medicare prescription drug benefit that goes into effect in 2006. At that time, Medicare beneficiaries aged 65 and over, or those who are disabled, may enroll in a stand-alone prescription drug plan offered by private-sector entities. Enrollment in a plan is voluntary, not automatic; however, if beneficiaries want to participate, they must elect the new prescription drug coverage (also known as Medicare Part D) a full year in advance. The law includes (largely unspecified) penalties and barriers for late enrollment.

Medicare Part D Plan Details:

  • Participants pay a $35 monthly premium.
  • Participants pay a $250 annual deductible.
  • Participants receive 75% coverage of the drugs covered by the benefit (the formulary list of covered drugs has yet to be determined) up to $2250.
  • Participants pay 100% of all drug costs after reaching $2250 up to $5100 (this is referred to as "the doughnut hole" in the new benefit).
  • Participants receive 95% coverage of drug costs over $5100 within the calendar year (this is referred to as "catastrophic coverage").
  • The annual out-of-pocket cap is $3600 ($5100-$2250 + $250 deductible; monthly premiums do not count toward the cap).
  • The cost of prescription drugs that are not on the official formulary list will NOT count toward the out-of-pocket "doughnut hole."
  • Participants with low incomes and limited assets may not have to pay the monthly premium and deductible. The income and asset limits will be defined in 2005. Those who qualify will instead have to pay a copayment for each prescription. The copayment amount has not been determined.
  • Supplemental policies (H, I, and J) that include drug coverage will not be available after January 1, 2006.

In the Interim Between Now and 2006:
Medicare-Approved Drug Discount Cards

To help seniors and disabled Medicare beneficiaries save money on prescriptions between now and 2006, when the new Medicare Part D benefit goes into effect, the government is sponsoring Medicare-approved drug discount cards. Medicare beneficiaries may purchase one Medicare-approved drug discount card from a private-sector provider. These cards will offer 10%-25% discounts on certain drugs. Each will have its own formulary list. To help beneficiaries compare cards, Medicare will feature a search by zip code feature on its web site that will allow users to look up 209 classes of drugs by name to see which sponsors offer coverage for it and what each one costs.

Before choosing a Medicare drug discount card, Medicare beneficiaries need to:

  • Determine if applying for a card benefits you
  • Determine if you require a nationwide or statewide program
  • Compare program formulary lists to find the best coverage and price for the drugs you take
  • Find out what pharmacies in your area participate in your chosen card
  • Compare annual fees

Medicare beneficiaries must choose their drug discount card very carefully because the new law will allow one and only one switch to a different discount card if you are not satisfied.

The annual fee for the drug discount card will be waived for an estimated 4.5 million low-income Medicare beneficiaries. The low-income eligibility limits for 2004 are $1045 per month for individuals and $1405 per month for couples. There is no asset test. Those who qualify as low-income:

  • Receive a $600 subsidy on their drug discount card;
  • May carry over any unused portion of their 2004 subsidy into 2005; and
  • Receive another $600 subsidy in 2005.

The timeline for rolling out these interim drug discount cards is as follows:

  • Medicare officials announced the names of approved drug discount card sponsors on March 26th, 2004 (a listing is also provided below).
  • The Medicare-approved sponsors market their drug discount cards in April and May 2004.
  • Medicare beneficiaries may enroll in a drug discount card program in May 2004.
  • Participating pharmacies will begin accepting drug discount cards in June 2004.

It is important for Medicare beneficiaries to seek proof that a drug discount card vendor is Medicare-approved (the application will be marked with a special Medicare seal of approval). If unsure, call 311 and ask for the Department for the Aging's Elderly Crime Victims Resource Center.