After you finish this lesson, you will be able to:

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• Define Medicare
• Describe the four different types of Medicare
• Identify patients who are eligible for Medicare
• Explain the purpose of a Medigap policy

Medicare is a public program. It is funded partially by the federal government through tax dollars. The rest is funded by the premiums, deductibles, and coinsurance payments that many Medicare patients pay.

• Medicare was formed in the 1960s when President Lyndon B. Johnson signed it into law.

• Administered by the Center for Medicare and Medicaid Services (CMS)

• Today, over 48 million people receive Medicare benefits.

Medicare is an entitlement program. �Enrollees in Medicare do not have to meet any income requirements.

The following groups are generally eligible for Medicare coverage:

At the age of 65, some people will automatically be enrolled in Medicare.

This includes people who already receive any of these benefits:

• Social Security retirement benefits
• Railroad retirement benefits
• Disability benefits

Most patients will not be enrolled automatically. They should contact their local Social Security office to verify their eligibility to join.

Medicare is structured into four parts:

Each part offers different services and has different restrictions and regulations.

Medicare Part A is Hospital Insurance. �It covers the following services:

• Hospital services
• Extended care after hospitalization
• Home health
• Hospice

For a service to be covered under Medicare Part A, it must be considered medically necessary by the Center for Medicare and Medicaid Services (CMS).

Some other exclusions of Part A include:

• Drugs not approved by the FDA
• Services, items, or medication still in their trial or research stages, or considered investigational

Medicare Part A is free to those who are eligible for Social Security or disability benefits. If a patient does not qualify for free Part A coverage, it can be purchased.

Medicare Part B is Medical Insurance. ��It covers the following services:

• Physician visits
• Outpatient services
• Therapy
• Durable medical equipment
• Radiology
• Ambulance fees
• Laboratory

Unlike Part A, no one can receive Part B for free.

�Everyone who enrolls in Part B pays a monthly premium, which is deducted from their Social Security benefit check. There is also an annual deductible and a coinsurance payment of 20 percent for each service.

If a patient waits more than one year after his is eligible to sign up for Medicare Part B, the premium will be higher. An exception would be if the patient was still employed and receiving benefits under the employer's group health plan.

Medicare Part C, or Medicare Advantage, expands the ability of private insurance carriers to provide Medicare plans. Medicare pays the private carriers a set fee for each patient they enroll. Then the private carrier handles the patient's claims and reimbursements.

The types of private plans include:

• Medicare managed care plans
• Medicare private fee-for-service plans
• Medical Savings Account (MSA) plans, or high-deductible insurance plans

Medicare Part C covers the following services:

• Everything covered under Medicare Parts A and B
• Preventive care
• Prescription coverage
• Dental coverage
• Eyeglasses
• Hearing aids

Anyone eligible for Parts A or B is eligible for Part C, except those with End Stage Renal Disease (ESRD).

Medicare Part D is a prescription coverage plan. Patients enrolled in Part D pay a monthly premium as well as an annual deductible.

After the deductible has been met, Medicare will pay a 75 percent coinsurance on prescription drugs up to $2970 per year.

What is known as a donut hole exists between $2970 and $4750. All costs that fall within the donut hole must be paid by the patient, out-of-pocket. For costs over $4750, Medicare provides catastrophic coverage.

Medigap policies supplement Medicare by covering out-of-pocket charges like deductibles and coinsurance payments. This means they help pay for the patient's out-of-pocket expenses. The National Association of Insurance Commissioners developed 12 standard supplement plans, labeled "A" through "L," with varying levels of coverage.

All states must offer Medigap Plan "A." However, each state may choose which other Medigap plans to offer.

In this lesson, you learned that:

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• Medicare is an entitlement program funded in part by the federal government.
• Medicare is split into four parts: Part A covers hospital services; Part B covers physician visits and outpatient services; Part C is a managed care type of plan; and Part D is a prescription drug program.
• Patients eligible for Medicare coverage include most people over 65 years of age, anyone with a disability who has received Social Security benefits for at least 2 years, and those with chronic kidney disease (ESRD).
• Because Medicare requires a deductible and coinsurance payments, Medigap policies are available as supplemental coverage to offset some of those out-of-pocket costs.