How to Insure Your Income: Medicare
Medicare, which became part of Social Security in 1965, is a federally subsidized health insurance program for the aged or disabled.
Eligibility based on disability means that you are totally disabled and collecting Social Security disability income benefits or have a major kidney problem requiring dialysis. Specifically, you must have been collecting Social Security disability income benefits for at least 24 months in order to attain Medicare eligibility. (This means 24 months of compensable disability, plus the five-month waiting period. So, after 29 months of disability, you are eligible for Medicare.)
Eligibility due to kidney failure or transplant requiring dialysis is effective with the first day of the third month following the month in which dialysis began. In essence, this means there is a three-month waiting period.
Medicare is organized into two parts. Part A is referred to as Hospital Insurance (HI). Part B is referred to as Medical Insurance -- and provides benefits for outpatient treatment and the services of physicians either in the hospital or as an outpatient.
Part A is funded by a 2.90 percent tax on all wages. Employees pay 1.45 percent of their gross earnings; employers match this with a tax of 1.45 percent on payroll. Generally, Part A covers all inpatient hospital services, except the services of physicians. Specifically, it covers the following hospital expenses:
- room and board;
- miscellaneous hospital benefits;
- inpatient diagnostic services;
- inpatient medication;
- extended care in a skilled nursing facility;
- an unlimited number of home health care services;
- hospice care for the terminally ill; and
- some blood transfusions. Part B covers:
- doctor's office calls;
- the services of surgeons;
- outpatient diagnostic services;
- outpatient therapy and rehabilitation services; and
- certain kinds of home health care.
Part B is usually more important to disabled people than Part A. But it's not automatic -- it requires an enrollment and the payment of a monthly premium. Typically, this enrollment takes place at the same time the Part A benefits become effective. The premium is deducted from the disabled person's Social Security check each month.
Part B contains a $100 calendar year deductible followed by 80-percent/20-percent copayments based on the Medicare allowable amount. There is no cap or stop loss on the 80/20 copayments.
The Medicare allowable amount is basically Medicare's version of reasonable and customary charges. If a doctor charges a Medicare patient $600 for certain services, Medicare may only approve or allow $300 for the payment of benefits. Its copayment will be based on 80 percent of $300.
Finally, Medicare benefits are influenced greatly by whether or not your doctor is a participating physician. A participating physician is one who has been approved to receive payment directly from the Social Security Administration. He or she has agreed to accept the amounts paid by Medicare. A nonparticipating physician is not approved by Medicare for direct payment and may charge more for services.
A caveat: A disabled person on Medicare may have to pay excess charges if his or her doctor is a nonparticipating physician.
