Taking Care of Mom and Dad: Medicare Basics

In most situations, your parent's primary source of medical coverage is a government program (Medicare if they are aged or disabled; Medicaid or state-level programs if they're poor or otherwise uninsurable).

Aged means 65 years old or older (though Congress has considered raising the qualifying age to 67); disabled means physically impaired as determined by the Social Security Administration or having a major kidney problem that requires dialysis. Medicare enrollment can be either automatic or optional.

If your parents are over 65 and getting Social Security pension benefits, they automatically qualify for Medicare. They also qualify if they've been collecting disability benefits for two years. Everyone else must file an application.

Technically, Medicare is administered by the Health Care Financing Administration -- an agency of the Department of Health and Human Services. The program is federally funded, which means participants pay very little for the coverage they receive. The coverage applies to hospitalization as well as basic medical expenses.

Medicare pays only for services determined to be medically necessary by federal health care experts. Even then, services are covered only to the extent that Medicare deems them to be reasonable. The basic medical care covered by Medicare includes:

• necessary day-to-day outpatient medical care;
• occasional hospitalization for care of chronic or acute ailments or accidents; and,
• in some cases, skilled nursing care in a nursing home.

Medicare benefits aren't great -- most private sector health insurance covers more more completely. But Medicare does offer the functional level of health coverage that most older people in the United States use.

Medicare benefits come in two parts. Part A (hospital insurance) is paid for by a Medicare payroll tax on people still working. Part A helps pay for inpatient hospital care, skilled nursing care and other services. Part B (medical expenses) is paid for by monthly premiums of those who are enrolled and from general revenues. It helps pay for such items as doctors' fees, outpatient hospital visits and other medical services and supplies.

In short, Medicare will pay for some health care expenses; it by no means pays for them all. There are limits on covered services -- and the program includes both deductibles and coinsurance provisions. We'll consider each of these in turn.