|Senior Citizens Handbook - Medicare||
Last updated: May 2011
What It Is: Medicare is a national health insurance program [INVALID]d by the Social Security Act for people with disabilities and the elderly.
Where to Apply: The Social Security Administration
Who May Be Eligible: People who are age 65 or older, people of any age who Social Security says are "disabled," and people with kidney failure.
Medicare is a federal health insurance program for people with disabilities and the elderly. The Medicare program pays a portion of hospital and other medical bills. There are four parts to Medicare.
This covers inpatient hospital care, skilled nursing home care, hospice care and some home health care.
This covers medically necessary doctors' services and supplies, hospital outpatient care, and home health care, as well as some preventive services to help maintain your health, avoid certain illnesses (like the flu) and keep certain illnesses from getting worse.
A Medicare Advantage Plan (like an HMO or PPO) is another Medicare health plan choice you may have as part of Medicare. Medicare Advantage Plans, sometimes called “Part C,” are offered by private companies approved by Medicare. If you go to a doctor, facility, or supplier that doesn’t belong to the plan, your services may not be covered, or your costs could be higher, depending on the type of Medicare Advantage Plan.
If you join a Medicare Advantage Plan, the plan will provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) coverage, although it does not need to cover hospice care. Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D).
Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. Although you will pay very small or zero premiums for such plans, each Medicare Advantage Plan can charge you different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only doctors, facilities, or suppliers that belong to the plan for non emergency or non-urgent care). Your out-of-pocket costs in a Medicare Advantage Plan depend on a variety of factors, including whether the plan: a) charges a monthly premium or requires any deductibles or co-insurance payments; b) pays any of your Part B premium; or c) charges for extra benefits.
Medicare will help pay for certain prescription drugs under Part D. Eligible persons can choose to join a prescription drug plan. Most persons will have to pay premiums, a deductible and co-payments, but there is Extra Help from the government to pay some or all of these costs for certain low-income persons. The plans will vary in coverage and cost. You can choose from different plans.
The Medicare program is administered by the Centers for Medicare and Medicaid Services (CMS), previously the Health Care Financing Administration (HCFA). CMS is a federal government agency. The Social Security Administration (SSA) cooperates with CMS by enrolling people in Medicare and collecting the premiums. CMS has entered into contracts with private insurance companies to process and pay Medicare claims.
In order to receive Medicare coverage, you must obtain your medical services from a doctor, hospital or other provider who has been certified by CMS as eligible to participate in the Medicare program. The great majority of doctors and medical providers do participate in Medicare.
Original Medicare provides coverage under Part A and Part B, and the federal government provides the coverage. You have your choice of doctors, hospitals, and other providers. Generally, you or any supplemental insurance you buy will pay the deductibles and coinsurance. You usually pay a monthly premium for Part B. You can also decide if you want prescription drug coverage (Part D). If you want this coverage, you must choose and join a Medicare Prescription Drug Plan. Private companies approved by Medicare run these plans. You can also decide if you want to get supplemental insurance coverage that fills gaps in Original Medicare coverage. You can choose to buy a Medigap (Medicare Supplement Insurance) policy from a private company. Costs vary by policy and company. Some employers or unions may offer similar coverage.
A Medicare Advantage Plan (like an HMO or PPO) provides coverage under Part C and private insurance companies approved by Medicare provide this coverage. In most plans, you need to use plan doctors, hospitals, and other providers or you pay more or all of the costs. However, the advantage of such plans is that while you receive regular Medicare covered services, you usually pay much less in out-of-pocket costs. Moreover, a Medicare Advantage plan holder will have access to additional services that neither Medicare supplements nor the original Medicare provides. Costs, extra coverage, and rules vary by plan. Here, too, you can decide if you want prescription drug coverage (Part D). If you want prescription drug coverage, and it's offered by your Medicare Advantage Plan, in most cases you must get it through your plan. If your plan doesn't offer drug coverage, you can choose and join a Medicare Prescription Drug Plan.
Note: If you join a Medicare Advantage Plan, you don't need a Medigap policy. If you already have a Medigap policy, you can't use it to pay for out-of-pocket costs you have under the Medicare Advantage Plan. If you already have a Medicare Advantage Plan, you can't be sold a Medigap policy.
Not everyone can enroll in Medicare, Part A. Those who can enroll may or may not have to pay a premium, depending on which of the categories below you belong.
Free Enrollment: You are eligible for free enrollment in Medicare Part A (without having to pay a premium), if any of the following apply to you:
Note: For an explanation about who is eligible to receive Social Security Disability Insurance (SSDI) benefits, see the section of this guidebook titled "Social Security Disability Benefits and Supplemental Security Income (SSI)".
Enrollment with a Premium: If you do not meet one of the above conditions, you may still be able to enroll in Part A, but you will have to pay a large monthly premium. You can enroll with a monthly premium if either of the following applies:
As of January 2011, the premium cost is $450 per month for people not eligible to enroll for free and who have less than 30 quarters of Medicare-covered employment. The cost is $248.00 per month for people having 30-39 quarters of Medicare-covered employment.
Again, not everyone can enroll in Medicare, Part B. Individuals residing in the U.S. who become entitled to premium-free Part A are automatically enrolled in Part B. Since Part B is voluntary program which requires the payment of a monthly premium, those individuals who do not want Part B coverage may refuse enrollment. A person age 65 or older who is not entitled to premium-free Part A must meet the following requirements to be entitled to Part B: he or she must be a U.S. resident and either a citizen, or an alien who has been lawfully admitted for permanent residence with 5 years continuous residence in this country at the time of filing.
Everyone enrolled in Part B must pay a premium for Part B. This includes persons who do not have to pay a premium for Part A. As of 2011, the Part B premium will be $96.40 for those who started to get Part B before January 1, 2010 or $110.50 for those who started to get Part B on or after that date, provided that the Social Security Administration withholds the Part B premium from their Social Security check and the individual has an income of $85,000 or less ($170,000 or less for joint filers). For all others, the standard Medicare Part B monthly premium will be $115.40 in 2011; however, if your income is above $85,000 (single) or $170,000 (married couple), then your Medicare Part B premium may be higher than $115.40 per month, and Social Security will use your IRS income tax return to determine your premium.
If you are already receiving Social Security Retirement or Railroad Retirement benefits before reaching age 65, you do not need to apply for Medicare. You will be automatically enrolled in both Part A and Part B upon reaching age 65. About three months before your 65th birthday, you should receive an initial enrollment period package in the mail, notifying you of your enrollment in Medicare.
If SSA determines that you are "disabled," you will automatically be enrolled in both Part A and Part B beginning with the 25th month that you are eligible for Social Security disability insurance (SSDI) benefits.
If you do not want Part B benefits, you must notify Social Security in writing to prevent the premiums from being deducted from your benefits.
If you are not automatically enrolled in Medicare as described earlier, or currently covered by Medicare for kidney disease, you will need to apply. Your application must be made during a seven month period based on when you turn age 65. Your seven month period includes the month you turn 65 and the three months before and after it.
If you do not enroll within this seven month period, you must wait until the next general enrollment period. This period is January 1 through March 31 of each year. If you do not enroll until the next general enrollment period, your Part B coverage will not start until the following July. In addition, for each year you wait to enroll after you first became eligible to enroll, your Part B premium will increase by 10%. Therefore, it is important to apply for Medicare when you first become eligible.
In certain cases, you are allowed to delay enrolling in Part B without penalty. You can do this under the following circumstances:
To apply for Medicare, you contact your local Social Security office, or Railroad Retirement Board office. You can use an online application to sign up for Medicare if you are least 64 years, 8 months old and live in the U.S. It’s convenient, quick and easy. There’s no need to drive to a local Social Security office or wait for an appointment with a Social Security representative. In most cases, once your application is submitted electronically, you’re done. There are no forms to sign and usually no documentation is required. Social Security will process your application and contact you if they need more information. Otherwise, you will receive your Medicare card in the mail.
Early application is recommended to avoid gaps in coverage. The late enrollment penalty is avoided if the delay is because the beneficiary is enrolled in employer based insurance coverage.
The following discussion explains many of the types of treatment and services that Medicare covers. CMS issues a handbook titled "Medicare & You" that contains a thorough summary of covered services. The handbook can be obtained at your local Social Security office or online.
You do not need to file a claim for coverage of a Medicare Part A covered service. Instead, the hospital, nursing home or other provider submits the claim. You will then receive a Benefits Notice explaining how much was paid and the amount you are responsible for paying.
Services covered under Part A include care provided in an inpatient hospital, a psychiatric hospital, or a skilled nursing facility, as well as hospice care and home health care.
Inpatient Hospital Care: Medicare covers the costs of hospital care if your doctor required the hospitalization to treat an injury or illness, and hospitalization was medically necessary.
In order to understand how Medicare covers inpatient hospital care, you must understand "benefit periods." A "benefit period" begins the day you enter the hospital and ends when you have been out of the hospital or skilled nursing facility for 60 straight days. Once a benefit period ends, a new benefit period begins upon a new admission to a hospital.
There is no limit to the number of benefit periods you can have. But Part A will pay only for up to 90 days of inpatient hospital care during a single benefit period. In addition, you have 60 lifetime reserve days that can be used to cover days beyond the 90th day.
During the first 60 days of hospitalization, Medicare pays the entire costs except for the hospital deductible. As of 2010, the deductible is $1,132 per benefit period.
During the 61st to the 90th days, you must pay a co-insurance amount. As of 2010, this amount is $283 per day. During any lifetime reserve days used beyond the 90th day, your co-insurance amount is higher, and as of 2010, is $566 per day. Unless you have supplemental insurance, you are responsible for all costs beyond your lifetime reserve days.
Part A pays for a semi-private room, meals, regular nursing and rehabilitation services, drugs and medical supplies administered during the hospital stay, lab tests and x-rays. Medicare also covers operating and recovering rooms, intensive care and other medically necessary services provided during the hospitalization.
Medicare does not cover personal convenience items, such as telephone use or private duty nursing. It does not cover extra charges for a private room, unless the private room is medically necessary.
Psychiatric Hospital Care: Medicare helps pay for mental health services given in a hospital that require you to be admitted as an inpatient. These services can be provided in a general hospital or in a psychiatric hospital that only cares for people with mental health conditions. Regardless of which type of hospital you choose, Medicare Part A will help cover mental health services.
There’s no limit to the number of benefit periods you can have when you get mental health care in a general hospital. You can have multiple benefit periods when you get care in a psychiatric hospital, but there’s a lifetime limit of 190 days. As of 2010, for each benefit period, you pay the following: a $1,100 deductible for days 1–60 of each benefit period; a $275 per day co-insurance payment for days 61–90 of each benefit period, and a $550 per day co-insurance for each lifetime reserve day after day 90 of each benefit period.
Skilled Nursing Facility Care: Medicare covers medically necessary care in a skilled nursing facility (SNF) if:
Part A pays for the full cost of the first 20 days in a SNF. During the 21st to 100th day, you must pay co-insurance. As of 2011, this amount is $141.50 per day. Medicare does not cover any days beyond the 100th day.
If you leave the skilled nursing facility and are then re-admitted within 30 days for treatment of the same condition, Medicare will resume coverage up to the 100th day.
Hospice Care: Medicare covers hospice care if you are terminally ill. The care is usually provided in your home and in-patient respite care is covered. Medicare covers homemaker services, counseling, and some prescription medications under the hospice benefit.
Home Health Care: To be eligible for home health care services, you must be confined to your home and your doctor must also establish a care plan. Medicare covers the following home health care items:
Medicare covers durable medical equipment needed to enable you to remain in the home, at 80%.
It is important to note that the rate at which home health care agencies are reimbursed has recently been greatly reduced. As a result, it may be difficult for a Medicare beneficiary to locate a provider of home health care services.
You may also qualify for a personal attendant or other home services under various state programs, such as the Illinois Department on Aging’s Community Care Program or the Illinois Department of Human Services’ Home Services Program.
Part B covers a wide range of medical services, which include:
Medicare Part B does not cover routine physical care, dental care, hearing aids or prescription medications.
You must pay the Part B annual deductible toward Part B covered services. In 2011, this is the first $162 per year.
Thereafter, Medicare pays 80% of the Medicare approved charge. You pay the Part B co-insurance amount, which is the remaining 20%. The "Medicare approved charge" is the amount that the CMS has determined is fair reimbursement to the medical provider for the services provided.
Exceptions: In 2011, because of the new health care law, many preventive services will be provided at no cost to you. These free benefits will not be affected by the deductible. In the case of out-patient hospital charges, you must pay 20% of the approved amount, but there is a $1,132 maximum. For clinical lab services, Medicare will pay the approved amount and you will pay nothing. In the case of outpatient mental health care, you must pay 45% of the Medicare approved charge.
Instead of having deductions taken from your Social Security check to pay for Part A and Part B, you may now opt for the new Medicare Part C. It covers everything in Part A and Part B, but offers this coverage in a new manner that may take the form of a health maintenance organization, preferred provider organization, Medical Savings Account or other new type of health plan. Congress [INVALID]d Medicare Part C to incorporate the cost-saving measures of “managed care” into the Medicare program. You may find a managed care program that is cheaper than the premiums you now pay.
Medicare Part C is now called “Medicare Advantage” (MA). You can think of MA as your choice of health insurance plans, rather than as a government reimbursement plan. In fact, under MA, you have a choice of a number of basic types of “health insurance” programs. Medicare will directly pay that program at a set rate, per member, per month for the basic coverage you would have had under original Medicare. These organizations, which are under contract to the Medicare program, will then be managing your access to health care providers.
Through MA, you have the following options for managed care plans (also known as “coordinated care plans”):
If you sign up for one of these plans and decide you don’t like it, you can change plans (although you may be locked in for a period of time) or you can go back to the original Medicare (Parts A and B).
Call 1-800-MEDICARE or visit the Medicare website to help you decide if you want Part C or to make plan choices.
You may want to choose a doctor who takes a Medicare assignment.
“Medicare assignment” is the term for the arrangement when a doctor or other medical provider has agreed with CMS that they will not charge more than the “Medicare approved charge” for a service or item.
By using a provider who accepts assignment, you will not have to pay more than 20% of the Medicare approved charge. On the other hand, providers that do not accept assignment (called “nonparticipating”) can charge you that amount, plus more. However, nonparticipating providers cannot charge above the Limiting Charge.
The “limiting charge” cannot exceed 115% of Medicare’s approved charge.
Even worse, nonparticipating providers can require that you pay the entire bill at the time of service. You would then have to ask Medicare to reimburse you, but Medicare will reimburse you only at 80% of the Medicare approved charge.
Example: You see a doctor and the Medicare approved charge for his service is $100. If the doctor accepts assignment, Medicare will pay him $80, and he can require you to immediately pay $20, but nothing more. If the doctor does not accept assignment, he could charge up to $115 and require that you pay the entire amount at once. Medicare will reimburse you $80, and you would be liable for the remaining $35.
You may also want to find out if your doctor is a participating provider. A “participating provider” is a doctor who has agreed with CMS to accept assignment on all Medicare claims.
Participating providers will submit a claim on your behalf to Medicare. The company that handles bills for Medicare will send you a Medicare Summary Notice (MSN) form each quarter. The MSN lists the services or items you received in Original Medicare, and provides information about the health care provider who provided the service or item and what was paid. People enrolled in Medicare Advantage plans do not receive a Medicare Summary Notice but may receive an Explanation of Benefits (EOB) from the MA plan. The EOB is a statement to inform enrollees how much their plan paid towards their claim(s). Medicare Part D plans and Medicare Advantage plans that cover prescription drugs are required to provide an EOB to each enrollee after he/she uses the plan to obtain prescription drugs. Medigap and retiree plans also send an EOB to their enrollees to inform them how much their plan paid towards their claim(s).
Medicare supplement insurance fills the “gaps” between Medicare benefits and what you must pay out-of-pocket for deductibles, coinsurance, and copayments. Therefore, it is often called “Medigap” insurance. Medigap policies are sold by private insurance companies that are licensed and regulated by the Illinois Department of Insurance. Medigap policies only pay for services that Medicare deems as medically necessary, and payments are generally based on the Medicare-approved charge. Some plans offer benefits that Medicare doesn’t, such as emergency care while in a foreign country.
There are 12 standardized Medicare supplement insurance plans, labeled “A” through “L.” Each plan offers a different combination of benefits. Plans F, J, K, and L offer a high-deductible option. Each insurance company must use these same identifying letters. All companies that sell Medigap insurance must offer Plan A, but do not have to offer the other 11 plans.
Medigap companies must sell you a policy – even if you have health problems – if you are at least 65 and apply within six months after enrolling in Medicare Part B. These six months are called your “open enrollment” period. During open enrollment, a company must allow you to buy any of the Medigap plans it offers. You can use your open enrollment rights more than once during this six-month period. For instance, you may change your mind about a policy you bought, cancel it, and buy any other Medigap policy within six months of enrolling in Medicare Part B.
Illinois residents under age 65 who receive Medicare because of disabilities have the same open enrollment rights as seniors. This right is also available for persons who are retroactively enrolled in Medicare Part B due to a retroactive eligibility decision made by the Social Security Administration if they apply within 6 months after receiving notice of retroactive eligibility. You can return your Medigap policy within 30 days after receiving it and get your money back with no questions asked.
All Medigap policies are guaranteed renewable. A company cannot cancel your policy or refuse to renew it unless you made intentional false statements on your application or failed to pay your premium. However, the amount of the premium is not guaranteed. An insurance company may raise your premium as often as once a year on a class basis. In addition, if you have an “attained-age policy,” a company may raise your premium on your birthday.
Low income persons may be eligible for payment of premiums, deductibles and co-insurance by the Illinois Department of Human Services (Public Aid). See section of this Handbook titled "Medicaid."
You are entitled to file an appeal if you are found ineligible to participate in the Medicare program. You also may file an appeal if you believe that Medicare has failed to pay the proper amount for services or if coverage has been denied for a particular service. Your appeal rights are different, depending upon whether your appeal concerns Part A or Part B. Appeals under each Part are explained separately below.
Your appeal rights are explained on the back of the Medicare Summary Notice (MSN). You get this notice every 3 months from the company that handles bills for Medicare. The MSN will list all the services and items that were billed to Medicare during the 3-month period and will tell you if Medicare paid for the services or items. The MSN will also tell you why Medicare won’t pay for the item or service and how to file an appeal. If you file an appeal, ask your doctor or health care provider for any information that might help your case.
Note: If you are enrolled in a Medicare Advantage Plan (like an HMO or PPO), your appeal rights are described in your plan’s materials.
The Appeals Process
There are five levels in the Part A and Part B appeals process:
Your MSN tells you if Medicare has paid your medical claim or denied it. This is the initial determination, which is made by people at the company that handles your bills for Medicare. If you don’t agree with this determination, you may request a redetermination. A redetermination is when the claim is reviewed by people at the company who are different from the people who made the initial determination. You must file a request for redetermination within 120 days of the date you received the MSN. In most cases, the company that handles your bills for Medicare will send you a written decision within 60 days of getting your request.
You can request a redetermination in one of three ways:
No matter how you choose to request a redetermination, you must send it to the company that handles your bills for Medicare. This company is identified on your MSN. You also should send any documents that you believe may help your case. For example, you should include copies of your medical bills, copies of related MSNs, and any information you get from your doctor. You may want to keep a copy of your request for your records.
If you aren’t satisfied with the redetermination decision, you may request a reconsideration. A Qualified Independent Contractor (QIC) that didn’t take part in the redetermination will make the reconsideration decision. You must file the request for reconsideration with the appropriate QIC within 180 days of the date you got the redetermination. Your redetermination notice will have detailed information about how to file for a reconsideration. In most cases, the QIC will send you a written reconsideration within 60 days of getting your request. If the QIC can’t issue a timely decision, you may ask to skip to the next level of appeal.
You can request a reconsideration in one of two ways:
Administrative Law Judge (ALJ) Hearing
If you aren’t satisfied with the QIC’s reconsideration decision, you may appeal to an ALJ. You must file the request for a hearing with an ALJ within 60 days of the date you received the reconsideration decision. In order to get a hearing, there must be a dispute that involves at least $130. In the reconsideration letter, the QIC will provide a statement of whether your case satisfies this requirement. However, it’s up to the ALJ to make the final decision. The ALJ will generally send you a written decision within 90 days of getting your request. If the ALJ can’t issue a timely decision, you may ask the ALJ to skip to the next level of appeal. To request an ALJ hearing, follow the instructions in the reconsideration letter you received from the QIC. You can find more information on the ALJ hearing process. [INVALID] “Coverage and Claims Appeals.” If you need help filing an appeal with an ALJ, call 1-800-MEDICARE (1-800-633-4227), or your local legal services office. TTY users should call 1-877-486-2048.
Medicare Appeals Council (MAC) Review
If you don’t agree with the ALJ’s decision, you may file an appeal with the MAC. You must submit the request for MAC review in writing within 60 days of when you received the ALJ’s decision. The MAC will generally send you a written decision within 90 days of getting your request. If the MAC can’t issue a timely decision, you may ask the MAC to skip to the next level of appeal. Refer to the ALJ’s decision for instructions on filing a request for MAC review.
U.S. District Court Review
If you don’t agree with the MAC’s decision, you may file an appeal in U.S. District court. The claim(s) in your appeal must involve a dispute of at least $ 1,300.00 in order to get Federal District court review. You must file your request in District Court within 60 days of when you received the MAC’s decision. Refer to the MAC’s decision for instructions on requesting District court review. In federal court, a judge will review your case to see if the MAC fairly considered all of the evidence and properly applied the law. In general, you are not permitted to introduce new evidence at this point, but you can submit a written argument in support of the case. The judge can approve your claim, deny it, or remand your case back to the ALJ for further hearing in accordance with the judge’s instructions.
Centers for Medicare and Medicaid Services (CMS) regional office:
The Medicare carrier which processes Medicare part B claims in Illinois:
Wisconsin Physicians Service Insurance Corp (WPS)
They can be reached at 608-221-4711(v) or (800) 535-6152 (TTY).
1717 W. Broadway
P.O. Box 8190
Madison, WI 53708
For general information about Medicare or to obtain Medicare publications, call 800- 633-4227 (toll free) or 800-820-1202 (TTY) or visit Medicare's website.
There are some very good internet resources to help you learn more about Medicare.
The American Association of Retired Persons: Medicare
This portion of AARP’s website provides a guide to Medicare, focusing on traditional Medicare coverage, Medicare prescription drug coverage and supplemental (Medigap) plans.
Centers for Medicare and Medicaid Services
The website of the Centers for Medicare and Medicaid Services (CMS) describes the programs and activities of CMS, the federal agency that administers Medicare, Medicaid and the State Children’s Health Insurance Program (SCHIP), with links to consumer information on all of these programs.
Medicare Rights Center
The Medicare Rights Center (MRC) provides free counseling services to ensure that older adults, people with disabilities and Medicare beneficiaries have access to good, affordable health care. This site provides basic information about Medicare, covering frequently asked prescription drug coverage. A glossary of Medicare terms and a chart that compares Medicare plan options are included.
For a list of organizations in your area that may be able to help you, enter your zip code.
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