Introduction to Medicare:

Medicare is a federally funded health insurance program.  It caters primarily to those aged 65 and older.  It also covers younger individuals with disabilities or specific medical conditions. Medicare is funded through a combination of payroll taxes, premiums paid by beneficiaries, and general revenues.

The funding sources are described as follows:

1. Payroll Taxes:
   • The largest source of funding comes from payroll taxes. These taxes are deducted from the paychecks of working individuals and are divided into two parts:
     • The parts are the Hospital Insurance (HI) payroll tax and the Supplementary Medical Insurance (SMI) payroll tax. The Hospital Insurance (HI) payroll tax is also known as the Part A tax. It is a 2.9% tax on earnings, with 1.45% paid by both employees and employers. For individuals with higher incomes, an additional 0.9% may apply.
2. Premiums from Beneficiaries:
   • Beneficiaries enrolled in certain parts of Medicare may be required to pay premiums. The main components are:
     • Part B Premiums:
       • Beneficiaries pay a monthly premium for Medicare Part B (Medical Insurance), which covers outpatient services, doctor visits, and other medically necessary services.
       • Part D Premiums:
         • Beneficiaries who opt for prescription drug coverage under Medicare Part D pay premiums to private insurance companies offering these plans.
3. Medicare Advantage Premiums:
   • Beneficiaries enrolled in Medicare Advantage plans (Part C) may pay premiums. It depends on the specific plan and the additional benefits it offers.
4. General Revenues:
   • In addition to payroll taxes and premiums, Medicare is funded through general revenues from the federal government. These revenues come from income taxes, corporate taxes, and other sources. General revenues help cover the costs of Medicare, particularly the Supplementary Medical Insurance (SMI) program, which includes Medicare Part B and Part D.
5. Other Sources:
   • Medicare also receives funding from other sources, such as interest earned on the Medicare Trust Fund's investments.

Medicare 2024 Part A (Hospital Insurance):

Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services. Medicare Part A consists of the following:

Premium

• $0 for most people (because they or a spouse paid Medicare taxes long enough while working - generally at least 10 years). This is sometimes called "premium-free Part A."
• If you do not qualify for premium-free Part A: You might be able to buy it. You will pay either $278 (2024) or $505 (2024) each month for Part A, depending on how long you or your spouse worked and paid Medicare taxes.
• Remember:
  • You also must sign up for Part B to buy Part A.
  • If you do not buy Part A when you are first eligible for Medicare (usually when you turn 65), you might pay a penalty.

Deductible

• $1,632 for each inpatient hospital benefit period, before Original Medicare starts to pay.
• There is no limit to the number of benefit periods you can have in a year. This means you may pay the deductible more than once a year.

Inpatient stay

• Days 1-60: $0 after you pay your Part A deductible.
• Days 61-90: $400 ($408 in 2024) copayment each day.
• Days 91-150: $800 ($816 in 2024) copayment each day while using your 60 lifetime reserve days.
• After day 150: You pay all costs.

Skilled nursing facility stay

• Days 1-20: $0 copayment
• Days 21-100: $200 ($204 in 2024) copayment each day.
• Days 101 and beyond: You pay all costs.

Home health care

• $0 for covered home health care services.
• 20% of the Medicare-approved amount for durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment).

Hospice care

• $0 for covered hospice care service.
• You may also pay:
  • A copayment of up to $5 for each prescription drug and other similar products for pain relief and symptom control while you are at home.
  • 5% of the Medicare-approved amount for inpatient respite care.

Medicare 2024 Part B (Medical Insurance):

Part B Costs

Covers outpatient care, preventive services, doctor visits, and other necessary services. Requires a monthly premium payment, with specific enrollment periods.  Medicare Part B costs consist of the following:

• Premium
  • $174.70 each month (or higher depending on your income). The amount can change each year. You will pay the premium each month, even if you do not get any Part B-covered services. You might pay a monthly penalty if you do not sign up for Part B when you are first eligible for Medicare (usually when you turn 65). You will pay the penalty for as long as you have Part B. The penalty goes up the longer you wait to sign up.
• Deductible
  • The Medicare Part B deductible for 2024 is $240.
  • You must pay $240 before Original Medicare starts to pay. You pay this deductible once each year.  
• General costs for services (coinsurance)
  • Usually, 20% of the cost for each Medicare-covered service or item after you have paid your deductible.   If your doctor or health care provider accepts the Medicare-approved amount as full payment, it is called "accepting assignment".
  • If your doctor does not "accept assignment", it means that they have not agreed to accept Medicare’s approved amount as the full payment for their services.
  • This means that they can charge you up to 15% more than the Medicare-approved amount.  You may have to pay the difference out of your pocket. 
  • You may also have to pay the entire bill upfront and seek reimbursement later.
• Clinical laboratory services
  • $0 for covered clinical laboratory services.
• Home health care
  • $0 for covered home health care services. 20% of the Medicare-approved amount for durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment).
• Inpatient hospital care
  • 20% of the Medicare-approved amount for most doctor services while you are a hospital inpatient.
• Outpatient mental health care
  • $0 for your yearly depression screening.
  • 20% of the Medicare-approved amount for visits to your doctor or other health care provider to diagnose or treat your condition.

• • If you get your services in a hospital outpatient clinic or hospital outpatient department, you may have to pay an additional amount to the hospital.
• Partial hospitalization mental health care
  • After you meet the Part B deductible:
  • 20% of the Medicare-approved amount for each service you get from a doctor or certain other qualified mental health professional.
  • Coinsurance for each day of partial hospitalization services you get in a hospital outpatient setting or community mental health center.
• Outpatient hospital care
  • Usually, 20% of the Medicare-approved amount is for doctors and other healthcare providers' services.
  • You will also pay a copayment to the hospital for each service you get in a hospital outpatient setting (except for certain preventive services). In most cases, your copayment will not be more than the Part A hospital stay deductible amount. This additional hospital copayment means you may pay more for an outpatient service you get in a hospital than you would pay if you got the same service in a doctor's office.

Part B Preventive Services

A key feature of Medicare Part B is the fact that it provides a set of preventive care services at no additional costs.  The preventive services are as follows:

• Annual "Wellness" visits to assess your health and develop a personalized prevention plan.
• Vaccinations for influenza (flu), pneumonia, hepatitis B, RSV, and COVID-19.
• Screenings for conditions like cardiovascular disease, diabetes, depression, HIV, and lung cancer.
• Counseling sessions for alcohol misuse, obesity, tobacco use, and sexually transmitted infections.
• Programs for health education and monitoring, such as the Medicare Diabetes Prevention Program and nutrition therapy services.

You can access a comprehensive list of preventive and screening services covered by Medicare Part B on Medicare.gov or in the booklet "Your Guide to Medicare’s Preventive Services."

• Part B Durable Medical Equipment

Medicare Part B will cover durable medical equipment (DME) if your Medicare-enrolled doctor or other healthcare provider prescribes it for use in your home. DME covered by Medicare includes, but is not limited to:

• Blood sugar meters
• Blood sugar test strips
• Canes
• Commode chairs
• Continuous passive motion machines, devices, and accessories
• Continuous Positive Airway Pressure (CPAP) machines
• Crutches
• Home infusion services
• Hospital beds
• Infusion pumps and supplies
• Lancet devices and lancets
• Nebulizers and nebulizer medications
• Oxygen equipment and accessories
• Patient lifts
• Pressure-reducing support surfaces
• Suction pumps
• Traction equipment
• Walkers
• Wheelchairs and scooters

Many of the DME equipment will support the emerging trends of at-home diagnostics.

Medicare 2024 Part C (Medicare Advantage):

Medicare Advantage, also known as Medicare Part C, is an alternative way for beneficiaries to receive their Medicare benefits. Rather than receiving Original Medicare (Part A and Part B) directly from the federal government, individuals can opt for Medicare Advantage plans, which are offered by private insurance companies approved by the Medicare program. Here are key points about Medicare Advantage:

• Combination of Coverage:
  • Medicare Advantage plans combine the benefits of Medicare Part A (hospital insurance) and Part B (medical insurance) into a single plan. Many Medicare Advantage plans also include additional coverage, such as vision, dental, and prescription drug coverage (Part D).
• Private Insurance Companies:
  • Unlike Original Medicare, which is administered by the federal government, Medicare Advantage plans are offered by private insurance companies that are approved by Medicare. These plans must provide at least the same level of coverage as Original Medicare.  
• Different Plan Types:
  • There are different types of Medicare Advantage plans, including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service (PFFS) plans, Special Needs Plans (SNPs), and more. Each plan type has its network of healthcare providers and specific rules for how services are covered.  Generally, these plans are managed care plans.  Costs are controlled by restricting or favoring beneficiaries using in-network providers.  Additionally, many of these plan types require prior approval from your primary care physician before you can see a specialist.
• Costs and Premiums:
  • While Medicare Part A is generally premium-free for most eligible individuals, Medicare Advantage plans may have monthly premiums in addition to the standard Part B premium. Some plans may offer low or $0 premiums, but individuals still need to pay their Part B premium.
• Out-of-Pocket Costs:
  • Medicare Advantage plans have out-of-pocket costs, including deductibles, copayments, and coinsurance. These costs can vary between plans, and some plans may have annual limits on out-of-pocket spending.
• Network Restrictions:
  • Depending on the plan type, individuals may need to use healthcare providers within the plan's network. Some plans require referrals to see specialists, while others allow direct access.
• Enrollment Period:
  • Beneficiaries can enroll in or make changes to their Medicare Advantage plans during the Annual Enrollment Period (AEP), which typically runs from October 15 to December 7 each year.  There is also a "Medicare Advantage Open Enrollment Period" that runs from January 1st until March 31st.

It's important for individuals considering Medicare Advantage to carefully review the specific details of each plan, including coverage, costs, and network restrictions, to choose a plan that best meets their healthcare needs.

Medicare 2024 Part D (Prescription Drug Coverage):

Part D is a prescription drug coverage program.  It is offered by private insurance companies.   Medicare must approve these plans. It is designed to help Medicare beneficiaries afford the costs of prescription medications. Here are key points about Medicare Part D:

• Voluntary Prescription Drug Coverage:
  • Part D is a voluntary program. Beneficiaries have the option to enroll in a standalone Part D Prescription Drug Plan (PDP) or choose a Medicare Advantage plan (Part C) that includes prescription drug coverage.
• Private Insurance Companies:
  • Part D plans are offered by private insurance companies that have been approved by Medicare. These plans operate alongside Original Medicare (Part A and Part B) or Medicare Advantage plans, providing coverage for prescription medications.
• Coverage Tiers:
  • Part D plans typically organize prescription medications into different tiers. Each tier represents a different cost level, and medications in higher tiers usually have higher out-of-pocket costs. Generic drugs often have lower costs than brand-name drugs.
• Deductibles, Copayments, and Coinsurance:
  • Part D plans often have a yearly deductible, which is the amount beneficiaries must pay out of pocket for prescriptions before their plan begins to pay. After meeting the deductible, beneficiaries typically pay a copayment or coinsurance for each prescription.
• Coverage Gap (Donut Hole):
  • In the past, Part D included a coverage gap, commonly known as the "donut hole," where beneficiaries had to pay a higher percentage of the drug costs. However, the Affordable Care Act has been gradually closing the donut hole.
  • The Coverage Gap (Donut Hole) Stage requires the beneficiary to pay 25% of the cost of the prescription drugs for both brand name and generic drugs.
  • During this stage, certain CMS-contracted drug manufacturers will offer a discount on certain applicable “brand” drugs.
  • This will continue until the total costs for drugs reach $8000 (in 2024). This amount reflects what you pay and the value of the manufacturer’s discount on brand-name drugs.
• Catastrophic Coverage:
  • Once a beneficiary's out-of-pocket spending reaches a certain limit, they enter the catastrophic coverage phase. During this phase, the Medicare beneficiary will no longer have a copayment or coinsurance for the rest of the calendar year.
• Enrollment:
  • Beneficiaries can enroll in a Part D plan during their Initial Enrollment Period when they first become eligible for Medicare. Additionally, they can enroll or make changes to their Part D coverage during the Annual Enrollment Period (October 15 to December 7) each year.
• Penalties for Late Enrollment:
  • Individuals who do not enroll in a Part D plan when first eligible but choose to do so later may face a late enrollment penalty unless they have creditable prescription drug coverage through another source.

Medicare beneficiaries need to review available Part D plans annually to ensure they have coverage that meets their medication needs and to compare costs and coverage options.

Medicare Eligibility Criteria:

The eligibility criteria are based on age and specific medical conditions. Here are the main factors determining eligibility:

• Age:
  • Individuals become eligible for Medicare when they turn 65 years old. This is the age at which most people qualify for benefits.
• Work History:
  • Individuals may also qualify for premium-free Part A based on their work history or their spouse's work history. If they or their spouse paid Medicare taxes while working, they may be eligible for premium-free Part A.
• Disability:
  • Individuals under the age of 65 may be eligible if they have received Social Security Disability Insurance (SSDI) benefits or certain Railroad Retirement Board disability benefits for at least 24 months.
• End-Stage Renal Disease (ESRD):
  • Individuals of any age with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS) are eligible. There is no waiting period for individuals with ALS.
• Automatic Enrollment:
  • If individuals are already receiving Social Security or Railroad Retirement Board benefits at the age of 65, they are typically automatically enrolled in Part A and Part B.

It's important to note that while Part A (hospital insurance) is generally premium-free for most eligible individuals, Part B (medical insurance) usually involves a monthly premium. Some individuals may choose to delay enrollment in Part B if they have other qualifying health coverage, such as through an employer. Understanding the eligibility criteria and enrollment timelines is crucial to ensure individuals receive timely access to benefits. Additionally, individuals can apply online through the official Social Security website or by visiting a local Social Security office.

Conclusion:

In summary, Medicare is a key foundation of the U.S. healthcare system. It provides comprehensive coverage and protections against surprise medical billing. For senior citizens and those with disabilities, staying informed about its components and eligibility is crucial.  This knowledge helps individuals make informed decisions, fostering a healthier and more secure future for all.