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Your mom is turning 65. She will be receiving Social Security retirement benefits but is very concerned about how to finance her health care. She owns her home, has a limited pension, and with Social Security, will be able to make ends meet but with little money to spare. Will she be eligible for Medicare? Does she need Medigap insurance? Can Medicaid help?

Medicare is the national health insurance program for Social Security recipients who are over 65 or permanently disabled. It is administered by the federal Health Care Financing Administration. Private insurance companies contract with the government to make payments to medical providers.

Medicare is not a welfare program. That is, personal income and assets are not considered in determining an individual’s eligibility or benefits. Medicare coverage is similar to the coverage that private insurance companies offer: Medicare pays a portion of the cost of some medical care and the beneficiary — the patient — assumes the cost of deductibles and the co-payments to healthcare providers.

Medicare has two coverage components — Part A and Part B. Part A covers in-patient hospital care, hospice care, in-patient care in a skilled nursing facility, and home health care services. Part B covers medical care and services provided by doctors and other medical practitioners, durable medical equipment and some outpatient care and home health care services. Part A is financed mostly through federal payroll taxes; the majority of beneficiaries do not pay a premium for this coverage. Part B is financed through monthly premiums paid by beneficiaries who choose this coverage and by general revenues from the federal government. Beneficiaries may be required to pay deductibles and make co-payments under both Part A and Part B.

Medicare recipients can choose to receive their health care services through Medicare’s traditional fee-for-service system or through managed care plans. The fee-for-service system lets patients see any physician who participates in Medicare. Although generally less expensive, managed care plans limit patients to certain doctors and generally require patients to get referrals to specialists from their managed care plan physicians, who may be known as gatekeepers. Some Medicare managed care plans let beneficiaries see a specialist without prior approval, but they charge a premium for that. Generally, beneficiaries who choose a managed care Medicare plan must get all their care through the plan to receive coverage.

Beginning January 1, 1999, Medicare recipients will have additional options for financing their health care coverage under a new Part C of Medicare. Also known as Medicare+Choice, Part C options will include coordinated-care plans, Medical Savings Accounts, and private fee-for-service plans. Beneficiaries will not have to change their current Medicare arrangement, however, and should do so only after study and thought.

Medicare Supplemental Insurance — also known as Medigap — can help beneficiaries pay for medical care that Medicare does not cover, including deductibles and co-payments. While all Medigap policies must contain basic or "core" benefits, beneficiaries can get additional benefits for higher premiums.

In deciding whether Medigap or supplemental insurance makes sense for your parent, consider your parent’s current health status and likely future medical needs (as best you can) as well as the policy’s cost and any restrictions, such as benefit restrictions for pre-existing conditions. Also check for restrictions on the policyholder’s ability to switch from one policy to another. Before enrolling in any insurance company, check with the insurance commissioner in your parent’s home state to see if there are unresolved complaints against the company on file.

Medicaid is different. Based on need, it helps pay the medical care for low-income older or disabled people and other individuals, including some with moderate incomes but high health care expenses. Eligibility for Medicaid is based on an applicant’s income and assets. Medicaid is financed jointly by federal and state governments and, while each state must follow basic eligibility and benefit requirements, significant details vary among states.

Medicaid covers far more nursing home care than Medicare, and pays for custodial and skilled care. It doesn’t limit the time a beneficiary can stay in a nursing home or other care facility.

Both Medicare and Medicaid can be a source of funding for long-term home health care, but Medicare covers home health care only if the person is homebound and needs skilled nursing or therapy services.

To apply for Medicare, your parents should contact the nearest Medicare office in their state about three months before their 65th birthday. Those who are receiving Social Security disability benefits also should inquire about Medicare. For more information, contact the Social Security Administration at (800) 772-1213, or the Health Care Financing Administration at (800) 638-6833, www.hcfa.gov. HCFA publishes the 1997 Guide to Health Insurance for People with Medicare, Pub. No. HCFA-02110. For Medicaid information, contact the state medical assistance office, often called the State Department of Social Services or Department of Human Services.

For More Information

The Center for Medicare Advocacy, Inc., publishes a variety of materials on Medicare, Medigap and Medicaid, including items on how to pursue a Medicare appeal or home health care appeal.

Center for Medicare Advocacy, Inc.
P.O. Box 350
Willimantic, CT 06226
(860) 456-7790.

Health Insurance Information, Counseling and Assistance Program (HIICAP)

National Academy of Elder Law Attorneys, Inc. (NAELA)
1604 N. Country Club Road
Tucson, AZ 85716-4005
(520) 881-4005; fax: (520) 325-7925

American Bar Association Commission on Legal Problems of the Elderly
740 15th Street, NW
Washington, DC 20005-1022
(202) 662-8690; fax: (202) 662-8698

The Commission publishes The ABA Legal Guide for Older Americans, which includes information about consumer legal issues. The cost is $13.00.

The Medicare Hotline at 1-800-638-6833

Prepared by the Center for Medicare Advocacy

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