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Unraveling Medicare Part A and B

The Original Medicare Plan is a “fee-for-service” plan. This means beneficiaries are usually charged a fee for each health care service or supply they get. The plan is managed by the Federal Government and is available nationwide.

Individuals eligible for Medicare can join the Original Medicare Plan. Typically, beneficiaries will stay in the Original Medicare Plan unless they choose to join a Medicare Advantage Plan or other Medicare Health Plans.

Medicare beneficiaries may go to any doctor or specialist that accepts Medicare and is accepting new Medicare patients, or to any hospital or other facility. Under the Original Medicare, beneficiaries get all the benefits covered under Part A and if they pay for Part B, they get all the Medicare Part B covered services.

Beneficiaries pay a set amount for their health care, known as a deductible, before Medicare pays its part. Once Medicare pays its share, beneficiaries will then pay an additional amount (co-insurance) for each service or supply they get.

Beneficiaries’ out-of-pocket (OOP) costs in the Original Medicare Plan depend on the following:

-Whether they have both Part A and Part B
-Whether their doctor or supplier accepts Medicare-approved amounts
-How often they need health care
-Type of health care needed
-Whether they have other health care insurance coverage that works with

Beneficiaries must meet their deductibles before Medicare pays its part. It is important to know that Medicare has significant gaps in coverage and relatively high cost-sharing requirements. Medicare pays for about half of the beneficiary’s total health and long term care expending; the remainder is financed by beneficiaries themselves and other sources of coverage, such as Medicaid or supplemental insurance.

The Original Medicare Plan pays for many health care services and supplies, but it does not cover everything. Items and services that are not covered include, but are not limited to:

Dental Care
Cosmetic surgery
Custodial care
Vision Services
Hearing Aids
Long-term care
Orthopedic shoes
Routine foot care
Screening test
Shots (vaccinations)
Diabetic supplies
Nursing home
Care outside the U.S.

Medicare Part A

Part A is the component of the Medicare program that pays primarily for inpatient services and is more formally called “Hospital Insurance”. Typically, individuals do not pay a monthly payment, called a premium, for Part A. However, upon use of the coverage individuals pay deductibles and co-insurance.

The Centers for Medicare & Medicaid Services (CMS) announced the changes to the Medicare Part A and Part B premiums, deductibles and coinsurance paid by beneficiaries that become effective on January 1, 2009.

The new deductibles and coinsurance numbers for Part A are an increase of 4.3%. They are as follows:

Daily Part A coinsurance for days 61 through 90 for a hospital stay increased from $256 in 2008 to $267 in 2009. Daily Part A coinsurance for days 21 through 100 for a stay in a Skilled Nursing Facility increased from $128.00 in 2008 to $133.50 in 2009.

Part A benefits include inpatient hospital care, short-term skilled nursing facility care, hospice care, and limited home health services following a hospital stay (up to 100 post-hospital).

Part A is funded by dedicated tax on earned income which is 2.9% of gross earnings which both the employer and employee each pays half.

Medicare Part B

Part B is the Supplementary Medical Insurance program that helps pay for doctor’s services, outpatient care and other medical services not covered by Part A, such as:

Physician Services
Outpatient Hospital Care
Preventive services, such as a mammography screening
Mental Health Services
Home Health Visits (exceeding 100 visits per spell of illness)
X-rays, diagnostic test, durable medical equipment
Clinical laboratory services
Blood (outpatient)

Part B is voluntary, but individuals receiving Social Security at age 65 automatically qualify and will receive Part B benefits, unless they decide to opt out of the program. Unlike Part A, Part B is funded by a combination of beneficiary premiums and general revenues.

Typically, monthly premiums are deducted from beneficiaries’ Social Security checks and in some cases this amount may be higher if the individual did not sign up for Part B when they first became eligible. (10% for each full 12-month period that they could have had Part B but didn’t sign up for it). The monthly Part B premium will see no increase for 2009. The monthly premium will remain at $96.40 for 2009.

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