Taxes imposed to finance Medicare
Medicare is financed in part by payroll taxes imposed by the Federal Insurance Contributions. When there are employees, the tax is equal to 2.9% (1.45% withheld from the employee and a matching 1.45% paid by the company) of the salaries and other compensation in connection with employment. Until December of 1993, the law provided a cap on wages, etc., on which the Medicare tax could be imposed each year. On January 1, 1994, the compensation limit was removed. In the case of individuals who are self employed, the entire 2.9% tax of earnings must be paid by the self-employed individual, however half of the tax can be deducted from the income calculated for income tax purposes.
Medicare Eligibility
In general, individuals are eligible for Medicare if:
· They are 65 years or older and U.S. citizens or have been permanent legal residents for 5 continuous years, and they or their spouse has paid Medicare taxes for at least 10 years.
· They are under 65, disabled, and have been receiving either Social Security benefits or the Railroad Retirement Board disability benefits for at least 24 months from date of entitlement (first disability payment).
· They get continuing dialysis for end stage renal disease or need a kidney transplant.
· They are eligible for Social Security Disability Insurance and have amyotrophic lateral sclerosis (known as ALS or Lou Gehrig's disease).
In 2008, Medicare provided health care coverage for 45 million Americans, making it the largest single health care payer in the nation. Enrollment is expected to reach 78 million by 2030, when the baby boom generation is fully enrolled.
Medicare Benefits | Different Parts
The original Medicare program has two parts: Part A which is Hospital Insurance, and Part B Medical Insurance. Only a few special cases exist where prescription drugs are covered by original Medicare, but as of January 2006, Medicare Part D provides more comprehensive drug coverage.
Medicare Part A: Hospital Insurance
Part A covers inpatient hospital stays, including semiprivate room, food, tests, and doctor's fees.
Part A covers brief stays in a skilled nursing facility if certain criteria are met:
1. A preceding hospital stay must be at least three days, three midnights, not counting the discharge date.
2. The nursing home stay must be for something diagnosed during the hospital stay or for the main cause of hospital stay.
3. If the patient is not receiving rehabilitation but has some other ailment that requires skilled nursing supervision then the nursing home stay would be covered.
4. The care being rendered by the nursing home must be skilled. Medicare part A does not pay for custodial, non-skilled, or long-term care activities, including activities of daily living (ADL) such as personal hygiene, cooking, cleaning, etc.
The maximum length of stay that Medicare Part A will cover in a skilled nursing facility per ailment is 100 days. The first 20 days would be paid for in full by Medicare with the remaining 80 days requiring a co-payment (as of 2009, $133.50 per day). Many insurance companies have a provision for skilled nursing care in the policies they sell.
If a beneficiary uses some portion of their Part A benefit and then goes at least 60 days without receiving facility-based skilled services, the 100-day clock is reset and the person qualifies for a new 100-day benefit period.
Medicare Part B: Medical Insurance
Part B medical insurance helps pay for some services and products not covered by Part A, generally on an outpatient basis. Part B is optional and may be deferred if the beneficiary or their spouse is still actively working. There is a lifetime penalty (10% per year) imposed for not enrolling in Part B unless actively working.
Part B coverage includes physician and nursing services, x-rays, laboratory and diagnostic tests, influenza and pneumonia vaccinations, blood transfusions, renal dialysis, outpatient hospital procedures, limited ambulance transportation, immunosuppressive drugs for organ transplant recipients, chemotherapy, hormonal treatments such as Lupron, and other outpatient medical treatments administered in a doctor's office. Medication administration is covered under Part B only if it is administered by the physician during an office visit.
Part B also helps with durable medical equipment (DME), including canes, walkers, wheelchairs, and mobility scooters for those with mobility impairments. Prosthetic devices such as artificial limbs andbreast prosthesis following mastectomy, as well as one pair of eyeglasses following cataract surgery, and oxygen for home use is also covered.
Medicare Part C: Medicare Advantage plans
With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). These programs were known as "Medicare+Choice" or "Part C" plans. Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, "Medicare+Choice" plans were made more attractive to Medicare beneficiaries by the addition of prescription drug coverage and became known as "Medicare Advantage" plans.
Medicare Part D: Prescription Drug plans
Medicare Part D was passed by the Bush administration, and went into effect on January 1, 2006. Anyone with Medicare Part A or B is eligible for Part D. In order to receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan or Medicare Advantage plan with prescription drug coverage . These plans are approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies. Unlike Original Medicare (Part A and B), Part D coverage is not standardized. Plans choose which drugs (or even classes of drugs) they wish to cover, at what level (or tier) they wish to cover it, and are free to choose not to cover some drugs at all.
