Medicare

Question 1

Medicare

Answer 1

• Universal health coverage and insurance for those 65 years and older and disabled
• Medicare Act amended to the Social Security Act in 1965– created Title XVIII
• Covers 55 million Americans
  
  • 46 million over 65 years old
  • 9 million disabled
• Costs $646.2 billion, approximately 14% of federal budget in 2015

Question 2

brief hx of medicare

Answer 2

• Medicare is the federal health insurance program for people who are:
• 65 or older,
• certain younger people with disabilities, and
• people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

Question 3

Part A (hospital insurance)

Answer 3

• Part A covers:
  
  • inpatient hospital stays,
  • care in a skilled nursing facility,
  • hospice care,
  • some home health care.
• Little parts from your paycheck go into this type of insurance
• You have to be “invested” in your retirement
• What if you were a stay at home dad and now youre 65 and you want medicare: you have to pay

Question 4

part A cost

Answer 4

• Most people don’t pay a monthly premium for Medicare Part A (Hospital Insurance) coverage (if you or your spouse paid Medicare taxes while working). This is sometimes called “premium-free Part A.”
• If you have to buy Part A (due to lack of eligibility), you’ll pay up to $407 each month.

Question 5

Part A funding

Answer 5

• Funded by 2.9% payroll tax
  
  • Worker’s contribution is matched by employers (1.45% from employees, 1.45% from employers)*
  • Deposited into “Medicare trust fund”
  • *ACA increased this contribution by 0.9% for individuals earning >$200,000 and couples earning over $250,000
• Hospital
  
  • Paid for by government after patient pays deductible
  • After 60-days (per illness) patient has additional co-insurance
  • After 90-days (per illness) patient pays even more
  • After 150-days (per illness) no further Medicare coverage
• Nursing Home
  
  • Paid for by government
  • After 20-days patient must pay co-payment per day
  • No coverage after 100 days
  • If no hospital stay, no coverage

Question 6

Part B (medical insurance)

Answer 6

• Part B covers:
  
  • certain provider services,
  • outpatient care,
  • medical supplies,
  • preventive services.

Question 7

enrollment in medicare parts A and B

Answer 7

• Usually automatic enrollment in Part A:
• you’ll get your Medicare card in the mail 3 months before your 65th birthday - or your 25th month of disability.
• If not eligible automatically, i.e. not getting Social Security benefits, for example, because you’re still working, or have End-Stage Renal Disease (ESRD), you have to sign up w Social Security.

Question 8

enrolling in part B

Answer 8

• Part B is voluntary – you must enroll and pay a premium
• In most cases, if you don’t sign up for Medicare Part B when you’re first eligible, you’ll have to pay a late enrollment penalty for as long as you have Part B, and could have a gap in your health coverage.

Question 9

part B cost

Answer 9

• Most pay the standard Part B premium of $134 each month; some pay additional Income Related Monthly Adjustment Amount (IRMAA)
• The Part B deductible is $183 per year
• Co-insurance (after meeting deductible) is 20% of Medicare-approved amount for:
  
  • most doctor services (including most doctor services while you’re a hospital inpatient),
  • outpatient therapy,
  • durable medical equipment.
• Must sign up for Part B when first eligible, or may have to pay a late enrollment penalty.

Question 10

part B funding

Answer 10

• Federal government pays 75% (out of general fund)
• Beneficiaries pay 25%
• Beneficiaries with higher incomes pay higher monthly premiums

Question 11

medicare beneficiary costs

Answer 11

• In 2017, the annual costs to beneficiaries for Medicare A & B are:
  
  • No Part A premium
  • Part A hospital deductible per hospital stay ($1316)
  • Part B premium ($134+)
  • Part B deductible ($183)
  • 20% coinsurance for all charges under Part B (except primary care)
  • Up to additional 15% for “non participating” physicians
  • All Rx costs
  • Dental Care
  • Eye glasses, hearing aids, foot care, etc.
• Dont need to memorize numbers

Question 12

part C (medicare advantage plans)

Answer 12

• Medicare health plans offered by a private companies that contract with Medicare to provide Part A and Part B benefits.
  
  • Health Maintenance Organizations (HMOs),
  • Preferred Provider Organizations (PPOs),
  • Private Fee-for-Service Plans (FFS),
  • Special Needs Plans,
  • Medicare Medical Savings Account Plans.
• Most Medicare services are covered
• Most offer prescription drug coverage.
• These are private health plans that the government is contracting for them to provide
• The people with these are not getting part A, or B

Question 13

medicare part C / advantage plans - costs

Answer 13

• Varies with company and plan out-of-pocket costs depend on:
  
  • monthly premium, including Part B
  • yearly deductibles.
  • copayment
  • coinsurance
  • yearly limit on out-of-pocket costs
  • type of plan and network (PPO, PFFS, or MSA) and only use network providers
  • need for extra benefits and plan charges
  • Medicaid eligibility

Question 14

medicare part D (prescription drug coverage)

Answer 14

• Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans.
• offered by insurance companies and other private companies approved by Medicare.
• Medicare Advantage Plans (Part C) may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.

Question 15

part D costs

Answer 15

• What you pay for generic drugs during the coverage gap will decrease each year until it reaches 25% in 2020.

Question 16

the “donut hole” in 2015 and beyond

Answer 16

• Most Medicare Prescription Drug Plans (Part D) continue to have a coverage gap (also called the “donut hole”).
• This gap begins after you and your drug plan have spent a certain amount for covered drugs
• In 2016, once you and your plan have spent $3,310 on covered drugs, you’re in the coverage gap.
• This amount may change each year. People with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap.
• People may qualify if they n yearly income less than $17,655 i ($23,895 for a married couple) and less than$13,640 in resources ($27,250 for a married couple).
• if you meet certain income and resource limits, you may qualify for “Extra Help” from Medicare to pay the costs of Medicare prescription drug coverage.
• Drug costs for most people who qualify are no more than $2.65 for each generic/$6.60 for each brand-name covered drug. (In 2016, costs are no more than $2.95 for each generic/$7.40 for each brand-name covered drug.)
• Other people pay only a portion of their Medicare drug plan premiums and deductibles based on their income level.

Question 17

proportion of federal budget

Answer 17

Question 18

medicare demographics

Answer 18

• In 1960s
  
  • Approximate 9.5% of country’s population was 65 years or older
  • A 65 year old man was expected to live an additional 13 years on average; a woman, 17 years.
• In 1990s
  
  • 12.3% of population was 65 years or older
  • Additional life expectancy now 15.1yrs for men, 18.9 for women
• In 2010+
  
  • +/- 13.3% over 65
  • 19.7% in 2030
    
    • Fastest growing age are those over 85 years of age

Question 19

characteristics of the medicare population

Answer 19

Question 20

medigap insurance

Answer 20

• Medicare Supplement Insurance policies, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.
• 89% of Medicare beneficiaries have a supplemental insurance policy:
  
  • Purchasing from private insurance company (17%)
  • Receiving as retirement benefit from former employer (34%)
  • Enrolling in Medicaid (if low income) (15%)
  • Joining a Medicare managed care plan (22%)
  • 11% choose not to purchase supplement insurance
• Supplemental coverage for Medicare beneficiaries.

Question 21

DRGs (initiated in 1983)

Answer 21

• Changed hospital payment structure, thereby changing incentives:
  
  • Paid a fixed amount each time a patient was admitted to the hospital rather than the cost of care
  • Each Diagnostic Related Group (DRG) has a reimbursement amount associated with it
  • The reimbursement amount reflects the average cost of treating that diagnosis
    
    • If hospital provides care for less than average cost, it can keep the difference
    • If cost of care is more, the hospital absorbs the difference

Question 22

Medicare and managed care: medicare part C

Answer 22

• In order to save $$$, in the 1980s the Federal government started letting Medicare beneficiaries enroll into HMOs (with plan taking risk)
  
  • Paid plans 95% of what would have paid for the beneficiary in traditional, FFS Medicare
  • HMOs were required to offer ALL that was offered under Medicare; could offer more
• Most HMOs offered Rx and many did so without a premium….
• Competed by offering more and more “extra” benefits

Question 23

medicare advantage and cherry picking

Answer 23

• Part C Medicare Advantage Plans may target healthier, younger Medicare beneficiaries (“favorably selecting,” or “cherry picking”)
• While the Private Insurance Plan is paid “average” costs of beneficiaries in the area, they may actually have lower costs than the average.
• This leaves Traditional FFS Medicare facing “adverse selection,” with sicker, more costly patients

Question 24

long term financing of medicare

Answer 24

• Greatest challenge to future of Medicare
• Increasing health care costs
• Aging US population
  
  • Between 2010 and 2030, number of beneficiaries projected to rise from 46 million to 78 million
• Declining ratio of workers to beneficiaries
• Changing solvency projections – when will funding be less than needed?