Medicare 2007

Medicare, created in 1965 under Title 19 of the Social Security Act, is a federal program that provides insurance for:

• People who are 65 and older
• People under 65 who have end-stage renal disease (permanent kidney failure)
• Some younger people who have disabilities.

There are two parts of Medicare, Part A (Hospital Insurance) and Part B (Medical Insurance). Part A covers hospital, home health care, hospice, and skilled nursing facilities. This portion of Medicare is usually provided at no cost to the member, since most people either worked themselves or had spouses that worked and paid taxes. Part B is provided as an option to eligible members, who pay an additional cost. Part B covers physician and outpatient hospital care, as well as, some other services, such as lab and radiology tests. There is also available Part D for Prescription Drugs. The cost for Part B is approximately $93.50 a month, which may be deducted automatically from your Social Security check.

Aside from the premium costs, the Medicare program does forward some additional out of pocket expenses to the member. For Part A, there is a deductible (approximately $992.00 per benefit period) and co-insurance of about $248.00 per day during an inpatient stay. The cost per day increases after the 90th day. In addition, Medicare pays just 80% for certain durable medical equipment, home health care visits and other items. Medicare does not cover all items, and it is imperative to review the Medicare guidelines for what is and what is not covered.

The additional costs for Part B, aside from the monthly premium, include a deductible of $131.00 and co-insurance of 20%, since Medicare continues to pay just 80% for covered services. The payment amount is determined by using an RBRVS (Resource Based Relative Value Studies) payment methodology 3that assigns a value for each medical procedure.

For additional information on Medicare, visit the Medicare website at http://www.medicare.gov

The New Medicare Prescription Drug Program

"The Medicare Prescription Drug and Modernization Act of 2003" is the most comprehensive change to the Medicare system since its inception in 1965. Some of the key elements in this act, include the following:

• Program Cost - Subscribers would be required to pay approximately $35 per month and a $250 annual deductible.
• Coverage - The new plan will pay 75% of drug costs to $2250. There will be no coverage from $2250 to $5100. The plan will cover 95% of costs over $5100.
• Out of Pocket Limits - Annual out of pocket limit is $3600 per year plus 5% over $5100.