Medicare 2003 in a Nutshell

by Carole C. Lamson & Martin Petroff, Esqs.
(Posted January 15, 2003, Updated March 4, 2003)

It is important to remember that purely custodial care (the type of care that most persons at home or in nursing homes require) is not covered by Medicare or Medigap policies. The only home-care or nursing-home services that Medicare covers is for skilled nursing or rehabilitation. Long-term-care insurance or Medicaid are the major alternative sources for paying for custodial-care services.

It is important to remember that purely custodial care (the type of care that most persons at home or in nursing homes require) is not covered by Medicare or Medigap policies. The only home-care or nursing-home services that Medicare covers is for skilled nursing or rehabilitation. Long-term-care insurance or Medicaid are the major alternative sources for paying for custodial-care services.

The Medicare program is a system of health insurance for the aged and disabled. It is administered by the Centers for Medicare & Medicaid Services, formerly the Health Care Financing Administration. It consists of two basic units: Part A provides coverage for the costs incurred by eligible beneficiaries for inpatient hospital care, inpatient care in a skilled-nursing facility following a hospital stay, home-health care and hospice services; Part B is a voluntary program in which eligible beneficiaries who pay a monthly premium are entitled to reimbursement for physician and other medical services and supplies. As discussed above, Medicare does not pay for care that is primarily custodial.

Eligibility

Primary Medicare eligibility is linked to eligibility for Social Security retirement and disability benefits. Disabled persons and disabled widows/widowers under age 65 may also be eligible for Medicare. Some persons who are 65 years of age or older, but not otherwise eligible, may purchase this insurance by applying to Social Security.

Enrollment

The initial enrollment period begins 3 months prior to the month of the 65 th birthday and continues 3 months after that. (There are substantial penalties for late enrollment.) A special enrollment period is available to the working aged and their spouses who delay enrollment because of primary, employer-based insurance.

Benefits under Medicare Part A

Inpatient Hospital Coverage: Medicare Hospital Insurance (Part A) will pay for all medically necessary inpatient hospital care for the first sixty days minus a deductible of $840 for each benefit period. For the remaining days a beneficiary must pay substantial co-payments, which may be covered under a Medigap policy (see discussion below). Major in-hospital services covered by Medicare Part A include a semi-private room, all meals, including special-care units, intensive-care units, coronary-care units, regular nursing services and drugs furnished by the hospital during the patient's stay.

Skilled Nursing Facility Care: Medicare will also pay for up to 100 days in a skilled-nursing facility. The first 20 days are covered, but for days 21 through 100 a $105 daily co-payment is required. The patient must have been hospitalized for a least 3 days and be admitted to the facility generally within 30 days after leaving the hospital.

Home Health Care: Medicare also provides home-health care services for a beneficiary who is under a physician's plan of care, requires skilled-nursing care or physical rehabilitation, and is essentially confined to home. Physical, occupational and speech therapy and the services of a home-health aide are available. A prior hospital stay is not required.

Hospice Care: Medicare's hospice program includes both home care and inpatient care, when needed, and a variety of services not otherwise provided by Medicare. To be eligible, a Medicare beneficiary must be certified by a physician as terminally ill with a life expectancy of approximately 6 months or less. Those who choose hospice care receive non-curative medical and support services for their terminal illness. Regular Medicare continues to pay for medical treatments not related to the terminal illness.

Benefits under Medicare Part B

Medicare Medical Insurance (Part B) covers a variety of medical services of particular importance to Medicare beneficiaries, including physician services in and out of the hospital, durable medical equipment, outpatient hospital services, physical, occupational and speech therapy and ambulance transportation. Part B coverage is voluntary. Most Medicare beneficiaries decide to enroll in the program with their monthly premiums deducted from their Social Security checks. There is a monthly premium of $58.70 and an annual deductible amount of $100 which must be paid before Medicare benefits are reimbursed. Medicare pays 80% of the approved charge for services and the beneficiary is responsible for the 20% co-payment.

Limiting Charge

There is a cap imposed on the amount doctors may charge their Medicare patients for each service. In New York, doctors may not charge more than 5% above the Medicare-approved rate for most services.

Excluded Services under Part A and Part B

Some services not covered by Medicare Part A are private-duty nursing and, generally, a private room. Other services excluded under Medicare Part B are most out-patient prescription drugs that do not require administration by a physician, routine physical checkups, immunization with some exceptions, eyeglasses or contact lenses, most dental care and hearing aids. Generally, Medicare will not pay for hospital or medical services abroad or for physician services on ship cruises beyond the territorial waters of the United States.

Medigap Insurance

Medicare beneficiaries generally decide to buy supplemental insurance (Medigap). At present, there are ten standard Medigap policies that may be offered by insurance companies. Plan A is a policy with core benefits that are included in the nine other plans. For further information, request a copy of the 2003 Guide to Health Insurance for People with Medicare by calling Medicare (800) 633-4227 or Social Security (800) 772-1213 or see the
Medicare website at http://www.medicare.gov/Publications/Search/View/ViewPubList.asp.  

Medicare and Managed-Care Plans

Managed-care plans are sometimes called coordinated-care or prepaid plans or Health Maintenance Organizations (HMOs). They might be thought of as a combination of insurance company and doctor/hospital. Like insurance companies, they cover health-care costs in return for a monthly premium which may be waived. Generally, the plans have "lock-in" requirements. This means that an enrolled member is locked into receiving all covered care from the doctors, hospitals and other care providers who are affiliated with the plan. In most cases, if the enrollee goes outside the plan for services, neither the plan nor Medicare will pay. The enrollee will be responsible for the entire bill.

About the Writers: CAROLE C. LAMSON is a member of the National Academy of Elder Law Attorneys and the National Association of Estate Planners. MARTIN PETROFF, formerly staff attorney for health affairs for the New York City Department for the Aging, is a member of the Executive Committee of the New York State Bar Association Elder Law Section. Their law firm, Lamson & Petroff, provides a broad range of legal services, concentrating on the rights of the elderly and disabled, estate planning, trusts, public benefits, probate and guardianships. The office is located at 270 Madison Avenue, New York, NY 10016, (212) 447-8690.


2003 Lamson & Petroff. Reprinted with Permission.

Available from ElderCare Online™     www.ec-online.net        2003 Lamson & Petroff. Reprinted with Permission.