CIC Life & Health Learning Guide - Medicare and Medicaid

Medicare and Medicaid Overview

Medicare

Purpose

  • Enacted in 1965 to provide insurance for medical, surgical and related services to eligible participants.
    • Coverage applies if costs are reasonable and necessary and approved by Medicare.

Eligibility

  • Persons aged 65 and older:

    • Automatically entitled if receiving Social Security benefits.
    • Must voluntarily enroll if not eligible for Social Security by paying a monthly premium.

  • Persons of any age with:

    • Social Security disability benefits for 24 months.
    • End-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).

Initial Enrollment Period

  • A seven-month enrollment period:
    • Begins three months before one's 65th birthday.
    • Includes the birth month.
    • Ends three months after the birth month.

Coverage Trigger

  • Medicare covers services that are medically necessary and show signs of improvement.

Medicare Coverage Parts

  • Part A: Hospital Insurance
  • Part B: Medical Insurance
  • Part C: Medicare Advantage
  • Part D: Prescription Drug Benefit

Medicare Benefits (2024)

Part A – Hospital Insurance

  • Premiums:

    • No premium for eligible beneficiaries.
    • $505 per month for ineligible beneficiaries.

  • **Inpatient Hospital Care:

    • 2024 Requirements:**
    • After a deductible of $1,632, Medicare covers all reasonable and approved expenses for the first 60 days of a hospital stay.
      • Benefit Period:
        • Begins when admitted as an inpatient.
        • Ends after 60 consecutive days without receiving inpatient care.
        • New admission restarts the benefit period.
        • No limit to the number of benefit periods.
Part A Hospital Care Costs:
  • Days 1–60: Patient pays $0 coinsurance.
  • Days 61–90: Daily copayment of $408 (2024).
  • Day 91 and beyond: Daily copayment of $816 (2024) for each lifetime reserve day.
    • Maximum of 60 reserve days per lifetime.
    • Patient responsible for all costs exceeding reserve days.
Skilled Nursing Facility (SNF) Care
  • Eligibility: Must satisfy a three-day inpatient hospital stay requirement in a non-observation capacity.
  • Coverage:
    • Days 1–20: Medicare pays 100% of approved charges.
    • Days 21-100: Patient pays $204 per day copayment (2024).
    • Days 101 and beyond: Patient assumes full responsibility.
Part B – Medical Insurance

  • Premiums:

    • Standard monthly premium is $174.70 (2024).
    • High-income beneficiaries may face higher premiums, based on two years prior tax return (for example, 2024 premiums based on 2022 tax return).
    • Maximum income-related premium: $594.00 (2024).

  • Deductibles and Cost-sharing:

    • $240 annual deductible (2024).
    • 80/20 coinsurance, no maximum out-of-pocket.

  • Coverage Includes:

    • Medical expenses, home health care, outpatient care.

Medicare Benefits Part C – Advantage Plans

  • Provide all of Part A and Part B benefits.
  • Additional benefits may include vision, hearing, dental, and wellness programs.
  • Often includes Part D (prescription drug coverage).
  • Costs vary by plan.

Part D – Prescription Drug Benefit

  • Established by the Medicare Prescription Drug, Improvement and Modernization Act in December 2003.
  • Provides a voluntary drug benefit under Medicare Part D.

Part D Coverage and Costs (2024)

  • Insurance Plans:

    • Governed by commercial insurance companies.
    • Beneficiaries with Part A or B can purchase drug benefit plans.

  • Premium Ranges:

    • Varies per plan and beneficiary’s tax status.
    • 2024 income-related premiums: $0.00 to $81.00.

  • Average Monthly Premium:

    • $55.50 (2024), with surcharges for high-income earners.

  • Annual Deductible:

    • Pay first $545 (2024) of plan-covered drugs.

  • Initial Coverage Period:

    • Begins post-deductible; beneficiaries pay a copayment or up to 25% coinsurance.
    • Part D plan pays 75% after deductible.
    • Coverage gap begins after reaching $5,030 total costs (2024).

  • Coverage Gap (Donut Hole):

    • Beneficiaries pay 25% of the costs for covered drugs during this phase.
    • Plan pays 5%, manufacturers offer a 70% discount.

  • Catastrophic Benefit Phase:

    • Begins after reaching $8,000 true out-of-pocket costs (2024).
    • Pay $0 for covered drugs during this stage; Plan pays 20%, Medicare pays 80%.

Medigap Policies

  • Help cover costs not included in Original Medicare (Parts A & B):

    • Copayments, coinsurance, and deductibles.

  • If enrolled in Original Medicare and get a Medigap policy:

    • Medicare pays its share first; Medigap pays afterward.

  • Different from Medicare Advantage Plans; Medigap only supplements Original Medicare benefits.

  • Medigap Coverage for Travel:

    • Some policies cover services not included in Original Medicare, such as medical care outside the U.S.

Medicare Supplement Plan Changes

  • Law changes effective January 1, 2020 (MACRA) prevent new enrollees from buying Plans F and C that cover Part B deductible.
  • Existing Plan F holders can retain coverage; new applicants (born after December 31, 1954) cannot enroll in these plans.

Medigap Benefits Matrix

  • Outlines benefits offered by various Medigap plans (A, B, C, etc.) and coverage for items like coinsurance, deductibles, and foreign travel.

Medicaid

Overview

  • Provides health coverage to low-income individuals, including:
    • Adults, children, pregnant women, elderly, and disabled persons.
  • Funded jointly by states and federal government; administered by states per federal guidelines.

Application Form and Requirements

  • Vary by state; two tests must be passed:
    • Income Rules Test: Determines income eligibility under Medicaid.
    • Level of Care Eligibility Test: Establishes need for assisted living or nursing home care.

Rules for Singles and Married Couples

  • Asset limitations and income requirements vary.
  • Key concepts include:
    • “Spend down” requirement to qualify.
    • “Community spouse resource allowance” for partners of institutionalized applicants.

Medicaid Deficit Reduction Act of 2005

  • Look-back Period: 60 months for all asset transfers.
    • Starts at application time.
  • Penalty Period:
    • Begins after all eligibility requirements met (nursing home residency, asset limits, applied for Medicaid).

Permitted Asset Transfers

  • Can transfer specific assets to certain individuals without penalty:
    • Spouse, blind/permanently disabled child, or into a trust for someone under 65 with disabilities.
    • Home can be transferred to specific family members (child under 21, caretaker child, or a sibling with an equity interest).

Mandatory Medicaid Benefits

  • Includes inpatient, outpatient services, nursing facilities, home health services, doctor services, and special programs for children and pregnant women.

Optional Medicaid Benefits

  • May include therapies, dental services, prescription drugs, and others depending on state approval.
  • Individual states may also offer additional services as allowed by federal guidelines.