Paying for an Older Person's Health Care
The cost of a serious illness, surgery, or a lengthy stay in the hospital can easily wipe out your elder's nest egg. The more you know about health-care insurance plans (government and private), the better prepared you are to help keep your elder as physically, mentally, and financially healthy as possible.
Medicare is a federal health insurance program that provides hospital and outpatient medical insurance for eligible people over age 65 (as well as younger people with disabilities or end-stage renal disease). The benefits, premiums, deductibles, and copay requirements are the same in every state. Most older Americans who were employed or were married to someone who was employed are eligible. Everyone who qualifies for Social Security benefits receives an application automatically at age 65.
The Original Medicare Plan
The Original Medicare Plan is the heart of Medicare, the nation's largest health insurance plan. It's divided into Part A and Part B.
Part A helps cover hospital stays. It pays for nursing home care (for a very limited period following a three-day hospital stay). Part A also pays for hospice care and certain home health-care services. There are no monthly premiums for Part A.
When your elder is admitted to the hospital under Part A, she's responsible for an initial deductible ($840 in 2003) for every benefit period. (A benefit period begins on the day of hospital admission and ends 60 days after discharge.) Should your loved one be readmitted within those 60 days, she doesn't have to pay another deductible. However, if she's readmitted after those 60 days, then she's responsible for a second deductible. After a deductible has been paid, Medicare kicks in the full amount of eligible charges for up to 60 days. After that, your elder must share the burden of cost through hefty copays. In 2003, the copay was set at $210 a day for days 61 to 90 and $420 a day for days 91 to 150. After 150 days in the hospital, your elder is responsible for 100 percent of the cost for each additional day.
Part B covers medical bills, most doctor's fees, diagnostic tests, outpatient care, and some medical equipment. Your elder pays a premium for Part B ($58.70 a month in 2003). The premium gets deducted from her monthly Social Security checks. A deductible of $100 must also be paid before Medicare covers any portion of physician fees. Once the deductible is satisfied, your elder pays 20 percent, and Medicare pays 80 percent of all eligible physician charges.
Before authorizing treatment, ask your physician and the local Medicare office if Medicare covers the proposed services or fees.
Medicare + Choice
Congress created the Medicare + Choice program to give older adults more choice. This program allows companies (under contract to Medicare) to manage Medicare services for its subscribers. It works like this: Medicare pays a set amount of money every month to a private health plan for your oldster's care. Medicare + Choice includes two different plans: Medicare managed care plans (HMOs) and Medicare private fee-for-service plans.
If your elder chooses a Medicare HMO plan, she still has Part A and Part B in the Original Medicare Plan coverage and still pays the premium, but she may also have to pay an additional premium to belong to the HMO plan. In return, the HMO may charge lower deductibles and copays or eliminate them altogether. The HMO may also have benefits that don't exist in the Original Medicare Plan (such as prescription drugs, eyeglasses, and dental care). But in this plan, your elder usually must see the health-care professionals that are in the HMO's network of providers.
The other plan, the Medicare private fee-for-service plan, also covers everything in Part A and Part B of the Original Medicare Plan. Your elder pays a premium for the fee-for-service plan in addition to the usual Part B premium. This plan may also offer additional services and require deductibles and copays. One of the main advantages for some oldsters is that this plan allows them to see any provider that accepts Medicare.
Medicare + Choice Plans are not available in all states. Recently, many private insurance companies have stopped participating because they can't make a profit. Others have had to raise their premiums while cutting their benefits to stay in the game.
Medigap (Medicare supplemental insurance)
Medigap is a cute nickname for the private health insurance policies your elder can buy to cover the costs that the Original Medicare Plan doesn't cover. Medigap policies in every state (except Massachusetts, Minnesota, and Wisconsin) are standardized (they're named A to J) so that you can compare them easily. Each of the policies offers a different combination of benefits. In addition, any one of the ten standardized policies may be sold as a Medicare Select policy. Medicare Select Policies require policyholders to use specific hospitals, and, in some cases, specific doctors, to get full insurance benefits.
If your elder is enrolled in the Medicare Managed Care Plan (HMO) or Medicare Private Fee-For-Service Plan, a Medigap policy isn't necessary. In fact, it may be illegal for anyone to sell your elder a Medigap policy if she's enrolled in one of these health plans.
Compare Medigap plans and get the names and contact information of the insurance companies in your area that offer them by visiting online Medicare.gov and clicking Medigap Compare.
If your elder decides that a Medigap policy is the way to go, buy the policy during the open enrollment period (a six-month period that starts on the first day of the month that your elder is 65 or older and enrolled in Medicare Part B). During this period, coverage can't be denied due to existing medical conditions. If your elder doesn't enroll during the open period, she may not be able to buy the plan she wants later, or she may get charged more for the same policy.
Medicaid (sometimes referred to as medical assistance) provides free medical care for people with low incomes and few resources. The federal and state governments share the costs for Medicaid, but the state manages the program. Eligibility requirements vary from state to state, and the complicated rules change frequently. To qualify, your elder must be a U.S. citizen (with some exceptions) and must meet income and asset requirements. The elder's home and car can be exempt in determining eligibility. Long waits and complicated application forms are the norm.
The good news is that every state must allow some choice of providers, and if your elder is on Medicare and Medicaid (Medi-Cal in California), most of her hospital stays and medical costs will be paid in full. Medicaid covers nursing home care and outpatient prescription drugs. If your elder is already in a nursing home, pays for care from her own pocket, and is almost out of money, the personnel at the nursing home can apply for Medicaid on her behalf.
Long-term care insurance
Private insurance companies sell long-term care insurance to cover medical and nonmedical needs. The older your elder gets (and the more medical conditions she accumulates), the more expensive the policy will be. Investigate this option early, before a crisis occurs.