What Medicare would mean for 55-64 year olds
Posted on 09 December 2009
Permanent URL of this article: http://retirementrevised.com/money/what-medicare-would-mean-for-55-64-year-olds
Expansion of Medicare as envisioned in the latest U.S. Senate health care reform compromise, would be a very big deal for Americans age 55-64 who can’t get good health insurance in the private market.
About four million Americans in this age bracket–12 percent–don’t have health coverage, according to Kaiser Health News. Many of those who have lost jobs recently have been depending this year on the federal subsidy of COBRA health benefits, which are starting to expire for many and may be extended.
How would Medicare expansion work? Although the details remain fluid, here is what’s surfaced thus far:
–The Medicare buy-in option would become available in 2011.
–Initially, participants would pay 100 percent of the premiums. A Congressional Budget Office analysis of a similar proposal earlier this year indicated total premium cost of $7,600 per year for an individual ($633 per month). A subsidy might be made available for lower-income beneficiaries–although it might not be available initially.
Private insurance for individuals age 60-64 average $5,755 per year, according to a recent report by America’s Health Insurance Plans, an industry trade group. Of course, many of these individuals have pre-existing conditions that make it impossible to obtain coverage at any reasonable price.
It’s not yet clear how new beneficiaries would access the various Medicare add-on options, such as Medigap, Medicare D prescription drug coverage or Medicare Advantage.
I’ll be tracking all these questions on this page as details surface. But in the meantime, here’s a guide to the basic features of the current Medicare program for the uninitiated.
Traditional Medicare (Parts A and B) provides basic health services but with some costs born by beneficiaries through premiums and copayments. Unlike most private health-insurance plans, Medicare has no overall limit on out-of-pocket expenses-which means you face risk in cases of the most serious, care-intensive illness. Should you need long-term care, you’re on your own. The basic program also doesn’t cover dental expenses or over-the-counter medicines.
Part A: Hospital Coverage
Medicare Part A covers stays at hospitals and skilled nursing facilities. When Medicare beneficiaries are hospitalized, they pay a deductible ($1,068 in 2009) that covers an initial period of care, with copayments required after that period.
Part B: Medical Coverage
Medicare Part B generally covers outpatient services, including physician and nursing services, tests, vaccinations, and a variety of therapies and other services. Medicare publishes a schedule of approved provider charges for various services, paying 80 percent of those rates. Patients pay the other 20 percent plus an annual deductible. You can go to any health provider that accepts Medicare. Doctors are permitted to charge more than the scheduled rates under certain circumstances, but beneficiaries can’t be charged more than 15 percent above the scheduled prices-although many physicians accept the Medicare reimbursement rate as payment in full.
The questions
It’s not yet known what the premium structure for the new Medicare buy-in will look like, but it’s likely to involve diferent fee structures for beneficiaries than standard Medicare.
Current beneficiaries don’t pay a premium for Part A (hospitalization); that is funded by the 1.45 percent federal payroll tax on all wages and salaries (Federal Insurance Contributions Act, or FICA taxes). Part B–which is optional–is funded by premiums, which usually are deducted from the beneficiary’s Social Security checks.
The premiums charged are progressive-but not very. In 2009, if your modified adjusted gross income (MAGI) was less than $85,000 a year (or $170,000 for married couples), then the premium was $96.40 per month; for beneficiaries with MAGI higher than those figures, the premium was somewhat higher, ranging from about $134 to $308 monthly. (For Medicare purposes, the federal government defines MAGI as a combination of your adjusted gross taxable income and tax-exempt interest income.)
You can find more details here on on how basic Medicare works.
Add-on options
Many participants purchase Medigap policies, which can protect against high out-of-pocket expenses. Since 2006, prescription drug coverage has been available through Part D plans. And, a growing number of beneficiaries have been opting for Medicare Advantage plans. These usually are managed care options that offer all-in-one coverage.
Enrollment for these plans takes place annually from November 15 to December 31. You can find more details here on Medicare Advantage and Medicare D.
Coverage elsewhere
Senate Democrats See Room for Hope on Health Care Bill - The New York Times
Democrats’ Ideas To Expand Medicare Raise Hackles Of Doctors, Hospitals, Insurers - Kaiser Health News
Health Reform Controversy: Opening Medicare to People Under 65 - Kaiser Health News
Medicare buy-in could benefit involuntary retirees - Philly.com
For Some Ages 55 to 64, Medicare Will Cost Too Much - The Wall Street Journal
Cost Of Medicare Buy-In Could Be Daunting - NPR.org
December 9th, 2009 at 4:36 pm
It is quite difficult to get healthcare through the private market if you have any health problems at all. Keeping healthcare may become quite expensive if all ready on a private plan. So, having the availability of Medicare for people 55-64 would be very helpful.