Working with Seniors: Health, Financial, and Social Issues

Chapter 19: Medicare

Mrs. Adams, who has Medicare and a health insurance plan from her former employer, pays $400 per month for her retiree group coverage. The retiree plan has a few features, like limited prescription drug coverage, that help fill some of Medicare’s coverage gaps. But otherwise the plan does not tie in well with Medicare, and it left Mrs. Adams with hefty out-of-pocket costs after a recent hospitalization. She wonders if she’s making a mistake by holding on to the employer insurance. She’s had it for 10 years.

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Mr. Lewis received a notice from Medicare denying payment for an ambulance trip from his home to a nearby hospital emergency room. His arm was severely broken after he fell from a ladder. He was surprised to learn that Medicare found the ambulance transport to be not medically necessary, and he was disappointed to discover that his supplement insurance policy paid nothing. Mr. Lewis paid the $600 ambulance bill, but now he wonders if there’s anything he can do to recoup the money.

Introduction

Medicare plays a dominant role in the lives of seniors. The program covers more than 35 million seniors along with 6 million younger adults who have permanent disabilities. It serves all eligible beneficiaries regardless of their medical history. As an acute care health insurance program, however, it until recently covered only 57 percent of seniors’ total health care costs. At the time of this writing, it does not pay for most long-term care services, and prescription drug coverage is 18 months away.

As a result of Medicare’s significant gaps, seniors spent, on average, 22 percent of their income for health care services and premiums in 2002. According to the Kaiser Family Foundation, to help with Medicare’s gaps, most seniors have some form of supplemental plan (Kaiser Family Foundation, 2004b). In fall 2001, one third (34 percent) of all Medicare beneficiaries had employer-sponsored benefits (28 percent as retirees). And while nearly one in four seniors (23 percent) owned a Medicare Supplement (Medigap) policy, only 7 percent had drug coverage through a Medigap policy. Twelve percent had Medicaid, the major public financing program for low-income Americans, and another 18 percent were enrolled in a Medicare managed care plan, the majority of which are Medicare health maintenance organizations (HMOs). In the past three years, however, enrollment in Medicare Managed Care plans fell to 11 percent of Medicare beneficiaries as plans dropped out of Medicare.

This chapter provides basic information about Medicare and Medigap insurance so that, as a CSA, you can help your clients understand the program and the options for filling in its gaps.