Understanding Medicare is necessary when advising elderly clients. All elderly clients have health concerns and the associated cost of these health concerns necessitates the use of Medicare benefits. The Medicare program has changed dramatically since its inception, and will probably will continue to evolve as our nation ages and health care costs rise.

Medicare, as opposed to Medicaid, is a health insurance program for people age 65 and older, people under age 65 with certain disabilities, and people of all ages with End-Stage Renal Disease. Medicare is not a needs-based health insurance program. The very poor, as well as the very wealthy, all have the same Medicare benefits. High-income Medicare beneficiaries pay higher premiums than less-affluent Medicare beneficiaries.

Medicaid is the payor of last resort for individuals that are aged, blind or disabled, and meet both the income and resource requirements for Medicaid eligibility.  Generally, to be eligible for Medicaid, an individual can have only nominal resources and income, and Medicaid will pay for medical care after all other sources, including Medicare, have been exhausted.

All of the practical rules for Medicaid eligibility determination, income and asset restrictions, transfer penalties and other similar information that the practitioner should have are found in the Virginia Medicaid Manual.  The Virginia Medicaid Manual is the resource used by the local Department of Social Services to determine eligibility.  The Medicaid Manual consists of several thousand pages of text, tables and charts.  No one section of the Medicaid Manual should be relied upon; some of the sections must be cross-referenced for a complete understanding of the rules that may apply to a hypothetical situation.  For example, treatment of the residence as an exempt resource for the first six months of continuous institutionalization is addressed in the Medicaid Manual at § M1130.100.  The Medicaid Manual also addresses exempt transfers of the residence in § 1450.502, but these two sections do not refer to each other.  Section 1400 of the Medicaid Manual is the long-term care section, but many of the rules for non-long-term care apply to long-term care. Moreover, the Department of Social Services eligibility workers are not permitted to answer hypothetical questions regarding specific situations, nor are the eligibility workerspermitted to interpret any section of the Medicaid manual.  To learn whether eligibility is possible in light of potential exempt resources or exempt transfers, a Medicaid application must be filed.  This system of uncertainty places a high premium on familiarity with the Medicaid Manual.

For those persons that meet the strict income and resource limits, Medicaid offers an unlimited nursing home benefit.  This is especially critical for elderly individuals that may be facing $6,000 per month or more of long-term care expenses.

Medicare has an excellent website, www.medicare.gov, that has an overview of the entire Medicare program, including rating nursing homes and lists all co-pays and deductibles. Medicare has four primary areas: Part A, Part B, Part D and Medigap policies.

Medicare Part A Coverage
Medicare Part A helps pay inpatient care in hospitals, including critical access hospitals, a limited benefit for skilled nursing care, hospice and some home health care.  Most beneficiaries pay no monthly premium for Part A; regular wage earners have effectively paid for Part A through payroll withholding taxes, currently 2.9% of gross wages, subject to annual limits.  For those individuals that did not participate in the payroll withholding taxes for Medicare, or who were disabled (and thus received Part A), but have now returned to work, Part A can be purchased for $443 per month.

  • Hospital Stays. Semiprivate room, meals, general nursing, and other hospital services and supplies.  This includes inpatient care provided in critical care access hospitals and mental health care.  This doesn't include private duty nursing, or a television or a telephone in the room.  It also does not include a private room, unless the private room is medically necessary.  Inpatient mental health care in a psychiatric facility is limited to 190 days in a lifetime.
  • Skilled Nursing Care Facility. Semiprivate room, meals, skilled nursing and rehabilitative services, and other services and supplies.  This benefit is only related to a three-day inpatient hospitalization, and does not include custodial nursing home care.
  • Home Health Care. Limited to reasonable and necessary part-time or intermittent skilled nursing care and home health aide services as well as physical therapy, occupational therapy, and speech-language pathology that are ordered by a doctor and provided by a Medicare-certified home health agency.  This benefit also includes medical social services, durable medical equipment, such as wheelchairs, hospital beds, oxygen, walkers, medical supplies, and other services.
  • Hospice Care. For individuals with a terminal illness, including drugs for symptom control and pain relief, medical and support services from a Medicare-approved hospice, and other services not otherwise covered by Medicare, such as grief counseling.  Hospice care is usually provided in the home, which may include a nursing facility if the nursing facility is the home.

Medicare Part B Coverage
Medicare Part B covers doctors' services and outpatient care, as well as other medical services that Part A does not cover, such as some of the services of physical and occupational therapists, and some health care.  Part B pays for part of these covered services and supplies when they are medically necessary.  The Part B premium for 2009 is 96.40 per month for most beneficiaries, but in some cases the premium is higher if the individual did not make a timely election for Part B.

  • Medically Necessary Medical and Other Services. These include doctors' services, but excluding routine exams other than a one-time "Welcome to Medicare" physical available within six months of enrollment, outpatient medical and surgical services and supplies, diagnostic tests, ambulatory surgery center facility fees for approved procedures, and durable medical equipment, such as wheelchairs, hospital beds, oxygen, and walkers.  It also covers a second, and sometimes a third, surgical opinion for surgery that isn't an emergency, outpatient mental health care, and outpatient occupational and physical therapy, including speech-language pathology.
  • Clinical Laboratory Services. This includes blood tests, urinalysis, some screening tests and other similar lab services.
  • Home Health Care. Limited to reasonable and necessary part-time or intermittent skilled nursing care and home health aide services as well as physical therapy, occupational therapy, and speech-language pathology that are ordered by your doctor and provided by a Medicare-certified home health agency.  Also includes medical social services, durable medical equipment.
  • Outpatient Hospital Services. Hospital services and supplies received as an outpatient as part of a doctor's care.
  • Blood. Pints of blood provided as an outpatient or as part of a Part B-covered service.
  • Preventative Services. Bone mass measurements, cardiovascular screenings, colorectal cancer screening, diabetes screening, flu shots, glaucoma tests, hepatitis B shots, pap tests and pelvic exam, including clinical breast exam, pneumococcal shot, prostate cancer screening and screening mammograms.

Medicare Part D Coverage
Medicare Part D is the relatively new drug plan administered by private companies. Each state has numerous private providers at various premium levels, drug formularies and co-pays. For 2009, the standard benefit has a $295 deductible, an initial coverage limit of $2,700 and an out-of-pocket threshold of $4,350. This optional coverage provides a limited drug benefit for many seniors, but with significant out-of-pocket expenses.

Medigap Policies
Many private companies offer health insurance policies that provide for gap coverage under Medicare parts A and B. Such policies pay, for example, a combination of the hospital co-pays and deductibles and other provider co-pays and deductibles.