Many people believe that the Medicare program will pay most of their long-term care expenses after age 65. Others think that Medicare supplement (Medigap) insurance covers most long-term care services not reimbursed by Medicare. Unfortunately, the benefits Medicare and Medigap insurance provide do not adequately meet long-term care needs.
Medicare is a federal healthcare benefits program. It helps pay for medical services (such as hospital stays and physician visits) of people age 65 and older, as well as some persons under 65 who are disabled or suffer permanent kidney failure (end-stage renal disease).
A Medicare beneficiary may choose the original Medicare plan or (where available) a Medicare Advantage plan. The original Medicare plan operates on a fee-for-service basis. Medicare reimburses health care providers who serve beneficiaries by paying them a fee for each service rendered. Beneficiaries can go to any physician, hospital, or other provider that accepts Medicare fees as payment. Beneficiaries must pay a deductible, and they also usually pay a portion of the cost of covered services in the form of copayments and coinsurance. The original Medicare plan has two parts:
· Medicare Part A primarily covers inpatient care in hospitals.
· Medicare Part B primarily covers physician services, outpatient hospital care, and some other medical services not covered by Part A.
Medicare Advantage (formerly Medicare-Choice, also called Medicare Part C) is a program under which private-sector health insurance plans provide coverage to Medicare beneficiaries. It consists of managed care plans, such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs), as well as private fee-for-service plans. Medicare Advantage plans provide a benefit package comparable to Medicare Parts A and B benefits.
Finally, the Medicare Modernization Act created Medicare Part D, a new prescription drug benefit program that began operating in January 2006.
Those at least 65 years old and eligible for retirement benefits from Social Security, the Railroad Retirement system and some government employee retirement plans can enroll in Medicare Part A without paying a premium. Those 65 and over who do not fall into one of these categories can enroll in Medicare Part A, but they must pay a premium, (As a general rule, those who paid into the Medicare system during their working lives through payroll deductions -- the great majority of senior Americans -- do not pay a premium for Part A.) Medicare Part A coverage is also extended to persons of any age who are disabled or suffer permanent kidney failure (end-stage renal disease) and meet certain criteria.
Anyone 65 or over can also enroll in Medicare Part B, as can disabled persons eligible for Medicare Part A -- but all must pay a monthly premium. Because Part B covers important health care services not covered by Part A, almost all those enrolled in Part A choose Part B as well. Starting in 2007, the Part B premium is adjusted according to the income of the beneficiary. Single persons with a modified adjusted gross income (MAGI) over $80,000 and couples with a MAGI over $160,000 will pay a higher premium than other beneficiaries. This increase will be phased in over five years.
Individuals enrolled in both Medicare Part A and Part B may opt for a private-sector Medicare Advantage plan instead. All Medicare enrollees may also enroll in Medicare Part D for an additional premium.
Medicare and Long-Term Care
The Medicare program was created to help pay the medical expenses of the elderly, and it primarily covers hospital and physician services. Medicare does provide limited benefits for nursing home care and home healthcare. But as we will see, these benefits do not meet the need for ongoing personal care or supervisory care, which is the focus of long-term care.
Nursing Home Coverage
A Medicare beneficiary can receive benefits for care in a skilled nursing facility provided all of the following conditions are met:
· The individual has had an inpatient hospital stay of at least three consecutive days within the last 30 days.
· The individual needs skilled care. The individual may require personal or supervisory care in support of skilled care, but if he needs only personal or supervisory care, he is not eligible for benefits.
· A physician has determined that there is a medical necessity for skilled care -- this means that skilled care is required for the diagnosis and treatment of a medical condition. In practice, benefits are paid to those who need care to help them recover from an acute illness or injury and regain normal functioning. Benefits are not paid to those who need care indefinitely to help them cope with a chronic impairment.
· The skilled nursing facility is certified by Medicare. (Most are, but not all.)
In those cases in which Medicare continues to pay benefits beyond 20 days, the beneficiary must make a daily copayment ($133.50 in 2009). And all benefits end after 100 days.
In theory, Medicare can pay up to 100 days of nursing home benefits. But in practice this does not often happen, as few people continue to meet the medical necessity requirement for very long. Most people recover from their injury or illness within a few weeks, so that care is no longer medically necessary. Others do not fully recover and become chronically impaired. These people also cease to meet the medical necessity requirement because they no longer need skilled care for the diagnosis and treatment of a medical condition, but instead need personal care to cope with their impairment.
Home Healthcare Benefits
Medicare Part A also pays benefits for home health care, but as with nursing home benefits, only if strict conditions are met:
· The beneficiary must need home care within 14 days after a stay of at least three consecutive days in a hospital or skilled nursing facility.
· A physician must certify the medical necessity of intermittent skilled nursing care or physical, speech, or occupational therapy. (Intermittent care is defined as less than eight hours per day of care, or fewer than seven days a week of care over a period of 21 days or less.) A need for only personal or supervisory care is not sufficient.
· The physician must certify that the beneficiary needs to receive care at home, and the physician must develop a plan of care.
· The beneficiary must be homebound -- that is, she must be unable to leave home, or doing so must require a major effort. When she does leave home, it must be infrequently and for a short time, and it must be for urgent purpose, such as to get medical treatment or to attend religious services.
· Care must be provided by a Medicare-certified home healthcare agency. (Many but not all agencies are Medicare-certified.)
If all these conditions are met, Medicare pays for intermittent skilled nursing care and therapy. In some cases other services and supplies required to support skilled care, such as home health aide services or durable medical equipment, may also be covered. Medicare pays the full approved amount for covered services, except for 20 percent coinsurance for durable medical equipment. However, there is a limit of 100 visits by home care personnel, and as with nursing home benefits, the duration of home care benefits is in practice severely limited by the medical necessity requirement. Like nursing home benefits, Medicare Part A home care benefits are designed to meet the needs of those recovering from an acute illness or injury, not those requiring long-term care to cope with a chronic impairment.
Medicare Part B provides the same home healthcare benefits as Part A and requires that the same conditions be met, with two exceptions:
· To receive Part B benefits, a person need not have had a prior stay in a hospital or a skilled nursing facility.
· Part B benefits are not limited to 100 visits. However, they are limited by medical necessity, and the physician may be required to periodically recertify that care is medically necessary.
In summary, Medicare does provide home healthcare benefits -- but only skilled care that is medically necessary. Consequently, few people qualify for benefits and even fewer qualify for more than a short time.