Y
ou may be looking forward to
retirement. If you are not there yet,
your parents probably are. Retire-
ment can be a wonderful time of
life for those who are prepared. However,
for those who are not prepared financially,
retirement can bring new challenges when
there are worries about unpaid medical bills.
If you are counting on Medicare or Med-
icaid (two government sponsored medical
insurance programs in the United States),
you could be in for a rude awakening.
In this issue, I will help you to under-
stand Medicare, what it is and how it works.
Next month, I will explain how Medicaid
works. Once you understand what Medicare
and Medicaid will and will not pay for, I
will offer suggestions for developing a plan
of action so you can be better prepared for
any unexpected medical expenses.
MEDICARE
Medicare is a single-payer, national
social insurance program administered
by the U.S. federal government since
1966. United States Medicare is funded
by a payroll tax, premiums and surtaxes
from beneficiaries, and general revenue. It
provides health insurance for Americans
aged 65 and older who have worked and
paid into the system through the payroll tax.
It also provides health insurance to younger
people with some disability status as deter-
mined by the Social Security Administra-
tion, as well as people with end stage renal
disease and amyotrophic lateral sclerosis.
On average, Medicare covers about
half of the health care charges for those
enrolled. The enrollees must then cover
their remaining costs either with supple-
mental insurance, separate insurance, or
out-of-pocket. Out-of-pocket costs can vary
depending on the amount of health care
a Medicare enrollee needs. They might
include the costs of uncovered services—
such as for long-term, dental, hearing, and
vision care—and supplemental insurance
premiums.
Medicare is further divided into parts
A and B - Medicare Part A covers hospital
and hospice services; Part B covers outpa-
tient services. Part D covers self-adminis-
tered prescription drugs. Part C is an alter-
native to the other parts intended to allow
experimentation with differently structured
plans in an effort to reduce costs to the
government and allow patients to choose
plans with more benefits.
PART A: HOSPITAL/HOSPICE
INSURANCE
Part A covers inpatient hospital stays,
including semi-private room, food, and
tests. As of January 1, 2016, Medicare Part
A has an inpatient hospital deductible of
$1288, coinsurance per day of $322 after
61 days confinement within one "spell of
illness", coinsuranc