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Medicare - Coverage

This topic contains details of coverage for each of the different parts of Medicare. You may read through the topic or jump to specific sections by using the links to sections of this topic below:

Medicare Part A (Hospital Insurance [HI])

Medicare Part B (Supplementary Medical Insurance [SMI])

Medicare Part C (Medicare Advantage, formerly Medicare+Choice)

Medicare Part D (Prescription Drug Coverage)

Medicare Part A (Hospital Insurance):

Hospital Insurance (HI) is generally provided automatically, and free of premiums, to persons age 65 or over who are eligible for Social Security or Railroad Retirement benefits, whether they have claimed these monthly cash benefits or not. Also, workers and their spouses with a sufficient period of Medicare-only coverage in Federal, State, or local government employment are eligible beginning at age 65. Similarly, individuals who have been entitled to Social Security Disability Insurance or Railroad Retirement disability benefits for at least 24 months, and government employees with Medicare-only coverage who have been disabled for more than 29 months, are entitled to HI benefits.

When first implemented in 1966, Medicare covered most persons age 65 or over. In 1973, the following groups also became eligible for Medicare benefits: persons entitled to Social Security or Railroad Retirement disability cash benefits for at least 24 months, most persons with end-stage renal disease (ESRD), and certain otherwise non-covered aged or disabled persons who voluntarily elect to pay a monthly premium for Medicare coverage. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 allowed persons with Amyotrophic Lateral Sclerosis (Lou Gehrig's Disease) to waive the 24-month waiting period.

In 2002, the HI program provided protection against the costs of hospital and specific other medical care to about 40 million people (34 million aged and 6 million disabled enrollees). HI benefit payments totaled $149.9 billion in 2002.

NOTE: For information about Medicare coverage for SSDI beneficiaries who engage in Substantial Gainful Activity (SGA), see: Medicare - Continuing Coverage.

The following lists the health care services covered under Medicare's Hospital Insurance:

· Inpatient hospital care coverage includes costs of a semi-private room, meals, regular nursing services, operating and recovery rooms, intensive care, inpatient prescription drugs, laboratory tests, X-rays, psychiatric hospitals, inpatient rehabilitation, and long-term care (LTC) hospitalization when medically necessary, as well as all other medically necessary services and supplies provided in the hospital. An initial deductible payment is required of beneficiaries who are admitted to a hospital, plus co-payments for all hospital days following day 60 within a benefit period (described later).

· Skilled nursing facility (SNF) care is covered by HI only if it follows within 30 days (generally) of a hospitalization of three or more days, and is certified as medically necessary. Covered services are similar to those for inpatient hospital, but also include rehabilitation services and appliances. The number of SNF days provided under Medicare is limited to 100 days per benefit period (defined below), with a co-payment required for days 21 through 100. Medicare HI does not cover nursing facility care at all if the patient does not require skilled nursing or skilled rehabilitation services.

· Home Health Agency (HHA) care is covered by both HI and SMI. The BBA transferred from HI to SMI those home health services furnished on or after January 1, 1998 that are unassociated with a hospital or skilled nursing facility stay. HI will continue to cover the first 100 visits following a 3-day hospital stay or a skilled nursing facility stay; SMI covers any visits thereafter. Home health care under HI and SMI has no copayment and no deductible.

HHA care, including care provided by a home health aide, may be furnished part-time by a HHA in the residence of a home-bound beneficiary if intermittent or part-time skilled nursing and/or certain other therapy or rehabilitation care is necessary. Certain medical supplies and durable medical equipment (DME) may also be provided, though beneficiaries must pay a 20-percent coinsurance for DME, as required under SMI of Medicare. There must be a plan of treatment and periodical review by a physician. Full-time nursing care, food, blood, and drugs are not provided as HHA services.

· Hospice care is a service provided to those terminally ill persons with a life expectancy of six months or less who elect to forgo the standard Medicare benefits for treatment of their illness and to receive only hospice care for it. Such care includes pain relief, supportive medical and social services, physical therapy, nursing services and symptom management. However, if a hospice patient requires treatment for a condition that is not related to the terminal illness, Medicare will pay for all covered services necessary for that condition. The Medicare beneficiary pays no deductible for the hospice program, but does pay small coinsurance amounts for drugs and inpatient respite care.

An important coverage limitation of HI is the "benefit period" which starts when the beneficiary first enters a hospital and ends when there has been a break of at least 60 consecutive days since inpatient hospital or skilled nursing care was provided. There is no limit to the number of benefit periods covered by HI during a beneficiary's lifetime; however, inpatient hospital care is normally limited to 90 days during a benefit period, and co-payment requirements (detailed later) apply for days 61 through 90. If a beneficiary exhausts the 90 days of inpatient hospital care available in a benefit period, he or she can elect to use days of Medicare coverage from a nonrenewable "lifetime reserve" of up to 60 (total) additional days of inpatient hospital care. Copayments are also required for such additional days.

Medicare Part B Supplementary Medical Insurance (SMI)

All citizens (and certain legal aliens) age 65 or over, and all disabled persons entitled to coverage under HI, are eligible to enroll in the SMI program on a voluntary basis by payment of a monthly premium. Almost all persons entitled to HI choose to enroll in SMI. In 2002, the SMI program provided protection against the costs of physician and other medical services to about 38 million people (33 million aged and 5 million disabled). SMI benefits totaled $110 billion in 2002.

The SMI program covers the following services and supplies:

· Physicians' and surgeons' services, including some covered services furnished by chiropractors, podiatrists, dentists, and optometrists. Also covered are the services provided by these Medicare-approved practitioners who are not physicians: certified registered nurse anesthetists, clinical psychologists, clinical social workers (other than in a hospital or skilled nursing facility), physician assistants, and nurse practitioners and clinical nurse specialists in collaboration with a physician.

· Services in an emergency room or outpatient clinic, including same-day surgery, and ambulance services.

· Home health care not covered under HI.

· Laboratory tests, X-rays, and other diagnostic radiology services, as well as certain preventive care screening tests.

· Ambulatory surgical center services in a Medicare-approved facility.

· Most physical and occupational therapy and speech pathology services.

· Comprehensive outpatient rehabilitation facility services, and mental health care in a partial hospitalization psychiatric program, if a physician certifies that inpatient treatment would be required without it.

· Radiation therapy, renal (kidney) dialysis and transplants, heart, lung, heart-lung, liver, pancreas, and bone marrow transplants, and, as of April 2001, intestinal transplants.

· Approved durable medical equipment for home use, such as oxygen equipment and wheelchairs, prosthetic devices, and surgical dressings, splints, and casts.

· Drugs and biologicals that cannot be self-administered, such as hepatitis B vaccines and immunosuppressive drugs (certain self-administered anticancer drugs are covered).

To be covered, all services must be either medically necessary or one of several prescribed preventive benefits. SMI services are generally subject to a deductible and coinsurance. Certain medical services and related care are subject to special payment rules, including deductibles (for blood), maximum approved amounts (for Medicare-approved physical, speech, or occupational therapy services performed in settings other than hospitals), and higher cost-sharing requirements (such as those for outpatient treatments for mental illness).

It should be noted that some health care services are not covered by Medicare. Non-covered services include long-term nursing care, custodial care, and certain other health care needs, such as dentures and dental care, eyeglasses, hearing aids, and most prescription drugs. These services are not a part of the Medicare program unless they are a part of a private health plan under the Medicare+Choice program.

Medicare Part C (Medicare Advantage) [formerly Medicare+Choice]

Medicare Advantage (Part C) is an expanded set of options for the delivery of health care under Medicare. While all Medicare beneficiaries can receive their benefits through the original fee-for-service (FFS) program, most beneficiaries enrolled in both HI and SMI can choose to participate in a Medicare Advantage plan instead. Organizations that seek to contract as Medicare Advantage plans must meet specific organizational, financial, and other requirements.

Following are the primary Medicare Advantage plans:

· Coordinated care plans, which include health maintenance organizations (HMOs), provider-sponsored organizations (PSOs), preferred provider organizations (PPOs), and other certified coordinated care plans and entities that meet the standards set forth in the law.

· Private, unrestricted FFS plans, which allow beneficiaries to select certain private providers. For those providers who agree to accept the plan's payment terms and conditions, this option does not place the providers at risk, nor does it vary payment rates based on utilization.

These Medicare Advantage plans are required to provide at least the current Medicare benefit package, excluding hospice services. Plans may offer additional covered services and are required to do so (or return excess payments) if plan costs are lower than the Medicare payments received by the plan.