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Additional Medicare Information

Understanding Medicare
Briefing Paper from BARC of Virginia Commonwealth University -  Extended Medicare Provisions, Vol. 1, Number 1. June, 2003

What is Medicare? 

Medicare is our country’s health insurance program for people age 65 or older, certain people with disabilities who are under age 65 and people of any age who have permanent kidney failure. It provides basic protection against the cost of health care, but it doesn’t cover all medical expenses or the cost of most long-term care.  The Medicare program is financed by a portion of the Federal Insurance Contributions Act (FICA) taxes paid by workers and their employers.  It also is financed in part by monthly premiums paid by beneficiaries. The Center for Medicare and Medicaid Services or CMS (formerly the Health Care Financing Administration or HCFA) is the federal agency in charge of the Medicare program. However, the Social Security Administration determines who is eligible for Medicare, enrolls people in the program, and disseminates general Medicare information

There are two parts of Medicare. Medicare “Part A” which is also known as Hospital Insurance or HI helps pay for care in a hospital and skilled nursing facility, home health care and hospice care.  Medicare “Part B” which is also known as supplemental medical insurance or SMI helps pay for doctors, outpatient hospital care and other medical services.  Anyone who is eligible for premium free Medicare hospital insurance (Part A) can also enroll in Medicare medical insurance (Part B) by paying a monthly premium.

The following chart outlines the two parts of Medicare. 

In addition to the monthly premiums, there are other “out-of-pocket” costs for Medicare. These are the amounts a person pays when medical services are actually received, known as “deductibles” and “coinsurance payments”.  The monthly premiums, deductibles and coinsurance for Medicare change each year. The current Medicare charges can be found at www.medicare.gov or by calling the Medicare toll free number at 1-800-633-4227.

What Medicare covers is too complex and extensive to discuss in this briefing paper.  Instead, refer to the www.medicare.gov website for a wealth of information about coverage, supplemental insurance, and service plans in a given geographic area.  As you will see, Medicare is available to many groups.  This document focuses primarily on Medicare issues related to individuals receiving Social Security disability benefits.

Medicare Versus Medicaid

Many people think that Medicaid and Medicare are two different names for the same program. Actually, they are two very different programs. Medicaid is a state-run program designed primarily to help those with low income and little or no resources. Medicare is an entitlement earned by someone who has paid into the Medicare trust fund through taxes on earned income; it is not needs based nor means tested.  The federal government helps pay for Medicaid, but each State has its own rules about who is eligible and what is covered under Medicaid.  In contrast, Medicare is a federally run program that has the same eligibility standards and coverage rules across all 50 states.   Medicaid coverage is typically free (with some exceptions in some States) while Medicare coverage involves premiums, co-payments and deductibles.  Some people get both Medicaid and Medicare.  The Center for Medicare and Medicaid Services (CMS) refers to these people as “dual eligibles”.  For more information about the Medicaid program in your state, contact your local Medicaid agency, social service or welfare office.   You can find the federal rules governing Medicaid at www.cms.gov/medicaid/

Who Is Eligible for Medicare? 

• Individuals age 65 and older who are insured for Retirement benefits under the Social Security program either through their own work, or through a spouse’s work

• Individuals receiving Social Security Disability Insurance (SSDI) who have met the 24-month qualifying period for Medicare. 

• Individuals receiving benefits as a Childhood Disability Beneficiary (CDB) who have met the 24-month qualifying period that begins no earlier than the person’s eighteenth birthday.

• Individuals who meet the Social Security disability standards and who are either entitled to disabled Widow(er)s benefits  (DWB) or Medicare on a deceased worker’s record and who have met the 24-month qualifying period

• Individuals who lost cash Title II disability benefits due to work and are in the Extended Period of Medicare Coverage (EPMC). 

• Individuals with disabilities who have worked beyond their Extended Period of Medicare Coverage (EPMC) and are eligible to purchase Medicare Parts A and B coverage as a Qualified Disabled and Working Individual (QDWI). 

• Individuals who have End-Stage Renal Disease (ESRD) who have been receiving dialysis for three months, or who have been performing self-dialysis for one month.  Note that people receiving Medicare under the End-Stage-Renal-Disease provisions do not have to meet a 24-month qualifying period.  Individuals who have Amyotrophic Lateral Sclerosis (ALS) also do not have to meet the 24-month qualifying period beginning 7/1/01.

• Government employees who paid only Medicare taxes and meet any of these above categories

• People who are age 65 or older, are not insured for Social Security Retirement benefits, and pay a premium for both parts of Medicare.

Medicare Enrollment Periods

Eligible individuals may enroll in Medicare only at specific times.  The initial enrollment period (IEP) occurs when people first become eligible for Medicare. The General Enrollment Period (GEP) occurs annually, and a Special Enrollment Period (SEP) occurs when people leave employment that had health coverage.  Social Security beneficiaries are automatically enrolled in Medicare Parts A and B when they first become eligible.  Part A hospital insurance is premium free for these individuals and is not optional.  Social Security beneficiaries who are eligible for Medicare Part A are not allowed the option of declining participation.  However, because a premium must be paid for Part B coverage, eligible individuals do have the option of turning it down. 

• Initial Enrollment Period  - The initial enrollment period is the first opportunity a person has to enroll in Medicare based on disability benefits or attainment of age 65.  It is a 7-month period beginning three months before the first month of potential Medicare coverage and ending three months following that month.  Social Security sends out a Medicare card automatically.  If someone wants both parts of Medicare, that individual need only keep the card, and Medicare Parts A and B coverage will automatically begin.  If a person does not want Medicare Part B, the individual returns the signed card to the sender. Returning the card indicates refusal of Part B coverage.
   

• General Enrollment Period (GEP) -  Each calendar year, eligible individuals who do not have Medicare Part A and/or B may enroll during the General Enrollment Period.  The General Enrollment Period lasts from January first, through March thirty-first of each year.  When people enroll during the GEP, Medicare coverage begins the first day of July of the year in which the request was made.  If more than twelve months have elapsed between the time the person first could have received Medicare and the time the beneficiary actually enrolls, the premium may be higher.  This is because a premium surcharge is levied for not accepting Medicare coverage when it was first available.  The monthly Medicare Part B premium increases 10 percent for each 12-month period an individual was eligible but didn’t enroll. This premium surcharge will be applied unless the beneficiary is eligible for a Special Enrollment Period.

• Special Enrollment Period (SEP) - Individuals covered by a qualified Employer Group Health Plan (EGHP) based on a spouse’s work or the individual’s current employment and for whom Medicare coverage would be secondary to the employer policy, may be eligible for a Special Enrollment Period (SEP).  The Special Enrollment Period is a time during which an individual may enroll in Medicare Part B if:

  • The beneficiary was covered under a group health plan based on the beneficiary’s own current employment, or based on the employment of the beneficiary’s spouse, and

  • The individual refused or terminated Medicare Part B, and

  • The person wishes to enroll in Medicare Part B during the 8 month period that begins the first full month after the employment or group health plan coverage ends, whichever occurs first. 

There is no premium penalty for months that the person declined Part B of Medicare because of an Employer Group Health Plan.  A person enrolling in Medicare during the SEP may choose to begin coverage with any month of this period.  

Medicare Qualifying Period 

The Medicare Qualifying period is different from the 5-month Social Security disability benefit waiting period. The 24-month Medicare Qualifying Period begins with the first month for which the person is entitled to a payment after the five-month waiting period.  Coverage begins the first day of the 25^th month of benefit entitlement.

• Qualifying period for Childhood Disability Beneficiaries (CDB) -  The Medicare Qualifying Period of Childhood Disability Beneficiaries may not be met before the beneficiary’s 20^th birthday, since the qualifying period can’t begin before the month of the individual’s 18^th birthday.  The 24-month MQP clock will not begin ticking until the month of the 18^th birthday, so the earliest point at which Medicare could begin is in the 25^th month after this point, which would be the age of 20.  Individuals who become re-entitled to CDB will not have to serve another 24-month qualifying period if the re-entitlement occurs within 7 years.  Keep in mind that re-entitlement to CDB on the same parental work record may never occur after 7 years from the last termination.  

• Qualifying Period for Disabled Widow(er)s Benefits (DWB) - For Disabled Widow(ers) Beneficiaries, the Medicare Qualifying Period may be met through current entitlement to DWB benefits, or may be met with prior entitlement to SSI benefits.  People who receive DWB benefits may also continue to receive Medicare based on a DWB benefit, even if they are entitled to a type of Title II cash benefit that does not usually confer Medicare eligibility on the beneficiary.  Like CDB benefits, a person may not be re-entitled to Disabled Widow(er)s benefits if the prior termination was more than 7 years in the past.  Also like CDB benefits, a DWB does not have to serve another 24-month qualifying period if the person becomes re-entitled to DWB within 7 years.

Medicare for People with End Stage Renal Disease (ESRD)

In addition to Medicare for people who are disabled under the Social Security rules, the SSA has a special type of Medicare for people who have End-Stage Renal Disease (ESRD).  ESRD is a condition of the kidneys caused by many factors that requires dialysis or a kidney transplant.  End stage renal disease Medicare is a special program that is not tied to receipt of cash benefits.  ESRD Medicare has less stringent rules for meeting insured status than do Social Security disability benefits.  This type of Medicare also has different rules for when the coverage begins and when it ends.  People who receive Medicare only because of End-Stage Renal Disease do not have to be otherwise disabled under Social Security regulations.  Unless these individuals are also entitled to cash benefits, they may not access any of the Social Security disability work incentives—including Expedited Reinstatement.

The rules for establishing insured status for ESRD Medicare are much easier to meet than the rules for cash disability benefits.  In fact, a person may receive Renal Medicare coverage on the work record of a spouse, or a parent, even though they may not otherwise meet any benefit criteria. Renal Medicare usually begins with the third month after dialysis begins.  Coverage can begin earlier if the person self-administers dialysis, or was previously entitled to Medicare under the ESRD provisions.  Coverage ends either 12-months after dialysis stops, or 36-months after a successful transplant.

Medicare Qualified Government Employees (MQGE)

MQGE are people who worked and paid Medicare taxes, but not Social Security taxes.  Medicare benefits for these individuals follow all of the same disability benefit rules that benefits for people who also paid Social Security taxes follow.  For example, these individuals must wait twenty-nine full calendar months from the date their disability onset date to become covered under Medicare.  This represents the five full months of the benefit waiting period plus the 24-month Medicare Qualifying Period.  Like people who receive cash benefits, dependants may become entitled on MQGE work records.  These dependants do not receive cash payments.  Rather, if they meet the appropriate requirements for Medicare coverage, they may receive Medicare.  People who receive Medicare coverage under the MQGE program may access all of the work incentives, except for benefit continuation under a Vocational Rehabilitation program when the DDS determines the person has medical improvement, otherwise known as Section 301 payments.

Medicare Supplements or Medigap Plans

Although Medicare is a valuable resource, it does not pay for prescription medications, nor does it pay for all services a beneficiary may need.  In addition, since Medicare involves deductibles and coinsurance payments, some people end up with large out-of-pocket expenditures to manage.  Medicare supplemental insurance policies, also called “Medigap Plans”, may help to meet a beneficiary’s medical insurance needs.  These are private insurance policies that are optional for Medicare beneficiaries to purchase, but which are mandated to exist in each State.  A wide array of plans is available and plans vary significantly in the amount of coverage they provide and how much they cost.  Beneficiaries can go to www.medicare.gov to access interactive electronic tools that compare various Medicare and Medigap plans as well as prescription drug assistance programs in their local area. 

Getting Help with Medicare Premiums and Other Out-of-Pocket Expenses

Certain beneficiaries may qualify for help from their state in paying Medicare premiums and other out-of-pocket medical costs.  States help by providing special limited Medicaid coverage that is mandated and regulated by the federal government.  CMS refers to this assistance as Medicare/Medicaid Dual Eligible programs or Medicare Savings Programs.  These special Medicaid programs are for certain eligible Medicare beneficiaries who have little income and few resources.  This coverage may help pay for all or part of the Medicare premiums, deductibles and coinsurance.  It is important to understand that Medicare Savings Programs are not the same as regular Medicaid coverage.  These programs do NOT pay for services or items that Medicare does not cover, such as prescription medications. 

To qualify for one of the Medicare Savings Programs, the beneficiary must have Part A (hospital insurance), a limited income, and countable resources such as bank accounts, stocks and bonds, must not be more than twice the SSI limit ($4,000 for a single person or $6,000 for a couple). Only the state can decide if a beneficiary qualifies for help under one of these programs.  In most states, the SSI income and resource rules are applied in these eligibility determinations.  There are numerous dual eligibility categories such as Qualified Medicare Beneficiary (QMB), Special Low-Income Medicare Beneficiary (SLIMB) and Qualified Disabled and Working Individuals (QDWI).  Each of these programs has different eligibility criteria and each pays for different types and amounts of Medicare out-of-pocket expenditures.   To find out if a person qualifies for one of these programs, contact the state or local medical assistance (Medicaid) agency, social service or welfare office.  A brief summary of the three most common eligibility Medicare Savings Programs is provided below.   For more information on this complex subject, go to http://cms.hhs.gov/dualeligibles/.

• Qualified Medicare Beneficiaries -  A Qualified Medicare Beneficiary, sometimes referred to as QMB or “quimby”, is someone receiving Social Security disability benefits and Medicare who has countable income equal to or less than 100% of the current federal poverty standard and countable resources not exceeding twice the SSI limit.  The QMB program provides limited Medicaid coverage to pay for Medicare premiums, deductibles, and coinsurance payments. In some states, the QMB program pays deductibles and coinsurance only up to the limit of the State Medicaid fee for the service provided.  In some cases, what Medicare allows in fees for a given service, treatment or item is higher than what the State Medicaid program allows.  The Balanced Budget Act of 1997 permits States to limit the QMB payment to the amount that the Medicaid program would otherwise pay for the service***.  

  The Balanced Budget Act of 1997 also prohibited “balance billing” of beneficiaries in cases where States use State Medicaid fee limits as the basis of QMB payment.  This means that the amount paid by Medicare plus the payment made by QMB Medicaid (if any) is considered to be payment in full for the services rendered.  The beneficiary may not be billed for any remaining balance after the Medicare and QMB payments have been made. The QMB has no legal liability for payment to a health care provider or health maintenance organization (HMO) for services.  However, a provider or HMO may pursue payment for Medicare deductibles, coinsurances, or co-payments from a Medicare supplemental insurance policy (Medigap Plan) or an employer health plan that the Qualified Medicare Beneficiary participates in.

  Beneficiaries and Benefits Specialists need to check with the state Medicaid agency for more information about what is covered and at what level of payment.  It is important to understand that beneficiaries receiving QMB may also have full Medicaid under another category of eligibility.  Many concurrent beneficiaries getting both SSI and SSDI cash benefits have Medicare, Medicaid and QMB coverage.

  ***NOTE:  Specifically, section 4714 of the Balanced Budget Act of 1997 amends section 1902(n) of the Social Security Act to clarify that a State is not required to provide any payment for any expenses incurred relating to Medicare deductibles, coinsurance, or co-payments for QMBs to the extent that payment under Medicare for the service would exceed the amount that would be paid under the Medicaid State plan if the service were provided to an eligible recipient who is not a Medicare beneficiary. Thus, a State's payment for Medicare cost-sharing for a QMB may be reduced or even eliminated because the State is using the State Medicaid plan payment rate. In situations where the rate payable under the State Medicaid plan exceeds the amount Medicare pays, but is less than the full Medicare-approved amount, the policy described Section 3490.14 of the CMS State Medicaid Manual continues to apply.  Section 3490.14 of the State Medicaid Manual requires States to pay, at a minimum, the difference between the amount Medicare pays and the rate Medicaid pays for a Medicaid recipient not entitled to Medicare.  The CMS State Medicaid Manual can be found at
  http://cms.hhs.gov/manuals/pub45/pub_45.asp
   

• Specified Low - Income Medicare Beneficiaries (SLMB) - Someone eligible under SLMB (also referred to as “slimby”) has Medicare Part A and countable income of more than 100% but less than 120% of the federal poverty level, as calculated using SSI exclusion rules.  SLMB beneficiaries must also have less in countable resources than twice the SSI limit.  The state of residence pays the Medicare Part B premiums for these individuals, but does not pay anything toward coinsurance or deductibles.  It is possible for SLMB beneficiaries to have full Medicaid coverage, but only if they meet the criteria for Medicaid eligibility under another program, like a state Medicaid buy-in program.
   
• Qualified Disabled and Working Individuals (QDWI) - These individuals are entitled to purchase Medicare Part A because Medicare benefits were lost due to return to work at a substantial level.  To be eligible for QDWI, the individual must have countable income of more than 120% but less than 135% of the federal poverty level, countable resources not exceeding twice the SSI limit, and not otherwise be eligible for Medicaid.  Eligibility for Medicaid benefits under the QDWI program is limited to payment of Medicare Part A premiums.

Summary

The rules governing Medicare eligibility, when Medicare begins, and what Medicare covers are complex.   Benefits Specialists may help people understand these provisions, but should remember that the SSA and CMS make the determination whether someone is entitled to Medicare coverage.  Also, the choice of what Medicare plan to take, or what Medigap policy would best meet the person’s needs must be up to the individual.   The Benefits Specialist can be instrumental in this decision making process by knowing what options are available and by presenting the advantages and disadvantages of each option.   

Previous Articles on Social Security:

New Ruling Bucks Up ADA, Olmstead and Services under HCBS Waivers

2003 Student Earned Income Exclusion

Advocacy Skills and the Social Security Administration

Special Medicaid Beneficiaries

Ticket to Work and Work Incentives Advisory Panel- Annual Report to the President and Congress, April 2003

SSI  and Resources Briefing Paper -  VCU’s Benefits Assistance Resource Center Vol. 7, February 2003

Supplemental Security Income and Age 18 Redetermination- Key Facts Vol. 1, No. 2, February, 2003

Advocacy Skills and the Social Security Administration - Key Facts Vol. I No. 1, February, 2003

SSI and Adults with Disabilities: Background, Trends, and a Study of Participation

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