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What Is The Insurance Value Of Medicare?

Posted Nov 19 2012 12:58pm

Stanley Feld M.D.,FACP,MACE

 

Healthcare insurance is great if you do not need it.

The wonderful thing about Medicare is private insurance is not available to seniors.  

Healthcare insurance companies are not interested in covering consumers with health risks or preexisting illnesses.

In fact private individual healthcare insurance policies are not available to an unemployed 55 year old person with mild obesity and hypertension.

If you are employed and over 65 years old with mild obesity and hypertension the healthcare insurance industry is required to insure you under your employer healthcare plan.

The employed person receives healthcare coverage with pre-tax dollars.

 A person who might be eligible to purchase individual healthcare insurance must pay with after-tax dollars.

This is unfair but easily corrected.

The pre-tax/post tax issue could be solved if the state insurance boards required the healthcare insurance companies, wanting to sell private insurance in that state, cover everyone applying for insurance. The insurance company should be required to set the premiums based on community rating.

Everyone should pay premiums with pre-tax dollars.

Medicare, through government inefficiency, has become very expensive. If it were efficient insurance it would be less expensive to both consumers and the government.

Most working people have no idea of Medicare’s cost to them during their working years.

Medicare’s yearly tax withholding is 1.45% of salary. A worker earning $100,000 a year pays $1450 yearly to the Medicare Trust Fund. In 40 years that person would pay $58,000 into the Trust Fund.

When they became eligible for;

 

If your yearly income in 2010 was

You pay (in 2012)

File individual tax return

File joint tax return

$85,000 or less

$170,000 or less

$99.90

above $85,000 up to $107,000

above $170,000 up to $214,000

$139.90

above $107,000 up to $160,000

above $214,000 up to $320,000

$199.80

above $160,000 up to $214,000

above $320,000 up to $428,000

$259.70

 

 

 

In 2013 the Medicare Part B premiums are going to increase.

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

If your yearly income in 2011 was

You pay (in 2013)

File individual tax return

File joint tax return

$85,000 or less

$170,000 or less

$104.90

above $85,000 up to $107,000

above $170,000 up to $214,000

$146.90

above $107,000 up to $160,000

above $214,000 up to $320,000

$209.80

above $160,000 up to $214,000

above $320,000 up to $428,000

$272.70

above $214,000

above $428,000

$335.70






 

Income is defined as income from all sources such as capital gains, interest, pension annuities, social security and all earned income.

Further premium increases have been announced for 2014 but have not been published.

Medicare premiums are taken out of each Social Security check.

The Medicare Part B insurance has deductible and co-pay rules. Medicare Part B deductibles apply for each hospital stay, ER visits and physician office visits.

For each benefit period you pay:

  • A total of $1,156 for each hospital admission of 1-60 days.
  • $289 per day for days 61-90 of a hospital stay.
  • $578 per day for days 91-150 of a hospital stay (Lifetime Reserve Days).
  • All costs for each day beyond 150 days.
  •  

Skilled Nursing Facility Coinsurance

  • $144.50 per day for days 21 through 100 each benefit period. Days 1-20 are free.
  •  

Part B: (covers Medicare eligible physician services, outpatient hospital services, certain home health services, durable medical equipment)

  • $140.00 per year. (Note: You pay 20% of the Medicare-approved amount for services after you meet the $140.00 deductible.)

 

The deductible for the first $140 dollars worth of services plus 20% of any physicians and hospital bill can add up as one gets older. It becomes unaffordable for many seniors.

 

Medicare Part B’s deductibles and copays’ costs makes Medicare gap coverage   essential.

Premiums For Medicare Part F   

Monthly Premium $84 - $302  depending on age and benefits

Estimated Annual Cost: $6,050.00

  • Basic Benefits Medigap Basic Benefits definition[?] - Opens in a new window
  • Skilled Nursing Facilities Skilled Nursing Facility definition[?] - Opens in a new window
  • Part A Deductible Part A (Hospital Insurance) definition[?] - Opens in a new window
  • Part B Deductible Part B (Medical Insurance) definition[?] - Opens in a new window
  • Part B Excess Charges (100%)
  • Foreign Travel Emergency
  • Preventive Services

 Medicare Part D is the drug benefit plan. Medicare Part D helps reduce the cost of medications.

Medicare Part D is also means tested. There are multiple plans to pick. Some include complete payment for brand named drugs and some cover the donut. The price can range from $40 to $120 per month per senior depending on the coverage a senior picks. The additional means tested fees are below.

The brand named drugs are expensive. Most drug chains have followed Wal-Mart’s lead and charge $4.00 for generic drugs. This forces seniors to purchase generic drugs

Medicare Part D is expensive and unfair for seniors needing brand named drugs.

The Means Testing Formula For Medicare Part D 2012

 If your yearly income in 2010 was

You pay

File individual tax return

File joint tax return

$85,000 or less

$170,000 or less

Your plan premium

above $85,000 up to $107,000

above $170,000 up to $214,000

$11.60 + your plan premium

above $107,000 up to $160,000

above $214,000 up to $320,000

$29.90 + your plan premium

above $160,000 up to $214,000

above $320,000 up to $428,000

$48.10+ your plan premium

above $214,000

above $428,000

$66.40 + your plan premium

  http://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html

 Medigap fees and Medicare Part D fees are paid with post tax dollars.

These costs are in addition to seniors having contributed $58,000 to the Medicare Trust Fund during their working years.

“The reason we have health insurance at all is not that health care is expensive , but rather that there is great uncertainty about who will need very expensive and potentially lifesaving care and when they will need it. Medicare should give beneficiaries not just access to medical care, but also protection from the risk of catastrophic spending.” 

Medicare coverage is not cheap. President Obama’s Obamacare is going to make it more expensive with less access to care.

 Why is Medicare Part B,F,D  so expensive when the average person on Medicare spends only $6,600 dollar per year?

This is the major question. The government should focus on the answer. It should not be spending time and money on a system that is punitive to patients and physicians and has little chance of being successful.

The cost to Medicare beneficiaries is high. The protection against economic ruin is limited. The basic benefit lacks a cap on out-of-pocket spending, so beneficiaries are exposed to the risk of open-ended cost sharing that can generate substantial financial strain (or deplete assets for surviving spouses). 1  

Moreover, the odds of facing a catastrophic expense mount over time. Almost 50% of beneficiaries are hospitalized at least once over a 4-year period. 2  

If we are going protect our seniors from financial strain or ruin Medicare must reassess it premises and reduce its administrative waste. It must be completely transparent. If the government did it correctly it would provide an affordable healthcare insurance plan for seniors.

Everyone knows the dice is loaded.” Leonard Cohen.

 

 

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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