How medicare affects older adults

In this research paper I will discuss policies that affects older adults. I choose to research Medicare because is one of the biggest polices that affect the elderly. ‪I will research the following, the parts of Medicare including the “doughnut hole” advantage cuts, what’s covered, what’s provided, Policy Challenges, Benefits and Affordability. Medicare as we know it today came into existence in July of 1965 during the Johnson Administration. Franklin Roosevelt’s administration was the first to address the subject of government assisted health care. During State of the Union speeches in 1943-1945, Roosevelt spoke about universal health care, and Americans being covered from “Cradle to Grave” (Mallon 2013). In 1950, 12.3 million personas living in the United States were aged 65 and older. By 2000, the number of personas aged 65 and older had grown to 35 million.

According to the 2010 Census, there are now 40.3 million aged 65 and older. The older population will continue to grow rapidly over the next few decades as the first baby boomers turn 65 in 2011 (Wacker & Roberto 2013). ‬Most Americans think that social security as a retirement program for the nations elderly. There are three types of programs are authorized under the social Security act: social insurance, public assistance and health and social services. These programs serve Americans of all ages and income level (Barusch 2012). Socoial security is a pay as you go program. That is most of revenue collected through payroll taxes go to pay for the benefits of current recipients. The remainder goes into four separate reserve funds: Old-Age and survivors insurance (OASI); Disablitlty Insurance (DI); Hospital insurance for Medicare part A (HI); and Supplementary Medical Insurance for Medicare Part B (SMI).‬

One out of every five elderly Americans faces each day on a limited income with little flexibility for extra or unexpected medical expenses. When medical care is needed, these 6 million poor and near-poor elderly Americans depend on Medicare for assistance with their medical bills. Both Social Security (OASDI) and Medicare are universal programs, which means that anyone who qualifies (by age) is eligible. These benefits are for everyone regardless of the individual’s income level. Rich and poor older adults get OASDI and Medicare (Rowland, D., & Lyons, B. L. 1996). In addition to Original Medicare offered by the government, private companies approved by Medicare provide a different way to get your health care and prescription drug coverage. These private plans are known as “Medicare Advantage” plans. The type of Medicare coverage that you select will affect your out-of-pocket expenses, benefits (to some extent), ability to select a doctor or other health care provider, administrative convenience, and coverage rules. There are four parts of Medicare. Part A (Hospital Insurance) B (Medical Insurance) C (Medicare Advantage) & D (Prescription drug coverage). Part A (Hospital Insurance)

Medicare Part A covers inpatient hospital care, skilled nursing facility care, home health care and hospice care. Most people do not have to pay a monthly premium for Part A because either they or their spouse paid Medicare taxes while they were working. There are deductibles and co-payments, which a patient is responsible for paying during each benefit period. A benefit period begins when you are admitted to the hospital or skilled nursing facility and ends when you are discharged, and 60 consecutive days have passed (Mallon). In any benefit period, Part A covers up to 100 days of skilled nursing facility care. For the first 20 days, Part A pays the full cost. For the next 80 days, your parent is responsible for a co-payment of $128 per day (Matthews 2013). Various forms of dementia are common among the elderly, so it’s possible that the elderly person might need a stay in a psychiatric facility even if she has no history of mental or emotional illness.

If so, Part A covers the full amount of the charges for that stay, minus only the hospital deductible. Inpatient care in a psychiatric facility is limited under Part A. If an elderly person has a lifetime coverage total of only 190 days in a mental health care facility. Care for psychiatric or other cognitive problems for an inpatient in a regular hospital, is subject to regular Part A hospital coverage limits, not this special 190-day total. Part A also covers home care only if, and as long as, if the elderly person is confined to home and needs part-time skilled nursing care or physical or speech therapy. If an elderly person only needs someone to help with daily activities like bathing, dressing, eating Part A won’t cover home care (Matthews 2013). As for hospice care Part A pays 100 percent of the cost, except for a $5 per prescription co-payment for prescription drugs, plus a 5 percent charge for any time your parent needs to receive hospice care as an inpatient in a nursing or hospice facility. Part B (Medical Insurance)

Part B is paid for by the monthly premiums of people enrolled and by general funds from the U.S. Treasury. It helps pay for doctors’ fees, outpatient hospital visits, and other medical services and supplies that are not covered by Part A. Medicare part B covers physician care, outpatient hospital care and surgery, home health care, durable medical equipment and supplies, and ambulance services. Part B also covers some preventive services to help maintain your health. Part B coverage is optional, though you may be charged a penalty fee if you are without coverage and later want to enroll in Part B. If enrolled in part B the monthly premium is the same for all persons enrolled in Medicare. The Part B monthly premium is $104.90 in 2013 ( 2013). The majority of Americans have the Part B premium taken directly out of the Social Security benefits each month. One of the major problems with Medicare Part B is the difference between the costs of medical items or services, particularly physicians’ services, and the Medicare approved “reasonable charge.”

When an item or service is determined to be coverable under Medicare, it is reimbursed at 80% of the “reasonable charge” for that item or service, the patient is responsible for the remaining 20%. Unfortunately, the “reasonable charge,” a rate set by Medicare, is often substantially less than the actual charge (CMA 2013). The result of the “reasonable charge” reimbursement system is that Medicare payment, even for items and services covered by Part B, is often inadequate. The patient is left with out-of-pocket expenses. Medicare Part C (Medicare Advantage)

Private insurers offer a Medicare Part C plan, also known as Medicare Advantage. If you choose Medicare Part C you will generally have access to services in addition to all services covered by Parts A and B. Under Medicare Advantage you likely will pay a copayment for covered services and see doctors in the plan’s network. Some Part C plans provide significant coverage beyond what you get in Parts A and B including, in some cases, prescription drug coverage. The better ones basically function like Medigap policies but are administered by Medicare rather than being wholly run by private insurance companies (Bihari 2010). If you have a Medicare Advantage plan, any Medigap policy you may have is useless; Medigap won’t pay if Medicare Part C covers you. The monthly premium varies widely depending on your state and the private insurer you choose, as well as whether you choose a (HMO) Health Maintenance Organizations or (PPO) Preferred Provider Organizations for your Medicare Advantage coverage. If you are enrolled in a health maintenance organization (HMO) you will need to receive most or all of your health care from a network provider. HMOs require that you select a (PCP) primary care physician who is responsible for managing and coordinating all of your health care. A preferred provider organization (PPO) is a health plan that has contracts with a network of “preferred” providers from which you can choose. You do not need to select a PCP and you do not need referrals to see other providers in the network (Bihari 2010).

Medicare provides a whole lot of coverage, but it doesn’t cover everything. So some people choose to buy a separate policy to provide coverage for the areas Medicare falls short on. This is known as Medigap insurance. You buy Medigap from a private insurance company. You can also use your Medigap policy to cover expenses you have under Medicare, such as annual co-pays and deductibles. If you opt for a Medicare Advantage Plan (Part C) any Medigap policy you have won’t pay out. So if you decide to move into a Medicare Advantage Plan and you already have a Medigap policy, drop the Medigap.

Medicare Part D (Prescription Drug Plans)

Part D is the government’s prescription drug benefit, created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The Medicare program offers prescription drug coverage to all individuals with Medicare. A Medicare beneficiary can get prescription drug coverage through one of two options: Medicare Part D Prescription Drug Plans, also known as (PDPs), are stand-alone prescription drug plans that are approved by Medicare and offered by a private insurance company. Medicare beneficiaries can sign up for Medicare Part D plans to add drug coverage to their Original Medicare coverage, Medicare Supplement (or Medigap) plan, or certain Medicare Advantage plans, including Cost Plans, Private Fee-for-Service (PFFS) plans, and Medical Saving Account (MSA) plans. Anyone enrolled in either Medicare Part A or Medicare Part B is eligible to enroll in a Medicare Part D plan.
(Plan Prescriber 2013) Medicare Advantage Prescription Drug Plans, also known as (MAPDs), are Medicare Advantage health plans that offer prescription drug coverage. A Medicare beneficiary can access the same Part D drug coverage by signing up for (MAPDs) that offer both health and drug coverage. To enroll in this type of plan, you need to be enrolled in both Medicare Part A and Part B. In either scenario, a Medicare beneficiary would be required to pay the monthly premium charged by the plan and these premiums vary by insurance provider. The initial coverage period for a standard benefit model 2013 Medicare prescription drug plan ends after the plan pays $2,970 in medication costs for you. The coverage period that begins after the conclusion of the initial coverage period is known as the Medicare Donut Hole. This refers to the gap between the prescription drug coverage limit and the catastrophic coverage threshold (Barusch 2012). From 2011 to 2020, a combination of government subsidies and manufacturer discounts will progressively reduce out-of-pocket costs for covered drugs during the donut hole period. In 2013, covered generic drugs receive a 21% government subsidy, so members pay 86% of the costs of generic drugs during the donut hole. For covered brand name drugs the Medicare Coverage Gap Discount Program provides a 52.5% discount from manufacturers that have agreed to participate. There are also some Medicare Prescription Drug plans that offer coverage to further reduce out-of-pocket costs in the donut hole. This coverage is in addition to the subsidy and discount during the donut hole described above. Individuals in the donut hole will enter catastrophic coverage after their out-of-pocket expenses for drugs on the plan’s formulary reach $4,750. The money you spend on drugs that are not covered on your plan’s formulary does not count towards the catastrophic coverage threshold. Part D resets each year. On January 1st of each year, you begin with your plan’s initial drug coverage and its associated deductible requirements (if there is a deductible). If you were in the donut hole in December of the prior year you would return to the plan’s initial coverage on January 1st where you pay a co-payment for drugs after the plan’s deductible is satisfied.

In conclusion the implementation of Medicare was necessary to provide access to care for the elderly. However, the differential patterns in the
use of many specific services according to income indicate that the provision of health insurance alone does not suffice to promote effective patterns of use by all beneficiaries. Policymakers periodically advocate raising the age of eligibility for Medicare beyond sixty-five to contain program costs, which will grow rapidly once the large baby-boom cohort begins to receive benefits. For example “Obamacare” the Obama administration has made the first move in cutting benefits. The administration’s cuts will impact the elderly poor the most. Low-income seniors will see an estimated 7 percent to 8 percent reduction in their Medicare Advantage benefits in 2014. As opposed to traditional Medicare, Medicare Advantage (MA) is provided by private providers and is attractive to lower-income individuals because it is less expensive. The reduction will occur because of the Affordable Care Act (“ObamaCare”), which which is reducing Medicare benefits and raising taxes to pay for the expansion of Medicaid and subsidies in the health insurance exchanges (Senger 2013). The cuts are larger than originally expected because the administration believes that Medicare spending will abruptly drop for no reason. Private plans, averse to such a large spending cut, will likely leave markets or reduce their benefits as plans become less profitable.

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Matthews, J. (n.d.). Medicare Part A (Hospital Insurance): A Beginner’s Guide. MSN Healthy Living. Retrieved October 24, 2013, from

Wacker, R. R., & Roberto, K. A. (2013). Community resources for older adults: programs and services in an era of change (Fourth ed.). Los Angeles: SAGE Publications, Inc.

Rowland, D., & Lyons, B. L. (1996). HEALTH CARE FINANCING REVIEW/Winter 1996/Volume 18,Number2. Medicare, Medicaid, and the Elderly Poor, 18(2), 61. Retrieved October 24, 2013, from the database. Senger, A. (2013, August 10). Obamacare’s Impact on Seniors: An Update. The Heritage Foundation. Retrieved October 29, 2013, from

The Selected Contemporary Benefits Issue Affordable drug coverage under Medicare has been a pressing issue in the US for quite some time now (Slaughter, 2006). In response to this issue, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) was …

Medicare Part D Drug Plan was created by Congress in 2003 to aid the elderly, disabled, and sick persons in affording their medication. Coverage for the drug plan went into affect January 1, 2006. This plan was called the Medicare …

The Employee Benefit Research Institute (EBRI) (2004), in its Issue Brief # 271, provides for an extensive discussion on the Part D program before it was implemented in 2006. The MMA, according to the Employee Benefit Research Institute (2004), was …

In general, Part D provides insurance coverage for beneficiaries’ prescription drugs. Those who are enrolled in the program (either voluntarily through private insurance companies, or if they do not select a program, CMS will enroll them in a PDP, as …

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