The American health care system is massive and complex. To navigate this system, it’s important to have a basic understanding of the various health insurance opportunities available to you and your family. This article spotlights Medicare – the federal health insurance program for those 65 years of age and older, some younger people with disabilities and people with end-stage renal disease (ESRD).
We encourage you to use the information in this article to explore the Medicare program in greater detail and at your own pace.
“Medicare and Medicaid are often confused with one another. Both health programs may serve the same groups of people, depending on circumstances such as household income,” says LHSFNA Management Co-Chairman Noel C. Borck. “It’s even possible to have both Medicare and Medicaid at the same time. To further blur the line, both health insurance programs are often lumped together, along with Social Security, as entitlement programs.”
Medicare and Social Security are considered contributory entitlement programs because you usually have to contribute by paying payroll taxes during your working career to qualify for them. Medicaid is considered a non-contributory entitlement program because qualifying is based on meeting certain lower income requirements, not contributing via payroll taxes.
A helpful tip to remember the difference between the two is to focus on the “care” in Medicare and the “aid” in Medicaid. We typically “care” for our senior citizens and “aid” those in need.
The Medicare program is made up of four components:
- Part A – Hospital Insurance
- Part B – Medical Insurance
- Part C (also referred to as Medicare Advantage) – Health Maintenance Organization (HMO) type of insurance which usually includes Parts A, B & D
- Part D – Prescription Drug Insurance
There is also a group of other Medicare health plans with special rules and exceptions which will be discussed in a future article.
Funding of Medicare’s various components is as complex as the program itself. Generally, Medicare Part A is funded through the payroll taxes mentioned above. It can also be purchased if you don’t have the required number of years paying payroll taxes. Funding for Part A comes from the Hospital Insurance Trust Fund. You may hear government officials and politicians discuss the solvency (money coming in vs. money going out) of this trust fund as the cost of health care continues to rise.
Generally, Medicare Parts B and D are funded through monthly premiums paid by those enrolled. Medicare Part C is typically funded through a combination of the Hospital Insurance Trust Fund and premiums paid by those enrolled.
There are financial penalties for not enrolling in Medicare when you first become eligible, so unless you qualify for an exception, it’s extremely important to pay attention to enrollment dates as you approach age 65.
Retiree Group Health & Disability Insurance
Your retiree group health insurance works with Medicare if you are eligible and receive both. Typically, Medicare pays your medical claims first and your retiree group health insurance pays second. You should check the terms of your retiree group health insurance, however, as some retiree group health insurance plans work with Medicare differently. Here’s a helpful link to five things to know about retiree coverage.
Medicare may also cover you if you’re under age 65 and have been receiving Social Security disability benefits for at least 24 months. Disability benefits are paid by the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs. The application process to receive Social Security disability benefits may take several months, so the sooner you begin the process the quicker you may be covered by Medicare.
This article only scratches the surface of the complex and ever-changing Medicare program. The LHSFNA’s Health Promotion Division welcomes specific questions and input from LIUNA District Councils, Local Unions, health and welfare fund trustees and staff, signatory contractors and other LIUNA affiliates regarding the Medicare program or other health care-related topics.
[Matthew Brown is the LHSFNA’s Health & Welfare Specialist.]