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The ABCDs of Medicare Investopedia Staff 03.14.08, 2:00 PM ET
In 1965, President Lyndon Johnson signed the original Medicare program into law. The program originally covered two portions: hospital insurance (Part A) and medical insurance (Part B).
Part A covers a large portion of hospital-related costs for eligible people over the age of 65 and only includes medically necessary and skilled care, not custodial care. People not eligible for coverage can participate in the program if they pay a monthly fee. Special Offer: Turnaround Letter Editor George Putnam told subscribers to buy Apple at $7.82 in 2003, turning $10,000 into more than $250,000 in four years. Click here for a free trial of the Turnaround Letter and to get his current buys.Part C gives Medicare beneficiaries the opportunity to enroll in private health care plans and receive all Medicare services, including Part A and Part B, from a private provider. It operates like the health care coverage provided by most employers. A menu of offerings is available with a variety of coverage options, co-payments and monthly costs. The private provider also covers services not provided by Parts A and B. Part C is available in most areas and provides a convenient way to receive medical services. Part D is an optional insurance program that charges a monthly fee in exchange for prescription drug coverage. The monthly cost varies widely depending on the coverage options you choose. Like employer-provided health care plans, Part D holds an open enrollment session Nov. 15 to Dec. 31 each year, during which program participants can choose to change their coverage options. While Part D is a voluntary program, Medicare recipients have to seriously review their health care needs in advance because the cost of Part D increases each year for individuals who choose not to participate immediately upon eligibility. This supplemental insurance, often referred to as "medigap" coverage, pays for expenses that are not covered by Medicare. Participants in Part C do not need to purchase medigap coverage; Part C enables them to select medical coverage that addresses most needs. Special Offer: Exchange-traded funds have exploded on Wall Street. They are rapidly replacing mutual funds as the smartest-packaged investment products available to investors. But how can you safely choose the best ETFs from a blizzard of more than 400 choices available today? Download Jim Lowells free report, "Three ETFs for the Current Market," and avoid dangerous ETF investor traps.In order for Medicare to pay for your LTC costs at all, you must meet three criteria: --The 72-hour rule: You must have been hospitalized for at least three full days and three full nights. Many hospital stays are three days and two nights. For example, you might go in for a hip replacement on Monday morning and leave Wednesday afternoon. --Medical necessity: Your care must fulfill the following requirements. It must be medically necessary. It must be care that can only be given in a nursing home, in most cases by skilled personnel. And it must result from the condition for which you were hospitalized. --Places where care can be given: In almost all cases, patients leaving a hospital go straight to a nursing home for further care. There's a difference between care that is skilled and medically necessary and care that is custodial. The bottom line is determining whether you need assistance with activities of daily living (ADL) or custodial care. (For related reading, see "Taking the Surprise Out of Long-Term Care.") Another exception is end-of-life or hospice care. The exact levels and locations for receiving skilled care vary from state to state .
Medicare may cost more and provide less in coverage and benefits than you may have thought. Investing time and energy into determining the best combination of coverage options can help you avoid unpleasant and expensive surprises down the road. This article is from Investopedia.com , the Web's largest site dedicated to financial education. Click here for more educational articles from Investopedia. More On This Topic
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