Consider This . . .
The Medicare Maze
The Medicare program
literally touches every American in some way. You may have parents
or grandparents using this program. You may have a disabled friend
or relative who receives benefits, or you may be one of the millions
of baby boomers beginning to think about retirement and how Medicare
relates to you and your future plans. If you avoided all of the
possible links or associations with the 39,000,000 referenced
beneficiaries as of 2000, then you most certainly are touched
by any changes in the law that require more tax dollars from you
through the Medicare payroll tax of 1.45 percent on every dollar
you earn and an equal amount from your employer. Or you may be
a general contributor through general income taxes which is the
ultimate resource to fund expanded benefits and new beneficiaries
that confront our lawmakers each and every year since President
Lyndon Johnson signed the law in 1965.
The benefits are referred to as Medicare Part A and Part B and
are available to every Social Security recipient at the age of
Medicare Part A (hospital insurance) is available at no additional
cost to all beneficiaries who have paid into the Social Security
system for 40 or more employment quarters. For beneficiaries who
have contributed for 30 to 39 employment quarters, the cost is
$165 per month or ($1,980 per annum). And for beneficiaries who
have contributed for less than 30 employment quarters, the cost
is $300 per month or ($3,600 per annum). This may not be the least
expensive plan for those who have to pay, but it might be the
only place to buy such coverage.
Medicare Part B (medical insurance) is available to all beneficiaries
of the Social Security system at a cost of $50 per month.
Much has been written about the scope of the coverage and the
pros and cons. In the October 2001 issue of the AARP Bulletin,
several issues were made clear. The prediction is that over the
next 25 years, annual out-of-pocket medical costs are projected
to rise by 66 percent from $3,142 to nearly $5,248 per beneficiary.
The single biggest contributor to this escalation---and the one
that gets the most press coverage---is prescription medications.
Ironically, when a survey was taken, a $25 monthly assessment
was viewed as too high and $50 was not possible. It does seem
clear that both Democrats and Republicans favor some sort of prescription
plan as part of Medicare. How that can be accomplished is the
problem. In spite of the growing number of beneficiaries and a
significant voting block, other government budget priorities and
partisan bickering keep it in the background and off center stage.
There are several factors which tend to keep cost verses benefit
shortfalls manageable. Today, we find many employees working beyond
normal retirement in order to keep health benefits active through
their employers or to secure the health care benefits from them
in the future. Medicare becomes a secondary payer when a beneficiary
has private insurance. This means that Medicare coverage pays
some of what is left unpaid after employer coverage is used. When
working is not an option, many consider supplemental plans called
MediGap policies. These specialized policies were created to cover
gaps in coverage and/or out-of-pocket costs left unpaid by Medicare.
A list of the companies can be found by searching the Internet
or calling a Medicare representative at 1-800-medicare (800-633-4227).
This is one government benefit that requires education and information
for proper utilization and maximum benefit. The good news is that
most health care professionals have participated in this environment
long enough to be a real asset to you. The bad news is that some
of those same skilled professionals havepbeen the perpetrators
of fraud against Medicare. This fraudulent activity is often a
result of our willingness as a patient to sign any documents,
receive medical care, and ignore the reams of notices that come
by mail. They do prosecute and jail offenders. I know there have
been local offenders, and my own mother's favorite doctor is in
his final year of incarceration. The fraud unit for Medicare is
an active and aggressive unit, but your vigilance is required.
It is certainly clear by any casual reading of the materials that
an entire section of the health care industry flourished under
the Medicare umbrella. Publishers and lawyers have prospered as
well-I found no fewer than a dozen books available covering Medicare.
The Mercer Guide to Social Security and Medicare, 2001 29th edition
is a great book and easy to follow and understand. I also found
numerous web sites like www.seniorlaw.com/medicare.htm
which go into greater details about coverage and practices than
can be addressed in this brief airing.
There is no reason to approach this topic alone or uninformed.
Just remember that you have been paying for Medicare on the installment
plan for a long time even though the Medicare plan booklet just
showed up. I encourage you to educate yourself now and check out
what you purchased before you are 65.
If you have comments or suggestions, or have an idea for a future
computer or business topic, e-mail me at firstname.lastname@example.org
Jimmy R. Hammond, CPA, is a resident of Annapolis and a consultant to businesses in Annapolis, Baltimore and Washington D.C.