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Questions & Answers

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What is the Medicare Prescription Drug benefit?

The Medicare Modernization Act of 2003 (MMA) established the Medicare prescription drug benefit (also known as Medicare Part D or Medicare Rx) as a new type of insurance to help people with Medicare pay for their prescription drugs. Medicare is working with insurance and other private companies to offer these plans. If you enroll in a Medicare Prescription Drug Plan, portions of your prescription drug costs are paid for by the plan. While plans will vary, you will have several plans to choose from.

Look for information about Medicare Prescription Drug Plans in October either in the Medicare & You 2009 handbook or on www.medicare.gov.

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Who can join a Medicare prescription drug plan?

Anyone who has Medicare Part A (Hospital Insurance) and/or is enrolled in Part B (Medicare Insurance) can enroll in a Medicare prescription drug plan. To enroll, a person must live in the service area of the plan. The State of Michigan is a service area.

Individuals who reside outside of the U.S. or who are incarcerated are not eligible to enroll in a Medicare prescription drug plan or a Medicare Advantage Prescription Drug plan.

Unlike Medicare Part A and Part B where a person is automatically enrolled, you have to take action. You have to enroll in a plan to get the coverage.

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Will the Medicare Prescription Drug Coverage help me?

Medicare prescription drug coverage is helpful, especially for those who currently do not have prescription coverage. Medical practice has come to rely more and more on new drug therapies to treat chronic conditions and out-of-pocket spending on drugs has increased dramatically. Most people with Medicare currently need or will come to need prescription drugs to stay healthy. Medicare prescription drug coverage will protect you from high out-of-pocket costs. For most people, enrolling when you are first eligible means that you will pay a lower monthly premium than if you wait to enroll.

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When can I join a Medicare Prescription Drug Plan?

There are three enrollment periods.

  • The Initial Enrollment Period allows people to enroll in a Medicare prescription drug plan when they are first eligible for the coverage. The initial enrollment period is similar to the initial enrollment period for Part B (3 months before eligibility, the month of eligibility, and 3 months after eligibility).
  • The Annual Coordinated Election Period allows people to change their Medicare prescription drug plan, enroll in a plan, or disenroll from a Medicare prescription drug plan. People may enroll, change plans or disenroll from November 15 to December 31 of each year.
  • Generally, a person remains enrolled in a Medicare prescription drug plan for a year. If the person chooses not to enroll in a plan during the Annual Coordinated Election Period, he or she may not enroll in a plan until the next Annual Coordinated Election Period or if the person has a Special Enrollment Period.
  • The Special Enrollment Period allows people with certain circumstances a special time to enroll in a Medicare prescription drug plan. These circumstances include:
  1. When an individual permanently moves out of the plan service area,
  2. If a person was not adequately informed that their non-Medicare prescription drug coverage was not creditable or if their current non-Medicare prescription drug plan coverage is reduced so that it is no longer creditable,
  3. When an individual is entering, residing in, or leaving a long-term care facility.

Full-benefit dual eligibles (people with both Medicare and Medicaid) have a continuous Special Enrollment Period. They can change their Medicare prescription drug plan at any time.

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Can I wait to enroll in the Medicare Prescription Drug Plan?

You could, but you may have to pay more if you enroll after your initial enrollment period. The longer you wait to enroll, the more you may have to pay for the premium.

The higher premium is 1% of the base premium for each month that you did not join a prescription drug plan and were eligible to join. The higher premium is charged as long as you are enrolled in a Medicare prescription drug plan.
Exceptions: If you have prescription drug coverage that covers at least as much as a Medicare prescription drug plan (has creditable coverage), then you can keep your current plan. If you decide to join a Medicare prescription drug plan later, you will not have to pay a higher premium to enroll (see next question).

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What do you mean by “coverage at least as much”, “as good as” or “creditable coverage”?

When you are told that your current prescription drug plan is “as good as the Medicare prescription drug coverage”, or that you have “creditable coverage” it means that your current plan provides equal or better benefits than the Medicare prescription drug plan. People who have other prescription drug coverage through their employer or union will receive a notice from their plan that tells them if the plan covers “at least as much as a Medicare prescription drug plan”, is “creditable coverage”, is “not creditable coverage” or “not as good as a Medicare prescription drug plan”.

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How will I know if I have creditable coverage?

If you have other prescription drug coverage, you will get a notice from your insurance carrier that will tell you if the plan covers at least as much as a Medicare prescription drug plan. The plan will also notify you if the coverage changes so that it is no longer as good as Medicare prescription drug coverage. (Please note that if your coverage does change to be non-creditable you will have 63 days to enroll in a Medicare prescription drug plan without paying the higher premium rate).

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What if I have prescription drug coverage that covers less than a Medicare prescription drug plan?

If your current prescription drug coverage is not as good as the Medicare prescription drug plan you can:

  • Keep the current drug plan and join a Medicare prescription drug plan to provide more complete coverage, or
  • Just keep the current drug plan. But if you join a Medicare prescription drug plan later, then you will have to pay a higher premium; or
  • Drop the current plan and join a Medicare prescription drug plan. If you drop your current plan, you may not be able to get the coverage back from your previous private plan (i.e. employer, union, etc.).

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How much will a Medicare prescription drug plan cost me?

Like other insurance, if you join, you will pay a monthly premium and a yearly deductible ($295 in 2009). You will also pay a part of the cost for your prescriptions, including a co-payment or coinsurance. Costs will vary depending on which drug plan you choose. Some plans may offer more coverage and additional drugs for a higher monthly premium.

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The law established a standard drug benefit that all Medicare prescription drug plans may offer. The standard benefit is defined in terms of the benefit structure and not in terms of the drugs that must be covered. The annual cost for 2009 for the standard benefit requires payment of a $295 deductible.Then you pay 25% of the cost of a covered plan prescription drug up to an initial coverage limit of $2,700. Once the initial coverage limit is reached, you then pay 100% of the covered prescription costs to $6,153 ($4,350 out-of-pocket cost not counting monthly premium) after which you then pay 5% of the prescription costs. (see chart for visual detail)

If you have limited income and resources, and qualify for extra help, you may not have to pay a premium or deductible (see question about extra help for more information).

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What drugs are included and what drugs will not be included in drug benefit plans?

By law, a Part D drug is any drug available only by prescription, approved by the Food and Drug Administration (FDA), used and sold in the United States, and used for a medically accepted reason. More specifically, a Part D drug includes prescription drugs, biological products, insulin, vaccines, and certain medical supplies associated with the injection of insulin (syringes, needles, alcohol swabs, and gauze).

Certain drugs or classes of drugs cannot be Part D drugs because they are excluded by law. These include: (1) drugs when used for anorexia, weight loss, or weight gain; (2) drugs when used to promote fertility; (3) drugs when used for cosmetic purposes or hair growth; (4) drugs when used for the symptomatic relief of cough and colds; (5) prescription vitamins and mineral products, except prenatal vitamins and fluoride preparations; (6) nonprescription drugs; (7) outpatient drugs for which the manufacturer seeks to require that associated tests or monitoring services be purchased exclusively from the manufacturer as a condition of sale; (8) barbiturates; and (9) benzodiazepines. In addition, a drug cannot be covered under Part D if payment for that drug, as it is prescribed and dispensed or administered to an individual, is available under Parts A or B of Medicare.

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Will all plans offer the same drugs?

The drugs covered may vary from plan to plan, so you will need to make sure that the plan you choose covers the drugs that you need.

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How do I get the Medicare Prescription Drug Coverage?

To obtain the Medicare prescription drug coverage you must enroll in the prescription drug plan that you have determined best meets your individual needs. You can enroll by either calling the plan directly, enroll on the internet at the plan's website or on medicare.gov, or by calling 1-800-Medicare. A MMAP counselor can help you with this process.

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Do I have to enroll?

No. Participation in the Medicare prescription drug benefit is totally voluntary. However, to obtain the coverage and to prevent paying a higher premium you must enroll during your initial enrollment period.

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Is there extra help with Medicare prescription drug coverage if my income and resources are low?

Yes. To determine if you are eligible for extra help, Social Security will need to know your income and the value of your savings, investments and real estate (other than your home.). Filing an application for help with Medicare prescription drug plan costs will help Social Security determine if you are eligible. Most of the questions on the application deal with income and resource limits. Social Security will not ask for documentation to support the information you provide, but will match your information with data available from other federal agencies. Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) or visit www.ssa.gov for more information.

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How can I find out if I qualify for the extra help with my Medicare Prescription Drug Benefit plan costs?

You can apply for extra help by completing the Social Security Administration’s “Application for Help with Medicare Prescription Drug Plan Costs.” You can also apply over the internet at www.socialsecurity.gov or by calling SSA at 1-800-772-1213. Applications are available at many community sites and Department of Human Services. If you live in Michigan, you can also obtain an application by calling the MMAP helpline at 1-800-803-7174. MMAP has staff and volunteers available to assist you with completing the application form.

Social Security also has an online tool that will help you determine if you qualify. Go to www.socialsecurity.gov/prescriptionhelp/ . Click “See if you qualify”, then click “Find out if you qualify” located at the bottom of the page.

If you think you may qualify and are not sure, Social Security is encouraging individuals to apply and let them determine your eligibility. Social Security says...”When in doubt, fill it out”.

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What are the income limits to qualify for the extra help?

If your annual income is below $16,245 (or $21,855 if you are married and living with your spouse), you may qualify for extra help. Even if your annual income is higher, you still may be able to get some help. Some examples where your income may be higher include if you or your spouse provide at least half of the support of other relatives who live with you, or have earnings from work.

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What are the resource limits to qualify for the extra help?

To get the extra help with Medicare prescription drug plan costs your countable resources generally must be valued below $12,510 (or $25,010 if you are married and living with your spouse). The resource limits include $1,500 per person for burial expenses.

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What are considered countable resources?

Resources include the value of things you own. In order to keep the process simple and minimize administrative cost, only two resources are considered available to the applicant to pay for the Medicare prescription drug coverage premiums, deductibles, and co-payments:

  • Liquid resources (such as any savings accounts, stocks, bonds and other assets that could be converted to cash within 20 days) and
  • Real estate not counting your primary residence or land on which your primary resident is located.
  • Items such as wedding rings and family heirlooms are not considered resources for the purposes of the extra help.

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What are some things that are not counted as resources when determining eligibility for extra help with prescription drug plan costs?

Some things that are not counted as resources are: your primary residence; your vehicle; your household goods and personal possessions; resources you could not easily convert to cash, such as farm machinery and livestock, jewelry and home furnishings; money conserved for medical and social services; federal income tax refunds; property, or land you use to grow produce for home consumption; life insurance policies owned by an individual with a combined cash value of $1,500 or less (an individual and spouse could have a total of $3,000).

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If I complete the extra help application, when will I find out if I qualify?

If you send your completed applications for extra help to Social Security or apply on line, Social Security will get back with you within approximately 45 days to tell you if you qualify and what level of extra help you will receive.

Please note: For people with both Medicare and Medicaid, you automatically qualify for extra help. If you do not choose and enroll in a plan Medicare will automatically enroll you in a plan so you do not lose any prescription drug coverage. For people who Social Security tells are eligible for extra help, if you don’t enroll in a plan Medicare will also enroll you in a plan.

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What if I already have both Medicare and Michigan Medicaid?

If you have both Medicare and Medicaid you should enroll in a Medicare Prescription Drug Plan because Medicare, not Medicaid, will cover your prescripitons. You will automatically qualify for extra help paying for your prescriptions through Social Security so you will not need to apply for this benefit separately. Since you receive this extra help you can change plans at any time. If you do not enroll yourself into a Medicare Prescription Drug plan you will be automatically enrolled in a plan so that you will not have a gap in prescription coverage.

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Will I lose my food stamp benefits if I apply and qualify for extra help paying for the new Medicare prescription drug coverage?

With the extra help for Medicare prescription drug coverage, you may see your food stamp benefits go down as you spend less on drugs. However, the reduction in food stamps will be more than offset by the value of the extra help you will receive from a Medicare prescription drug plan. Using the extra help means you will have more cash to spend on food and other things that you used to spend on prescription drugs. Generally, every $1 increase in adjusted income (because drug spending declines), results in only $0.30 decline in food stamps.

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Will I lose my HUD (housing assistance benefit) if I apply and qualify for extra help paying for the new Medicare prescription drug coverage?

With the extra help for Medicare prescription drug coverage, you may see your HUD housing assistance reduced because of lower drug spending. However, any housing assistance reduction will be more than offset by the value of the extra help.

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Will I see a reduction in the assistance I receive from LIHEAP (Low Income Home Energy Assistance Program)?

No. You will not lose your energy assistance. Michigan sets eligibility levels for home energy assistance based on your income without regard to your medical expenses.

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What if I have Medicare and am eligible for Medicaid after my income is adjusted due to high medical expenses. Am I eligible for the extra help?

Yes, once you become eligible for Michigan Medicaid because you have met your deductible (spent down) through approved medical expenses you are then eligible for the extra help. This extra help is available to you for the entire year even if you do not remain eligible for Michigan Medicaid because your medical expenses are no longer high enough to meet your deductible to qualify for Medicaid.

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I understand that the Social Security Administration (SSA) may call me if they need more information to process my application for extra help with Medicare Prescription Drug costs. How will I know if a call is from SSA and not part of a scam?

SSA may call you if some questions on the application were not answered or if they cannot read the answer. They may also call you to check any differences between your answers on the application and information they receive from other Federal agencies about your income or resources. When SSA calls you for more information, they should never ask you for bank account numbers, credit card numbers, or life insurance policy numbers. The only time SSA will ask for your Social Security Number is if the number on the application isn’t valid, and they need the correct number. If you get a suspicious call from someone claiming to be the SSA, hang up and call SSA at 1-800-722-1213 to find out if the call was real. Remember the motto “When in doubt...Check it out.”

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What if I live in a nursing home or long-term care facility?

If you have Medicare and are a long-term care or nursing home resident and currently receive your prescription drugs through Michigan Medicaid, you will automatically be eligible for extra help through the Medicare prescription drug benefit. You will be automatically enrolled in a plan.

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What if my prescriptions aren’t covered under my new Medicare prescription drug benefit?

CMS (Medicare) is very aware of the need to make sure that people continue to get the drugs they need without interruption. So, CMS has a multi-faceted approach to addressing this potential problem.

  • First, in general, there is no reason to believe that a drug you need will not be covered under the Medicare benefit. Plans will be required to cover all the types of drugs commonly needed by people with Medicare. CMS will carefully review each plan’s list of covered drugs (that is, the drug formulary) to make sure that the plan provides a full range of drug options.
  • CMS is also requiring that each drug plan have a set of “transition” rules that will address exactly this type of situation, where an individual who is new to a plan is already receiving a course of drug treatment. CMS will not approve any plan for participation in the Medicare program unless CMS is convinced that its transition plan is adequate to protect people with Medicare.
  • CMS is going to make sure that every individual who is eligible for both Medicaid and Medicare is enrolled in a Medicare drug plan, so there will be no gap in drug coverage. Individuals will be free to choose a plan of their own or they can be enrolled automatically into a plan in their area. CMS has made available the information you need to check whether the specific drugs you take are covered under a given plan, and at what cost, at www.medicare.gov.
  • Despite all these steps though, CMS realizes that in some cases a particular drug may not be on a plan’s formulary. So, they have established rapid procedures for requesting a non-formulary drug, or appealing any decision by a plan not to cover a prescribed drug. A request can be made either by the person with Medicare, the prescribing physician, or by an authorized representative. Plans will have to deal with requests for a non-formulary drug (a drug that is not listed as a covered drug under the plan) within 24 hours if the patient’s condition dictates, and within 72 hours for all other coverage determinations. Plans must process appeals filed with them within 72 hours if the case warrants expedited appeal, or within 7 days for all other appeals.
  • Finally, for those with Medicare and Medicaid, or those receiving extra help, should you need to change prescription drug plans to better meet your pharmaceutical needs and pharmacy affiliations, you may do so at any time.

For more information see Medicare’s frequently asked questions www.medicare.gov.

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I receive some of my prescription drugs through my Medicare Part B benefit; will this change?

The implementation of the Medicare prescription drug coverage (Part D) benefit does not alter coverage or associated rules for drugs currently covered under Part B. Part B covers drugs in a variety of settings, particularly drugs administered by physicians in the physicians’ office. In almost all of these settings, the question of whether coverage should be provided under Part D will not arise since the drugs are being provided in the context of a service or procedure.

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What happens if my doctor says I need a drug that isn’t on the formulary? Or a drug that is “non-preferred” and requires a high co-pay? How does the exception and appeals process work?

The exceptions process is different from an appeal or grievance. This is a process by which enrollees may have access to medically necessary Medicare-covered prescription drugs. There are two types of exceptions: tiering exceptions and formulary exceptions. An enrollee may request a tiering exception to obtain a Medicare covered prescription drug at a more favorable cost-sharing level, or a formulary exception to obtain a Medicare-covered prescription drug that is not on a plan’s formulary.

An enrollee’s appointed representative may request a coverage determination (including exceptions) or any appeal on behalf of the enrollee.

A physician may request a standard or expedited coverage determination and an expedited redetermination on the enrollee’s behalf without being the enrollee’s authorized representative.

An enrollee may request an exception under the following circumstances:

  • The enrollee is using a Medicare covered prescription drug on a plan’s formulary that has been removed during the plan year for reasons other than safety.
  • The enrollee’s physician prescribed a non-formulary Medicare-covered prescription drug for the enrollee that the physician believes is medically necessary because the formulary drug is medically inappropriate.
  • The enrollee is using a Medicare-covered prescription drug that has been moved during the plan year from the preferred to the non-preferred cost-sharing tier.
  • The enrollee’s physician prescribed a Medicare-covered prescription drug for the enrollee that is included in a plan’s more expensive cost-sharing tier because the prescribing physician believes the Medicare-covered prescription drug included in the less expensive cost-sharing tier is medically inappropriate for the enrollee. The enrollee can request an exception to obtain a non-preferred Medicare-covered prescription drug at the cost-sharing terms that apply at the preferred (but not generic) level.

Generally, plans must grant exceptions when they determine that it is medically appropriate to do so.

When a plan denies an exception request, the enrollee may appeal the plan’s decision.

The plan must notify the enrollee and the prescribing physician involved, as appropriate, of its determination as fast as the enrollee’s health condition requires, but no later than 24 hours for expedited requests, or 72 hours for standard requests, after receipt of the request for a coverage determination or receipt of the physician’s oral supporting statement for exceptions requests.
A plan must provide an expedited coverage determination if it determines, or the enrollee’s prescribing physician indicates, that applying the standard timeframe for making a determination may seriously jeopardize the life or health of the enrollee or the enrollee’s ability to regain maximum function. If a plan does not make its determination within the appropriate timeframe, it must forward the enrollee’s request to the Independent Review Entity (IRE) within 24 hours of the expiration of the adjudication timeframe.

Once a plan sponsor approves an exception request, it cannot require the enrollees to file additional exception requests for refills for the remainder of the plan year so long as the physician continues to prescribe the drug and it continues to be safe for treating the enrollee’s condition.

Plan sponsors are prohibited from assigning drugs approved under the exceptions process to a special formulary tier, co-payment, or other cost-sharing requirement. From CMS Issue Paper 21 – Coverage Determination and Appeals Processes

Level 1: Redetermination
Enrollee can request when the plan’s initial coverage determination is unfavorable; plan has 7 days; can request expedited appeal, up to 72 hours

Level 2: Reconsideration
Enrollee can request when plan’s redetermination is unfavorable. The reconsideration is conducted by an Independent Review Entity (IRE) has 7 days to make its decision. Under certain circumstances, an expedited appeal can be requested which give the IRE up to 72 hours for a response to the reconsideration. The IRE must solicit the views of the prescribing physician whenever it processes either a standard or an expedited reconsideration.

Level 3: Administrative Law Judge (ALJ)
Enrollee can request consideration when IRE’s determination is unfavorable; must meet amount in controversy requirement.

Level 4: Medicare Appeals Council (MAC)
Enrollee can request consideration when ALJ is unfavorable; MAC is entity within Department of Health and Human Services that reviews ALJ decisions

Level 5: Federal District Court
Enrollee may request consideration when MAC is unfavorable; must meet amount in controversy

For additional information on re-determinations, appeals and many other items of interest you may visit www.medicar.gov or contact your Medicare Prescription Drug Plan.

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Do I have to track my out of pocket spending? How will I know how close I am to the out-of-pocket limit?

No. Ultimately, tracking and calculating true out-of-pocket (TrOOP) spending is the responsibility of the Medicare prescription drug plan (Part D plan). From your perspective, most of the tracking will occur automatically. However, you have an obligation to inform your Part D plan of any supplemental coverage for prescription drug benefits you have, and of any reimbursement of out-of-pocket costs you receive (such as from a Health Reimbursement Account), so that TrOOP can be correctly calculated.

Any beneficiary who materially misrepresents information on third parties may be disenrolled from any Part D plan for a period specified by CMS and may be subject to late enrollment penalties upon enrollment in another plan.

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There are a number of sources where you can get more information about the Medicare Prescription Drug benefit including:

  • Medicare’s website for people with Medicare, www.medicare.gov
  • Medicare’s website for partners, www.cms.hhs.gov
  • Social Security’s website www.socialsecurity.gov
  • The toll-free number for Medicare, 1-800-MEDICARE (1-800-633-4227) and 1-877-486-2048 for TTY users
  • The toll-free number for Social Security, 1-800-772-1213 and 1-800-325-0778 for TTY users

Order publications such as the Medicare & You handbook or Facts About Medicare Prescriptions Drug Plans. They can be ordered from Medicare’s website, by calling 1-800-MEDICARE or through the information request section of this website.

This information is made available through grants from the Center for Medicare and Medicaid Services (CMS), Michigan Department of Community Health (DCH) and Michigan Office of Services to the Aging (OSA). It does not constitute a legal document. The official Medicare program provisions are contained in the relevant laws, regulations, and rulings. However, all answers provided are based on Medicare information and current as of this posting.

MMAP is Michigan’s official State Health Insurance Assistance Program (SHIP) for all Michigan Medicare beneficiaries and is designated by the Center for Medicare and Medicaid Services to provide Medicare assistance.

Additional Information

What is long term care?

Long term care can mean many different things. A chronic or disabling condition that requires nursing care or constant supervision can bring on the need for long term care services. Long term care means not only care in a nursing home, it can also mean nursing care in your own home and help with activities of daily living, such as dressing, eating, bathing and taking medicine.

There are a variety of services that would fall under the definition of long term care. These services include institutional care that is provided in a nursing home, adult day care center, or assisted living facility. It can also mean skilled or personal care that is provided in your home by a home health care agency.

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Who needs long term care services?

Long term care clients are individuals who need assistance from another person for an extended period of time in order to carry out everyday activities. The help may come from a family member, friend or from an employee of an agency that provides the services. Although it may be an uncomfortable thought, it makes sense to think ahead about your possible long term care needs. This includes your preferred setting for long term care.

Generally, an individual who needs long term care services is someone who had difficulty in performing day-to-day functions without the assistance of another person. Another person is needed because of the person’s reduced physical or mental abilities or assistance is needed to maintain or improve their well-being. (Long term care is not the same as medical care.)

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Who provides long term care?

Long term care services are provided in a wide variety of settings. The services can be provided at home (including another person’s home), in the community, or in a residential setting (care is provided on-site and the person lives at the facility).

Nursing homes in Michigan are licensed under the Public Health Law as nursing facilities. The nursing home provides room and board, skilled or basic nursing care, assistance with activities of daily living, recreational and physical therapy.

Home health care consists of services received in your home, and can include skilled nursing care, speech, physical or occupational therapy or home health aide services.

Home care (personal care) consists of assistance with personal hygiene, dressing or feeding, nutritional or support functions and health-related tasks.

Adult day care (provided at a day-care center or person’s residence) is for persons living at home, and provides supervision for elderly persons during the day when family members are not at home. It is a method of delivering a variety and range of services including social and recreational, and in some cases, health services, in a group setting.

Assisted living facilities provide ongoing care and related services to support those needs resulting from a person’s inability to perform activities of daily living or a cognitive impairment.

Respite care includes services that can provide family members a rest or vacation from their caregiving responsibilities. It can be provided in a variety of settings including an individual’s home or a nursing home.

Hospice care is a program of care and treatment, either in a hospice care facility or in the home, for persons who are terminally ill and have a life expectancy of six months or less.

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Do I need insurance coverage for long term care?

Long term care is very expensive, and most people cannot afford to privately pay for long term care services for very long. In Michigan, skilled nursing facilities currently charge approximately $77,000 per year or more.

Home health care is also expensive. In Michigan, if your home health care services are not covered by Medicare, three home health care visits per week by a registered nurse can cost over $15,000 per year. Even custodial home care at three visits a week can cost over $10,000 per year.

The chance of needing some type of long term care services is fairly high. It is estimated that over 40% of all persons who were 65 years old in 1990 will enter a nursing home during their lifetime.

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Aren’t long term care services covered by Medicare or other health insurance?

Medicare does NOT pay for most long term care services. Individuals should not rely on Medicare to meet their long term care service needs. For example, Medicare does not pay for custodial care when that is the only kind of care needed. Even skilled nursing facility care is covered by Medicare only on a very limited basis.

In order to obtain Medicare coverage of a skilled nursing facility stay, the following five conditions must be met:

  • Your condition must require daily skilled care which, as a practical matter, can only be provided in a skilled nursing facility on an inpatient basis.
  • You must have been admitted to a hospital for at least three days in a row (not counting the day of discharge) before you are admitted to a certified skilled nursing facility.
  • You must be admitted to the facility within a short time (generally within 30 days) after you leave the hospital.
  • You must have received treatment in a hospital for the condition for which you are receiving skilled nursing care.
  • You must receive certification from a medical professional that you need skilled nursing care or skilled rehabilitation services on a daily basis.

If the skilled nursing facility stay continuously meets all of the above conditions, Medicare will provide benefits for up to 100 days of skilled care in a skilled nursing facility during a benefit period. For the first twenty days of care, all covered services are fully paid by Medicare. For the next 80 days of care, Medicare requires a co-payment (the amount you pay) of up to $133.50 per day (2009 amount).

If you need skilled health care in your home for the treatment of an illness or injury, Medicare can pay for home health services furnished by a home health agency. You do not need a prior hospital stay to qualify for home health care. Medicare pays for home health visits only if all four of the following conditions are met:

  • The care you need includes intermittent skilled nursing care provided by a registered nurse, physical therapist, or speech language pathologist;
  • You can only leave your home with assistance (you are homebound);
  • You are under the care of a physician who determines you need home health care and sets up a plan for you to receive care at home; and
  • The home health agency providing services participates in Medicare.

Once all four of these conditions are met, Medicare will pay for covered services as long as they are medically reasonable and necessary. (The services must be provided either on a part-time or intermittent basis, not full-time.)

Medicare pays the full cost of medically necessary home health visits by a Medicare-approved home health agency. You do not have to pay a deductible or coinsurance for services; however, if you need durable medical equipment, you are responsible for 20% coinsurance payment for the equipment.

Medicare will not pay for full-time nursing care at home, drugs, meals delivered to your home, and homemaker services that are primarily to assist you in meeting personal care or housekeeping needs.

More information on Medicare and changes to the deductibles and co-payments under Medicare is available on the web site of the Centers for Medicare and Medicaid Services (CMS) at www.medicare.gov.

Medicare supplement insurance is designed to fill in some of the major gaps in Medicare coverage, but it does not cover most long term care services.
Other private health insurance that you might already have covers mainly acute conditions and probably does not cover custodial care.

Medicaid, a governmental program for low-income individuals and families, is currently the major source of funding for long term care services. In order to qualify for Medicaid coverage, persons must meet certain income and asset tests. Because of the high cost of nursing home care, more than half of those who enter nursing homes privately paying for their care reach this level in less than a year. For additional information regarding long term care under Medicaid see MMAP’s booklet entitled When My Spouse Is In A Nursing Home or contact a MMAP volunteer counselor at 1-800-803-7174.

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*How else can I pay for long term care services?

There are other options that you should be aware of that may help you pay for long term care services:

  • Savings and Investments – A savings or investment plan may help pay for long term care services. A retirement plan such as an IRA or 401K plan may also be available to you.
  • Life Insurance – A life insurance policy may offer the opportunity for a loan or withdrawal of the cash value. In addition, a person who is terminally ill may arrange for an accelerated cash lump sum death benefit from his life insurance company or for a cash lump sum (called a viatical settlement) from an outside firm. (Note: not all life insurance companies offer an accelerated death benefit option). These cash lump sum benefits are paid in lieu of the policy’s death benefit.
  • Equity in Your Home – If you have built up equity in your home, you could use the profit from the sale of your home to fund long term care costs and move to less expensive accommodations. Another option is a “reverse mortgage,” which is a loan based on the amount of equity you have built up in your home.

*These options should be reviewed carefully with consideration for Medicaid eligibility. See a Medicaid attorney or MMAP counselor for details.

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What should I consider before purchasing insurance

  • Are you eligible for Medicaid? If so, Medicaid will pay for nursing home and home health services.
  • How much can you afford to pay out-of-pocket for long term care expenses?
  • How much can you afford to pay for an insurance policy covering long term care services?
  • If you are planning to retire, will your reduced income be adequate to meet the annual costs of the premium?
  • All long term care policies are medically underwritten, i.e., your physical/mental condition and health history will be evaluated, so if you intend to purchase a policy, don’t wait until you have a medical condition that could make long term care coverage more expensive or unavailable to you. Some insurances offer a discount on your premium for “good health”.
  • In most cases, the premium for a policy will be lower when purchased at a younger age.
  • What types of long term care services would best meet your own personal needs and preferences?
  • What are the costs of these services in the locality where you would be receiving them?

It is very important to read the policies carefully and compare the benefits to determine which policy will best meet your own personal needs.

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How can MMAP help?

MMAP -- Michigan’s State Health Insurance Assistance Program -- can help you with your long term care insurance choices. For Michigan Medicare beneficiaries, their family members, and individuals shopping for long term care insurance call, 1-800-803-7174 to be connected to a MMAP counselor in your community. MMAP provides free, confidential, accurate and unbiased health benefits information, counseling and assistance. Trained counselors and staff explain the coverage, costs, comparisons and options of Medicare, Medicaid, private insurance, Medigap, long term care insurance, Medicare Advantage plans, and prescription drug coverage.

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Why does it take so long to resolve my complaint about Medicare Fraud, Waste and Abuse?

All Medicare contractors (the intermediaries and carriers that contract with CMS to process Medicare claims) have Medicare Fraud Units in place to detect, deter and prevent fraud, waste and abuse. In addition to other workload these units have, they receive and respond to a large number of complaints. Some of these complaints involve fraud, waste and abuse while others are simple misunderstandings. The Fraud Unit staff must treat each complaint seriously. This means that they meticulously investigate each case. Investigating may involve a number of steps including sending surveys to a random sample of beneficiaries on the phone, obtaining medical records from providers, conducting on-site audits and writing a report on the investigation.

After the Fraud Unit has completed its investigation, the case is often referred to federal law enforcement and then on to the U.S. Attorney for criminal prosecution. Obviously, this process takes a considerable amount of time. It is important for beneficiaries to realize that the process is so lengthy because we take protecting the Medicare Trust Fund seriously.

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What are the consequences if Medicare provider commits fraud?

Fraud units refer the results of their investigations to the U.S. Department of Health and Human Services (DHHS)/Office of Inspector General (OIG). The OIG’s Office of Investigations then prepares the case for referral to the Department of Justice for criminal and/or civil prosecution.

A person who is found guilty of committing Medicare fraud faces a host of different criminal, civil, and administrative sanction penalties including:

  • Civil penalties of $5000 to $10,000 per false claim and triple damages under the False Claims Act.
  • Criminal fines and/or imprisonment of up to 10 years if convicted of the crime of Health Care Fraud as provided in the Health Insurance Portability and Accountability Act of 1996, or, for violations of the Medicare/Medicaid Anti-Kickback Statute, imprisonment of up to five years, and /or a criminal fine of up to $25,000
  • Administrative sanctions including up to $10,000 civil monetary penalty per line item on a false claim, assessments of up to triple the amount falsely claimed, and/or exclusion from participation in Medicare and State health care programs.

In addition to the penalties previously outlined, those who commit health care fraud can also be tried for Mail and Wire Fraud. It has never been more dangerous to commit Medicare Fraud.

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Why is Medicare paying for this service I never had?

This question often arises when a beneficiary receives services which are not commonly performed in the beneficiary’s presence, such as lab tests or an x-ray reading by a radiologist. To avoid confusion, beneficiaries or their caregivers can ask the physician’s office staff if other suppliers, labs or doctors will bill Medicare for services related to this visit. Keep a record of the response. Carefully review Medicare Summary Notices (MSN) to make sure Medicare was billed only for the services your physician performed or referred.

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Why does Medicare pay so much for items that I can get more cheaply?

The price Medicare pays for many items are set by Congress. These prices often do not take into account rebates that may be available from retail establishments. For example, Medicare pays a fixed amount for the glucometer that a diabetic uses to test blood sugar. Many of these items currently have rebates which make them less expensive. Medicare cannot take into account such discounts.

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Is it the responsibility of the beneficiary to forward the Medicare information to their supplemental insurance?

This depends on your supplemental insurance carrier and your provider. Your provider takes information on all your insurance at the time of service and will usually bill you for it. You need to check with your provider at the time of service. Remember; wait until all the “dust” settles before you pay any out-of-pocket expenses. Compare your MSN with the statement from your supplemental insurance.

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