The
Federal Medicare program provides hospital
and medical insurance protection for
railroad retirement annuitants and their
families, just as it does for social
security beneficiaries. Part A (hospital
insurance) is financed through payroll
taxes paid by employees and employers,
while Part B (medical insurance) is
financed by premiums paid by participants
and by Federal general revenue funds.
The following questions and answers
provide basic information on Medicare
eligibility and coverage, Medicare
premium, deductible and coinsurance
increases in 2005, as well as information
on the changes in Medicare effected by
legislation enacted in 2003.
1. Who is eligible for Medicare?
All railroad retirement beneficiaries
age 65 or over, and other persons who are
directly or potentially eligible for
railroad retirement benefits, are covered
by the program. Although the age
requirements for some unreduced railroad
retirement benefits are rising just like
the social security requirements,
beneficiaries are still eligible for
Medicare at age 65.
2. Who is
eligible for Medicare coverage before age
65?
In general, coverage before age 65 is
available for disabled employee annuitants
who have been entitled to monthly benefits
based on total disability (i.e., the
employee must have met the Social Security
Act's requirements for a disability
benefit) for at least 24 months. Disabled
widow(er)s under 65, disabled surviving
divorced spouses under 65, and disabled
children may also be eligible.
Medicare coverage before age 65 on the
basis of permanent kidney failure is also
available to employee annuitants,
employees who have not retired but meet
certain minimum service requirements,
spouses, and dependent children who suffer
from permanent kidney failure requiring
hemodialysis or a kidney transplant.
(Special rules also apply for individuals
diagnosed with Amyotrophic Lateral
Sclerosis.)
3. How do
persons enroll in Medicare?
If a retired employee or a family
member is receiving a railroad retirement
annuity, enrollment for both Part A
(hospital insurance) and Part B (medical
insurance) is generally automatic and
coverage begins when the person reaches
age 65. An individual may decline Part B
if so desired, and this does not preclude
him or her from applying for medical
insurance at a later date. Premiums may be
higher, however, if enrollment is delayed.
If an individual is eligible for but not
receiving an annuity, he or she should
contact the nearest Board office about
three months before attaining age 65 in
order to apply for Medicare. (This does
not mean that the individual must retire
if presently working.) The best time to
apply is during the three months before
the month in which the individual reaches
age 65. He or she will then have both
hospital and medical protection beginning
with the month age 65 is reached. If the
individual does not enroll for Part B in
the three months before attaining age 65,
he or she can enroll in the month age 65
is reached or during the next three
months, but there will be a delay of one
to three months before medical insurance
is effective. Individuals who do not
enroll during their initial enrollment
period may sign up in any General
Enrollment Period (January 1 - March 31
each year). Coverage for such individuals
begins July 1 of the year of enrollment.
4. How much
can Medicare Part B premiums increase for
delayed enrollment?
Premiums
for Part B are increased 10 percent for
each 12-month period the individual could
have been, but was not, enrolled. However,
individuals who wait to enroll in Part B
because they have group health plan
coverage based on their own or their
spouse's current employment may not have
to pay higher premiums because they are
eligible for special enrollment periods.
Nonetheless, individuals covered by an
employer group health plan should consider
how delaying enrollment will affect their
eligibility for health insurance policies,
known as "Medigap" insurance, which
supplement Medicare coverage.
Individuals can get more detailed
information about Medigap policies from
the publications
Medigap Policies or
Guide
to Health Insurance for People with
Medicare. To get a copy, they can call the
Medicare toll-free number 1-800-MEDICARE
(1-800-633-4227) or go to
www.medicare.gov
on the Internet and click on
"Publications."
5. What is
covered by Part A (hospital insurance) of
the Original Medicare Plan?
The hospital insurance program is
designed to help pay the bills when an
insured person is hospitalized. The
program also provides payments for
required professional services in a
skilled nursing facility (but not for
custodial care) following a hospital stay,
home health services, and hospice care.
There is a limit on how many days of
hospital or skilled nursing care Medicare
helps pay for in each "benefit period." A
benefit period begins the first day a
patient receives services in a hospital.
It ends after a person has been out of a
hospital or other facility primarily
providing skilled care for 60 days in a
row.
Benefits are
ordinarily paid only for services received
in the United States or Canada.
Hospital insurance also covers hospital
stays in Mexico under very limited
conditions.
6. What are the Medicare Part A
deductible and coinsurance charges in 2004
and what will they be in 2005?
For the first 60 days in a benefit period,
a Medicare patient is responsible for
paying a deductible, which for 2004 is the
first $876 of all covered inpatient
hospital services. The Part A deductible
will increase to $912 in 2005. The daily
coinsurance charge that a Medicare
beneficiary is responsible for paying for
hospital care for the 61st through the
90th day is $219 in 2004, increasing to
$228 per day in 2005. If a beneficiary
uses "lifetime reserve" days, he or she is
responsible for paying $438 a day for each
reserve day used in 2004, and $456 a day
in 2005. Lifetime reserve days are an
extra 60 hospital days a beneficiary can
use if illness keeps him or her in the
hospital for more than 90 days; a
beneficiary has only 60 reserve days
during his or her lifetime and the
beneficiary decides when to use them.
In addition, the daily coinsurance charge
a beneficiary is responsible for paying
for care in a skilled nursing facility for
the 21st through the 100th day is $109.50
in 2004 and will be $114 in 2005.
7. What are some of the services
covered by Part B (medical insurance) of
the Original Medicare Plan?
Medicare medical insurance helps pay for
doctors' services and many medical
services and supplies that are not covered
by the hospital insurance part of
Medicare, such as certain ambulance
services, outpatient hospital care,
X-rays, laboratory tests, physical and
speech therapy, blood, mammograms, Pap
smears, and colorectal cancer screening.
8. Will the Medicare Part B deductible
and premium change next year and by how
much?
The annual deductible for Medicare Part B
will increase from $100 in 2004 to $110 in
2005. After that, the deductible will be
indexed and subject to annual increases.
After the deductible is paid, Medicare
will generally pay 80 percent of the
approved charges for covered services
during the rest of the year; the
beneficiary is responsible for paying the
remaining 20 percent of the cost.
All beneficiaries currently pay the same
basic premium amount for Medicare Part B
($66.60 in 2004 and increasing to $78.20
in 2005), which covers outpatient care and
doctor visits. Beginning in 2007, the
premium will increase for individuals with
annual incomes of more than $80,000, and
for couples with annual incomes of more
than $160,000. The amount of the premium
increase will be based on a sliding income
scale.
9. What is not currently covered by
the Original Medicare Plan?
The Original Medicare Plan provides
basic protection against the high cost of
illness, but it will not pay all health
care expenses. Some of the services and
supplies Part A or Part B cannot pay for
are custodial care, such as help with
bathing, eating, and taking medicine;
dentures and routine dental care; most
eyeglasses, hearing aids, and examinations
to prescribe or fit them; long-term care
(nursing homes); personal comfort items,
such as a phone or TV in a hospital room;
most prescription drugs; and routine
physical checkups and most related tests.
10. What changes to Medicare were
effected by the enactment of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003?
Among the major features of this
legislation are provisions for Medicare
coverage of prescription drugs, the
establishment of a Medicare Advantage
Program to replace the previous Medicare +
Choice Program, and provisions for new
preventive benefits.
11. When will
Medicare coverage for prescription drugs
begin?
The actual prescription drug benefit will
begin in 2006. In the interim,
Medicare-approved drug discount cards
became available in June 2004 to help
beneficiaries save on prescription drugs.
Medicare contracts with private companies
to offer the drug discount cards which
bear a Medicare-approved seal. Voluntary
enrollment began May 2004 and continues
through December 31, 2005.
The discount card program is not intended
to be a prescription drug benefit, but
rather a temporary discount program to
help people without outpatient
prescription drug insurance until the
Medicare drug benefit takes effect on
January 1, 2006.
In June 2004, Medicare also began
providing a $600 annual credit towards the
purchase of prescription drugs for
Medicare beneficiaries with incomes in
2004 of not more than $12,569 for single
individuals or $16,862 for married
individuals. To qualify for the credit,
beneficiaries must not be receiving
outpatient drug coverage from other
sources, including Medicaid, TRICARE,
group or individual health insurance
coverage, or the Federal Employees Health
Benefits Program. Generally, once a person
qualifies for the $600 credit, he or she
is qualified until the new Medicare drug
benefit begins.
The credit is reflected on the
Medicare-approved drug discount cards of
qualified beneficiaries. While
Medicare-approved discount card programs
can charge a beneficiary an enrollment fee
of up to $30 per year, Medicare will pay
the enrollment fee for beneficiaries who
qualify for the $600 credit.
12. How will the Medicare prescription
drug benefit work when it takes effect?
Beginning in 2006, all people with
Medicare will be able to enroll in plans
that cover prescription drugs. Plans might
vary, but in general, this is how they
will work:
- Beneficiaries
will choose a prescription drug plan and
pay a premium of about $35 a month.
- Beneficiaries
will pay the first $250 (the
deductible).
- Medicare then
will pay 75% of the costs between $250
and $2,250 in drug spending.
Beneficiaries will pay only 25% of these
costs.
- Beneficiaries
will pay 100% of the drug costs above
$2,250 until they reach $3,600 in
out-of-pocket spending.
- Medicare will pay
about 95% of the costs after the
beneficiary has spent $3,600.
Some prescription
drug plans may have additional options to
help pay the out-of-pocket costs.
Extra help will be
available for people with low incomes and
limited assets. Most significantly, people
with Medicare who have incomes below a
certain limit won't have to pay the
premiums or deductible for prescription
drugs. The income limits will be set in
2005. If a beneficiary qualifies, he or
she will only pay a small co-payment for
each prescription needed.
Other people with low incomes and limited
assets will get help paying the premiums
and deductible. The amount they pay for
each prescription will be limited.
13. What is Medicare Advantage?
In 2004, the health plan option known as
Medicare + Choice was replaced by the
Medicare Advantage Program.
Congress created the Medicare Advantage
Program to give beneficiaries more
choices, and sometimes, extra benefits, by
letting private companies offer them their
Medicare benefits. Persons who join a
Medicare Advantage Plan may have the
following choices:
- Medicare Managed Care Plans;
- Medicare Preferred Provider
Organization Plans, and;
- Medicare Private
Fee-for-Service Plans.
If Medicare Managed Care Plans,
Medicare Preferred Provider Organization
Plans, or Medicare Private Fee-for-Service
Plans are available in a beneficiary's
area, he or she can join one and get
Medicare benefits through the plan. By
joining one of these Medicare Advantage
Plans, beneficiaries can often get extra
benefits, like additional days in the
hospital. The plan may have special rules
that they need to follow. They may also
have to pay a monthly premium for the
extra benefits.
Medicare Advantage Plans are available in
many areas of the country. For information
about the Medicare Advantage Plans
available in a particular area,
beneficiaries should call Medicare's
toll-free number 1-800-MEDICARE
(1-800-633-4227) or visit Medicare's Web
site at
www.medicare.gov.
14. What new preventive benefits are
being offered?
Beginning in 2005, preventive benefits
coverage will be expanded to include: a
one-time initial wellness physical
examination; screening blood tests for
early detection of cardiovascular
diseases; and diabetes screening tests for
people at risk of diabetes.
15. Will Medicare be putting out
information about these program changes?
The Centers for Medicare & Medicaid
Services (CMS), the Federal agency
responsible for administering Medicare,
mailed letters to all Medicare
beneficiaries in Spring 2004 to explain
the prescription drug discount cards. In
2005, CMS plans to mail informational
booklets to Medicare beneficiaries to
explain the prescription drug benefits.
In the meantime, CMS will provide
information about the Medicare-approved
drug discount cards through the Medicare
toll-free number 1-800-MEDICARE
(1-800-633-4227), and through their Web
site at www.medicare.gov.
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