"The School Bell: Medicare Turns 50"

 

Did you know that Medicare, our country's health insurance program for people age 65 and older celebrated its 50th birthday this week? That means it's time for "The School Bell" - a special edition of SAVED BY THE BELL where we reflect on an event in history and share the tips you need to know. The date is July 30, 1965. Today's lesson is on Medicare. Get ready students, it’s time for class. "The School Bell" is ringing!

THE HISTORY LESSON
The Birth of Medicare

 

THE ROAD TO MEDICARE:

1916: Congress held its first hearings on government health insurance in 1916. Health coverage discussions became part of the deliberations over the Social Security program, but President Franklin D. Roosevelt decided it was a better strategy to pass the old-age pension provisions first. 

1939: Senator Robert Wagner introduced national healthcare legislation and held hearings, but the outbreak of World War II caused his bill to be shelved.



PRESIDENT HARRY S. TRUMAN

1945: After World War II, President Harry S. Truman sent to Congress the first comprehensive federal health insurance proposal. The proposal provided for physician and hospital insurance for working-aged Americans and their families. The bill went nowhere.

1947 & 1949: Legislators didn't act on Truman's 1945 health insurance proposal. Truman asked again in 1947 and 1949. Bills were introduced, but died in Congress.

1961: A task force convened by President John F. Kennedy recommends creating a national health insurance program specifically for those over 65. 

KENNEDY'S MEDICARE SPEECH

1962: In May 1962, President Kennedy gives a televised speech about the need for Medicare. The plan was sponsored by New Mexico senator Clinton Anderson. Although polls showed widespread public support for Medicare, the Anderson bill lost by two votes in the Senate. 

1964: President Lyndon B. Johnson continued the effort to enact Medicare. In 1964, the House and Senate passed alternate versions of the bill, but a conference committee failed to resolve those differences.

1965: Legislation creating Medicare as well as Medicaid (health services for certain low-income people and others) passes both houses of Congress. 

JOHNSON SIGNS MEDICARE MEASURE 

July 30, 1965: President Lyndon B. Johnson signed a measure creating Medicare, which began operating the following year. The program, providing hospital and medical insurance for Americans age 65 or older, was signed into law as an amendment to the Social Security Act of 1935. At the bill signing ceremony, former President Truman was enrolled as Medicare's first beneficiary. 

MEDICARE CARD (MALE)

1966: When Medicare services actually begin on July 1, more than 19 million Americans age 65 and older enroll in the program.

1966: Former President Truman and his wife Bess received Medicare cards number one and two. President Johnson wanted to recognize Truman, who was the first president to propose national health insurance. 

1972: President Nixon extends eligibility for the program to Americans under 65 with certain disabilities and people of all ages with permanent kidney disease requiring dialysis or transplant.

1997: Private insurance plans — originally called Medicare+Choice or Part C, later renamed Medicare Advantage — begin, giving beneficiaries the option of choosing a HMO-style Medicare plan instead of the traditional fee-for-service Medicare program.

2003: President George W. Bush signed into law the Medicare Modernization Act (MMA), which added outpatient prescription drug benefits to Medicare.

2006: On January 1, Medicare Part D goes into effect and enrolled beneficiaries begin receiving subsidized prescription drug coverage. 

 OBAMA SIGNS HEALTH CARE LAW        

2010: The health care law (officially the Patient Protection and Affordable Care Act) signed by President Barack Obama on March 23 mandates that Medicare beneficiaries receive certain preventive care services and health screenings, such as mammograms, free of charge and reduces the out-of-pocket expenses of Part D enrollees.  

2015 and beyond: About 55 million retirees and disabled people get Medicare. The Medicare Payment Advisory Commission predicts the Medicare population will increase to over 80 million beneficiaries by 2030 as the baby-boom generation ages into Medicare. 

(Sources: Senate.gov, History.com, AARP.org, TrumanLibrary.org)

 

 

THE MONEY LESSON

Getting the Most Out of Medicare



ABC:

Medicare is our country's health insurance program for people age 65 and older. People who are disabled or have permanent kidney failure can get Medicare at any age. The program helps with the cost of health care, but it doesn't cover all medical expenses or the cost of most long-term care.

 

SAVED BY THE BELL QUICK TIP:

Even though Social Security's full retirement age is no longer 65, you can sign up for Medicare three months before your 65th birthday, even if you are covered by other health insurance.  Apply at Social Security's website: www.socialsecurity.gov. If you don't sign up at 65 and decide to enroll later, you may have to pay a lifetime late enrollment penalty. You may also have a gap in medical insurance coverage.  There are exceptions, but it's best to play it safe.

 

 

Medicare has four parts. Let's first discuss Parts A & B:

 

THAT'S WHAT IT'S ALL ABOUT:

1) Hospital insurance (Part A) helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care and hospice care. You usually don't pay a monthly premium for Medicare Part A coverage if you or your spouse paid Medicare taxes while working. 


The other three parts of Medicare require premium payments:

 

2) Medical Insurance (Part B) helps pay for services from doctors and other healthcare providers, outpatient care, home health care, durable medical equipment and some preventative services. The standard monthly premium for Medical Insurance (Part B) is $104.90 per month. However, some people with higher incomes pay higher premiums. 

The government automatically enrolls individuals who already get Social Security retirement or disability benefits in Parts A & B. If you receive your Part A and Part B benefits directly from the government, you get original Medicare.


SAVED BY THE BELL QUICK TIP
While Medicare will help you with your healthcare when you get older, it will not cover everything. Just like you put money aside for retirement, you should start putting money aside to cover healthcare or long-term care needs when you stop working. If you are not healthy, it's even more important to start saving money early. Worried about keeping track of all the premiums you will have to pay? Sign up for Medicare Easy Pay. The free service automatically deducts premium payments from your savings or checking account each month. You can also get help from your state with paying Medicare premiums. In some cases, Medicare Savings Programs may also pay for Medicare Part A and Medicare Part B deductibles, coinsurance and copayments, if you meet certain conditions.


Now let's discuss Parts C & D:
 

 

I WANNA KNOW:

3) Medicare Advantage Plans (Part C) give coverage through private insurance companies that are approved by Medicare. People with Medicare Parts A and B can choose to receive all of their health services through a single provider under Part C. What you pay in a Medicare Advantage Plan depends on a number of factors including: whether the plan charges a monthly premium, the plan's yearly limit on out-of-pocket costs and if you have Medicaid or get help from your state.

 

4) Prescription Drug Coverage (Part D) helps play for the cost of prescription drugs. These are run by private insurance companies that are approved by Medicare. Deductibles vary between Medicare drug plans. However, Medicare.gov says no Medicare drug plan may have a deductible of more than $320 in 2015. In 2016, it shoots up to $360.


SAVED BY THE BELL QUICK TIP:
Each year you have a chance to make changes to your Medicare Advantage (Part C) and Medicare Prescription Drug Coverage (Part D.) The enrollment period is October 15 to December 7. Not sure about which plans to choose? Medicare has a plan finder at www.medicare.gov. Punch in your zip code to get more information on the plans being offered.
 

A LITTLE HELP FROM MY FRIENDS:   

If you have original Medicare, you may need a Medigap policy. Medigap is sold by private companies and helps pay some of the healthcare costs that original Medicare doesn't cover - like copayments, coinsurance and deductibles. A Medigap policy is different from a Medicare Advantage Plan.  If you receive your benefits from a Medicare Advantage organization or other company approved by Medicare, you have a Medicare Advantage Plan.  If you sign up for a Medicare Advantage Plan, you might have to a pay a monthly premium, because of the extra benefits it offers.

 

 

SAVED BY THE BELL QUICK TIP:

It's important to know about the restrictions of Medigap or Medicare Advantage Plans. In order to buy a Medigap policy, you must have Medicare Part A and Part B. Medigap policies typically don't cover long-term care, vision or dental care, hearing aids, eyeglasses or private duty nursing. Medigap policies can't work with Medicare Advantage Plans. If you have a Medicare Advantage Plan, you can apply for a Medigap policy, but make sure you can leave the Medicare Advantage Plan before your Medigap policy begins.

 

 

 

  THIS IS HOW WE DO IT:

A portion of the payroll taxes paid by workers and their employers cover most Medicare expenses. Monthly premiums, usually deducted from Social Security checks, also cover a portion of the cost.

 

 

SAVED BY THE BELL QUICK TIP:

Unfortunately, you can't decide how much the government takes out of your check in payroll taxes, or how often. The Medicare payroll tax is 2.9%. It applies to only earned income, which includes wages you are paid by an employer, plus tips. You are responsible for 1.45% of the tax and it is deducted automatically from your check. Your employer pays the other 1.45%. High income earners are taxed an additional 0.9% in Medicare earnings above certain amounts. For example, if you are married filing jointly, the threshold is $250,000. If you are single, the threshold is $200,000.

IS THIS THE END?

Medicare programs are financed through two funds: the Hospital Insurance trust fund and the Supplementary Medical Insurance trust fund. The trustees of the two Medicare trust funds issue a formal status report each year. The Medicare Trustees projects that the trust fund that finances Medicare's Hospital Insurance coverage will remain solvent until 2030. This doesn't mean Medicare will cease to exist by 2030, just that the program won't be fully funded by the time we reach that milestone. The projection says at that time, annual payroll taxes would still fund Medicare, but only 86% of the program's costs. Why is this happening? One reason is that we are living longer. The number of Medicare beneficiaries continues to grow as the retiree population increases. At the same time, fewer workers are paying into the system because of lower fertility rates.

 

 

SAVED BY THE BELL QUICK TIP

If you are concerned about the dire outlook for Medicare, you are in good company. A study from the Kaiser Family Foundation found that 54% of people fear that Medicare will not be able to provide the same level of benefits to future enrollees. So what needs to happen? Your vote counts - so put the pressure on Congress to act! Lawmakers need to address the financial challenges facing Medicare sooner rather than later. The Kaiser Family Foundation study found that 26% of people believe the Medicare program should be changed to instead guarantee each senior a fixed contribution to the cost of their health insurance. This is a system known as premium support that has been proposed to address Medicare's long-term financing challenges. Another solution is to boost the eligibility age for Medicare from 65 to 67. According to a report from the Congressional Budget Office, increasing the eligibility age by just two years would save $19.1 billion by 2023.

DON'T YOU WANT ME?

While Medicare provides a great benefit to many Americans, it is not perfect. Medicare insolvency isn't the only problem. Payments to health-care providers have lagged behind those made by private insurers. As a result, the Medicare Payment Advisory Commission says nearly three in 10 seniors on Medicare struggle to find a primary-care doctor who will treat them. At the same time, Medicare spending is soaring. The Kaiser Family Foundation says Medicare cost $511 billion in 2014 and seven years from now it will double to more than $1 trillion. Medicare fraud is also a big concern. In June, the Department of Justice announced a nationwide sweep led by the Medicare Fraud Strike Force involving 243 individuals including 46 doctors, nurses and other licensed medical professionals. The individuals were charged for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings. The takedown was the largest in Strike Force history.

This article is just a basic overview of some the things you need to know about Medicare. To find out more, visit www.medicare.gov.

 



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