Understanding Health Care Insurance
These three organizations can help you locate the benefits that apply to the elder in your care.
They will help you save valuable time in learning the health care insurance system.
1 Medicare Rights Center at www.medicarerights.org/ is an independent source of statespecific
information on Medicare and other health care coverage issues. Its Web site offers
an interactive search called “MI Counselor” that walks you through the qualification
process. You can also call the consumer hotline at 800-333-4114 toll free. A Medicare
counselor can answer your questions about health insurance choices, Medicare rights and
protections, dealing with payment denials or appeals, complaints about care or treatment,
and Medicare bills.
2 The National Council on Aging provides a “Benefits Checkup” at www.benefitscheckup.org/
on its Web site. It’s a fast, free, and confidential screening tool to determine eligibility for
nearly 1,000 unique state and federal programs, as well as detailed instruction on how to
apply for these programs.
3 The State Health Insurance Assistance Program (SHIP) at www.medicare.gov/contacts/
static/allStateContacts.asp is a national program that offers one-on-one counseling and
assistance. Every state provides free counseling and assistance by telephone or in person
on a wide range of Medicare and Medicaid matters, including health plan options, long-term
care insurance, claims and billing problem resolution, and information and referral on
public benefit programs for those with limited income and assets. To locate the program in
your state, go to the SHIP Web site or call 800-MEDICARE (800-633-4227) toll free and ask
for health insurance counseling for your area.

Medicare
Medicare is a federal health insurance program for people age 65 or over and is the major
insurer of health care for elders and certain disabled people. It includes various programs with
different requirements for different purposes and different groups of people.
Despite what many people believe, Medicare does not pay for long-term care in a nursing home
or home care services. An elder is required to pay out-of-pocket for care until he or she has
“spent down” to Medicaid eligibility.
For complete information about Medicare, go to the Web site at www.medicare.gov/ or call
800-633-4227 toll free and request a copy of the publication, “Medicare and You” for your state.
Here is a brief overview of Medicare’s major components.
Original Medicare Plan
The Original Medicare Plan is a fee-for-service plan managed by the federal government that is
used by the majority of elders. An individual is enrolled in the Original Plan by the Social
Security Administration at the age of 65 unless he or she elects to enroll in another type of plan
(see Part C). There are deductibles, co-payments, and health services, such as hearing aids and
eyeglasses, that are not covered by the Original Medicare Plan, but supplemental insurance can
provide coverage for these services.
PART A: Hospital Insurance helps pay for hospital care, some home health services, certain
short-term stays in a skilled nursing facility (nursing home), and hospice care. There is no
monthly premium charge for Part A coverage if the elder or spouse paid Medicare taxes
while working. As of 2008, there was a $1,000 deductible for hospital stays, co-pays for stays
beyond 60 days in hospitals and 20 days in skilled nursing facilities, and limits on the number
of days covered.
PART B: Medical Insurance helps pay for doctors, outpatient services, and supplies. Consumers
pay a monthly premium for Part B (premiums vary by income, but an individual in 2008 would
typically pay between $97 and $238 per month), plus a $135 annual deductible. Some co-pay
charges apply for equipment, therapies, and preventative services.
Home health services included in parts A and B are most frequently used to provide short-term
follow-up care after discharge from a hospital or skilled nursing facility. Medicare covers
expenses if four conditions are met:
1 The individual is confined to home
2 The individual needs intermittent skilled nursing care, physical, occupational or speech
therapies
Insurance
3 under the care of a physician who determines the need and establishes a
home health care plan
4 The home health agency providing services is Medicare-certified
PART C: Medicare Advantage Programs are managed health care plans approved by Medicare
and run by private companies to provide all of the medically necessary services provided in
Parts A and B. Providers can charge different co-payments and deductibles and may require the
use of providers in the plan. They can also offer additional services, such as prescription drug,
vision, hearing, and dental coverage. There are five different types of Medicare Advantage
Programs, and many different plans and providers. You can switch or join plans during defined
periods of the year. Note that if an elder drops employer or union coverage or Medigap
insurance by joining a Medicare Advantage Plan, he or she may not be able to get it back. The
Medicare Web site at www.medicare.gov provides a comparison of the plans, or you can call
Medicare’s consumer hotline at 800-633-4227 toll free.
PART D: Prescription Drug Coverage has been available since 2006. People in either the Original
Medicare Plan or Medicare Advantage Programs can add drug coverage through Part D. Part D
insurance plans, which include co-payments and deductibles, are run by private companies
approved by Medicare. A number of plans are available, but they need to be assessed carefully.
For help with this complex decision, call the Medicare hotline, the Medicare Rights Center, or
your state’s SHIP counselors.
Other Medicare Health Plans
There are some types of Medicare Health Plans that aren’t part of Medicare Advantage. When
you are researching Medicare coverage in your area, ask the counselor for details on Medicare
Cost Plans and Demonstration or Pilot Programs.
Other Government Insurance Plans
Many people think that Medicare is the only government-funded program that provides health
care insurance for people over 65. However, certain groups of elders have access to other
government-funded insurance programs. The following information can help you decide if the
elder in your care is eligible for one of these programs.
Government Employee Health Plans
Retired federal, state, or local government employees (and their families) may have health care
coverage that replaces Medicare or insurance that complements Medicare. Contact the
employer’s personnel or human resources department for details regarding the elder’s
health care benefits.
Indian Health Plans
Native American elders who receive health care from the Indian Health Service, a Tribal Health
Program, or Urban Indian Health Program should contact their provider to understand how
Medicare benefits work with their coverage.
Military Service Benefits
Some elders (and family members) may be eligible for health care coverage through the
Veterans Administration (VA) or the Department of Defense (DoD) if they have served in the
military or, in some cases, have been on active duty while in the National Guard. Coverage in
either program may also require participation in Medicare Part A and Part B. There are two major
programs:
TRICARE: The DoD provides coverage through TRICARE (formerly known as CHAMPUS) to
active-duty and retired military persons and their dependents. Detailed information about
eligibility and coverage is available on the Web site at www.tricare.mil/ or by calling
877-TRICARE (877-874-2273). Not all VA Medical Centers participate in the TRICARE network.
VA Medical Centers that participate in TRICARE will provide treatment for a non-servicerelated
disability if space is available.
CHAMPVA: This VA health care coverage is provided to veterans and their dependents who
meet one of the eight categories of eligibility. Detailed information is provided on the U.S.
Department of Veterans Affairs Web site at www1.va.gov/health/index.asp or by calling
877-222-8387 toll free. In many cases, home care services to manage daily living tasks are
covered by the CHAMPVA.
Some veterans are eligible for health care coverage through either program. Choosing which
program is best for the elder requires some research. Be warned that making a decision to
change benefit coverage between these two programs within a specific episode of care may
result in denial of payment from either program. For more information about how this works,
contact the person who serves as the TRICARE “Beneficiary Point-of Contact” at your regional
VA facility.
Private Insurance Plans
While Medicare benefits provide an important component of health insurance for people 65 and
over, it only provides the foundation of a comprehensive insurance coverage plan. It is advisable
to investigate other kinds of private insurance plans that can provide coverage for services,
medications, and equipment that are not provided by Medicare.
Employer or Union Health Coverage
Elders (or family members) may have health coverage based on current or past employment that
will help pay deductibles and other expenses not covered by Medicare. It is important to contact
the benefits administrator of the union or employer to understand what the coverage includes
and what it costs. The employer or union generally has the right to change benefits and
premiums or stop offering coverage, so it is important to watch for notices regarding coverage
and keep them on file. Prescription drug coverage, in particular, may change annually.
Medigap
When an elder is not covered by an employer or union health care plan, it is possible to buy a
supplemental policy to help bridge the gaps in the Original Medicare Plan. These policies are
called Medigap insurance.
Medigap policies must follow federal and state laws and have certain standardized benefits so
you can compare them. Costs do vary, and cost should be the only difference between standard
Medigap policies. Standard policies cover co-payments for outpatient visits, deductibles for
hospitalization, skilled nursing facilities, mental health benefits, and other specialized services.
Medigap policies may also offer additional services for extra cost that may be helpful for the
elder in your care, such as vision care.
Medicare does not pay for any of the costs of a Medigap policy. To buy a Medigap policy, you
must be enrolled in Medicare Part A and Medicare Part B.
Medicaid
Medicaid is a joint federal and state program that provides health insurance and long-term care
to low-income children, parents, elders, and people with disabilities. While Congress and the
Centers for Medicare and Medicaid Services (CMS) set out the main rules that govern Medicaid,
each state runs its own program. As a result, the eligibility rules differ significantly from state to
state, although all states must follow the same basic framework.
Elders with extremely limited income and assets often qualify for both Medicare and Medicaid,
and they are referred to as “dual eligible.” Most of their health care and long-term care costs
are covered.
Medicaid eligibility is extremely complicated. The types of programs, income limits, and
definitions vary by state, and they are adjusted annually. State programs are also called by
different names, such as “Medical Assistance,” “Medi-Cal,” or “MassHealth.” It is important to
understand the impact of the Medicaid rules in your state on your personal situation.
Many states offer Medicaid managed care programs. Under managed care, Medicaid recipients
are enrolled in a private health plan based on a fixed monthly premium paid by the state. Today,
all but a few states use managed care to provide coverage for a significant proportion of poor
children and parents, while the aged and disabled eligibility groups more often remain in
traditional “fee for service” Medicaid. PACE (Program of All-inclusive Care for the Elderly) is a
managed care model program that enables frail elders to remain independent in the community
and in their own homes. It may be available in your area.
To learn more about an elder’s eligibility for Medicaid, visit the Web site of the National
Association of State Medicaid Directors at www.nasmd.org/links/state_medicaid_links.asp
which offers links to each state agency or call 800-Medicare (800-633-4227) toll free and ask for
Medicaid counseling for your area. The Eldercare Locator at www.eldercare.gov/eldercare/
Public/Home.asp can also connect you with Medicaid counseling. Visit the Web site or call
800-677-1116 toll free.
Long-term Care Insurance
Medicare and other health care policies do not cover long-term care. According to the American
Health Care Association, costs of services provided by a nursing facility can exceed $50,000 a
year. Financial planners advise retirees and other individuals who may face high costs for
nursing home or in-home long-term care to adopt strategies that will protect their financial
assets. Long-term care insurance is becoming increasingly popular as the baby boomer
population ages and elders realize the potentially devastating effect of long-term care expenses.
(To estimate an individual’s long-term care costs, see the Planning Tool offered on the Medicare
Web site at www.medicare.gov/LTCPlanning/Home.asp.)
Long-term care policies can vary greatly from one insurer to the next. Policies may include
benefits for care in a nursing home, in an assisted living facility, in your home, or in an adult day
care center. Some policies may pay for family benefits, such as caregiver training, but do not pay
for services provided by family members.
It is important to determine what types of care are covered by a long-term care policy. Policies
that limit coverage to care provided in a nursing home will not generally pay for services you
receive at home. More flexible policies are available which allow you to use benefits to cover any
necessary long-term care in any setting, but these policies usually are more expensive. If you are
thinking of buying a policy, ask an experienced eldercare lawyer or financial planner to review
the policy with you before you sign. (See the Finances section for information on finding a
financial planner and the Legal Issues section for information on locating a lawyer.)