For Consumers
FAQs
Q: What is Medicare?
A: Medicare is the federally administered health insurance plan that covers all United States Social Security recipients. This includes people who are eligible for Social Security and may be 65 years of age or older and those who are younger than 65 years of age but are medically disabled. The Medicare health insurance program is administered by the US government’s Centers for Medicare and Medicaid. Medicare benefits are paid for primarily by payroll taxes, general tax revenues and beneficiary premiums. In addition, beneficiaries are responsible for paying part of the cost for most health care, with deductibles, co-payments and premiums for some “parts” of Medicare.
Q: What are the “parts” of Medicare?
A:There are four parts to Medicare, including:
- Medicare Part A
- This is a hospital insurance program that also covers short-term care in skilled nursing facilities for rehabilitation, short-term skilled home care, and hospice services.
- Part A is automatically covered under Medicare.
- Medicare Part B
- Also known as “supplemental,” this covers outpatient medical visits and other services, such as laboratory and diagnostic testing.
- Part B is optional Medicare coverage.
- Medicare Part C
- This is health maintenance organization (HMO)-type coverage that is also known as Medicare Advantage (MA).
- It’s a combination of Medicare Parts A and B.
- Medicare Part C sometimes also includes Medicare Part D and is known as Medicare Advantage with Prescription Drug coverage (MA-PD).
- Medicare Part D
- Covers many prescription drugs in various levels of payment.
- Part D is optional Medicare coverage.
Q: What is “Medigap” insurance?
A: This is optional health insurance that you may purchase to cover the “gaps” in your Medicare coverage, including co-payments and deductibles that are built into the Medicare program. Medigap insurance is sold by private insurance companies to individuals and is not a required “part” of Medicare. There are up to 12 different varieties of Medigap plans, labeled A through L. Not all varieties of Medigap insurance are available in all areas, due to state laws that govern health insurance.
Q: What is Medicaid?
A: Medicaid is a health insurance program for certain low-income individuals and families, of any age, who meet the criteria, set by federal and state governments. Medicaid insurance is paid for by tax dollars from the federal, state and sometimes local budgets. Medicaid coverage varies widely around the Untied States, based primarily on state and local regulations.
Q: What is long-term care (LTC)?
A: Long-term care, also known as LTC, is supportive care for people who have chronic health conditions and need help with the basic “work” of talking care of themselves. In the LTC world, this type of work is known as the “activities of daily living” (ADL) and “instrumental activities of daily living (IADL). Long-term care refers to a wide range of services beyond medical and nursing care for people who have disabilities or chronic (long-lasting) illness.
Q: Who provides LTC services?
A: Most of the people who need LTC care—about 85%—live in community settings, such as their own homes and retirement communities, rather than in nursing homes. Family and friends typically provide most of the long-term care for people at home. LTC is also provided by professional caregivers in home, community-based and nursing-home settings.
Q: What does LTC cost?
A: LTC includes a broad range of health and support services that people may need as their functional abilities decline. For many people across America who need LTC, these services are personal care, or help with the “activities of daily living” or ADL and the “instrumental activities of daily living” or IADL. Family members and friends provide these services some or all of the time, usually at little or no cost. But as care and support needs increase, paid care may be needed to supplement family-provided care or provide respite to family caregivers. Some LTC patients may eventually need more extensive services in a facility, such as a nursing home or assisted living center, when family and friends can no longer care for them at home.
Q: Who pays for LTC?
A: Most health insurance plans, including Medicare, don’t cover LTC. The exceptions are Medicaid, some very limited Medicare coverage, some limited VA (Veterans Administration) benefits and private, third-party LTC insurance. Other private third-party insurance, including Medigap, also don’t cover long-term care.
Some individuals will qualify for Medicaid, which is the major payer of long-term care services, but most people will not. There are other federal public programs, such as the Older Americans Act, and state-funded programs that pay for some LTC services, but like Medicaid, these programs are for people with very low incomes and the highest degrees of functional disability.
Privately purchased LTC insurance and VA benefits do cover some long-term care services, but these also contain restrictions, such as waiting periods and financial limits, before you can access those benefits. With LTC insurance, the insurance payout still does not cover the full cost of care. In fact, depending on the benefit amounts of the policy, less than half the cost of LTC is covered, which leaves families to pay for the rest of the cost out-of-pocket. So if you should need long-term care services, there’s a very good chance that you’ll need to pay for some or all of your services through your personal income or other assets.
Determining how you’ll pay for LTC can be challenging, especially if you’re trying to predict how much money you or a loved one may need for care in the future. To help you make the best decisions about how to pay for LTC, take the time to learn and understand what LTC services cost, along with any programs you or your family member may qualify for, what is covered, private financing options available to you, and which ones are the best fit for you as you plan for retirement.
The bottom line: there is no “one size fits all” solution when it comes to planning for LTC needs and costs during retirement. So take your time and learn all you can about long-term care.
For more information about what to look for when you’re shopping for a private LTC policy, be sure to download Tool #5 in our GOODCARE.com Tool Kit™—“The Key Features to Shop for in a Long-Term Care Insurance Policy.” It contains lots of great tips and guidelines to help you make good decisions. And if you still have questions, please contact us. We’re experts at helping you sort through LTC choices and how to finance this type of care.
Q: I’ve been self-employed for more than 20 years. Will I still be eligible and covered by Medicare at age 65?
A: As long as you or your spouse have paid into Social Security and Medicare during your self-employment for 40 quarters, or 10 years, you’ll be eligible for Social Security and therefore for Medicare when you reach age 65. A word to the wise—check your Social Security statements for your status and that of your spouse.
Q: At what age should I consider purchasing long-term care insurance?
A: The best time to buy long-term care insurance may be during your middle-aged years. That is the when you have the highest likelihood of being eligible for a policy and when premiums costs might be lower. It’s also worth considering if you’re younger than middle-aged and have dependents. Given that 40% of LTC goes to people under the age of 65, you may have a need for LTC at any age.