More and more, responsibility for America’s health care price tag is shifting to individuals and families. Premiums for employer-sponsored insurance have increased 87 percent cumulatively from 2000-06, and many employers are moving to limit the benefits and coverage they will offer to current and future retirees. Medicare faces constant cost pressures, and some people are concerned that the program might eventually become insolvent. Many Americans are rightfully concerned. 

Federal cornerstone of health care

Introduced in 1965, Medicare provides health insurance for almost everyone age 65 or older as well as some younger people who have disabilities and people with end-stage renal disease. Typically, individuals are eligible if they or their spouse worked for a minimum of ten years in Medicare-taxed employment (including self-employment), are 65 years of age or older and are citizens or permanent residents of the United States. 

Originally, Medicare consisted of two parts: Part A for hospital insurance and Part B for medical insurance. Part A helps pay for care in hospitals as well as some skilled nursing facilities, hospice and some home health care. Part B helps cover doctors fees, outpatient hospital care and some other medical services such as physical and occupational therapists.

Part C, added in 1997, gives Medicare beneficiaries the option to receive their Medicare benefits through private health insurance plans. 

Part D, introduced in 2006, adds general coverage options for many prescription drugs. 

Covering ‘holes’ in Medicare coverage

Out-of-pocket expenses for Medicare can be substantial. Medigap was devised to “fill in the gaps” of coverage for the original Medicare (Parts A and B). Most states offer ten Medigap options. All plans must offer certain Basic Benefits: coinsurance for inpatient hospital care and 365 extra days of hospital care during your lifetime after Medicare coverage ends, Part B co-insurance and the first three pints of blood per year. Some of the more extensive Medigap plans also could pay such things as co-insurance for skilled nursing, Part A deductibles, preventive care, foreign travel emergencies and prescription drug costs (as an alternative to Medicare Part D). 

While Medicare and Medi¬gap help in many ways, they do not cover long-term care. This non-coverage of long-term care applies generally to most group and individual health insurance policies as well. And it is long-term care that can be financially devastating for older Americans.