Cost Health Insurance.Medicare has Benefits for disability

Cost Health Insurance Benefits.

Part A Hospital Insurance - Most people don't pay a premium for Part A because they or a spouse already paid for it through their payroll taxes while working. (Hospital Insurance) helps cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Beneficiaries must meet certain disability conditions to get these benefits.

Part B Medical Insurance - Most people pay a monthly premium for Part B. Medicare Part B (Medical Insurance) helps cover doctors' services and outpatient care. It also covers some other medical services that Part A doesn't cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically disabilityBenefits necessary.

Prescription Drug Coverage - Most people will pay a monthly premium for this coverage. Starting January 1, 2006, new Medicare prescrip tion drug coverage will be available to everyone with Medicare. Everyone with Medicare can get this coverage that may help lower prescription drug costs and help protect against higher costs in the future. Medicare Prescription Drug Coverage is insurance. Private companies provide the coverage. Beneficiaries choose the drug plan and pay a monthly premium. Like other insurance, if a beneficiary decides not to enroll in a drug plan when they are first eligible, they may pay a penalty if they choose to join later.

Must meet certain disability conditions to get these benefits.

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Bena, a retired airline worker, is among the nation's 12 million people 65 and older who get prescription-drug coverage from their former employers.

The number of companies offering health benefits to retirees has been declining for at least 15 years. And nobody knows whether the Medicare dr ug insurance that begins in 2006 will accelerate that trend, despite a provision in the law designed to entice companies to maintain coverage.

"I can foresee the company saying, 'This is costing us too much money, so we're bailing out,'" said Bena, 77. "That's my big fear."

Bena drove from his home in Fairfax, Va., one recent rainy morning to sit through a two-hour presentation in a windowless hotel meeting room because he believes things will change. "I don't think it will last," he said.

With health costs rising fast, companies have sought to contain their costs, and retiree benefits have been a frequent target.

In 1988, 66 percent of firms employing 200 or more workers offered health coverage to retirees. By 2003, it had fallen to 38 percent, said the Kaiser Family Foundation, which surveys businesses about their health benefits.

Lawmakers and representatives of civic groups report that retirees with health benefits are nervous that the new Medicare law will cause more companies to abandon retiree drug coverage, removing the protective barrier between them and fast-rising drug prices.

"The anxiety level is off the charts," said John Rother, policy director at AARP, which has been sponsoring Medicare meetings, including the one in Manassas. AARP has 35 million members.

The changes could be dramatic for retirees like Bena, who spend a few dollars each month to pay their share of the cost of prescription medicines. Even with a recent increase in his co-payment, Bena pays only $25 a month for two blood-pressure drugs.

People with no drug coverage who enroll in the Medicare drug plan will have to pay an insurance premium of $35 a month and the first $250 of prescription costs before any benefit kicks in.

Insurance will pay 75 percent of the next $2,000 in drug costs, at which point there will be a gap in coverage until a beneficiary spends $2,850 more.

AARP and business interests were among the biggest backers of a provision in the law that provides up to $88 billion over 10 years in subsidies to companies that offer a prescription benefit that is at least equal to that of Medicare.

But because company-provided drug coverage often is more generous than what Medicare will provide, the law also offers companies the opportunity to reduce benefits and still receive a subsidy.

Companies that banded together to lobby for the subsidy also are major contributors to President George W. Bush, other GOP candidates and the Republican Party, with contributions of $47 million since 2000, according to the Center for American Progress, a liberal-policy think tank in Washington.

Ten of those companies - General Motors, IBM, AT&T and 3M among them - have reduced benefits or increased retiree costs, the think tank said.

But even some critics of the new law look at the subsidy as a genuine effort to deal with a problem. "Congress and the administration were indeed between a rock and a hard place on this one," said Robert Hayes, president of the Center for Medicare Rights in New York. "It's not so clear that balance was achieved ideally, but I'm not very critical of the balance Congress tried to reach."

James Klein, president of the American Benefits Council, which represents primarily Fortune 500 companies, said he expects that the law will slow but not halt the erosion in retiree benefits, primarily because nothing has been done to address the underlying issue of rising health costs.

The law gives employers three options to cut their costs. They can drop retiree drug benefits, which would force people to enroll in the Medicare drug plan if they want prescription insurance.

A second option is to reduce but not eliminate benefits, making Medicare the first place retirees would turn for drug coverage and letting company benefits fill in the coverage gap.

Finally, companies could continue the current benefit, accepting a government subsidy to shoulder some of the costs.

Caption:

Color photo headshot - Fred Bena

PHOTO