Medical Insurance for Elders

Medical insurance for elders is well-established, with government programs such as Medicare and Medicaid at the foundation. However, in recent years, with the increasing budget deficit and the retiring baby-boomer generation, these programs are under increasing financial and political pressure.

Medicare

• Medicare is heath insurance administered by the federal government. It provides coverage for people 65 and older. It originated in 1965 as an amendment to Social Security legislation. It's funded as part of a single-payer system tied to Social Security. Medicare has two parts, Part A and Part B. Part A provides basic hospitalization along with some home-care and nursing services. Part B provides physician care and some outpatient services. Medicare recipients have to pay monthly premiums.

Medigap

• There are some health costs not covered by Medicare. Medicap insurance is designed to cover the "gap" between various medical costs and what is not covered by Medicare. Medigap is considered supplemental insurance to Medicare. Medigap policies are provided by private insurance companies. As of 2006, Medigap policies covered 18% of Medicare beneficiaries Medigap premiums are charged to the insured.

Medicaid

• Medicaid is a for low-income individuals who cannot afford to pay insurance premiums. It's a means-tested program funded by both state and federal governments but mostly administered by the states. Medicaid is not just for the elderly. It covers low-income adults, children and people with specific disabilities. The largest uses of Medicaid among the elderly are those who live in nursing homes. To qualify, they must spend down all of their assets prior to going on Medicaid.

Long-Term-Care Insurance

• Long-term-care insurance is not technically health insurance, but it fits in the picture of elderly care. Long-term-care insurance generally covers the cost not covered by Medicare, Medicaid or regular health insurance. This is for individuals who are not necessarily sick but need help with the basic functions of daily living such as dressing, taking a bath, eating, and using the toilet. Individuals who can afford it purchase long-term-care to cover this cost. This option is especially important given the fact that individuals who do not have such coverage must spend down all their assets in order to qualify for Medicaid benefits.

The Future

• As the baby-boomer generation ages and medical costs continue to increase, the pressure on Medicare and Medicaid is likely to increase. But curbing the programs will be a difficult political proposition for Congress, regardless of which party is in control.