When I sat down to write my second blog on AnnArbor.com I had a million topics running through my mind. I want to provide information that will help people in our community the most.

A friend caring for his aging mother requested information on Medicare, Medicaid and Private Insurance. I could provide information here about all three, but it would be a never ending blog. So I have decided to begin a series called “Who pays for what?”.

Every Thursday I will provide information that will help you navigate through the insurance and healthcare maze. I don’t know how long the series will be - because there is so much information to give you - but I will do my best to break it down and make it as short and understandable as I can. I will start with a brief description of insurance programs.

People are often confused between Medicare and Medicaid. Anyone 65 years and older is eligible for Medicare. It is a federal government-provided health insurance for senior citizens. Anyone working a legal job in the United States has taxes taken out of their payroll check for the Medicare fund.

There is also a Medicare disability insurance for people under 65 years of age. This insurance is difficult to obtain even if you are severely disabled. Truthfully, I have yet to see someone approved for Medicare disability insurance without obtaining an attorney to fight for it. Those that do obtain an attorney who specializes in Medicare disability will usually and eventually get it. Once it is approved it will be retroactive. Attorneys will usually take their fees when the claim is approved and the retroactive monies are paid.

When my Mom was under 65 years of age she had three back surgeries. Doctors wrote letters to Medicare certifying my Mom disabled, and she was denied. It wasn’t until she finally got an attorney that she was approved. I have heard of this type of scenario time and time again. Medicare is a federally-funded health insurance. There are two main parts to Medicare: Part A and Part B. Part A is automatically given to persons who are 65 years of age. Part B is an optional part of Medicare that requires the recipient to pay a portion of the premium. It covers other charges Part A does not pay for, so most people enrolled in Part A will enroll in Part B. To understand the cost, individuals pay about one-third of the total cost of Part B, while the other two-thirds are paid by the general tax fund. I will explain these further in another part of this series.

The new part of Medicare is Part D, also known as the prescription drug plan. This is new and pretty complicated, so I will address this in a blog all of its own.

Medicaid is also government provided insurance, but it is funded by federal and state funds. The criterion for enrollment differs from state to state. For our purpose I will focus on Medicaid in Michigan. For seniors to qualify you must be medically needy, and fall below the federal poverty level. The 2009 federal poverty level is $10,830 for a single family household, and $14,570 for a two person household.

Most people in their later years have heard of the term “spend down”. What that means is in order to qualify for medical assistance through Medicaid, you must spend nearly everything you have before you can obtain Medicaid. Many seniors end up on Medicaid because they have spent their life savings on medical and/or custodial care.

There is a third type of health insurance which is paid by the government, and that is Veterans Administration benefits. It does not pay for medical care or prescriptions outside of the Veterans Administration healthcare system, but it can include services by specific types of companies that contract with the VA. Only Veterans are eligible for this healthcare, but there is a pension benefit available to some spouses of deceased Veterans, called Aid and Attendance. Veterans Administration health care is very different than the Aid and Attendance pension benefit. I will clarify the distinction in a future part of this series.

Private Health insurance is either paid privately, or as a retirement benefit through a previous employer. Private insurance is secondary to Medicare and varies widely from company to company and policy to policy. Private insurance expects Medicare to pay whatever it will pay before they’ll even think about covering anything. Because of rising healthcare costs, policies from employers are changing. Employers are discontinuing insurance benefits, reducing benefits, or requiring employees to pay more. Retirees are nervously sitting and hoping they don’t lose their health insurance benefits.

Long Term Care insurance is privately paid and fairly new in the history of insurances. Few seniors have it in comparison to traditional insurances, but it is a growing industry. This insurance also varies by company and policy, but it is usually the policy that will pay for all or part of care when none of the other insurances listed above will pay. It really is more of a “care” insurance than a medical insurance. The older an individual is the higher the cost of long term care insurance. This is one of the few personally paid insurances that I believe people will most likely use in their lifetime, unlike home and auto insurance that so many never use. It is much more cost effective to purchase this insurance in your younger years, and almost cost prohibitive in your later years.

Look for more information on Medicare in Part 2 of the series “Who pays for what?” next Thursday.

I welcome your questions, comments and suggestions.

Angil's blog can be seen at www.angiltarachrn.com, or she can be emailed at