What is Medicare?

What are the Options for Medicare Insurance Coverage?

Components of the Medicare?

Medicare Part A (Hospital Insurance)

Medicare Part B (Medical Insurance)

Medicare Part C (Medicare Advantage Plans)

Medicare Part D (Medicare Prescription Drug Coverage)

Things to Consider When Choosing a Plan

Medicare Summary Notes

Resources

 

What Is Medicare?

Medicare is a federally funded health insurance program for:

• People age 65 or older
• People under age 65 with certain disabilities
• People of any age with End-Stage Renal Disease (ESRD)

 

What are the Options for Medicare Insurance Coverage?

Original Medicare

• Fee for service, not a part of a group plan
• Includes Part A and/or Part B coverage
• Provides access to any doctor or hospital that accepts Medicare
• Does not include drug coverage; this may be obtained by enrolling in a Medicare Prescription Drug Plan
• Coverage gaps in Part A and Part B services can be filled in with Medicare Supplement Insurance called Medigap, which is sold by private insurance companies

 

Medicare Advantage Plans (like an HMO or PPO)

• A group plan run by private insurance companies approved by and under contract with Medicare
• Provides Part A and Part B coverage and may include additional services
• Individual plans offer coverage for extra services and prescription drug coverage, sometimes for an extra cost; cost for items and services vary by plan
• In most cases, prescription drug coverage must be accessed through the plan
• Medigap Insurance is not necessary or allowed with a Medicare Advantage Plan

 

Other Medicare Health Plans (Not Medicare Advantage Plans but still part of Medicare)

• Medicare Cost Plans
• Demonstration/Pilot Programs
• Programs of All-inclusive Care for the Elderly (PACE)

 

Components of the Medicare

Medicare Part A (Hospital Insurance)

Helps cover inpatient care in hospitals, skilled nursing facility, hospice, and home health care.

 

Medicare Part B (Medical Insurance)

Helps cover doctors' services, outpatient care, and home health care and some preventive services.

 

Medicare Part C (Medicare Advantage Plans)

A health plan or network similar to an HMO or PPO run by private insurance companies approved by and under contract with Medicare, includes services in Part A, Part B, and usually other coverage like prescription drugs.

 

Medicare Health Plans

There are also non Part C health plans such as Medicare Cost Plans, Demonstration/Pilot Programs, and Programs of All-inclusive Care for the Elderly (PACE) that are available to join.

 

Medicare Part D (Medicare Prescription Drug Coverage)

A prescription drug option run by private insurance companies approved by and under contract with Medicare that helps cover the cost of prescription drugs and may help lower your prescription drug costs.

 

Medicare Part A (Hospital Insurance)

Covered Services

Medicare Part A helps cover inpatient care in hospitals such as critical access hospitals, inpatient rehabilitation facilities, and long-term care hospitals.  It also helps cover skilled nursing facility, hospice, and home health care.  It does not cover custodial or long term care.

 

Cost of Part A

If Medicare taxes were paid while an individual or their spouse was working, there is no monthly premium for Part A coverage.  If an individual did not work sufficient number of quarters and is not eligible for premium-free Part A, it can be purchased if certain conditions are met.

 

Signing Up for Part A

If an individual gets benefits from Social Security or the Railroad Retirement Board (RRB), they automatically get Part A starting the first day of the month they turn age 65.

 

Individuals under age 65 and disabled automatically get Part A once disability benefits from Social Security have begun.

 

If an individual at age of 64 is not getting Social Security or RRB benefits (for instance, because they are still working), it is necessary to sign up for Part A by contacting Social Security 3 months prior to turning 65.

 

Anyone who is eligible for Part A and does not have other insurance will pay a higher premium if they do not buy Part A when first eligible to enroll.

 

Initial Enrollment Period: 3 months prior to and 3 months after turning  age 65, and the month of the 65th birthday, for a total period of 7 months.

 

General Enrollment Period for those who did not enroll during the initial enrollment period:  January 1–March 31 each year; coverage will begin July 1. There may be a higher premium for late enrollment.

 

Special Enrollment Period: for individuals or their spouses (or family member if the beneficiary is disabled) who are currently working, and are covered by a group health plan through the employer or union occurs during the 8 month period after work or health insurance coverage ends.

 

The Medicare Card

The Medicare card is sent by mail 3 months before the 65th birthday or 25th month of disability coverage. This card is always used to get Medicare-covered services except for those in a Medicare Part C plan; the card from the plan must be used to access Medicare-covered services.

 

Medicare Part B (Medical Insurance)

Part B-Covered Services

Part B helps cover medically-necessary services like doctors' services, outpatient care, home health services, and other medical services. Part B also covers some preventive services. There are two kinds of Part B-covered services:

1. Medically-necessary services—Services or supplies that are needed to diagnose or treat a medical condition and that meet accepted standards of medical practice.
2. Preventive services—Screenings to prevent illness or detect it at an early stage, when treatment is most likely to work best (for example, Pap tests, flu shots, and colorectal cancer screenings). Examples of preventive services of particular interest to women with or at risk of heart disease:

 

Cost of Part B Services

Costs for Part B services include a monthly premium, a yearly deductible and coinsurance or copayments for health services.  While there are different costs for Part B services with Original Medicare or a Medicare health plans, most people will pay the standard premium amount every month.   However, if income as reported on tax return is above a certain amount, the premium may be higher. Social Security will notify participants regarding premium rates.  If participants have limited income and resources, a state may help pay costs for Medicare Part A and/or Part B.   Contact the State Medicaid office and ask for information about the Medicare Savings Programs.

 

Participants pay full cost for Medicare Part B services until the yearly deductible is met.  Then payment for Medicare Part B services is 20% of the Medicare-approved amount for the service, if the doctors or providers agree to accept assignment.

 

How to Get Part B

Individuals receiving benefits from Social Security or the Railroad Retirement Board (RRB), will, in most cases, automatically have the option to purchase Part B health insurance coverage starting the first day of the month when turning age 65.  Individuals under age 65 and disabled will automatically get Part B after receiving disability benefits from Social Security or certain disability benefits from the RRB for 24 months. The Medicare card will be sent in the mail about 3 months prior to the 65th birthday or 25th month of disability. There are instructions that come with the card regarding accepting or declining Part B. Otherwise, a Part B premium will be charged. There may be a late enrollment penalty if sign up for Part B occurs after the initial period of eligibility.

 

Signing Up for Part B

After the initial enrollment period for Part B expires, sign up occurs during one of these times:

• General Enrollment Period —January 1–March 31 each year; coverage will begin on July 1. There may be a late enrollment penalty.
•  Special Enrollment Period —If an individual or their spouse is working and covered by a group health plan based on that work, or disabled, they may choose to wait to sign up for Part B. For working seniors, sign up for Part B can take place anytime if there is group health plan coverage based on current employment or during the 8-month period that begins the month after the employment ends, or the group health plan coverage ends, whichever happens first.  Even with COBRA coverage, enrollment in Part B without penalty must be done during the 8‑month period that begins the month after the employment ends.

 

If there is a delay signing up for Part B, it only becomes available during the general enrollment period, and there may be a significant late enrollment penalty. The monthly premium for Part B may go up 10% for each full 12-month period that an individual was eligible, but did not enroll.  Usually, there is no a late enrollment penalty if sign up for Part B takes place during a special enrollment period.

 

Medicare Part C (Medicare Advantage Plans)

Medicare Advantage Plans, sometimes called "Part C" or "MA Plans," are offered by private companies approved by and under contract with Medicare. Members of a Medicare Advantage Plan, which are similar to an HMO or PPO, receive Part A (Hospital Insurance) and Part B (Medical Insurance) coverage, as well as emergency and urgent care.

 

Advantage plans are another health coverage choice. Medicare Advantage Plans must cover all the services that Original Medicare covers except hospice care, which is always covered by Original Medicare.  Medicare Advantage Plans aren't considered supplemental coverage.

 

Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage. In addition to the Part B premium, there is usually one monthly premium for the additional services provided by the Medicare Advantage Plan.

 

Medicare pays a fixed amount every month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. However, each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how to get services and referrals and may limit access to doctors, facilities, or suppliers that belong to the plan).

 

Medicare Advantage Plans include the following:

• Health Maintenance Organization (HMO) Plans
• Preferred Provider Organization (PPO) Plans
• Medical Savings Account (MSA) Plans
• Special Needs Plans (SNP)

 

Medicare Part D (Medicare Prescription Drug Coverage)

Part D is a prescription drug option run by private insurance companies approved by and under contract with Medicare. Part D helps cover the cost of prescription drugs and may help lower prescription drug costs and protect against higher costs in the future.

 

Medicare offers prescription drug coverage (Part D) to everyone with Medicare through various plans run by an insurance companies or other private company approved by Medicare. Each plan can vary in cost and drugs covered. There are two ways to get Medicare prescription drug coverage:

• Medicare Prescription Drug Plans. These plans (sometimes called "PDPs") add drug coverage to Original Medicare, to some Medicare Cost Plans, Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
• Medicare Advantage Plans or other Medicare health plans. Prescription drug coverage (Part D) is added to Part A and Part B coverage through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called "MA-PDs."

 

Seniors should consider signing up for a Medicare drug plan during the initial eligibility period, especially if they do not have other reliable prescription drug coverage (called "creditable coverage"), regardless of their prescription drug needs at that time.  There will most likely be a penalty that will result in higher premiums with later enrollment.  Seniors with limited income and few resources, may qualify for Extra Help from Medicare to pay for prescription drug coverage; some states also offer extra help for prescription drugs.

 

Things to Consider When Choosing or Changing Prescription Drug Coverage

• Individuals with employer or union coverage should CALL THEIR BENEFITS ADMINISTRATOR before making any changes or signing up for coverage.  Failure to do so may result in loss of existing drug and health coverage, which may not be able to be restored.
• Current drug needs
• Current prescription drug coverage
• Benefits to joining a Medicare drug plan
• Penalties for delaying enrollment in a drug plan
• Cost of prescription drugs under each plan
• List of drugs covered under the plan's formulary

 

Joining, Switching, or Dropping a Medicare Drug Plan

There is an Annual Open Enrollment for Medicare prescription drug coverage at the end of each year.  In 2009, it was November15-December 31, 2009. This is the one time all year when people with Medicare can join or change their Medicare drug plan without an additional fee. Plans make changes every year to cost of premiums, deductibles, copayments, list of covered drugs and policies restricting access to drugs. In addition, some plans stop providing service and other plans initiate new services.  It is very important that seniors review options during this time to decide which plan to select for the next calendar year.The Medicare Prescription Drug Plan Finder at www.medicare.gov is available to compare programs in a particular area.

 

Join, switch, or drop a Medicare drug plan at these times: 

• During the initial enrollment period which begins 3 months before the month an individual turns age 65, the month of the 65th birthday, and 3 months after the birthday month, for a total of 7 months.
• Medicare eligibility due to disability, you can join during the 3 months before to 3 months after your 25th month of disability. You will have another chance to join 3 months before the month you turn age 65 to 3 months after the month you turn age 65.
• November 15–December 31 each year; coverage will begin on January 1 of the following year, as long as the plan receives the enrollment request by December 31.
• January 1–March 31 of each year if the senior is switching from one Medicare prescription drug plan to another.
• Anytime, if a senior qualifies for Extra Help or has both Medicare and Medicaid.

 

In most cases, enrollment is in effect for the calendar year starting the date coverage begins. However, in certain situations, (such as moving out of the service area, losing other creditable prescription drug coverage, or living in an institution) seniors are able to join, switch, or drop Medicare drug plans during a special enrollment period. For more information, call 1-800-MEDICARE (1-800-633-4227) or the State Health Insurance Assistance Program (SHIP).

 

Joining a Medicare Drug Plan

Visit www.medicare.gov, or call 1‑800‑MEDICARE for a list of the Medicare plans in the area.  Once a Medicare drug plan is selected, contact the plan to find out how to join or call 1-800-MEDICARE. A Medicare number and the date Part A or Part B coverage started is needed to join a Medicare drug plan. This information is on the Medicare card.

 

Medicare drug plans aren't allowed to call seniors to enroll in a plan. Call 1-800-MEDICARE to report a plan that does this.

 

Switching Medicare Drug Plans

Depending on the circumstances, a senior can switch to a new Medicare drug plan simply by joining another drug plan during one of the enrollment times. There is no need to cancel the old Medicare drug plan or send them anything. Medicare drug plan coverage will end when the new drug plan begins.

 

Participants should receive a letter from the new Medicare drug plan with the date coverage begins and membership materials, including a card to get prescriptions filled.

 

Note:  If a Medicare Prescription Drug Plan decides not to participate in Medicare or stops providing service, a letter will be sent describing opportunities to join a different Medicare Prescription Drug Plan.

 

Cost

Exact coverage and costs are different for each Medicare drug plan, but all plans must provide at least a standard level of coverage set by Medicare.  There are payments throughout the year in a Medicare drug plan. Costs will vary depending on the prescriptions, the plan, and the formulary.

 

Monthly premium - most drug plans charge a monthly fee that varies by plan. Payment is in addition to the Part B premium. The monthly premium for a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage may roll in an amount for prescription drug coverage.

 

Yearly deductible - Amount paid for prescriptions prior to plan begins to pay. Some drug plans don't have a deductible.  

 

Copayments or coinsurance - Amounts paid at the pharmacy for covered prescriptions after the deductible. You pay your share, and your drug plan pays its share for covered drugs.

 

Coverage gap - Most Medicare drug plans have a coverage gap. This means that after the senior and the drug plan have spent a certain amount of money for covered drugs, the senior must pay all costs out-of-pocket for prescriptions up to a yearly limit. The yearly deductible, coinsurance or copayments, and what is paid in the coverage gap all count toward this out-of-pocket limit. The limit doesn't include the drug plan's premium or the amount what you pay for drugs that aren't on your plan's formulary.

 

There are plans that offer some coverage during the gap, like for generic drugs. However, plans with gap coverage may charge a higher monthly premium. Seniors should check with the drug plan first to see if their drugs would be covered during the gap.

 

For help comparing plan costs, contact the State Health Insurance Assistance Program (SHIP) or visit www.medicare.gov and select "Compare Medicare Prescription Drug Plans."

 

Catastrophic coverage - Medicare drug plans have an annual limit for drug coverage. When the patient and the drug plan have spent a designated amount of money for covered drugs, and the limit is reached, the patient must then pay all costs for prescription drugs until they hit the yearly limit. This gap in coverage, when a patient must pay all out of pocket costs is also referred to as the "donut hole". Once a plan's out-of-pocket limit has been reached, catastrophic coverage automatically goes into effect. Catastrophic coverage assures that once the plan's out-of-pocket limit for covered drugs has been met; only a small coinsurance amount or copayment is required for the rest of the year.

 

Note: With the Extra Help program, there is not drug coverage gap, and either a small or copayment or none at all after reaching the catastrophic coverage.

 

What is the Part D Late Enrollment Penalty?

The late enrollment penalty is an amount that is added to the Part D premium. A late enrollment penalty may be assessed if one of the following is true:

• A senior fails to sign up for a Medicare drug plan when first eligible for Medicare, and did not have other creditable prescription drug coverage.
• There was a break in Medicare prescription drug coverage or other creditable coverage of at least 63 days in a row.

 

Note:   There is no a late enrollment penalty for those with the Extra Help program

 

To avoid paying a penalty:

Join a Medicare drug plan during the initial eligibility period.

Maintain continuous coverage with a Medicare drug plan or other creditable coverage. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, or the Department of Veterans Affairs.

Inform the Medicare drug plan regarding other creditable coverage. Provide documentation about if creditable coverage is in place from a non-Medicare source.

 

Appealing the Penalty

A late enrollment penalty can be a reviewed or reconsidered. Fill out a reconsideration request form from the drug plan and provide proof that supports the case against paying. Such as information about previous prescription drug coverage.    

 

Things to Consider When Choosing a Plan

NOTE:  No matter which plan is chosen, make sure that the doctor, hospital or drug that matters most is still covered at the time of enrollment.

• Coverage - are the needed services covered?
• Other coverage - do you have, or are you eligible for, other types of health or prescription drug coverage? If so, read the materials you get from your insurer or plan, or call them to find out how the coverage works with, or are affected by, Medicare. If you have coverage through a former or current employer or union, or get your health care from an Indian Health or Tribal Health Program, talk to your benefits administrator, insurer, or plan before making any changes to your coverage.
• Cost - how much are your premiums, deductibles, and other costs? How much do you pay for services like hospital stays or doctor visits? Is there a yearly limit on what you could pay out-of-pocket for medical services? Your costs vary and may be different if you don't follow the coverage rules.
• Doctor and hospital choice - do your doctors accept the coverage? Are the doctors you want to see accepting new patients? Do you have to choose your hospital and health care providers from a network? Do you need to get referrals?
• Quality of care - the quality of care and services given by plans and other health care providers can vary. Medicare has information to help you compare plans and providers.
• Convenience - Where are the doctors' offices? What are their hours? Which pharmacies can you use? Can you get your prescriptions by mail? Do the doctors use electronic health records or E-prescribe?
• Travel - Will the plan cover you in another state?

 

Medicare Summary Notices

After receiving a Medicare-covered service, a Medicare Summary Notice (MSN) will be sent in the mail. The MSN shows all the services or supplies that providers and suppliers billed to Medicare during each 3-month period, what Medicare paid, and what the senior may owe the provider. The MSN isn't a bill. Read it carefully and do the following:

• Check to see if additional insurance covers anything that Medicare didn't.
• Keep receipts and bills, and compare them to the MSN to be sure that all services, supplies, or equipment listed were received.
• Compare the MSN with the any bills paid out of pocket to determine that the right amount was credited.
• If an item or service is denied, call the doctor's office to make sure the claim is coded correctly. If not, the office can resubmit.
• MSNs are mailed every 3 months. If Medicare owes you a refund, the MSN will be mailed as soon as the claim is processed.
• To change the address on call Social Security at 1-800-772-1213. TTY users should call 1-800-325-0778. If you get RRB benefits, call the RRB at 1-877-772-5772.

 

Resources

Visit www.medicare.gov to get most current information. 

 

Call Social Security at 1-800-772-1213 to apply for Medicare, the Medicare Savings Program or Extra Help.

 

Call toll free 1-800-MEDICARE (1-800-633-4227) or visit www.MyMedicare.gov to track Medicare claims.

 

To order a new card, call Social Security at 1-800-772-1213, or visit www.socialsecurity.gov

 

 

This document has been excerpted from the Centers for Medicare and Medicaid Services publication: Medicare and You 2010