Medicare Basics

Medicare is a health insurance program administered by the federal government, providing health insurance coverage to people who are 65 years of age or older, under age 65 with certain disabilities and at any age with End-Stage Renal Disease (ESRD – permanent kidney failure requiring dialysis or a kidney transplant). Medicare is broken down into four main categories:

 

HOSPITAL INSURANCE (PART A)

One category of the Medicare program is called Part A. You usually do not pay a premium for Part A coverage if you or your spouse paid Medicare taxes while working. In most cases, you will automatically be signed up for Part A. If you are not eligible for premium-free Part A, you may be able to buy Part A if you meet certain requirements.

Part A is a type of hospital insurance plan provided by Medicare. Hospital Insurance coverage includes inpatient care in hospitals, skilled nursing facilities and critical access hospitals. Part A does not include long term or custodial care. If you meet specific requirements, you may also be eligible for hospice or home health care.

Medicare does not cover everything, nor does it cover the total cost for many of the covered services or medical supplies.

MEDICAL INSURANCE (PART B)

Part B coverage offers medically necessary doctor’s services, outpatient care and most other services that Part A does not cover. These may include physical or occupational therapies and some home health care services. Part B also covers some preventive services. Though many services and products are covered, keep in mind that Part B is still not a complete insurance coverage plan. Original Medicare (Part A and Part B) covers many health care services and supplies; however, there are many costs (“gaps”) it doesn’t cover.

Most people have to pay a premium for Part B. You can check to see if you qualify to receive help from your state to pay for premiums and deductibles. If you don’t qualify for this, then the premiums are usually deducted from your Social Security, Railroad Retirement or Civil Service Retirement check. There are other payment options for premiums such as quarterly bills or check draft.

MEDICARE ADVANTAGE PLANS (PART C)

Medicare Part C is a combination of your Part A and Part B options and must cover at least all of the services that Original Medicare covers (Part A and Part B). One difference is that private insurance companies that are approved by Medicare provide this type of coverage. Part C is often a lower out-of-pocket risk alternative to the Original Medicare Plan, and usually provides extra benefits such as vision, hearing, dental, and/or health and wellness programs and may include prescription drug coverage (Part D). Part C plans often have networks in which you must use the doctors or hospitals that are contracted with the plan. Costs for items and services vary by plan and by insurance company. Medicare Advantage plans have several plan types available.

MEDICARE PRESCRIPTION DRUG COVERAGE (PART D)

Part D is Medicare regulated and approved prescription drug coverage offered by private insurance companies. Except for certain situations, you should enroll in Part D when you first become eligible to avoid penalties. Part D was designed in part, to aid Medicare enrollees lower their prescription drug costs and to protect against future costs. It also provides access to medically necessary drugs via a Medicare-approved prescription drug plan.

Keep in mind that a plan’s premium (monthly cost of the plan), drug formulary (list of covered medications) and copay amounts will vary by plan and by insurance company. Medicare Part D plans all follow the same structure designed by Medicare: Annual Deductible, Initial Coverage (prescription copays), the Coverage Gap or “donut-hole” (projected to be closed by 2020), and Catastrophic Coverage.

Medicare Part D coverage can be obtained by purchasing a “stand-alone” drug plan or by purchasing a Medicare Advantage plan that includes Part D coverage as part of the plan.

MEDIGAP OR MEDICARE SUPPLEMENTS

A Medigap (also called “Medicare Supplement Insurance” and more recently “Modernized Supplement Insurance”) is private health insurance policy that is designed to supplement Original Medicare (Part A and Part B). This means that it helps pay some of the health care costs, or “gaps” that Original Medicare doesn’t cover (like copayments, coinsurance and deductibles). Every Medigap policy must follow federal and state laws designed to protect you. Medigap insurance companies can only offer you a “standardized” plan. Each standardized plan must offer the same basic benefits, no matter which insurance company provides it. Under the new Modernized plans, insurance companies may offer innovative benefits in addition to the required standardized benefits. These “innovative” benefits may include things like eyewear or hearing aid coverage. Make sure to find out what innovative benefits are included in the plans you are considering.

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