Medicare Basics

Understanding Medicare

The Parts of Medicare

Part A (Original Medicare)

Covers inpatient hospital, skilled nursing facility, home health and hospice care.

Part B (Original Medicare)

Covers medical procedures, services and equipment, injectable drugs administered in the doctor’s office (such as those used to treat macular degeneration, vein occlusion or diabetic retinopathy), and other outpatient services.

Part C (Medicare Advantage)

Offers a range of plans sponsored by private insurers and approved by Medicare, including:

  • Health Maintenance Organizations (HMOs), require you to seek care from a specific network of hospitals and doctors
  • Preferred Provider Organizations (PPOs), allow members to obtain care from providers outside the network, at significantly higher costs
  • Private Fee-For-Service (PFFS)

These plans must provide the same benefits offered by Original Medicare, but may charge different coinsurances, copayments or deductibles for services. Different regions may have different Medicare Advantage plans.

Part D

A prescription drug program available to all Medicare beneficiaries for a fee. Private companies provide the coverage.

Supplemental Medicare (also known as Medigap)

Can only be purchased with Original Medicare plans and CANNOT be purchased with Medicare Advantage plans. These plans may cover some or part of out-of-pocket costs related to Medicare Part B. Consider purchasing supplemental plans that are “community rated” or “issue-age rated” rather than “attained-age” rated, so that rates don’t increase uncontrollably as you age.

 Enrollment

  • Initial Enrollment Period: A seven-month period that begins 3 months before you turn 65, includes the month you turn 65 and continues for three months after you turn 65. During this period, you can enroll in either Original Medicare or Medicare Advantage, if you have Medicare Part A and Part B.  If you are receiving Social Security or Railroad Retirement Board benefits, you are automatically enrolled on the first day of the month you turn 65
  • Medicare Open Enrollment: From October 15 through December 7, anyone with Medicare can join, switch, or drop a Medicare Advantage Plan.
  • Supplemental Medicare Open Enrollment lasts for 6 months beginning the month you turn 65 years old and enroll in Part B. During this 6-month period you are guaranteed access to these policies for a limited time, regardless of your health status. You may be denied access to these policies based on your health status at a future date.
  • You must sign up for Part D prescription drug coverage within three months after you start receiving Medicare Part A or B, or you will pay a late-enrollment penalty.  
  • Medicare Advantage (MA) Open Enrollment is January 1 - March 31.
    • If you are in a MA plan, you can switch to another MA Plan.
    • During this time, you can leave your MA Plan and enroll in Original Medicare.
    • If you enrolled in a Medicare Advantage Plan during your Initial Enrollment Period, you can change to another Medicare Advantage Plan (with or without drug coverage) or enroll in Original Medicare (with or without drug coverage).
    • If you switched from Original Medicare and dropped your Supplemental Medicare plan (also called Medigap) to join a Medicare Advantage plan, you may not be able to re-enroll in Supplemental Medicare.
    • If you have Original Medicare, you cannot switch your plan during this time.
  • Note: If you are not satified with your plan you have an opportunity to make a one-time change to another Medicare Advantage plan or Original Medicare from January 1 – March 31.

 

Original Medicare

Medicare Advantage (MA)

Access

  • Allows you to go to any doctor or hospital in the US that accepts Medicare
  • In most cases, you can see specialists without referrals
  • Don’t have to obtain any authorizations before you seek services
  • Limited to specific providers
  • May need to choose a primary care provider
  • May need to obtain referrals to see specialists
  • May require prior authorization for certain services
  • May have to return to your service area if you need follow-up or routine care
  • May require step therapy for new prescriptions or other restrictions before they will pay

Coverage

  • Covers Part A, B, and covers Part D, if purchased
  • Accepted nearly everywhere
  • Includes injectable/infused drugs
  • Eye exams and treatments related to an injury or illness. Does not include routine eye exams.
  • Have a choice to purchase Medigap plan to cover Medicare cost-sharing
  • Varies by plan, but is required to cover all services offered by Original Medicare
  • May offer all-in-one coverage that includes prescription drug coverage
  • May include extra benefits such as eye glasses and routine eye care, dental care and hearing exams
  • Cannot purchase Supplemental Medicare Plan (Medigap)

Costs

  • Deductible is the same in every state. For Medicare Part B you pay 20% coinsurance, if you see a participating provider, after you meet the deductible.
  • Supplemental Medicare (Medigap) may help cover coinsurance
  • No out-of-pocket limit
  • Cost-sharing varies depending on the plan Many MA plans require you to pay coinsurance of up to 20 percent of the cost of in-network services, until you meet your yearly out-of-pocket limit
  • Yearly out-of-pocket limit

 What to Consider During Enrollment

  • Do all of my doctors, hospitals, surgical centers, etc., accept my coverage?
  • Are my medications covered by the plan I am considering?
  • Do I travel to other parts of the country for extended periods of time? Will I be able to see a doctor in those places?
  • Have I talked to my physicians and pharmacists about the plan I am considering?
  • Are there out-of-pocket costs for office visits, testing, procedures and/or drugs?
  • Does my insurer have rules for physician-administered drugs, such as my eye injections of Eylea or Lucentis?

Medicare Supplement (Medigap) Insurance Plans

Medigap policies are available in every state from private health insurance companies and there are ten different plan designs: A, B, C, D, F, G, K, L, M, and N. The price may vary by company and state, but the plan benefits are the same, within each letter. Medigap policies are guaranteed to be renewed year to year, and your company cannot cancel your policy as long as you pay the premium. If you want prescription drugs covered, you will also need a Part D prescription drug plan.

Yes = the plan covers 100% of this benefit

No = the policy doesn't cover that benefit

% = the plan covers that percentage of this benefit

N/A = not applicable 

Medigap Benefits

Medigap Plans

A

B

C*

D

F*

G

K**

L**

M

N

Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Part B coinsurance or copayment

Yes

Yes

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes***

Blood (first 3 pints)

Yes

Yes

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes

Part A hospice care coinsurance or copayment

Yes

Yes

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes

Skilled nursing facility care coinsurance

No

No

Yes

Yes

Yes

Yes

50%

75%

Yes

Yes

Part A deductible

No

Yes

Yes

Yes

Yes

Yes

50%

75%

50%

Yes

Part B deductible

No

No

Yes

No

Yes

No

No

No

No

No

Part B excess charge

No

No

No

No

Yes

Yes

No

No

No

No

Foreign travel exchange (up to plan limits)

No

No

80%

80%

80%

80%

No

No

80%

80%

Out-of-pocket limit**

N/A

N/A

N/A

N/A

N/A

N/A

$5880

$2940

N/A

N/A

*As of  January 1, 2020, Medigap plans will not cover the Part B deductible. Those with Plans C and F will be “grandfathered” and able to continue with their plan. Those eligible for Medicare before January 1, 2020, but not yet enrolled, may still purchase either plan. New enrollees do not have the option to purchase Medigap Plan C or F. Plans F and G also offer high-deductible plans in some states. If you choose this option, this means you must pay for Medicare-covered costs up to the deductible amount of $2,340 in 2020 before your Medigap plan pays anything.

** For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible, the Medigap plan pays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don't result in inpatient admission.

 Medigap

  • If you enroll in a Medicare Advantage plan when you first join Medicare and stay with the plan for a year, you may not qualify for supplemental Medigap coverage if you want to join Original Medicare at a later date.
  • Medigap policies must follow federal and state laws. However, Massachusetts, Minnesota, and Wisconsin Medigap policies are standardized in a different way.
  • As of January 1, 2020, Medigap plans do not cover the Part B deductible. Those with Plans C and F were “grandfathered” and able to continue with their plan. Those eligible for Medicare before January 1, 2020, but not yet enrolled, may still be able to buy one of these plans. New enrollees no longer have the option to purchase Medigap Plan C or F.

For more information


Definitions

Co-insurance – An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).

Co-payment – An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit, hospital outpatient visit, or prescription drug. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription drug.

Deductible – The amount you must pay for health care or prescriptions before Original Medicare, your prescription drug plan, or your other insurance begins to pay.

Drugs injected by your doctor – Medicare covers a limited number of drugs injected in a doctor’s office to treat eye diseases. You pay 20% of the Medicare-approved amount for these covered drugs, and the Part B deductible applies.

Intravitreal Injections  Procedure where your doctor places a medication directly into the space in the back of the eye. You pay 20% of the Medicare-approved amount for the doctor’s service, and the Part B deductible applies.

Medicare-approved amount – In Original Medicare, this is the amount a doctor or supplier that accepts Medicare can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference.

Network – The doctors, hospitals and medical facilities your health insurer or plan has contracted with to provide health care services.

Network Provider or Preferred Provider or Participating Provider – A provider who has a contract with your health insurer or plan and who has agreed to provide services to members of a plan. You will pay less if you see a provider in the network. Also called a “preferred provider” or “participating provider.”

Out-of-pocket Limit – The most you will be required to pay during a coverage period (usually one year) for your share of the cost of covered services. After you meet this limit, the plan will usually pay 100% of the allowed amount. This limit helps you plan for health care expenses. This limit never includes your premium, balance-billed charges or uncovered services. Some plans don’t count all of your copayments, deductibles, coinsurance payments, out-of-network payments, or other expenses toward this limit.

Premium – Payment that you make to a health or drug plan. How often you pay this amount depends on the plan.

Provider  An individual or facility that provides health care services. Some examples of a provider include a doctor, nurse, chiropractor, physician assistant, hospital, surgical center, skilled nursing facility, and rehabilitation center. The plan may require the provider to be licensed, certified, or accredited as required by state law.

Step therapy – Medicare Advantage plans may require that you be treated with a less expensive drug before your doctor can use a more expensive drug, without regard to which drug you or your physician prefer.

Resources

Medicare and You Handbook                                                                                         www.medicare.gov/sites/default/files/2020-09/10050-Medicare-and-You_0.pdf

Glossary of Health Coverage and Medical Terms                                                       www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/UG-Glossary-508-MM.pdf

The Medicare Resource Center                                                                                                                        www.medicareresources.org

1-800-MEDICARE (1-800-633-4227) TTY users can call 1-877-486-2048. 

Medicare Plan finder                                                                                                                                                          www.medicare.gov/find-a-plan

 Medicare Rights Center: Differences between Original Medicare and Medicare Advantage   www.medicarerights.org/fliers/Medicare-Advantage/Differences-Between-OM-and-MA.pdf?nrd=1

 Kaiser Health News Medicare vs. Medicare Advantage How to Choose                                       khn.org/news/medicare-vs-medicare-advantage-how-to-choose/

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