Medicare Basics

Medicare is a federal health insurance program that originated back in 1965 and is made available to people 65 years of age or older.  Today Medicare covers 47 million Americans.  Medicare is also available to persons under age 65 years old with certain disabilities and people with end-stage renal disease.
Original Medicare is a fee-for-service plan managed by the federal government. If you have Medicare Part A and Part B, then you have Original Medicare.  Your options for additional coverage to cover what original Medicare does not cover are as follows:

• Enroll in a Medicare Advantage Plan.  If the Medicare Advantage Plan has a Medicare Part D prescription drug plan included with it, then you do not need to purchase a separate drug plan.
• Enroll in a Medicare Supplement Plan (Medigap) and enroll in a Medicare Part D prescription drug plan.

Basic Parts of Medicare

Part A (Hospital Insurance) – helps cover your inpatient care in hospitals, skilled nursing facilities stays, hospice care, and some home health care if you meet certain conditions.  Part A benefits from the federal program are subject to a deductible and other out-of-pocket expenses.

Part B (Medical Insurance) – helps cover medically-necessary services like doctor’s visits, outpatient care, other medical services that Part A doesn’t cover such as physical and occupational therapists, and some home health.  Part B also helps cover some preventive services to help maintain your health and to keep certain illnesses from getting worse.  There is a deductible and coinsurance with Part B benefits.

Part C (Medicare Advantage Plans) – helps to cover what Part A and Part B do not cover. Medicare Advantage Plans are provided by private health insurers like the current HMOs and PPOs.   They must follow rules set by Medicare.  However, each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how you get services.  Some may require a referral and most have restrictions on the network of doctors, facilities or suppliers that belong to the plan.  You must be check to make sure that current doctors and hospitals participant in the plan.  These rules can change each year.  Sometimes a prescription drug coverage plan is included with Medicare Advantage plans.  The Advantage plan will have their own “formulary” of prescription drugs, so it is important to make sure you know what your copay and coinsurance will be for your prescription drugs on an annual basis before you agree to the plan.  There are still copay’s, deductibles and coinsurance for Medicare Advantage plans.  Private insurers contract with and are subsidized by Medicare to provide these plans.  Medicare Advantage plans vary in premium and coverage.  New legislation has been initiated that will decrease the government subsidy to Part C providers over time.  This may result in increased copay’s, deductibles or coinsurance or in higher premiums.

Medicare Supplemental Insurance Plans are also referred to as Medigap or Med-Supp policies.  Medicare Supplement plans are designed to pay most or all of the copay’s, deductibles and coinsurance costs that Medicare Part A and Part B does not cover.  Every Medigap policy sold must follow Federal and state laws designed to protect you, the beneficiary.  As such, Medigap insurance companies provide plans identified by letters A through N.  These plans are standardized by guidelines set by the government.  Each standardized Medigap plan must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.  It is recommended to purchase a separate Medicare Part D prescription drug plan because Medigap plans do not come with prescription drug plans.

A Medicare SELECT Plan is a type of Medigap policy sold in some states that requires you to use hospitals and, in some cases, doctors within its network to be eligible for full insurance benefits (except in an emergency).  A Medicare SELECT Plan can take on the standardized plan letters of A through N.  These policies generally cost less than other Medigap policies.  However, if you don’t use a Medicare SELECT hospital or doctor for non-emergency services, you’ll have to pay some or all of what Medicare doesn’t pay. Medicare will pay its share of approved charges no matter which hospital or doctor you choose.

Medicare Part D (Medicare Prescription Drug Coverage) helps cover prescription drug costs.  Private insurers contract with Medicare to provide these plans too.  There are many different plans offered by the insurers that vary by monthly premium.  The plans are based on a combination of drugs that you have been prescribed called a “formulary.”  Choosing the right plan is important so you do not have to pay excessive amounts towards a plan that may not cover your prescriptions.  Part D plans can only be changed during open enrollment with an effective date of January 1.  Please remember that even though Part D is an option and not a requirement, if you don’t join a Medicare PDP when you become eligible, you may have to pay a higher premium if you join later.  New legislation has been initiated that will increase the government subsidy to Part D providers over time.  This is expected to reduce the costs associated with the Medicare Part D “doughnut hole.”

Important Things to Know About Original Medicare

Original Medicare Part A and Part B provides very basic coverage for medical expenses, so you are still responsible for costs such as deductibles and coinsurance. Medicare has relatively high deductibles and cost‐sharing requirements, no limit on out‐of‐pocket spending, and (until 2020) a coverage gap called the Medicare Part D “doughnut hole” in the prescription drug benefit. In addition, Medicare does not pay for many services of critical importance to elderly and disabled beneficiaries, such as long‐term care, dental, or vision.

Medicare Supplemental Advisors is an independent broker agency specializing in Medicare Supplement, Dental, Vision, Hearing and Medicare Part D Insurance Plans and is not connected with or endorsed by the United States Government or with the Federal Medicare Program.  Medicare beneficiaries are encouraged to seek professional advice from an independent licensed agent/broker that is authorized to provide multiple Medicare insurers before final plan selection.