A basic guide to Medicare

What is Medicare?

Medicare is a government health insurance program for people age 65 years and older or who have a disability or  end-stage renal disease (commonly known as kidney failure).

But, Medicare is NOT…

Insurance for dependents.
It is health insurance only for the individual eligible for Medicare.

Free.
See the following “Paying for Medicare” section to learn more information.

Government healthcare.
The federal government runs and regulates Medicare, and pays for about 75 percent of the healthcare used by Medicare recipients. However, the services themselves are almost always from the private sector. In other words, most physicians, pharmacists, and other healthcare providers are not government employees – they simply accept Medicare as a form of insurance that will cover their services.

Continuation of Medicare services

Medicare recipients do not have to sign up for Medicare on an annual basis. However, it would be in their best interest to review the various health plans during the Open Enrollment Period every year. The prices of coverage and prescription drug plans change every year, and recipients can learn about the latest adjustments from Medicare materials such as, “Evidence of Coverage (EOC)” and “Annual Notice of Change (ANOC).”

Medicare coverage

Parts A, B, C, and D

Medicare coverage is broken down into four main areas, called parts A, B, C, and D.

Part A: Known as hospital insurance. Helps cover inpatient hospital care, skilled nursing facility (SNF) care, hospice, and home health services.

Part B: Known as medical insurance. Helps cover outpatient care, some home health care, durable medical equipment (such as walkers and blood sugar monitors), some preventive services, and services from doctors and other healthcare providers.

Part C: Known as Medicare Advantage, which is administered by private health insurance companies authorized by Medicare. Includes all that is covered under Part A and Part B, and usually includes Part D (see below), and sometimes additional benefits and services for an extra cost.

Part D: Known as Medicare prescription drug coverage. As with Part C, Medicare-authorized private insurance companies administer Part D.

Coverage options

You can get Medicare Parts A and B in two different ways: Original Medicare or a Medicare Advantage Plan.

Original Medicare (Part A or B). People who choose Original Medicare begin by selecting Part A (hospital insurance) or Part B (medical insurance), or both. Then they can get Part D (prescription drug coverage) as an option. Finally, they can decide if they want Medicare supplement insurance, known as a Medigap policy, which is sold by private insurers and covers some or all of the costs that Original Medicare does not cover. Medigap is available to those who have both parts A and B. See the following “Services not covered by Medicare” section for more about Medigap.

Medicare Advantage Plan (Part C). In this scenario, people choose a care plan offered by a private insurance company to administer the Part A and B benefits. The plans can be in the form of a health maintenance organization (HMO), or preferred provider organization (PPO), Private-Fee-For-Service (PFFS) plan, Special Needs Plan (SNP), HMO Point of Service (HMOPOS) plan, or Medical Savings Account (MSA) plan. All Part C plans must cover Parts A and B, and usually also include Part D. If a Medicare Advantage Plan does not automatically offer prescription drug coverage, the Medicare recipient may have the option of choosing a separate Part D plan. Note: Those who have a Medicare Advantage Plan cannot also have (or be sold) a Medicare supplement insurance (Medigap) policy.

Services not covered by Medicare
Original Medicare does not pay for every type of healthcare. Exemptions include: cosmetic surgery, acupuncture, hearing aids, routine dental or eye care, and long-term care (also known as custodial care). While some long-term nursing home care is medical, if custodial care is all the patient needs, that care is not covered by Medicare.

To find out online whether a specific test, item, or service is covered by Original Medicare, visit this page: https://medicare.gov/coverage/your-medicare-coverage.html. Or, see the “Need more information?” section below.

If you have Original Medicare, you have the option of buying a Medigap policy to pay for costs that are not covered by Medicare, such as copayments, coinsurance, and deductibles.

Paying for Medicare

On average, Medicare pays about 75 percent of the healthcare you use. Medicare recipients pay monthly premiums for Original Medicare coverage. Those who paid Medicare taxes while they were employed usually qualify for premium-free Part A. Most Medicare recipients pay a premium for Part B.

However, those who qualify for low-income assistance from their state may pay less than others. At the other end of the spectrum, people whose income is over a certain level pay higher premiums.

Also, Medicare recipients may pay deductibles, coinsurance or copayments (their cost share) based on the type of coverage they choose to use.

How does Medicare work with other insurance?

Some people with Medicare may also have other types of insurance, such as employer group health coverage. There are rules that dictate which insurance pays first, up to the limits of its coverage. If you are thinking about Medicare and you have other insurance, here are a few general guidelines.

Medicare pays first when a Medicare recipient:

  • Has retiree insurance (insurance from past employment)
  • Is 65 years old or older, has group health plan coverage based on current employment, and the employer has less than 20 employees
  • Is under 65 and disabled, has group health plan coverage based on current employment, and the employer has fewer than 100 employees

The group health plan pays first when a Medicare recipient:

  • Is at least 65 years old, has group health plan coverage based on current employment (or the active employment of a spouse), and the employer has 20 or more employees
  • Is under 65 and disabled, has group health plan coverage based on current employment, and the employer has at least 100 employees

For people who have end-stage renal disease (kidney failure) at any age, their group health plan pays for the first 30 months after they qualify to enroll in Medicare. Medicare pays first after this 30-month period.

How has the Affordable Care Act (ACA) changed Medicare?

Medicare services have been broadened to include more preventive/screening procedures, such as mammograms and colonoscopies, without Medicare recipients having to pay out of pocket. ACA also reduced the cost for some brand-name and generic prescription medications during certain stages of part D drug coverage.

Also, a new feature has been built into the MyMedicare.gov website. Blue Button is an online tool that allows people to download their personal health information on their computers or mobile devices. The purpose of Blue Button is to make it easier to view medical claims and to share medical history with a healthcare provider.

The Health Insurance Marketplace, which was established under the ACA, is separate from Medicare. A person who has Medicare cannot obtain an additional plan from the Health Insurance Marketplace. However, if a person already has a plan from the Marketplace but then qualifies for Medicare, that person can cancel the Marketplace plan once he or she starts using Medicare.

Need more information?

Medicare
www.medicare.gov
Toll-free national help line: 1-800-MEDICARE (633-4227) / TTY: 1-877-486-2048
The Medicare website and Medicare customer service agents are bilingual (English and Spanish). The website offers easy-to-read guides to Medicare, as well as forms and contact information. It also offers a “Find health and drug plans” feature as well as a directory of healthcare providers and medical equipment suppliers who accept Medicare as payment. Customer service is able to help answer basic questions about the program and about claims.

SHIPTalk
shiptalk.org
The State Health Insurance Assistance Program (SHIP) is a free nationwide service offering “one-on-one counseling and assistance to people with Medicare and their families.” The program is funded by the federal government, and the SHIP counselors are not associated with any private insurance carriers. They can provide information and guidance about Medicare plans, coverage, rules and regulations, and how Medicare works with employee/retiree coverage. Visit the website to find a local SHIP office in your state; keep in mind that the program name differs from state to state.

Medicare Rights Center
www.medicarerights.org
Help line: 1-800-333-4114
Help line hours: 10:00 a.m. – 3:00 p.m., Monday – Friday, Eastern time
The Medicare Rights Center is a nationwide, nonprofit organization that helps older adults and people with disabilities get access to health coverage. The website provides fact sheets, newsletters, and an online reference tool called Medicare Interactive. The center also offers telephonic counseling and advocacy on issues related to Medicare coverage and public policy, as well as information about local resources.

Sources

“Medicare & You: 2014.” Centers for Medicare & Medicaid Services, accessed February 24, 2014.
http://www.medicare.gov/Publications/Search/SearchCriteria.asp?version=default&browser=Chrome%7C28%7CWindows+7&Language=English&pagelist=Home&comingFrom=13

“What Medicare covers.” Medicare.gov, accessed February 24, 2014.
https://medicare.gov/what-medicare-covers/index.html

“The Affordable Care Act & Medicare.” Medicare.gov, accessed February 24, 2014.
http://www.medicare.gov/about-us/affordable-care-act/affordable-care-act.html

This material is intended for informational purposes only and should not be construed as medical advice or used in place of consulting a licensed medical professional. You should consult with your doctor to determine what is right for you.

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