Medicare Basics

What is Medicare?

Medicare is the federal health insurance program for

• People who are 65 and older
• Certain younger people with disabilities
• People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called RSFD)

If you are eligible for Medicare, you can choose between getting Medicare benefits through traditional Medicare or a Medicare Advantage (MA) plan. In choosing which one is best for you, you should think about your circumstances, including health, need for flexibility, budget and your tolerance for financial risk.

What are the different parts of Medicare?

Medicare has 4 parts: Part A, Part B, Part C and Part D.

• Part A
  Covers hospital care, including hospital care, skilled nursing facility care, home heath care and hospice care.
• Part B
  Covers medical insurance, including doctor visits, medical equipment, outpatient procedures, home health care, lab tests, x-rays, ambulance services and some preventive services.
• Part C
  This is also known as a Medicare Advantage (MA) plan. It is administered by private insurers that have contracts with the Medicare program. MA is a different way of getting Medicare Part A and Part B coverage. These plans combine Part A and Part B, and often Part D, into one plan so that the entire package of benefits comes from a private insurance company regulated by the federal government.
• Part D
  Provides outpatient prescription drug coverage. Part D is administered and run by private insurance companies that have contracts with the federal government. People who have traditional Medicare, or a Medicare Advantage plan that does not include prescription drug coverage and want Part D coverage, must buy it separately. This is called a “stand-alone” Prescription Drug Plan (PDP). A Medicare Advantage (MA) plan that includes both health and drug coverage is called a Medicare Advantage Prescription Drug (MA-PD) Plan.

What is Medigap?

Medigap plans are also known as Medicare Supplement Insurance. They are private health insurance plans that help pay for “gaps” in payment for Medicare-covered care not covered by traditional Medicare. These include copayments, coinsurance and deductibles. Often, someone with traditional Medicare must choose to buy a separate Part D drug plan as well as a Medigap plan to supplement their Medicare benefits. Medigap policies do not work with MA plans and it is illegal for anyone to sell an MA enrollee a Medigap policy unless they are switching to traditional Medicare.

What are some key differences between Traditional Medicare and a Medicare Advantage Plan (MA)?

Enrollment

• Traditional Medicare
  If you meet the requirement of at least 40 quarters of employment (10 years) paying into Social Security, you automatically qualify for Medicare Part A. There is no required monthly premium. You should contact Social Security to enroll. When you enroll in Medicare for the first time, you are automatically enrolled in traditional Medicare, but you can choose a private Medicare Advantage (MA) plan if you prefer.

  Medicare Part B requires the payment of a monthly premium. You must elect to either accept or decline this coverage. Be aware that there may be penalties for not enrolling during your initial enrollment period.
   

• Medicare Advantage
  Generally, you must specifically opt in to receive your Medicare coverage through an MA plan. It does not happen without your authorization, except for some individuals enrolled in Special Needs Plans. You must be enrolled in Medicare Part A and Part B in order to be eligible to enroll in a MA plan. If you choose to enroll in a Medicare Advantage plan and you are still in the traditional Medicare program, you still have rights and protections, but your Medicare benefit is provided through a private plan.

Access to Services

• Traditional Medicare
  You can go to any doctor or hospital in the United States that accepts Medicare – there is no network requirement. Referrals are not needed to see specialists and there is no prior authorization to obtain services.
   
• Medicare Advantage
  You may be limited by the plan to using a network of specific providers. You may have to choose a primary care physician, get referrals to see specialists and get prior authorization for some services. Some MA plans may cover care you get outside of the network, but you may have to pay more for them. Most plans may only cover only emergency and urgent care if you are out of the service area, and require that you return to the service area for follow up and routine care. Network providers can join and leave a plan’s provider network anytime, but you must generally wait until the next year’s open enrollment period to opt to leave the plan. The MA plan is also allowed to change the providers in the network anytime during the year.

Costs

• Traditional Medicare
  Part A is free if you have worked and paid Social Security taxes for at least 40 calendar quarters (10 years). Part B requires a monthly premium. You may also have to pay for deductibles, coinsurance and copays. There are no out-of-pocket maximums or caps on what you can spend on your healthcare. With traditional Medicare, you have to purchase Part D drug coverage and a Medigap plan separately (if you choose to have one). For those with limited resources and income, there may be help available with the costs. You can find additional information on the Medicare Savings Program here https://chfs.ky.gov/agencies/dms/dpo/epb/Pages/msp.aspx or here https://www.ssa.gov/benefits/medicare/prescriptionhelp/

  There are also Medicare Savings Programs that are available for those with limited income and resources to pay for the Medicare Part B premium. For additional information, visit https://chfs.ky.gov/agencies/dms/dpo/epb/Pages/msp.aspx.
   

• Medicare Advantage
  Costs for these plans vary. You must pay the same monthly premium as those enrolled in traditional Medicare Part B. Additional out-of-pocket costs in an MA plan depend on the type of plan you choose and may include an extra monthly premium, a yearly deductible limit, the cost for each visit or service (copayments and/or coinsurance), the type of health care services needed and how often and whether or not you use network providers.

  MA plans may charge cost-sharing for a service that is above or below the traditional Medicare cost-sharing for that service. MA plans can’t impose cost-sharing for chemotherapy administration services, renal dialysis services and skilled nursing services that exceed the cost-sharing for those services under traditional Medicare. All MA plans must have a maximum allowable out-of-pocket (MOOP) limit on the amount of cost-sharing they can charge for Part A and Part B services. After you meet the maximum, you pay nothing for covered benefits for the rest of the year. MA plans may change benefits, premiums and copays every year.

Benefits

• Traditional Medicare
  There is a standard benefit package that covers medically necessary health care services. Traditional Medicare does not offer coverage for prescription drugs. You will have to buy a separate Part D Prescription Drug Plan and you may want to buy a Medigap plan as well.
   
• Medicare Advantage
  These plans must offer a benefit package that is at least equal to traditional Medicare’s and covers everything that traditional Medicare covers. Some MA plans my cover services that are not covered by traditional Medicare, such as dental, hearing and vision care and health-club memberships. Most MA plans have prescription drug coverage built in to the benefits package.

What things should I consider before choosing between traditional Medicare and a Medicare Advantage plan?

• Research how the MA plan you are considering works with any current coverage that you may have. If you have retiree or employer health coverage, you may lose this coverage if you join an MA plan. Also, your former employer may offer you retiree coverage through an MA plan.
• Compare the coverage and costs available through traditional Medicare, combined with an appropriate Medigap policy and prescription drug plan vs. the available MA plans, including any monthly premiums, deductibles, copayments and yearly out-of-pocket maximums.
• Ask MA plans if and to to what extent you have to get services from medical providers who participate in the plan you are considering.
• Figure out if the physicians and health care providers that you are likely to use contract with the MA plan you are considering.
• Read all the information about each MA plan you are considering. Make sure you understand the plan and what it pays for. Not all MA plans work the same way.
• Find out if the MA plan you are thinking about covers you if you travel outside of the service area.
• Check to see if the medications you need are on the MA plans list, called a formulary.
• Find out what MA plan services are provided at an additional cost. Look for preventative services and extra benefits. Also look for any limitations associated with visits or services.
• Make sure that your doctor is included in the MA plan’s network. If they are, ask your doctor about their experience in dealing with that plan and if they would recommend it.
• Ask what hospitals, skilled nursing and home care agencies the plan contracts with.
• Learn how the plan’s complaint system and appeals and grievances are handled.
• Ask an MA plan representative if member satisfaction surveys are conducted and if the results are available for review. You may be able to get free help to compare the plan options here https://chfs.ky.gov/agencies/dail/Pages/ship.aspx.
• You can find out if you are eligible and calculate your premium here: https://www.medicare.gov/eligibilitypremiumcalc/.

For more in-depth information on Medicare, see the Medicare and You Handbook, available in several different languages, here: https://www.medicare.gov/forms-help-resources/medicare-you-handbook/download-medicare-you-in-different-formats.