What is it?
Medicare, in essence, is an individual health insurance program for those age 65 and older or age 65 and younger with a qualifying disability. Medicare has four parts: A, B, C, D. Parts A and B are called “Original Medicare” which cover hospital and medical insurance. Medicare Part C is known as Medicare Advantage which is an “all in one” plan that includes Parts A, B, and D into one plan. Part D is prescription drug coverage.
Quick Video on 4 Parts of Medicare
If you are new to Medicare, it can be overwhelming! Watch this short 30 second video to help you better understand the 4 parts of Medicare.
All Things Medicare
Medicare
Basics
Learn about Medicare Part A, Part B, Part C (Advantage) and Part D (Prescription Drug).
Medicare
Eligibility
Learn about when you can enroll in Medicare and when you can apply for more coverage
Enrollment
Periods
Learn about the different enrollment periods and which ones might apply to you
Advantage Vs. Supplement
Learn about the differences between Medicare Advantage Plans and Medicare Supplement Plans
Medicare
Costs
Learn about how much you need to pay, when you need to pay and if you need help with payments
Coverage
Options
Learn about the different coverage options and combinations available for you to chose from
Medicare Basics
Medicare can be a very confusing topic to fully comprehend. Luckily for you, we have completed the necessary licenses and training to educate our clients on all things medicare! Trust us, we understand how complex Medicare can be and the related industry jargon can be overwhelming or misleading. That’s why we are going to try our best to break it down into easy-to-digest bits of information for you.
First, let’s start with the basics of Medicare. There are 4 parts to Medicare. Parts A and B together make up “Original Medicare”. Part C is Medicare Advantage. Part D is prescription drug coverage.
Part A
Also known as Hospital Insurance. Part A covers inpatient hospital care, skilled nursing facility, hospice, lab tests, surgery, home health care.
Part B
Also known as Medical Insurance. Part B covers doctor and other health care providers' services and outpatient care, home health care, and some preventive services.
Part C
Also known as Medicare Advantage (MA). MA plans combine the benefits of Parts A and B with additional benefits that are not provided by Original Medicare.
Part D
Also known as Prescription Drug Coverage. Part D is a stand alone plan that can be combined with Parts A and B or included in a Part C plan.
Medicare Eligibility
Medicare eligibility is rather straight forward but it is still very important you know what to do when the time comes to sign up.
US citizens and legal residents that meet the following criteria are eligible for Medicare:
- Age 65 or older
- Younger than age 65 with a qualifying disability
- Any age if you have End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS, or Lou Gehrig’s Disease)
Legal residents must have lived in the US for at least 5 consecutive years before applying.
Probably nothing!
Most people are automatically enrolled in Original Medicare (Parts A & B) once eligible. If you are receiving your Social Security benefit when you turn age 65 or have a qualifying disability and are receiving Social Security then you are automatically enrolled in medicare. If you did not elect to receive your Social Security at age 65 and instead chose to defer your benefit, then you must enroll in Medicare manually. There are 3 ways to enroll in Medicare:
- Online at www.ssa.gov (usually no signatures or forms required and takes less than 10 minutes)
- Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778)
- Visit your local Social Security Office in person. Use this link to find your local office: Social Security Office Locator
If you are enrolled in Medicare you’ll receive a red, white and blue Medicare Card with your information on it, showing whether you are enrolled in Part A, Part B or both. Keep this card safe, you will need this card in the future if you sign up for a Medicare Supplement plan or Medicare Advantage plan or when you go to the doctor if you stay with Original Medicare. You can call the Social Security Hotline at 1-800-772-1213 (TTY 1-800-325-0778) or set up a Social Security account at www.ssa.gov to request a replacement card.
Didn’t receive a Medicare Card?
Call the SSA hotline at 1-800-772-1213 (TTY 1-800-325-0778) to check on your status.
You still need to make a decision!
Even if you decide to continue to work or are covered by a spouses employer sponsored health plan, you may still be required to sign up for Medicare Part A and/or Part B. Contact your health plan administrator to learn more about your options regarding Medicare enrollment requirements.
Enrollment Periods
If you have ever wondered when you can make changes to your Medicare coverage you’ve probably wandered upon abbreviations galore; SEP, AEP, IEP, etc, etc… Truly confusing isn’t it? Our goal is to clear the confusion regarding the different enrollment periods by making this as simple as possible. We’ll outline what each enrollment period means, who can or cannot use it, and the options available.
| Initial Enrollment Period (IEP) | General Enrollment Period (GEP) | Annual Enrollment Period (AEP) | Open Enrollment Period (OEP) | |
|---|---|---|---|---|
|
For Who? |
About to turn age 65 |
Missed your IEP |
All Medicare Enrollees |
Medicare Advantage Enrollees |
|
Purpose? |
Enroll in Original Medicare, Medigap, or Medicare Advantage Plan |
Enroll in Medicare Part A and/or Part B |
Enroll in or make a change to Medicare Advantage (MAPD) or Medigap plan |
Make a change to Medicare Advantage plan (MAPD) or switch back to Original Medicare |
|
When? |
7 month span - 3 months before 65th birthday month, the month you turn 65 and 3 months after your birthday |
January 1 - March 31 |
October 15 - December 7 (Coverage begins January 1) |
January 1 - March 31 |
Special Election Periods (SEPs)
SEPs are a time period during which eligible Medicare beneficiaries can change their Medicare Advantage or Part D plan outside of the standard annual open enrollment period and after their initial enrollment period has ended.
Lifelong SEPs
- You are chronically ill or have a disability and are receiving Social Security benefits
- You are enrolled in a Special needs Plan (SNP)
- You are eligible for Medicaid or a Medicare Savings Program (MSP)
- You are receiving financial assistance from the State Pharmaceutical Assitance Program
Circumstantial SEPs
- Involuntarily lose employer based coverage
- Gain or lose Medicaid status
- Lose or gain employment
- Move to a new area
- Your current plan changes it contract with medicare
- You are released from jail
- You move into/out of an institution
- 5-star rating plan is availble in your area
Medicare Advantage
vs.
Medicare Supplement
A lot of people think a Medicare Advantage plan is the same thing as a Medicare Supplement plan. Don’t worry if you fall into that category! You’ll soon find out the differences and similarities between the two options and hopefully gain some insight into which option might be better suited for you.
Medicare Advantage
(Part C)
Medicare Advantage Plans, also known as Part C or MA/MAPD plans, are another way of getting Medicare coverage. MA plans combine all parts of Original Medicare (Part A and Part B), and most of the time Part D (prescription drug coverage) into one plan.
Medicare Supplement (Medigap)
Medicare Supplement policies are individual health insurance plans sold by private insurance companies that help cover the gaps and other out-of-pocket costs associated with Original Medicare (Parts A & B). There are 10 plans denoted by letters A – N.
Medicare Costs
How much will this cost me? That’s usually one of the first questions that pops into our minds when looking at different options regardless if it’s for insurance or TVs. We get it, we are the same way. Medicare is no exception, how much you will pay is a huge factor in determining which coverage is ideal for you. Before we begin, it’s very important to clearly state Medicare is not free. The amount you pay for services depends entirely on what coverage you select and the services received. We believe the best way for you to understand how much you will pay is by defining all of the terms associated with Medicare. This way, when you sit down with a Medicare professional, you will understand the difference between deductible, premium, co-payment, and co-insurance.
Everyone has different health care needs and varying levels of services therefore it is impossible to give a dollar amount for out-of-pocket costs.
Medicare Cost Terms Defined
You are probably familiar with this term as almost all insurance products have a premium. With Medicare it’s no different. The premium is the monthly amount you must pay for your medical insurance. This can be paid to Medicare directly or to a private insurance company or both.
Cost sharing is basically how the costs for medical services is split (shared) between what you must pay out of pocket and what Medicare (insurance) will pay.
A deductible is a pre-determined amount of money you must spend out of your pocket before your medical insurance starts to pay for services.
For example, if your plan has a $500 deductible, then you must spend $500 on different services before your insurance will start to pay for services. What you pay after the first $500 depends on your personal plan.
A co-payment (copay) is a flat dollar amount that you must pay for a particular service. You might have a $15 copay for a doctors visit or a $5 copay for a prescription. You always pay the same amount regardless of how much the service actually costs.
For example, it might cost $80 total to see a doctor for an annual physical. Your insurance plan states that you have a $15 copay for an annual physical so $15 is all you pay. Your insurance company pays the difference ($65).
A coinsurance is a percentage of the total costs that you are responsible for a particular service. You might have a 20% coinsurance for a doctors visit or a 5% co-insurance for a prescription. How much you owe is entirely dependent on the total cost of the service.
For example, it might cost $100 total to see a doctor for an annual physical. Your insurance plan states that you have a 20% coinsurance for an annual physical so $20 is how much you owe. Your insurance company pays the difference ($80).
First off, let’s define out-of-pocket (OOP). OOP is what you must pay for medical services from your own money, this includes deductibles, copays and co-insurance. Therefore, MOOP is the maximum amount of money you will pay for covered services in a year. Premiums are not counted for MOOP. After you reach this monetary amount, your insurance company is responsible for 100% of covered costs for the remainder of the year.
It is very important to note there is no MOOP for Original Medicare (Parts A & B). However, Medicare Advantage and some Medicare Supplement plans do have MOOPs.
Medicare Part D Payments
Medicare Part D plans do not have an out of pocket maximum. The amount you pay for drugs depends on numerous factors such as the number of prescriptions you are taking and what tier your prescriptions are for your specific plan. Below describes the four stages of Part D payments.
Phase 1
Yearly Deductible.
Coverage begins Jan 1. You pay 100% of drug costs until you reach your annual deductible. This amount varies by plan.
Phase 2
Initial Coverage.
You pay a copay or coinsurance amount for every medication until you hit the coverage limit. This amount varies by plan.
Phase 3
Coverage Gap
There is no more donut hole, but if you go over the Coverage limit, you'll pay no more than 25% of the cost of your covered drugs.
Phase 4
Catastrophic Coverage.
Once you hit this phase, you are responsible for roughly 5% of prescription drug costs.
Coverage Options
There is no “best plan” when it comes to Medicare. Everyone’s healthcare needs are different depending on multiple factors including prescriptions, specialists, primary care physician, etc. With that in mind, you have an important decision to make when you become eligible for Medicare.
At first, understanding all of your choices can be overwhelming, but we cannot stress enough how important it is for you to understand what each option can provide for you. Fortunately, that’s where we step in, our job as Medicare Specialists is to help you find you the right policy.
Let’s have a quick review on the four parts of Medicare: Original Medicare (Parts A & B), Medicare Advantage (Part C), Prescription drug coverage (Part D), and Medicare Supplement (Medigap).
Original Medicare. Part A pays for in-patient care and hospital stays. Part B pays for doctors visits and out-patient care. Parts A & B are provided by the government and what you are automatically enrolled in when you become eligible for Medicare.
Medicare Advantage. Essentially and “all-in-one” plan that combines all of the benefits from Parts A & B. Most Medicare Advantage plans have prescription drug coverage as well as other benefits such as hearing, dental, vision, and fitness. While Parts A & B are provided by the government, private insurance companies offer Part C plans.
Prescription Drug Coverage. Part D offers prescription drug coverage that you can get in two ways. First, you can enroll in a Part C plan that includes prescription drug coverage or you can enroll in a stand alone Part D plan. Part D is offered by private insurance companies. Prices vary by plan.
Medicare Supplement. Also known as Medigap, these plans help pay for most of the out of pocket costs associated with Parts A & B. There are 10 plans offered (lettered A – N) with varying levels of coverage. Medigap plans are only offered by private insurance companies. These plans are standardize by the government meaning that the same benefits are offered regardless of which insurance company you chose, although prices can vary based on which insurer is chosen.
Medicare Combinations
Now that we’ve had a brief review of the four parts of Medicare, let’s dive into the different combinations that you can chose from. In total, there are seven different combinations for coverage.
Original Medicare Combinations
Original Medicare
Medicare Advantage Combinations
Important Takeaways
- Original Medicare is provided by the government.
- Medicare Advantage and Medicare Supplement and standalone Part D are offered by private insurance companies ONLY.
- There are seven different coverage options, which can be overwhelming BUT most people will chose either Original Medicare + Part D + Medigap OR a Medicare Advantage with included drug coverage.
- You CANNOT have a Medicare Advantage and a Medicare Supplement at the same time.
Still Have Questions?
Give us a call to speak with a licensed Medicare Specialist!