What is Medicare?

Medicare is a federal health program for citizens who are 65 and older and individuals with certain disabilities (typically collecting Social Security benefits). The program is funded by Social Security and Medicare taxes that most Americans pay through payroll deductions or an individual tax return. 

Components of Medicare:

Beneficiaries of Medicare will enroll in Part A and to be eligible for Part C, have to enroll in Part B. A beneficiary looking to enroll in Part D has to be enrolled in Part A and/or be eligible for Part B. In many cases, beneficiaries who turn 65 get automatically enrolled in Part A and then elect Part B online or through the Social Security office.

Part A

Coverage Includes:

  • Inpatient Care in Hospitals (Semi-Private Room)

  • Skilled Nursing Facility Care

  • Nursing home care

  • Hospice Care

  • Home Health Care
     

For more information on premiums assigned to a Medicare beneficiary and up to date out of pocket expenses, please click here.

 

Depending on if a Medicare beneficiary elects a Part C Medicare Advantage plan or a MediGap/Supplement plan, out-of-pocket costs will differ.

Part B

Coverage Includes:

  • Medically necessary services

  • Preventive care services

  • Clinical research

  • Ambulance services

  • Durable medical equipment (DME)

  • Mental health (inpatient, outpatient, partial hospitalization)

  • Limited outpatient prescription drugs

 

Part B premiums are calculated based off a household's modified adjusted gross income from 2-3 years prior. Individuals with higher income may have an Income Related Monthly Adjustment Amount (IRMAA) apply. Exceptions can be requested through Social Security if a beneficiary believes an incorrect IRMAA has been applied. For assistance determining your specific premium, please visit Medicare.gov.

For more detailed coverage information on Part B, please click here.

Part D

Accessing prescription drug coverage under Medicare works differently than traditional group or individual major medical plans on the market today. Medicare’s prescription drug plan program is optional, however, penalties could apply for those who wave coverage and decide to elect at a later time. For more information on penalties, please click here. 

 

There are two ways to access drug coverage:

  1. Stand-alone Prescription Drug Plan (PDP): These plans add coverage to Original Medicare, some Medicare Private Fee-for-Service (PFFS) plans, and Medicare Medical Savings Accounts (MSA) plans

  2. Medicare Advantage Plans (Part C): You get all of your Part A, Part B, and Part D through these plans. These plans are commonly referred to as “MA-PDs”.

The 4 Phases of a Drug Plan:

Most drug plans have an annual deductible, a 4-5 tier copay/coinsurance schedule, coverage in the gap and catastrophic phases. Private insurance carriers are required to cover the yearly standard benefit set by Medicare and CMS. In addition, each carrier has their own a drug formulary covering at least 2 drugs in each therapeutic class.

Premiums:

Part D premiums will vary by stand-alone prescription drug plans or Part C plans elected.  More robust drug needs may warrant a plan with a higher premium but lower out-of-pocket costs at the pharmacy.  A standard rule of thumb to follow is your specific drug list will determine the right Part D plan for you. Individuals with higher income may have an Income Related Monthly Adjustment Amount (IRMAA) apply. 

Part C

Medicare Advantage:

Medicare Advantage Plans are offered through private insurance companies contracted with Medicare and are an optional election.  Advantage plans renew annually and have a similar feel of a group/major medical health plan. 

Some coverage options include:

  • Copays and/or coinsurance for doctor visits, outpatient services, and hospital stays

  • Built-in prescription drug coverage (in most cases)

  • Preventive and/or comprehensive dental, hearing, and vision benefits

  • A network of providers to choose from (not all providers participate)

    • Health Maintenance Organizations (HMO)

    • Preferred Provider Organizations (PPO)

    • Private Fee-for-Service (PFFS)

  • Most private insurance providers offer plans for beneficiaries with special needs, chronic conditions, and individuals needing additional financial assistance.

Medigap/ Medicare Supplement

Medigap policies help pay some of the health care costs that Original Medicare (Parts A&B) doesn’t cover. Examples of those are deductibles, copayments, and coinsurance. Beneficiaries must be enrolled in Part A&B to elect a Medigap plan. Medigap plans are also sold by private insurance companies. 

Some coverage options include:

  • Foreign travel emergency services

  • Policyholders are not limited to a specific network of doctors and/or facilities

  • Household Premium Discounts may apply

  • You can buy a Medigap policy from any insurance company that's licensed in your state

  • Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can't cancel your Medigap policy as long as you pay the premium.

  • Prescription Drug coverage is not included – a stand-alone prescription drug plan must be elected

  • Does not cover long-term care, vision or dental care, hearing aids, glasses or private nurses

 

​Out-of-Pocket Costs and Premiums will vary by supplemental plan choice. You pay the private insurance company a monthly premium for your Medigap policy. You pay this monthly premium in addition to the monthly Part B premium that you pay to Medicare.