What Is Medicare?
Medicare is the US Federal Government Health Insurance Program for:
- People 65 years of age and older.
- Some people with disabilities under age 65.
- People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant).
Medicare has Four Parts:
- Part A (Hospital Insurance): Most people do not have to pay for Part A.
- Part B (Medical Insurance): Most people pay monthly for Part B.
- Part C (Medicare Advantage Plans): Medicare Advantage plans are offered by private insurance companies as an alternative to Original Medicare; plans are government subsidized and regulated.
- Part D (Prescription Drug Coverage): Part D Plans are offered by private companies to provide coverage for prescription drug costs; plans are government subsidized and regulated.
Part A (Hospital Insurance)
Helps Pay For:
Care in hospitals as an inpatient, critical access hospitals (small facilities that give limited outpatient and inpatient services to people in rural areas), skilled nursing facilities, hospice care, and some home health care.
Most people get Part A automatically when they turn age 65. They do not have to pay a monthly payment called a premium for Part A because they or a spouse paid Medicare taxes while they were working.
If you (or your spouse) did not pay Medicare taxes while you worked and you are age 65 or older, you still may be able to buy Part A. If you are not sure you have Part A, look on your red, white, and blue Medicare card. It will show "Hospital Part A" on the lower left corner of the card. You can also call the Social Security Administration toll free at 1-800-772-1213 or call your local Social Security office for more information about buying Part A. If you get benefits from the Railroad Retirement Board, call your local RRB office or 1-800-808-0772.
Part B (Medical Insurance)
Helps Pay For:
Doctors, services, outpatient hospital care, and some other medical services that Part A does not cover, such as the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.
Medicare beneficiaries pay a monthly Part B premium. The monthly Part B premium for 2016 is $104.90 for Medicare beneficiaries with incomes under $85,000 (single) and $170,000 (married). In some cases this amount may be higher if you did not choose Part B when you first became eligible. The cost of Part B may go up 10% for each 12-month period that you could have had Part B but did not sign up for it, except in special cases. You will have to pay this extra 10% for the rest of your life. The annual deductible for Part B in 2016 is $166.
Enrolling in part B is your choice. You can sign up for Part B anytime during a 7 month period that begins 3 months before you turn 65. Visit your local Social Security office, or call the Social Security Administration at 1-800-772-1213 to sign up. If you choose to have Part B, the premium is usually taken out of your monthly Social Security, Railroad Retirement, or Civil Service Retirement payment. If you do not get any of the above payments, Medicare sends you a bill for your part B premium every 3 months. You should get your Medicare premium bill by the 10th of the month. If you do not get your bill by the 10th, call the Social Security Administration at 1-800-772-1213, or your local Social Security office. If you get benefits from the Railroad Retirement Board, call your local RRB office or 1-800-808-0772.
Part C (Medicare Advantage Plans)
People with Medicare can get their coverage through Original Medicare (the traditional fee-for-service program) or from Medicare private plans (the Medicare Advantage program also known as Medicare Part C). Depending on where you live, you may be able to enroll in a Medicare Advantage Plan offering one or more of the following types of health care: HMO, PPO, PFFS, MSA.
If you choose coverage under the traditional fee-for-service Medicare program, you can generally get care from any doctor or hospital you want and receive coverage for your care anywhere in the country. However, traditional Medicare has high cost-sharing requirements and does not currently cover the costs of certain services. To help pay for uncovered benefits and to help with Medicare's cost-sharing requirements, many people in the traditional Medicare program have supplemental insurance, known as Medicare Supplements or Medigap Plans (these supplemental insurance plans fill in gaps that Medicare does not cover but unlike Medicare Part C and Part D, these plans are not part of the government Medicare program).
Medicare Advantage Plans
Medicare HMOs cover the same doctor and hospital services as the original Medicare program, but out-of-pocket costs for these services are usually different. HMOs appeal to some people with Medicare because they may provide additional benefits, such as eyeglasses, which are not covered by the traditional Medicare program. Medicare HMOs may charge a premium that you would need to pay in addition to the Part B monthly premium.
You should be aware that Medicare HMO enrollees generally can only use doctors, hospitals, and other providers in the HMO's network. For an additional fee, some HMOs offer point-of-service (POS) benefits that partially cover care received outside the network.
If you join a Medicare HMO, you will usually have to select a primary care doctor who is responsible for deciding when you should see a specialist and which specialist you should see.
Most HMOs will not pay for unauthorized visits to specialists in the plan, providers outside the HMO's network, or for non-emergency care outside the HMO's service area.
Medicare PPOs, or "Preferred Provider Organizations," are private health plans, much like Medicare HMOs. HMOs and PPOs differ in two key ways:
1. Medicare PPOs cover some of the costs of your care if you use doctors and hospitals outside the network.
2. Medicare PPOs generally do not require that you see a primary care physician before going to a specialist.
Regional PPOs became available under Medicare in 2006. These plans are similar to local Medicare PPOs, but serve a larger geographic area (either a single state or multi-state area) and must offer the same premiums, benefits, and cost-sharing requirements to all beneficiaries in the region. Regional Medicare PPOs offer all Medicare benefits, including the prescription drug benefit. These plans often but not always have a single deductible for hospital and physician services and an annual out-of-pocket limit on cost sharing for benefits covered under Parts A and B of Medicare. Keep in mind that the out-of-pocket limit will vary depending on the plan you select. As with local PPOs, individuals who sign up for a regional PPO will typically pay more if they go to providers outside of the network.
Private Fee-for-Service (PFFS) Plans
Private fee-for-service plans cover Medicare benefits like doctor and hospital services, much like Medicare HMOs and PPOs. Unlike Medicare HMOs and PPOs, private fee-for-service plans do not have a formal network of doctors and hospitals. Still, not all doctors and hospitals are willing to treat members of a private fee-for-service plan. If considering enrolling in a private fee-for-service plan, make sure your doctor and hospital are willing to accept the private fee-for-service plan's payments for services before you enroll. Also, be sure you understand a plan's benefits and cost sharing requirements before you enroll because private fee-for-service plans decide how much enrollees pay for Medicare-covered services and may charge higher cost sharing for certain health care services than the original Medicare program. While private fee-for-service plans are not required to offer the Medicare drug benefit, most do. If you enroll in a private fee-for-service plans without drug coverage, you can also enroll in a Medicare stand-alone prescription drug plan for your drug coverage.
A Medicare Advantage Private Fee-for-Service plan works differently than a Medicare supplement plan. Your provider is not required to agree to accept the plan's terms and conditions of payment, and thus may choose not to treat you, with the exception of emergencies. If your provider does not agree to accept the terms and conditions of payment, they may choose not to provide health care services to you, except in emergencies. If this happens, you will need to find another provider that will accept the terms and conditions of payment. Providers can find the plan's terms and conditions of payment on the plan's website.
Medicare MSA Plans
A Medicare MSA Plan is a health insurance policy with a high deductible coupled with a Medical Savings Account (MSA). Medicare pays the premium for the Medicare MSA Plan and makes a deposit to the Medicare MSA that you establish. You use the money deposited in your Medicare MSA to pay for medical expenses. If you don't use all the money in your Medicare MSA, next year's deposit will be added to your balance. Money can be withdrawn from a Medicare MSA for non-medical expenses, but that money will be taxed. If you enroll in a Medicare MSA, you must stay in it for a full year.
Special Needs Plans (SNPs)
Special needs plans are private plans that provide Medicare benefits, including drug coverage for beneficiaries with special needs. These include people who are eligible for both Medicare and Medicaid, those living in certain long-term care facilities (like a nursing home), and those with severe chronic or disabling conditions.
For additional information about Medicare Advantage plans, call 1-800-MEDICARE, or get information about Medicare options in your area on the Medicare Personal Plan Finder website, www.medicare.gov.
Medicare Advantage and Prescription DrugsAll companies offering Medicare Advantage plans must offer prescription drug coverage in at least one of their plans. Medicare Advantage plans with drug coverage may vary in their premiums, deductibles, formularies and cost-sharing, depending on the type of Medicare Advantage plan you select.
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Know What You Want from a Medicare Plan
Whether Original Medicare alone, Original Medicare plus a Medicare Supplement plan, or a Medicare Advantage plan is right for you will depend on your unique needs and circumstances. Think about what is most important to you when you are healthy and when you are sick. Here are some topics to consider:
- Receiving care from the doctor and hospital of your choice Under original Medicare, you can use whichever specialists and hospitals you choose, whenever you need, and without a referral from another doctor, so long as they accept Medicare Assignment. Medicare private plan options could limit your ability to get care from the doctor or hospital of your choice, or there may be extra charges for out-of-network care. If provider choice is a priority, you should consider original Medicare with added protection from a Medicare Supplement insurance policy, sometimes known as Medigap, or from an employer-sponsored or union retiree health plan, if you are eligible.
- Getting coverage of additional benefits to reduce your medical costs If you are on a tight budget and are willing to limit your choice of doctors and hospitals, you may be able to reduce your health care expenses and get coverage of additional benefits through a Medicare Advantage plan. It is important to review the scope and limits of additional benefits when choosing among available plans. It is also important to look at how much your out-of-pocket costs will be if you get sick. For example, some Medicare private plans charge a copay for each day of an inpatient hospital stay, while original Medicare charges only a deductible but no daily copays for the first 60 days of a hospital stay.
- Maintaining health care coverage while away from home Under original Medicare, you will be covered for care anywhere in the United States. While private plans must cover emergency care for members outside the plan area, most do not cover other health care services while away from home. For example, Medicare HMOs have more restrictive networks of doctors and hospitals that limit coverage away from home.
- Keeping supplemental coverage from a former employer or union If you are considering joining a Medicare private plan (either a Medicare Advantage plan or a stand-alone prescription drug plan), you should talk to your employer or former employer to be sure you won't lose valuable retiree health benefits if you sign up for a private plan. Many employers offer retiree health coverage as a supplement to traditional Medicare; some also offer coverage through Medicare HMOs and other private plan options.
- Coordinating with Medicaid benefits If your income and assets are quite modest, you may qualify for Medicaid benefits or other special programs that will help pay some of your health care costs. For those who qualify, Medicaid often pays for valuable benefits, such as nursing home care, and also pays Medicare's premiums. If you are already covered by Medicare and Medicaid, you should find out what you must pay to join a Medicare private plan and whether Medicaid will cover the plan's copayments.
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Medicare Part D (Prescription Drug Coverage)
Medicare Part D is the federal government's prescription drug program that covers both brand-name and generic prescription drugs at participating pharmacies in your area. The coverage is available to all people eligible for Medicare, regardless of income and resources, health status, or current prescription expenses. Medicare prescription drug coverage provides protection for people who have very high drug costs. For more details see What is Medicare Part D.