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Are you turning 65? These days, you may feel like you’re constantly hearing the word “Medicare” without anyone taking the time to explain it. Learn the basics, the lingo, and more of what you can expect from Medicare here.
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What Is Medicare?
- Introduced in 1965, Medicare is a federally-administered health insurance program that covers more than 60 million Americans.
Who Is Eligible for Medicare?
- While eligibility requirements vary from plan to plan, Medicare is generally available to the following groups:
- Americans over 65.
- Americans who have received Social Security disability benefits or Railroad Retirement Board disability benefits for at least 24 months.
- Americans with end-stage renal disease (ESRD) who have undergone three months of dialysis treatment or one month of at-home dialysis treatment.
- Americans with amyotrophic lateral sclerosis (ALS) who have been classified as “disabled” for five months.
What Is Original Medicare?
- Since it was established, Medicare has included two components: Part A and Part B. These are sometimes called Original Medicare or Traditional Medicare:
- Medicare Part A (Hospital Insurance): Medicare Part A covers a variety of in-patient services including hospital visits and home health services.
- Medicare Part B (Medical Insurance): Medicare Part B covers other medically-necessary services and procedures like x-rays and blood transfusions.
What Is Medicare Advantage?
- Also called Medicare Part C, Medicare Advantage is an alternative to Original Medicare that allows seniors to receive Medicare benefits through a private health insurance plan. Enrollment is on the rise. In 2019, more than a third of all Medicare beneficiaries were enrolled in a Medicare Advantage plan.
- Americans had the option to enroll in more than 3,100 Medicare Advantage plans in 2020. The number of available plans varies from county to county. On average, residents of metropolitan counties have access to 31 plans. Non-metropolitan residents can access an average of 16 plans. 77 counties (accounting for less than 1% of Medicare beneficiaries) do not offer Medicare Advantage in 2020. 90% of plans cover the cost of prescription drugs.
- There are four primary types of Medicare Advantage plans:
- Health Maintenance Organization (HMO) Plans: Enrollees in these plans must choose from a network of providers. This does not apply for emergency care, out-of-area urgent care, or out-of-area dialysis. In most cases, HMO plans cover the cost of prescription drugs. Even if your plan does not, you cannot join a Medicare Part D plan to supplement coverage.
- Preferred Provider Organization (PPO) Plans: PPO plans also encourage enrollees to choose from a select provider network. They are, however, generally more flexible than HMO plans. PPO enrollees typically do not need a referral to see a specialist and they do not need to select a primary care provider. What’s more, they often pay less to visit out-of-network providers than HMO enrollees would. Most PPO plans cover the cost of prescription drugs. Even if your PPO does not, you cannot join a Medicare Part D plan to supplement coverage.
- Private Fee-for-Service (PFFS) Plans: Some PFFS plans have provider networks and some do not. Doctors and other healthcare providers can choose to accept PFFS plans on a patient-by-patient basis. Unless you require emergency care or your doctor has an agreement with a PFFS network, there is no guarantee that they will accept the plan’s payment terms or even provide treatment. Some PFFS plans cover the cost of prescription drugs. If your plan does not, you can sign up for Medicare Part D during the appropriate enrollment period.
- Special Needs Plans (SNPs): Chronic Condition SNPs serve enrollees with major conditions including cancers, dementia, ESRD, and neurological disorders. Institutional SNPs cover costs for beneficiaries who live in institutions like nursing homes. Dual Eligible SNPs are available to beneficiaries who qualify for both Medicare and Medicaid. Benefits, provider networks, and drug formularies will vary based on the specifics of the SNP. All SNPs cover the cost of prescription drugs.
- Providers also offer two less common types of Medicare Advantage plan:
- HMO Point of Service (HMOPOS) Plans: This is a type of HMO plan that may allow you to get certain services from out-of-network providers for an additional fee.
- Medicare Medical Savings Account (MSA) Plans: These combine a high-deductible plan with an MSA that can be used to cover healthcare expenses. While Medicare MSA plans cover most of what other Medicare Advantage plans cover, they do not cover the cost of prescription drugs.
What Is Medicare Part D?
- Part D provides prescription drug coverage to Medicare beneficiaries who are enrolled in Medicare Part A and Part B or an eligible Medicare Advantage plan that does not provide drug coverage. Part D plans are often referred to as Prescription Drug Plans (PDPs)
What Is Medigap?
- Medigap refers to a broad range of supplementary insurance plans. These are intended to fill in the gaps left by Original Medicare and help to limit beneficiaries exposure to out-of-pocket expenses.
- These plans are sold by private insurance carriers who agree to follow strict state and federal guidelines. There are ten different types of plan: A, B, C, D, F, G, K, L, M, and N. All but three states offer each of the ten plans. Plans C and F are no longer available to newly-eligible enrollees.
- While pricing will vary from plan to plan and state to state, coverage is consistent for each plan type. A Plan B Medigap policy will offer the same level of coverage in New Jersey as it does in California. Medigap standardization differs in Massachusetts, Minnesota, and Wisconsin.
What Costs and Services Are Not Covered by Original Medicare?
- Though Medicare Part B effectively picks up where Part A leaves off, Original Medicare leaves a number of coverage gaps. With only a few exceptions, Original Medicare will not cover the following services and healthcare costs:
- Routine vision care and eyeglasses
- Routine dental care and dentures
- Routine foot care and orthopedic shoes
- Hearing exams and hearing aids
- Most vaccinations (Part B will cover flu and pneumonia vaccines)
- Cosmetic procedures
- Outpatient prescriptions
- Deductibles, copayments, and coinsurance
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