Medicare 101

Hi there! Welcome to Medicare 101.  Here’s (really) all you need to know about Medicare.

These definitions are not all-encompassing nor will this page ever look like a dictionary.  The goal is to keep it simple.  As the site grows, so will the need to update or add to these, but I promise to keep it simple.  In fact, if you’ve attempted to do some research on other sites before you hit this one, you’ll find a lot of definitions you’re used to seeing are missing.  I personally suspect that’s because those sites are more interested in attracting search engine traffic instead of really helping clarify things for the reader.  Fact is, most of you probably don’t need to dive into every last detail and definition.  Not every Medicare term is included, nor is every special situation, exception and/or circumstance.  In most cases, I’ve tried to add a bit of context or shortened “official” definitions so it’s easier for you to digest.  In essence, I’ve attempted to simplify these so they made sense to the casual reader who doesn’t want to spend hours scrolling through glossaries.  If that’s your thing, you can find all sorts of information online elsewhere.  I’d start here.

Medicare – Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

Medicare Eligibility – You’re eligible for Medicare Part A and Medicare Part B if you are a U.S. citizen or permanent legal resident for at least 5 years.  Typically, you’ll be automatically enrolled in Medicare Part A (covers hospital visits) when you reach age 65 and are eligible for Social Security.  Medicare Part B (covers doctor visits, ambulance rides, outpatient visits and durable medical equipment) carries a premium with it, which typically changes (increases) every year.  Most people are, “informed” they’re being enrolled into Medicare Part B at the same time they get automatically enrolled in Medicare Part A.  You can defer enrollment into Medicare Part B, but should only really do so if you’re still working and receiving health insurance coverage through work.

So, you’re eligible for Medicare and know what it is?  Great.  Now, let’s go over the 4 “parts” of Medicare.

Original Medicare – The tried and true health insurance for people aged 65 and older, regardless of income or medical history President Johnson signed Medicare into law in 1965.  Consists of Medicare Part A and Medicare Part B.  If you are enrolled in Original Medicare, you’ve got medical coverage, but still (in most cases) need to purchase a Medicare Part D (PDP) plan to cover your prescription drug costs at the pharmacy.

Medicare Part A –  Covers hospital visits, home health services, skilled nursing care and hospice care. Medicare Part A can cost you money every month, but it’s relatively rare.  You’ll typically only be charged a premium if you or your spouse didn’t pay Medicare taxes while working.

Medicare Part B – Covers doctor visits, ambulance rides, outpatient visits and durable medical equipment. Medicare Part B costs money every month.  How much depends upon how much money you make reflected on your tax returns.  You don’t have to do anything, and you can’t lower it;  Medicare figures out how much your premium is annually. It is what it is.  The monthly premium is typically taken right out of your Social Security check.

 Medicare Part D (PDP) – Medicare Part D (or a PDP, which stands for “Prescription Drug Plan”) is an insurance product that covers (you guessed it) prescription drugs.  Only insurance companies can offer these; there is no “federal” Medicare Part D plan.  You’ll need to purchase one of these if you’re sticking with Original Medicare for your hospital and doctor coverage, and if you’re buying a Medicare Supplement plan.  Premiums, benefits and insurance companies offering these plans change annually, so you have to keep on top of it annually.  Each insurance company also has a list of pharmacies you must use in order to get benefits.  These days, most major companies all have very similar networks that include big-box retailers and national/regional chains.  More on that in a blog post later.

Medicare Advantage (Medicare Part C) – Medicare Advantage is an all-in-one Medical and Prescription drug “combo” plan.  Most Medicare Advantage plans are, “MAPD” plans… which stands for, “Medicare Advantage/Prescription Drug.”  These insurance policies cover what’s typically covered under Medicare Part A (hospital visits, etc.) and Medicare Part B (doctor visits, ambulance rides, etc.) and Medicare Part D.  Though it’s a very basic explanation, Medicare Advantage combines Medicare Part A and Medicare Part B, and Medicare Part D, all in one.  Like Medicare Part D (above) only insurance companies can offer these; there is no “federal” Medicare Advantage plan.  Multiple companies offer these across the U.S. and the premiums vary; many $0 options exist (mostly in larger metro areas) while others have a monthly premium.  Insurance companies usually offer these plans on a county-by-county basis.  The premiums, benefits and counties can change annually, so painful as it may be, it’s really important you keep up what’s going on with your policy every year!  The vast majority of these are HMO and PPO plans.  All Medicare Advantage insurance companies have their own doctor and hospital networks, and if you’re going to go this route you must be prepared to do your homework to make sure your preferred doctor and hospital are in their network. Some plans have out-of-network benefits.  Some do not.   Some plans have travel benefits.  Some do not.  Some plans cover dental care, eyeglasses/contacts, over-the-counter medicines, hearing aids, or any combination of the above.  Some do not.

Medicare Supplement Plans – Medicare Supplement (also known as Medigap plans) are insurance policies that cover some or in some cases all of the costs Original Medicare Part A and/or B does not cover.  Essentially, they pay for the deductibles, coinsurance and copays to a greater or lesser degree left over after Medicare gets done paying their portion (depending upon what kind of policy you buy). They only cover medical care, not prescription drug coverage.  If you choose to go this route, you’ll still need to purchase a Medicare Part D plan to accompany your Medicare Supplement plan.   Medicare Supplement plans are standardized, which means a Medicare Supplement plan F is the same in Kansas as it is in New York.  The only difference is how much it costs.  The enrollment rules also vary state-by-state.  Some states allow people to enroll in Medicare Supplement plans regardless of how old you are, most do not.  Some states allow insurance companies to medically underwrite (approve or deny you based upon your health conditions), others do not.  One very nice thing about Medicare Supplement plans is there’s no network you must use, like you have to if you’re enrolled in a Medicare Advantage plan.  If a hospital or doctor “accepts assignment” for all Medicare patients (the vast, vast majority do) you can receive services.   They generally don’t cover things like long-term care, vision or dental benefits, glasses/contacts, etc.

Deductible –  A specified amount of money that the insured must pay before an insurance company, or Medicare, will pay a claim.  If you’re on Original Medicare, the Medicare Part A deductible is $1,228 per benefit period in 2016.  The Medicare Part B deductible is $166 per year in 2017  After you pay those, you must then pay 20% of all remaining charges, called coinsurance.

Coinsurance –  The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible.

That’s it!  Really?  For now, yes.  Feel free to send suggestions.