Medicare Explained

Medicare is a federally funded health insurance program that provides healthcare benefits to individuals 65 years and older, younger people with certain disabilities, and people of any age who have permanent kidney failure or end-stage renal disease (ESRD) and require dialysis or a kidney transplant.

Gayle B. Peoples Health Member

Introduction

Get more than Original Medicare

jimmy-b-vertWhen you have Medicare, you have a lot of choices. It’s important to find the Medicare option that works best for you.

Whether you are just becoming eligible for Medicare or you’ve had it for years, you have a lot of options for health coverage. It’s important to take some time to consider those options. No matter how healthy you are or how complicated your health condition may be, look for coverage that will help you do the things you want to do.

Some people just need to know that they’ll be covered if something happens while they’re out enjoying life. Others like getting some of the things Original Medicare doesn’t cover—like a fitness center membership, routine vision and dental benefits, or Part D drug coverage. Some people have more severe health issues and need very involved, personalized attention to help them achieve better health. Whatever your situation, Peoples Health can help.

Peoples Health can also help you navigate the world of Medicare and understand the choices available to you. We hope our website can help you learn a little more about Medicare and give you a better idea of your Medicare options, including those from Peoples Health.

If you have questions about Medicare, getting answers is free and easy. Just call Peoples Health or continue reading.

Medicare Facts

What are the different parts of Medicare?

Medicare has four parts. Each part covers specific services or benefits.

part_APart A: Hospital insurance covers inpatient hospital services, blood, skilled nursing facility care, home health and hospice care. Most people do not pay a premium for Part A services. For some services (e.g., inpatient hospital stays) they will need to pay a deductible before Medicare coverage begins. The deductible amount may change from year to year.


part_BPart B: Medical insurance covers doctor, outpatient hospital, home health and preventive services, as well as other services Part A does not cover. You can choose if you want to enroll in Part B. Most people must pay a monthly premium to receive coverage. (This premium may be paid by other individuals or organizations if the Medicare beneficiary qualifies.) The premium amount may change from year to year and is based on annual income.


part_CPart C: Private insurance, also known as Medicare Advantage plans, allows individuals to enroll in a private plan that Medicare pays to provide healthcare coverage. To be eligible to enroll in Part C, beneficiaries must be enrolled in parts A and B. Part C is optional. Click here to learn more about Medicare Advantage programs and how they work.


part_DPart D: Outpatient prescription drug coverage is optional coverage provided by private health insurance plans that contract with Medicare. Part D covers prescription drug costs and can be received by itself through a prescription drug plan (PDP) or through a Medicare Advantage prescription drug plan. Depending on the health plan, there may be a premium associated with Part D prescription drug coverage. Plans can offer a “standard” benefit defined by law (or an equivalent benefit), which has a deductible, coinsurance payments and “the coverage gap” (also called “the doughnut hole”). Plans may also offer enhanced Part D coverage, which means there may be no deductible, drug costs may be lower or it may offer partial coverage in the coverage gap.

Please note: Medicare does not pay for custodial long-term care services, preventive dental care, dentures, routine vision care, eyeglasses for vision correction, or hearing aids.

Regulatory History of Medicare

date_19971997 Balanced Budget Act (BBA): Since the 1970s, private insurance plans have had the option to offer insurance coverage to Medicare beneficiaries. Under the BBA, these plans were officially renamed “Medicare + Choice” plans, and Medicare was granted the right to contract with these plans to provide Medicare coverage to beneficiaries on Medicare’s behalf. These plans were renamed “Medicare Advantage” plans in 2003 with the passage of the Medicare Prescription Drug Improvement and Modernization Act.


date_20032003 Medicare Prescription Drug Improvement and Modernization Act (MMA): This act provided a prescription drug benefit (Medicare Part D) and more benefits under Medicare. The MMA also established a late enrollment penalty (LEP) for beneficiaries who do not enroll in Medicare Part D when they are originally eligible. The MMA created a coordinated enrollment process, or enrollment periods, for all plan types. The current annual enrollment period is October 15 through December 7 each year.


date_20082008 Medicare Improvements for Patients and Providers Act (MIPPA): In 2008, Congress enacted MIPPA. The bill maintained payment rates for physicians providing Medicare services, set higher regulatory standards for Medicare Advantage plans, increased Medicare benefits for low-income beneficiaries and eliminated the LEP for low-income beneficiaries.


date_20102010 Patient Protection and Affordable Care Act (PPACA): Effective in 2011, PPACA eliminated the open enrollment period (OEP) for Medicare Advantage plans. PPACA also established the annual Medicare Advantage disenrollment period (from January 1 to February 14 each year), which allows beneficiaries to disenroll from a Medicare Advantage plan and return to Original Medicare.

What is the coverage gap?

Most Medicare drug plans have a coverage gap, also called the “doughnut hole.” This means that after beneficiaries and their plans have spent a certain amount of money for covered drugs, the beneficiary may have to pay higher costs out-of-pocket for prescription drugs.

The coverage gap is one stage of the Medicare Part D prescription drug coverage cycle. The cycle begins each year on January 1. Here’s how it works:

During Phase 1 (Initial Coverage Stage), the beneficiary pays the standard plan cost for each drug, and the plan pays the remainder of the cost. The beneficiary stays in this stage until his or her total drug costs (the amount paid by both the beneficiary and his or her plan) reach an amount specified by Medicare. This amount may change from year to year.

During Phase 2 (Coverage Gap Stage), the beneficiary pays higher costs for many or all drugs. However, the Medicare Coverage Gap Discount Program provides a discount on the cost for most brand-name drugs. The amount of the discount may change each year. Some plans may provide additional coverage for beneficiaries during the coverage gap stage. The beneficiary stays in the coverage gap stage until his or her total out-of-pocket drug costs (the amount the beneficiary pays and the amount paid by others on the beneficiary’s behalf) reach an amount specified by Medicare. This amount may change from year to year. The amounts paid by others on the beneficiary’s behalf may include drug assistance programs like the Extra Help program, and it also may include amounts paid by organizations like the U.S. Department of Veterans Affairs or the Medicare Coverage Gap Discount Program. The beneficiary then moves into phase 3.

During the final phase, Phase 3 (Catastrophic Coverage Stage), the plan pays most or all of the costs for covered drugs, and the beneficiary pays reduced costs.

Over the next several years, beneficiaries will pay less in the coverage gap until it’s closed by 2020.

What is Medicare supplemental insurance or a Medigap policy?

Supplemental insurance helps fill in the “gaps” for medical care that may not be covered by Medicare. It assists beneficiaries with costs for coinsurance, copays and deductibles. There is usually an additional premium that must be paid for supplemental insurance.

What is a Medicare Advantage plan?

Medicare Advantage plans offer all benefits covered by Medicare. Medicare Advantage plans are another way for people eligible for Medicare to receive coverage for medical services. Medicare Advantage plans are regulated by the Centers for Medicare & Medicaid Services. While Medicare allows beneficiaries to go to any healthcare facility and see any doctor who accepts Medicare, Medicare Advantage plans give their members a specific network of providers and hospitals from which to receive services.

Click here to learn about Medicare Advantage plans.