Understanding Medicare Plans and Features
Learn about Medicare and Medicare-related health insurance plans.
First, you’ll learn about the basics of Medicare and how Medicare Parts A and B work. Next, is information on Medicare Advantage Plans (also known as Part C), Prescription Drug Plans (also known as Part D) followed by an explanation of how standardized Medicare supplement insurance plans work.
What is Medicare?
Medicare is a health insurance program for:
- Adults age 65 and over
- Adults under 65 with certain disabilities
- People of any age with End-Stage Renal Disease (ESRD - permanent kidney failure requiring dialysis or a kidney transplant)
- Since 1965, Medicare insurance has helped millions of Americans pay for the health care services they need. More than likely, you have already paid into the program through Social Security.
Am I eligible?
As you approach age 65, you may enroll in Medicare. You can enroll three months before the month you turn 65, the month of your birthday or three months after your birthday month. Eligibility requirements include:
- You or your spouse have worked for at least 10 years in Medicare-covered employment, and
- You are a U.S. citizen or permanent resident for at least five years
- Even if you’re not collecting Social Security yet, you’re eligible to join at age 65 or later
If you are over age 65, Medicare eligibility requirements include:
- You or your spouse have worked for at least 10 years in Medicare-covered employment
- You’re a U.S. citizen or permanent resident for at least five years
- Even if you’re not collecting Social Security yet, you are eligible to join at age 65 or later
If you are eligible for Medicare due to disability, requirements include:
- You’re a U.S. citizen or permanent resident for at least five years, and
- You have a disability or End-Stage Renal Disease (ESRD) and you get disability benefits from Social Security or certain disability benefits from the Railroad Retirement Board (RRB) for 24 months
What are Medicare Parts A and B?
Medicare Parts A and B are part of the federal government’s standardized plan for people age 65 or over, people under 65 with certain disabilities and people of any age with End-Stage Renal Disease (ESRD - permanent kidney failure requiring dialysis or a kidney transplant).
Medicare works the same way throughout the U.S. with any provider that accepts Medicare patients. Parts A and B each help to pay for different types of medical costs, but they don’t cover everything.
Medicare Parts A and B pay:
Most fees for covered stays in the hospital except the Part A deductible and coinsurance amounts About 80% of Part B-covered doctor and outpatient medical expenses (after the annual deductible is met)
- The Part A premium if required, deductible and coinsurance amounts that apply
- Usually a Part B monthly premium
- The remaining Part B out-of-pocket expenses
- Part B annual deductible
Part C (Medicare Advantage Plans)
Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. You’ll get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage from the Medicare Advantage Plan and not from Original Medicare.
Medicare pays a fixed amount for your care each month to the companies offering Medicare Advantage Plans, and these companies must follow rules set by Medicare.
However each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only certain doctors, facilities, or suppliers that belong to the plan for non-emergency or non-urgent care). These rules and theses costs can change each year.
Costs for Medicare Advantage Plans
Your out-of-pocket costs in a Medicare Advantage Plan (Part C) depend on:
- Whether the plan charges a monthly premium.
- Whether the plan pays any of your monthly Medicare Part B (Medical Insurance) premium.
- Whether the plan has a yearly deductible or any additional deductibles.
- How much you pay for each visit or service (copayment or coinsurance). For example, the plan may charge a copay like $10 or $20 every time you see a doctor. These amounts can be different than those under Original Medicare.
- The type of health care services you need and how often you get them.
- Whether you go to a doctor or supplier who accepts assignment (if you’re in a PPO, PFFS, or MSA plan and you go out-of-network).
- Whether you follow the plan’s rules, like using network providers.
- Whether you need extra benefits and if the plan charges for it.
- The plan’s yearly limit on your out-of-pocket costs for all medical services.
- Whether you have Medicaid or get help from your state.
* A note from The National Committee to Preserve Social Security and Medicare
The National Committee to Preserve Social Security and Medicare(NCPSSM) confirmed that Advantage Plans shift significantly more costs of major illnesses to beneficiaries. According to the NCPSSM, all Advantage Plans are required to cover everything that Medicare covers, but they do not have to cover every benefit in the same way. For example, private plans may create financial barriers to care by imposing higher cost-sharing requirements for benefits such as home health services, hospitalization, skilled nursing facilities, inpatient mental health services, and durable medical equipment that protect the sickest and most vulnerable beneficiaries. In many cases, beneficiaries are lured into the private plans based on improved coverage of relatively inexpensive services such as expanded dental or vision care, only to discover after it is too late, that their plans shift significantly more of the higher costs of major illnesses onto their shoulders. Preventing private plans from imposing greater cost-sharing requirements than traditional Medicare would better protect beneficiaries from these high out-of-pocket costs.
How Advantage Plans Actually Work
Medicare Prescription Drug Coverage (Also known as Medicare Part D)
If you have Medicare Parts A and/or B, Part D plans can be purchased separately to help cover your prescription drug costs. These plans are offered by Medicare-approved private insurers – so costs and covered drugs vary from plan to plan.
Part D works with a Medicare supplement insurance plan, or on its own. You can also get Part D benefits through some Part C (Medicare Advantage) plans.
Each year, Part D pays:
- Covered prescriptions included on the formulary (a list of covered drugs based on the plan selected)
- Usually a Part B monthly premium
- Varying shares of other covered prescription costs until you reach the coverage gap
- Most of the other covered prescription costs after you are out of the coverage gap
Each year, you pay:
- Monthly premium
- Varying shares of covered prescription costs, until you reach the coverage gap
- Varying shares of the cost of generic and brand name drugs while in the coverage gap
- Low or zero copays or coinsurance for prescription drug costs, after you are out of the coverage gap
Standardized Medicare Supplement Insurance Plans
Medicare Parts A and B work together to provide basic medical coverage, but they don’t cover everything. Expenses such as deductibles and coinsurance are still your responsibility.
Medicare supplement insurance plans are designed to help cover the out-of-pocket eligible costs that Medicare Parts A and B don’t cover. Medicare supplement insurance plans are offered by private insurance companies and work with the coverage provided through Medicare Parts A and B. A variety of standardized plans are available to meet your budget, and each offer the same basic benefit structure. Benefits and costs vary depending on which plan you choose.
Because there are no physician network restrictions, a medicare supplement insurance plan may also help you control your health care. This means you can visit any doctor who accepts Medicare patients, and you can see a specialist with virtually no referrals needed. Some Medicare Supplement Plans may offer hospital networks in your service area to help reduce premium costs. Medicare Supplements enable you to better predict the actual month-to-month costs of your healthcare coverage.
Costs for Medicare Supplement Insurance Plans:
In all states, Medicare supplement plans have the same basic benefits. So when shopping for a plan, you can compare one company’s “plan F” to another company’s “plan F.”
Depending on the plan you choose, Medicare supplement insurance pays:
- Part A coinsurance, and most plans pay the hospital deductible
- Some of the out-of-pocket costs not paid by Part B. Some plans also cover the Part B deductible
- Cost of blood transfusions (first 3 pints)
- Cost of 365 extra hospital days after you’ve used up your Part A benefits
- Skilled nursing facility coinsurance
- Hospice - Part A coinsurance
- Respite care
Depending on the plan you choose, you pay:
- Monthly premium
- Limited out-of-pocket costs
Remember When Comparing Medicare Supplements:
- Prices for the same standardized plan will be different from different insurers.
- You should review the following 5 factors during the comparison process: benefits, plan type, insurance company, age-related pricing structure, and price.
- Comparison shopping for Medicare Supplement insurance is important to ensure that you get the benefits you need at the best price available.
- Even though Medicare Supplement plans are standardized, prices vary from insurer to insurer. You need to first decide which benefits you want and which particular plan options provide those benefits. After receiving several quotes from different insurers, you can compare plans based on price and eventually buy a policy.
Why Choose FirstCommunity Senior Select Medicare Supplement Insurance?
AFFORDABILITY: Because FirstCommunity was designed by doctors and hospitals right here in North Alabama for North Alabamians, we are able to offer more affordable premiums by using our leading network of 14 Alabama hospitals.
FLEXIBILITY: You have a choice of plans to meet your needs and budget now and in the future.
CHOICE: Choose any doctor or network hospital that accepts Medicare patients.
CONTROL: You may visit any specialist who accepts Medicare patients with virtually no need for referrals.
VALUE: You get help paying out-of-pocket expenses such as copays and deductibles. Help with these expenses makes it easier to manage your health care costs.
Glossary of Medicare Terms
- a kind of cost sharing where costs are split on a percentage basis. For example, Medicare Part B pays about 80% and you pick up the rest.
- a kind of cost sharing where you pay a pre-set, fixed amount for each service. Sometimes called “copay.”
- a kind of cost sharing where you have to pay a pre-set, fixed amount before Medicare begins to pay.