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Medicare Basics

ORIGINAL MEDICARE
Medicare Parts A and B together comprise what is known as Original Medicare.

Medicare Part A – Hospital Coverage is offered to nearly everyone eligible for Medicare at no cost. If you have been employed and paid into the Medicare program through payroll taxes for approximately ten years, you don't pay a premium for Part A coverage. Part A includes coverage for inpatient hospital services, skilled nursing facilities, home health care, and hospice care. 
Medicare Part B – Medical Coverage, available to most individuals eligible for Medicare, for a monthly premium covering physician services, outpatient care, durable medical equipment, preventive care, and laboratory services. Medicare Part B does not have a 'stop loss limit.' This means you will pay 20% of the balance due for medical expenses, regardless of the amount.

Medicare Part D – Prescription Drug Coverage
Medicare prescription drug plans provide coverage for generic and brand-name drugs.
• Plans are regulated by Medicare but administered by private insurance companies
• Premiums and cost shares will vary depending on the plan.

Medicare Part C - Medicare Part C is also called Medicare Advantage. You still need to enroll in Medicare Parts A and B to enroll in a Medicare Advantage plan, but you receive your benefits from one plan rather than Original Medicare. Many Part C plans offer additional benefits, and some include Medicare Part D prescription drug benefits.

  • Usually, they have lower out-of-pocket expenses and copays than Original Medicare.

  • Administered through private insurance carriers.

  • Benefits are equal to or greater than Original Medicare .

Original Medicare
Enrollment Tips

  1. You can still work and get Medicare. If you’re 65 or over, still on the job, and work for an employer with 20 employees or fewer, Medicare must provide primary coverage for you. 

  2. Enroll in Medicare when you’re first eligible, even if you have other health coverage. Even if your former employer provides some retiree health benefits, you should sign up for Medicare when you’re first eligible to avoid penalties and coverage gaps. Then, employer-provided benefits provide a secondary layer of coverage. 

  3. Don’t think because you have Medicare, your coverage and costs won’t change. If your plan’s cost and coverage remain the same, your health or finances may change. Review your plan each year to make sure it still meets your needs. 

  4. If you have Medicare or will soon enroll, you may be eligible for a Low-Income Subsidy or Extra Help. But you must apply. Millions of dollars are left unspent each year because Medicare beneficiaries don’t know help is available (see pages 18 and 19). 

  5. Original Medicare doesn’t cover everything. You’ll have gaps in care with Original Medicare, but in rural areas, your coverage will extend to doctors and hospitals outside a Medicare Advantage network that accepts Medicare.

Source: Making the Most of Medicare, published by Blue Cross and Blue Shield of Nebraska - See documents under the resources tab.

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Medicare Eligibility

When are you eligible? For most, eligibility is the first of the month you turn 65 unless your birthday is the first of the month. Then, your Medicare coverage starts the month before you turn 65. A good time to reach out to Social Security is within 90 days of the first of the month in which your birthday falls.​​

If you plan to continue to work beyond 65, you may want to consider delaying Part B of Medicare until you are ready to retire. If you work full-time, you can delay Part B of Medicare until you either go part-time or retire completely without being assessed a penalty. This also works for individuals whom their spouse covers. ​

When you or your spouse retires or goes into part-time status, this will trigger a Special Enrollment Period allowing you to sign up for Medicare Part B. Simply call Medicare at 1-800-MEDICARE (1-800-633-4227) within 90 days of your “retirement” date and advise them that you will be retiring. Medicare will send the necessary paperwork to complete. Once you finish your portion of the paperwork, take it to your employer, and the employer will complete their section of the documents verifying your current coverage is “credible” and the last date of coverage, which determines the effective date of Medicare Part B. If you fail to enroll in Medicare during your IEP – Initial Enrollment Period, you may owe a late enrollment penalty or LEP. You may have to wait until the General Enrollment period to sign up for coverage.​

You can find more information at Medicare.gov.

Medicare Plan Enrollment Periods

Initial Enrollment Period (IEP): Begins three months before you turn 65 and ends three months after you turn 65. When you are first eligible for Medicare, you have a 7-month initial enrollment period to sign up for Part A and/or Part B. 
Annual Enrollment Period (AEP): Each year, from October 15 - December 7, Make changes to your Medicare Advantage or Medicare Part D prescription drug coverage for the upcoming year.
Open Enrollment Period (OEP): Each year, from January 1 - March 31. A period directly following AEP is when you can make a one-time switch to a similar plan; you must be on a Medicare Advantage plan to use the OEP. 

Special Enrollment Period (SEP): A period of time when circumstances allow you to enroll in a Medicare Part D prescription drug plan and Medicare Advantage plan. You can change your Medicare Advantage and Medicare Part D prescription drug coverage when certain events happen, like if you move or lose other insurance coverage.

Medicare Sign-up Periods

Initial Enrollment Period

Generally, when you turn 65. This is called your Initial Enrollment Period. It lasts for 7 months, starting 3 months before you turn 65, and ending 3 months after the month you turn 65.

Special Enrollment Period

After your first chance to sign up (Initial Enrollment Period), there are certain situations when you can sign up for Part B (and Premium-Part A) without paying a late enrollment penalty. A Special Enrollment Period is only available for a limited time. If you don’t sign up during your Special Enrollment Period, you’ll have to wait for the next General Enrollment Period and you might have to pay a monthly late enrollment penalty.

General Enrollment Period

You can sign up between January 1-March 31 each year. This is called the General Enrollment Period. Your coverage starts the month after you sign up. You might pay a monthly late enrollment penalty, if you don’t qualify for a Special Enrollment Period.

Definitions

Medicare

The federal health insurance program for:

  • People who are 65 or older

  • Certain younger people with disabilities

  • People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)​

Source: What's Medicare? | Medicare

Medicaid

Medicaid provides health coverage to Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.  States administer Medicaid according to federal requirements. The program is funded jointly by states and the federal government.

Source: Medicaid | Medicaid

Dual Eligible

People who have both Medicare and full Medicaid coverage are “dually eligible.” Medicare pays first when you’re a dual eligible and you get Medicare-covered services. Medicaid pays last, after Medicare and any other health insurance you have.

If you're dually eligible, Medicare covers your prescription drugs. You’ll automatically be enrolled in a Medicare drug plan that will cover your drug costs instead of Medicaid. Medicaid may still cover some drugs that Medicare doesn’t cover.

You can still pick how you want to get your Medicare coverage: Original Medicare  or 

Medicare Advantage (Part C).

If you choose to join a Medicare Advantage Plan, there are special plans for dual eligibles that make it easier for you to get the services you need, including 

Medicare drug coverage (Part D), and may also cost less, like:

  • Special Needs Plans

  • Medicare-Medicaid Plans (DSNP) are only available in certain states

  • Program of All-Inclusive Care for the Elderly (PACE) plans can help certain people get care outside of a nursing home

Source: Medicaid | Medicare

Acronyms and Terms

Acronyms:

ACA - Affordable Care Act or Obamacare is insurance for individuals not eligible for employer-sponsored group coverage.

AEP - Annual Enrollment Period.

CMS - Centers for Medicare and Medicaid Services.

MAPD - Medicare Advantage Prescription Drug Plan

MA - Medicare Advantage plan, excluding Part D prescription drug benefits.

MBI - Medicare Beneficiary Identification number, which can be found on your red, white, and blue Medicare card.

SEP - Special Enrollment Period.

 

Terms:

Benefit Period - Original Medicare, the benefit period begins on the first day of a hospital stay. It ends when you have been out of the hospital or skilled nursing facility for 60 days in a row.

Lifetime reserve days - These are extra days that Original Medicare will pay for when you are in the hospital for more than 90 days. You have 60 lifetime reserve days to use during your lifetime and have a per-day copay when you use them.

Medicare Supplement (Medigap) plan - Health insurance policies that typically have standardized benefits and are sold by private insurance companies. Medicare supplement plans complement your Medicare Part A and Part B coverage.

Preferred/standard pharmacy - Typically, preferred pharmacies offer lower copayments for your prescriptions, while a standard pharmacy may have a higher copayment than preferred pharmacies.

Formulary - A list of drugs covered by the plan.

Drug tiers - Covered drugs are placed in a tier that determines the cost associated with each tier.

Exception requests - This may be used if a drug a member needs is not currently covered on a plan's formulary.

Step therapy - You must try one or more similar, lower-cost drugs before the plan will cover the prescribed drug.

Prior authorization - You and/or your prescriber must contact the drug plan before you can fill certain prescriptions. Your prescriber may need to show that the drug is medically necessary for the plan to cover it.

Quantity limits - Limits how much medication you can get at a time.

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