Medicare 101: The ABC’s of Medicare

From Group Health Solutions

Medicare: Answers to Common Questions 2014

Medicare is a topic that every person nearing or in retirement, or has a loved one heading into that situation, should understand. Health care costs may make up a big share of your expenses during retirement. This presentation explains the “Alphabet Soup” of Medicare to help you make better decisions about this important benefit.

What is Medicare and who is eligible?Medicare is a national social insurance program, administered by the U.S. federal government since 1966, that guarantees access to health insurance for:

• Individuals 65+ who have worked and paid into the system• Individuals younger than 65 who are disabled• Individuals with end stage renal disease

How do I enroll in Medicare?

The Social Security Administration handles Medicare eligibility and enrollment. Contact the Social Security Administration at (800) 772-1213 to enroll in Medicare or to ask about eligibility. You can also enroll online at www.socialsecurity.gov • Eligible at 65. Recommended to sign up 3 months prior to your birthday to avoid delaying

coverage. You are still eligible to sign up the month you turn 65 and 3 months after. This is called your “Initial Election Period” (IEP).

• Medicare sends you a questionnaire three months before you’re entitled to Medicare coverage. Your answers to these questions, including whether you have group health insurance through an employer or family member, help Medicare set up your file and make sure your claims are paid correctly.

Other Options to enroll: • www.medicare.gov• Visit a SSA office

Types of Medicare Coverage

The Medicare program is housed under the Social Security Administration and overseen by the Centers for Medicare Service (CMS). There are four types of Medicare: • Medicare Part A helps cover inpatient care in hospitals, skilled nursing facilities,

and hospice and home health care. Generally there is no monthly premium if you qualify and paid Medicare taxes while working.

• Medicare Part B helps cover medical services like doctors’ services, outpatient care and other medically necessary services that Part A doesn’t cover. You need to enroll in Medicare Part B and pay a monthly premium determined by your income, along with a deductible.

Types of Medicare Coverage-continued• Medicare Part C Medicare Advantage Plans, also known as Medicare

Part C, are combination plans managed by private insurance companies approved by Medicare. They typically are a combination of Part A, Part B and sometimes Part D (Rx) coverage, but must cover medically-necessary services. These plans have discretion to assign their own copays, deductibles and coinsurance.

• Medicare Part D is prescription drug coverage, and is available to everyone with Medicare. It is a separate plan provided by private Medicare-approved companies, and you must pay a monthly premium.

“Original Medicare” through CMS

PART A Hospital Insurance Coverage Examples • Hospital Stays - First 60 days Medicare pays all but $1,216, Days 61–90 all but $304 per day, Days 91 and later while using 60 lifetime reserve days all but $608 per day

• Skilled Nursing Care – Medicare pays first 20 days all approved amounts, Days 21–100 all but $152, Days 101 and later $0

• Hospice -All but very limited co-payment/ co-insurance for outpatient drugs and inpatient respite care

PART B Medical Insurance Coverage Examples• Doctors’ Services – You pay $147 of Medicare-approved amounts

• Outpatient Medical/Surgical Services - You pay 20% of Medicare Approved Amounts

• Clinical Laboratory Services – Medicare pays 100%

• Home Health Care – Medicare pays 100%

How do I enroll for Medicare Part Band how much does it cost?Generally, you enroll in Medicare Part B when you enroll in Medicare Part A, unless you are still covered by you or your spouse’s group medical plan. There are two options for enrolling for Medicare Part B benefits if you don’t sign up when you are first eligible:• General Enrollment Period – January 1 - March 31 of each year• Special Enrollment Periods – Extending up to eight months after your group coverage ends• Important note: If you don’t enroll when you’re first eligible, premiums

will increase 10% for each full 12 months until you do enroll. Exception is if you have “Creditable Coverage” ex. Employer sponsored coverage

Part B Premiums vary depending on your household incomeMEDICARE PART B File Individual Tax Return File Joint Tax Return You Pay• $85,000 or less $170,000 or less $104.90• $85,001 – $107,000 $170,001 – $214,000 $146.90• $107,001 – $160,000 $214,001 – $320,000 $209.80• $160,001 – $214,000 $320,001 – $428,000 $272.70• Above $214,000 Above $428,000 $335.70*Note – if you elect SSA benefits you are auto enrolled in Part B and premiums are deducted out of your monthly benefit. If not you are billed by CMS Quarterly

How is Medicare Part C different and how much does it cost?• Medicare Part C, also called Medicare Advantage, is medical and hospital insurance provided by private

companies that replaces Original Medicare Part’s A & B

• Covers everything in Medicare Parts A and B

• May also cover other medical expenses(e.g. vision, dental)

• May also provide cost-sharing such as co-insurance or copay, but may add additional expense

• May have premiums that will vary on an individual county basis but generally are very low. www.medicare.gov is a good resource to look up plans and premiums available in your county

Most Medicare Advantage Plans are managed care plans, usually a health maintenance organization (HMO) or a preferred provider organization (PPO). These plans may require that you choose a primary care physician (PCP) get a referral from your PCP to see a specialist, and use only doctors, hospitals, and other medical facilities and services that are part of that health plan’s provider network.

What is Medicare Part D?

Medicare Part D is prescription drug coverage launched in 2006. Part D benefits can be purchased two ways:

• Through a Part C Medicare Advantage program (MAPD)

• Through a stand-alone prescription drug plan (PDP) offered by an outside provider

• Other important information about Part D:• Costs will vary based on which plan you choose• There may be an additional charge depending on your income• If you do not apply for coverage when eligible, you may have to pay a penalty• You can change your plan during the Annual Coordinated Election Period (October 15 – December 7

each year)

MEDICARE PART D- How much does it cost?

File Individual Tax Return File Joint Tax Return IRMAA - Add to Part D Premium*$85,000 or below $170,000 or below $0.00$85,001 – $107,00 $107,001 – $214,000 $12.10$107,001 – $160,000 $214,000 – $320,000 $31.10$160,001 – $214,000 $320,001 – $428,000 $50.20Above $214,000 Above $428,000 $69.30

*Contact an insurance broker or insurance carrier that provides Part D coverage to obtain premium information for Part D coverage.

What is the coverage gap for Medicare Part D?Most Part D programs have what is called a “donut hole,” or coverage gap. • This means that after total retail costs for your prescriptions reach

$2,850 (for 2014), you will have to pay the full amount until you have paid a total of $4,550 (for 2014).

• At that point, catastrophic coverage will pick up most of the additional prescription drug costs. In 2014, there is assistance for individuals who reach the “donut hole.”

• You’ll get a 52.5% discount on brand-name drugs and a 28% discount on generic drugs. You still receive credit for the full cost in meeting the “donut hole” exclusion amount.

What is MediGap insurance?

MediGap insurance is Medicare supplemental insurance provided by private insurance companies to help cover some of the costs not covered by Medicare (such as the 20% co-insurance). You have a six-month open enrollment period to buy a MediGap policy. The period starts the month you’re 65 and enrolled in Part B. You have a guaranteed right to buy any MediGap policy sold in your state regardless of your health status during that time. If purchased after the initial enrollment period, however, the insurance company can require underwriting, set waiting periods for pre-existing conditions, set different terms or premiums, or may not accept your application at all.

• Medicare Part’s A & B are your primary coverage

• The Supplement fills in the “Gaps”

• Higher Premiums than Part C but no managed care, networks, or referrals

• Providers must take payment from Medicare in some form or fashion

• You have a choice of different levels of Supplements. Plan F is the richest in coverage.

• Popular with higher income beneficiaries who prefer more provider choice and less restriction

• National coverage

What if I’m still working?If you or your spouse are still working and have insurance through a group insurance plan, contact the benefits administrator to find out how your insurance works with Medicare.• If an employer has 20+ W-2 employees Medicare is secondary coverage to

the health plan and enrollment in Part B is not necessary while you are enrolled in a group health plan

• 4A’s plan is “Creditable Coverage” and is considered as good or better than Medicare Parts A & B or D

• No penalty to enroll into Part B later as long as you have coverage through an employer sponsored plan

• You can elect Medicare Part B, enroll into Part C, or Part D and a Supplement if you retire or lose employer sponsored coverage under a “Special Election”

Can I change my Part C or D coverage?There are certain times of year when you can make changes to the coverage you already have:• During certain open enrollment periods that happen every year from October

15 – December 7.• Under certain circumstances that qualify you for a Special Enrollment Period

(SEP), such as the following: •You move

• You’re eligible for Medicaid• You qualify for extra help with Medicare prescription drug costs• You’re getting care in an institution, such as a skilled nursing facility or

long-term care hospital

How Doctors/Hospitals Participate with Medicare?Part A & B providers have options on how they take payment from Medicare. This is very important to understand before you drop employer sponsored coverage and elect any form of Medicare Insurance: • Accept Assignment- this means the provider accepts payment in full• May or May Not Accept Assignment – this means the provider can charge up to 15% above

what Medicare Pays. These are called “Excess Charges” and only Medicare Plan F will cover that.

• Private Contractors- these are providers that have “Opted Out” of and do not accept Medicare payment. No Supplement will work in this situation.

• Medicare Part C – provider has agreed to participate in network of carrier sponsoring the plan and cannot balance bill. Members pays set co-pays, deductibles, or coinsurance of the applicable plan design. Check if your provider participates in the carrier’s Part C network before you enroll.

• Medicare Part D – participating pharmacies - CVS, Walgreen’s, etc.

Nursing Home, Assisted Living, & Custodial Care: Why Long Term Care Insurance is crucial

Medicare is very limited when it comes to Nursing Home Care. Part A pays in full for days 1-20 if you are in a Skilled Nursing Facility but only following a recent 3-day hospital stay. If your need continues, Medicare may pay for days 21-100 after a $137.50 per day co-payment. Does not pay after day 100.• Assisted Living Facility (and similar facility options) – Medicare does

not pay• Continuing Care Retirement Community - Medicare does not pay• Adult Day Services – Not covered

Medicare 101 Review

• Most Americans are entitled at no charge and auto enrolled into Medicare Part A on the first of the month in which they turn 65.

• Part B is elective and there is a premium associated.• Once Part A & B is in place a beneficiary can elect to purchase

Medicare Insurance such as Part C or a MediGap Supplement.• Part D can be purchased on a stand-alone basis and used with Part’s A

& B and/or a Supplement OR it can be bundled in with a Part C plan. • Beneficiaries must have Part D when first eligible, unless you have

employer sponsored coverage, or will pay higher premiums later.

• Administered and managed by federal government• No Premium• Auto enrolled

Part A Inpatient hospitals, skilled nursing

facilities, hospice and home health care

• Administered and managed by federal government• Premium determined by income

Part B Doctors’ services and outpatient care

• Managed by private insurance companies approved by Medicare• Premium determined by plan elected

Part CMedicare Advantage Plan

Typically combination of Part A, B & D

• Managed by private insurance companies• Premium determined by plan electedPart D

Rx

• Managed by private insurance companies• Premium determined by plan elected

MediGapMedicare supplemental insurance

• Managed by private insurance companies• Premium determined by several factors. Speak to an LTC broker for pricing

Long Term Care (LTC)Assist with LTC expenses that Medicare

does not pay

Understanding Medicare & Medicare supplemental

insurance is an important factor in planning for your

retirement years.

Medicare Resources: Medicare & Youwww.socialsecurity.govwww.medicare.gov

Questions? David Cotie Managing Partner SDL Brokerage Inc. Group Health Solutions Inc. 148 Madison Avenue, 15th Floor New York, NY 10016 General: (212) 779-4158 Direct: (646) 661-6181 davidc@grouphealthsolutions.com www.grouphealthsolutions.com

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