Top 10 Medicare Terms to Know

Having trouble understanding Medicare terms? Medicare is the national health insurance program for seniors and some people with disabilities. The program can be complex and hard to understand. Use our glossary of commonly used Medicare definitions and terms to help you understand your Medicare coverage.     

  1. Annual Enrollment Period  – The period from October 15 to December 7 when you can enroll in a Medicare Advantage plan with Part D, a stand-alone Prescription Drug Plan, or switch Medicare plans.
  2. Appeal – A process to request your Medicare health plan to reconsider or perhaps change the decision of denying your request for coverage or payment.
  3. Coverage Gap – A stage in the Part D drug benefit during which you pay a certain percent of prescription drug costs set by Medicare. Also known as the “doughnut hole,” the gap begins after your costs reach an initial coverage limit and ends after you have paid enough to become eligible for catastrophic coverage. 
  4. Catastrophic Coverage – The part of the prescription drug benefit that kicks in after you have paid a certain amount in a calendar year. For 2020, that’s $6,350.
  5. Durable Medical Equipment (DME) – Certain medical equipment that is ordered by your doctor for use in your home. Some examples are walkers, wheelchairs, and hospital beds.
  6. Extra Help – Financial assistance from Medicare to help cover Part D drug plan costs. Also known as the low-income subsidy (LIS). To determine if you are eligible for Extra Help or other government assistance, click here.
  7. Formulary – A plan’s list of covered prescription drugs.
  8. Initial Enrollment Period (IEP) – The 7-month period when you first can enroll in Medicare (3 months before you turn 65, the month of your birthday, and the 3 months afterward).
  9. Medigap – Plans sold by private companies to supplement Original Medicare coverage by helping you cover some of the out-of-pocket costs of Medicare. Not to be confused with Medicare Advantage (Part C) or Cost plans.
  10. Special Enrollment Period (SEP) – A time other than the annual enrollment period or initial enrollment period when you may join, change, or drop a Medicare plan. An SEP can be triggered by certain events such as a change in residence.

Top 5 Medicare Mistakes to Avoid

Medicare mistakes are common due to the complex nature of Medicare, the national healthcare system for people over 65 and some disabled people. Here are five costly Medicare mistakes to avoid.

1.      Not enrolling when you first become eligible

Most people will automatically be enrolled in Medicare Part A when they turn 65. If you are not already receiving Social Security benefits, you will need to enroll in Medicare Part B during your Initial Enrollment Period. This is the three months before your 65th birthday, your birthday month, and the following three months. If you don’t enroll when you first become eligible, you could face late enrollment penalties later on.

2.      Failing to read your Annual Notice of Change

This document arrives in the mail each September and notifies you of any changes to your current Medicare Advantage or Medicare Part D plans, like increasing premiums, deductibles, or changes in covered services. It’s important to read this document in case you need to change plans during the Open Enrollment Period. Failing to do so could mean you’re stuck with an expensive plan that doesn’t give you the coverage you need in the following year.

3.      Assuming Medicare will cover everything

While Medicare will probably cover most of your healthcare expenses once you turn 65, it doesn’t cover everything. For example, Medicare doesn’t cover deductibles, premiums, copays, or coinsurance. If you have a chronic illness or expect recurring doctor visits, this could mean you’re paying a lot out-of-pocket. Thankfully, Medigap exists to help you cover some of the out-of-pocket costs of Medicare.

4.      Not picking the right Medigap plan

Medigap currently offers 10 plans (standard in most states) to help you save on out-of-pocket Medicare costs, so knowing which one is right for you can be tricky. Do you choose the one with the most coverage with higher premiums? Or one with fewer coverage options and lower premiums? Consider consulting your local State Health Insurance Assistance Program (SHIP) to help you decide.

5.      Not doing your research for Medicare Advantage

Original Medicare is made up of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance), which most Medicare beneficiaries have. Original Medicare doesn’t cover services like dental, vision, and hearing care. However, many Medicare Advantage (Medicare Part C) plans do cover these services. If you know you’ll want coverage of these services, it would be wise to research your Medicare Advantage options before enrolling in Medicare coverage.

Additional Medicare resources:

·         Visit www.Medicare.gov

·         Call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, 24 hours a day, 7 days a week

·         Call your local State Health Insurance Assistance Program (SHIP) to see if you qualify for any financial assistance.

Everything You Need to Know about Medicare Part B

What is Medicare Part B coverage?

Original Medicare is made up of two parts: Part A and Part B. While Part A covers hospital stays, Part B focuses on medical insurance.

Medicare Part B helps cover medically necessary services and supplies needed for the diagnosis or treatment of your health condition. This includes outpatient services received at a hospital, doctor’s office, clinic, or other health facility. Medicare Part B also helps cover many preventive services to thwart illnesses or detect them at an early stage.

Medicare Part B benefits

Medical services and supplies covered by Medicare Part B include (but may not be limited to):

  • Doctor visits
  • Clinical research
  • Laboratory tests and X-rays
  • Emergency ambulance services
  • Mental health services
  • Durable medical equipment (DME)
  • Preventive services, such as pap tests, flu shots, and screenings
  • Getting a second opinion before surgery
  • Rehabilitative services, including physical therapy, occupational therapy, and speech-language pathology services
  • Some outpatient prescription drugs

If in doubt, check to find out if Medicare covers a service or item.

Medicare Part B costs

Medicare Part B involves costs. You’ll pay both a monthly premium and a yearly deductible for Medicare Part B. The monthly premium amount may vary depending on your specific situation:

  • The standard Part B premium for 2020 is $144.60.

You may have to pay a higher premium if your yearly income is above a certain amount, as reported on your tax return from two years ago. In addition, if you didn’t enroll in Medicare Part B when you were first eligible, you may have to pay a late-enrollment penalty in the form of a higher premium, unless you’re eligible for a Special Enrollment Period.

  • In addition to your monthly premium, you’ll pay $198 for the yearly Part B deductible in 2020.

For individual services and supplies, your Medicare Part B costs may vary. Some preventive services are completely covered if your provider accepts Medicare assignment. If the Medicare Part B deductible applies, you must pay all costs until you meet the yearly deductible amount before Medicare begins paying its share.

After your deductible is met, you typically pay 20% of the Medicare-approved amount for the service. You may also owe a copayment for certain outpatient services.

Alternatives to Original Medicare Part B

If you feel you might need extra help paying your expenses, you can purchase a Medigap plan to help cover expenses for drugs for a chronic illness or other medical needs.

There are also Medicare Advantage plans (Medicare through a private insurer that covers Parts A and B and sometimes D) if you choose not to go with Original Medicare. You may not have Medicare Advantage and Medigap at the same time.

These alternatives incur the same Part B premium costs (plus the extra premiums of these programs). However, with Medigap you have the peace of mind of knowing your extra costs are covered, and with Medicare Advantage there is a maximum limit on what you can spend out of pocket per year on Part A and B expenses.

5 Things to Know about Medigap

Most people are aware of Original Medicare (Part A and Part B), but there can be some confusion when it comes to supplemental and alternative plans. 

Do you have a chronic illness or recurring doctor visits? Are you worried about how you’ll pay for your Medicare copays, deductibles, and premiums? Medigap can help with that.

Medigap, or Medicare Supplement, exists to help you fill in the gaps in your Medicare coverage by paying for things like copays and deductibles. In order to qualify for Medigap, you must have Original Medicare (Part A and Part B). Medigap is sold by private insurance companies and offers 10 standard plans, with the exception of Massachusetts, Minnesota, and Wisconsin which have their own standard plans.

Here are five things you need to know about Medigap:

1. A Medigap plan only covers one person.

Medicare beneficiaries can’t add a spouse to their Medigap plan. Medigap offers 10 standard plans (A-N), so it’s wise to choose a plan that works best for you and your healthcare needs.

2. You must have Medicare Part A and Part B to enroll.

Once you have Medicare Part B, you enter the Medigap Open Enrollment Period. This is a six-month window in which you can purchase a Medigap plan for the same price as a healthy person. Outside of this window, there is no guarantee of coverage, and if you do receive coverage, you could be charged a higher premium.

3. You can’t have a Medicare Advantage plan and a Medigap plan at the same time.

It is illegal for an insurance broker to sell you a Medigap policy if you have Medicare Advantage. If you switch from Original Medicare with Medigap to a Medicare Advantage plan, you will need to drop your Medigap plan.

4. You will have to pay a premium for Medigap on top of your Part B premium.

You cannot use a Medigap plan to pay your Medicare Part B premium, and Medigap carries a separate premium you will have to pay in addition to your Part B premium.

5. Shop around Medigap plans before signing up.

Medigap coverage is standard across the country. For example, Plan N in Tennessee gets the same coverage as Plan N in Washington. However, prices may vary depending on where you live and which private insurance company provides your coverage.

The most popular Medigap plan, Plan F, is being phased out in 2020. If you are enrolled in this plan before then, you’ll be grandfathered in. Plan F also has the highest premium, so shop around before committing to a plan. 

Medigap vs. Medicare Advantage: Which is Better?

Most people are aware of Original Medicare (Part A and Part B), but there can be some confusion when it comes to supplemental and alternative plans. 

What are Medigap and Medicare Advantage plans?

Medicare Advantage plans are  healthcare plans sold by private insurance companies. By law, the plan must offer the same benefits as Original Medicare, but the plans often come with extra benefits like dental, vision, hearing, and prescription drug coverage. 

Medicare supplement (Medigap) plans fill the “gaps” in your Original Medicare coverage. This means a plan will often pick up the bill for out-of-pocket expenses like copays, deductibles, and coinsurance and is also sold by private insurance providers. 

Costs

There are several different types of cost associated with Medicare:

  1. Premiums. Medigap premiums typically range between $100 and $250 per month. Medicare Advantage premiums can be anywhere from $0 to over $300. 
  2. Copays. Medigap plans pick up copays you accrue from Original Medicare. You are subject to copays with Medicare Advantage.  
  3. Deductibles. Medicare Advantage deductibles vary by plan; some are $0. Medigap plans do not cover the Medicare Part B deductible unless you purchased Plan F or Plan C before December 31, 2019 before these plans were phased out. 
  4. Out-of-pocket costs. Medigap plans pick up the bill for out-of-pocket costs; you typically will not have any out-of-pocket costs with Medigap unless your healthcare is not covered by Original Medicare. Out-of-pocket costs vary by Medicare Advantage plan, but no plan can have a cap higher than $6,350 in 2020.

Plans

Medicare Advantage plans vary by county. If you live in a rural area, you may have fewer options for Medicare Advantage plans. 

Medigap has 10 standardized plans across the United States, with the exception of Minnesota, Massachusetts, and Wisconsin, which have their own standard plans. Medicare announced in 2019 that it was phasing out its most popular plans–F and C. However, this is just for newly-eligible beneficiaries; everyone born before December 31, 2019 may purchase Medigap Plan F and Plan C indefinitely. 

Referrals

You do not need a referral to see a specialist if you have Original Medicare with a Medigap plan. 

You may need a referral to see a specialist if you have an HMO Medicare Advantage plan; many PPO plans do not require a referral. 

Networks

Ninety-nine percent of doctors, hospitals, and clinics in the United States accept Original Medicare. If you have Original Medicare with a Medigap plan, you may see any of these doctors. Medigap plans are beneficial to snowbirds who split their time between states or for beneficiaries who travel often. 

Beneficiaries with Medicare Advantage plans may be subject to smaller networks of doctors and could be the victim of surprise medical bills. 

Note: It is wise to call your insurance before a non-emergency appointment to verify that the doctor, hospital, or clinic is in your network.

Enrollment periods

It’s best to enroll in a Medigap plan during your initial enrollment period, or when you are first eligible for Medicare. 

You can enroll in a Medicare Advantage plan or switch plans each year between January 1 and March 31. 

If you have a Medigap plan with Original Medicare, you will also need to purchase a Medicare Part D prescription drug plan.

Many Medicare Advantage plans come with prescription drug coverage included. 

Additional notes

  • Medical underwriting. If you wait to purchase a Medigap plan or switch from one plan to another, you could be subject to medical underwriting. Medical underwriting is when an insurer can limit your coverage, deny your coverage, subject you to a waiting period, or charge you much higher rates. 
  • Must choose one or the other. You may not have a Medigap and a Medicare Advantage plan at the same time. It is illegal for a Medicare broker to sell you one plan while you have the other. 

If you’re having trouble choosing between Medicare Advantage plans and Medigap plans, you can call your local State Health Insurance Assistance Program (SHIP) for free and unbiased advice about your Medicare options.

5 Tips for Picking a Medicare Advantage Plan

With all the choices out there, it’s important to find out the best ways to pick out a Medicare Advantage plan. Medicare Advantage plans are an alternative to Original Medicare in that sometimes include other benefits like prescription drugs, dental, vision, and fitness benefits.

With Medicare Advantage plans, you sometimes have lower premiums and there is an annual out of pocket limit on how much you can spend each year. This amount varies with each plan, but cannot be more than $6,700. Also with Medicare Advantage, there is a network of providers that you have to stick with, and you don’t have as much freedom to visit any doctor in the country like you do with Original Medicare.

5 Tips for Choosing a Medicare Advantage Plan

Here are 5 tips to follow when choosing a Medicare Advantage plan:

  1. Don’t choose based on what benefits the plan offers. The main things to look at are whether the plan covers the doctors and the prescription drugs that you need. You might really want a plan that gives you membership to a fitness club, but make sure to look at the medical essentials first so you’re not caught in a bind.
  2. If you already have a Medicare Advantage plan, check your Annual Notice of Change (ANOC). Your plan should send you this ANOC in the fall to let you know if anything is changing in your plan. Check it carefully (any major changes should be listed on the first few pages) so that you can make sure your needs are still covered. If anything major with drug or doctor coverage is changing, you should look at other plans that might be better for you.
  3. If you choose to go with Medicare Advantage, it is safe to have some other funds set aside for possible medical emergencies, since out of pocket costs can go up to $6,700 with these plans. If you don’t have extra medical savings, a Medigap plan with full coverage will be a good option for you. (Note: you can’t have a Medigap plan and a Medicare Advantage plan at the same time.)
  4. There’s no one-size-fits-all Medicare Advantage plan that’s going to be great for everyone. Look around and see what options are best for you and your situation, especially regarding the doctors in the plan’s network.
  5. Check the Medicare Advantage plan’s star rating. Medicare gives each plan a star rating from 1 to 5. It’s best to choose a plan with a 3.5 or higher star rating. Plans with a 4 or 5 star rating receive extra funding from the government for your medical benefits.

What is Medicare?

Medicare is the national healthcare system for people 65 and older and some people with disabilities. It is divided into four parts: Parts A, B, C, and D.

Medicare Part A

Medicare Part A covers inpatient and hospital care. Most people will be enrolled in premium-free Part A automatically once they turn 65. You may have to pay a premium for Part A if you have fewer than 40 quarters or work credits, or about 10 years of work history in which you paid Medicare taxes through payroll. Part A may also cover home health care, skilled nursing facility care, and hospice care.

Medicare Part B

Medicare Part B covers outpatient and medical care, like routine doctor visits and preventative services. Part B also covers lab tests and x-rays, emergency ambulance services, mental health services, and getting a second opinion before surgery. You will be automatically enrolled in Part B if you already receive Social Security benefits. If you do not receive Social Security, you will need to enroll in Part B when you become eligible. The standard Part B premium for 2020 is $144.60; however, you may pay more depending on your level of income. Original Medicare consists of Part A and Part B.

Medicare Part C

Medicare Part C, also known as Medicare Advantage, is an alternative to Original Medicare offered through private insurance companies that are approved and regulated by Medicare. In addition to covering Part A and Part B, some Medicare Advantage plans cover things like dental, hearing, vision care, and prescription drug coverage as well. Plans vary by state, county, and insurer, so it’s important to do research and find the plan that’s right for you.

Medicare Part D

Medicare Part D covers prescription drugs. Like Medicare Advantage, Part D is sold through private insurance companies approved and regulated by Medicare. If you don’t have prescription drug coverage through Medicare Advantage, you will need a stand-alone Part D plan. If you don’t enroll in Part D coverage when you are first eligible, you could be penalized with a late enrollment fee that you will have to pay along with your monthly deductible. This late enrollment penalty will stay with you the entire time you have Part D coverage, so it’s crucial to enroll on time.

Medigap

If you’re worried about how you’ll pay for some of the out-of-pocket costs not covered by Original Medicare, Medigap may be right for you. A Medigap plan can help pay for things like premiums, deductibles, copays, and coinsurance. This is a good option for people who have chronic illnesses with recurring doctor visits. However, you cannot have Medigap and Medicare Advantage at the same time. Medigap will incur an additional premium on top of your Original Medicare premium.