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Medicare Coverage

Date: 10/1/2017

Author: Financial Hotline


Medicare coverage is based on 3 main factors:

1. Federal and state laws.

2. National coverage decisions made by Medicare about whether something is covered.

3. Local coverage decisions made by companies in each state that process claims for Medicare.

Signing up for Medicare can be confusing because there are a lot of options. Original Medicare (Part A and Part B) are administered and run by the federal government. Part A covers hospital care, skilled nursing facility care, home health care and hospice care. Part B covers medical insurance (e.g. doctor visits, medical equipment, outpatient procedures, lab tests, x-rays, ambulance services and some preventive services). All recipients must take at least Part A, but part B is optional.

Most people don’t pay a monthly premium for Part A (sometimes called “premium-free Part A”). If you or your spouse (or former spouse) have at least 40 calendar quarters (10 years) of work in any job at which you paid Social Security taxes in the U.S.; or are eligible for Railroad Retirement benefits; or were a federal employee after December 31, 1982 or a state or local employee after March 31, 1986 then you will not pay a premium for part A. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is currently $413. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $227. The standard Part B premium amount is $134 (or higher depending on your income). However, most people who get Social Security benefits pay $109 on average.

If you have Original Medicare you may choose to also buy a private health insurance plan that helps pay for ‘gaps’ in coverage such as copayments, coinsurance, and deductibles. This is called Medigap insurance. Most Original Medicare recipients purchase a separate Part D drug plan as well as a Medigap plan to supplement their Medicare benefits. If you have a Medicare Advantage (Part C) plan, you cannot purchase a separate Medigap policy but the benefit is typically already included or an option you can add.

If Original Medicare doesn’t work for you, you may decide to choose Part C, also known as Medicare Advantage, which is administered and run by private insurers. This isn’t a new plan, it is simply a different way of getting Medicare Part A and Part B coverage. Most Medical Advantage plans combine Part A and Part B and often Part D, into one plan so the entire package of benefits comes from a private insurance company.

Medicare Advantage Plans must cover all of the services that Original Medicare covers. However, if you’re in a Medicare Advantage Plan, Original Medicare will still cover the cost for hospice care, some new Medicare benefits, and some costs for clinical research studies. In all types of Medicare Advantage Plans, you’re always covered for emergency and urgently needed care.

Most Medicare Advantage Plans offer extra coverage, like vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). In addition to your Part B premium, you usually pay a monthly premium for the Medicare Advantage Plan.

Part D provides outpatient prescription drug coverage. This part is administered and run by private insurance companies that have contracts with the federal government. If you have Original Medicare or a Medicare Advantage plan that does not include prescription drug coverage and you want Part D coverage, you must purchase it separately. This is called a “stand-alone” Prescription Drug Plan (PDP). A Medicare Advantage plan that includes both health and drug coverage is referred to as a Medicare Advantage Prescription Drug (MA-PD) Plan.

If you are enrolled in original Medicare, there isn’t a ‘network’. You can go to any doctor or hospital in the United States that accepts Medicare. Referrals are not needed to see specialists and there is no prior authorization required to obtain services.

Those rules don’t necessarily apply to Medicare Advantage plans. When comparing Medicare Advantage plans, be sure to review the small details. You may be limited by the plan to using a network of specific providers for the plan to cover your care. You may have to choose a primary care physician, obtain referrals to see specialists, and get prior authorization for certain services. Some plans may cover out of network care, but you may have to pay more. Plans may only cover emergency and urgent care if you are out of the service area; you must return to the service area for follow up or routine care. Network providers can join or leave a plan’s provider network anytime during the year but, generally, you must wait until the next year’s open enrollment period to opt to leave the plan.

Regardless of which options you choose you can find out if your health need is covered at www.medicare.gov/coverage/your-medicare-coverage.html. If you need a service that the plan says isn’t medically necessary, you may have to pay all the costs of the service. But, you have the right to appeal the decision.

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