Basics of Medicare

Last updated May 15, 2013
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Parts A & B

Part A: Hospital Insurance

Medicare Part A helps cover inpatient hospital stays, care in a skilled nursing facility and some home health care and hospice care. If you or your spouse has 40 or more quarters of Medicare-covered employment, then your Part A premium has already been paid by your payroll taxes while working.

More about each service Part A covers

Hospital services

Part A provides coverage for a semiprivate room, meals and eligible services for up to 90 days per benefit period. A benefit period begins on the first day of a hospital stay and ends when you have been out of the hospital for 60 days in a row.

For each benefit period in 2013:

You pay a deductible of $1,184
After you pay the deductible, eligible charges are covered in full for days 1 through 60
For days 61 through 90, you pay $296 per day
For your additional 60 lifetime reserve days, you pay $592 per day
You pay any charges not covered by Medicare

Skilled nursing facility care

Part A covers up to 100 days for eligible care and services in a Medicare-certified skilled nursing facility after a hospital stay of at least three covered days. For each benefit period in 2013:

For the first 20 days, eligible charges are covered in full
For days 21 through 100, you pay $148 per day

Home health and hospice care

Unlimited visits for eligible home health care are paid in full when ordered by a doctor. Eligible hospice services are paid in full by Medicare. Terminally ill patients may receive drugs for symptom control and pain relief, short-term respite care and home health services. Care must be provided by a Medicare-certified hospice program.

Part B: Medical Insurance

Medicare Part B covers doctor visits and services, outpatient hospital care, durable medical equipment and some medical services and supplies not covered by Part A. Generally, there is a monthly premium for Part B that you pay to the federal government (this will be deducted from your Social Security check).

What you pay for Part B in 2013:

A monthly Part B premium of $104.90 to $335.70 (determined by income and your eligibility date)
An annual Part B deductible of $147
After your annual deductible, you pay 20 percent (Medicare pays 80 percent) of most Medicare-approved charges for eligible services and supplies

See services Part B covers

Doctors’ services

Hospital, clinic, office and home visits
Surgery
Osteopathy and radiology

Diagnostic tests

X-rays
Lab tests

Medical supplies and services

Certain diabetes testing supplies
Surgical dressings; splints, casts and prosthetic devices
Oxygen, ventilator-assist devices and durable medical equipment used at home
Portable X-ray services
Radiation therapy
Other procedures that are part of your treatment but not covered by Part A

Outpatient services

Rehabilitation
Diagnostic and treatment services
Some services performed at a Medicare-certified ambulatory surgical center

Preventive services

Original Medicare also covers a yearly “wellness exam” and provides many preventive services and screenings at no cost to you. Preventive services help you and your doctor monitor and manage your health on a regular basis. These services may also uncover a disease or condition in its early stage when more treatment options are available. Your doctor can speak with you about these services and when you might need them.

Services covered include:

A “Welcome to Medicare” physical exam within the first 12 months of your Part B coverage
A wellness exam once every 12 months (after your first 12 months of Part B coverage)
Cancer screenings, such as mammograms, colorectal and prostate screenings, Pap tests and pelvic exams
Cardiovascular screenings once every five years to check cholesterol and other blood fat levels
Bone mass measurements
Flu shots, pneumonia and hepatitis B vaccines
Diabetes and HIV screenings
Stop-smoking counseling
Glaucoma tests
Medical nutrition therapy for those with diabetes or kidney disease, or if referred to the service by a doctor

When can I enroll in Original Medicare?

The Social Security Administration automatically enrolls most people in Original Medicare when they request Social Security benefits, usually at age 65. If you or your spouse are still working and have health coverage through an employer or union you may want to consider postponing enrollment in Part B to delay your Part B premium cost.

Enrollment periods for Parts A & B

Initial Enrollment Period

The first time you are eligible to sign up for Original Medicare is called the Initial Enrollment Period (IEP). The IEP begins three months before your 65th birthday month and ends three months after your 65th birthday month.

Your coverage will start no sooner than your birthday month. If your birthday falls on the first day of the month, your effective date may be the first day of the month prior to your birth month.

Note: You will be charged a 10 percent penalty for each year you delay enrolling in Part B if you do not have coverage that is considered creditable (as good as Medicare). This charge may increase as Medicare premiums increase and will continue for as long as you are enrolled in Part B.

General Enrollment Period

If you miss signing up for Original Medicare during your initial enrollment period, you will have another chance to enroll. You are allowed to enroll between January 1 and March 31 of each year. Your coverage will begin in July.

Special Enrollment Periods

A Special Enrollment Period allows you to avoid the penalty for late enrollment. You may qualify for a Special Enrollment Period for Medicare Part B if:

You delayed Part B because you or your spouse has medical coverage through a union or employer with more than 20 employees, or
You cancelled Part B coverage because you went back to work and have group medical coverage

The Special Enrollment Period lasts eight months. It begins when your employer or union coverage ends or when your employment ends, whichever is first. Contact Social Security four months before you retire or when your employer or union coverage ends.

To find out more about how to enroll in Medicare, visit ssa.gov or call 1-800-772-1213, (Railroad Retirees call 1-800-808-0772), TTY users call 1-800-325-0778, 7 a.m. to 7 p.m. Monday through Friday.

Plans that provide coverage in addition to Original Medicare

Medicare Part A and Part B cover basic hospital and medical needs but you are still responsible for paying deductibles, copayments and coinsurance when you receive medical services.

Fortunately, you can enroll in one of several private health plan options to reduce your out-of-pocket costs and get additional discounts and features to help you lead a healthy life. Visit the Medicare Part C and other plans sections to learn more.

What can I do next?

Last updated May 15, 2013
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Part C: Medicare Advantage plans

Medicare Part C or Medicare Advantage plans offer the convenience of one plan that provides your Medicare Part A and Part B benefits, plus additional medical coverage. Some plans also include Medicare Part D prescription drug benefits.

What you should know:

Regulated by the federal government
Replace your Original Medicare benefits as long as you remain enrolled in the plan
Plan benefits, premiums and cost-sharing may change from year to year
You are generally “locked in” to the plan until the next annual election period unless special circumstances apply

Types of Medicare Advantage Plans

Health Maintenance Organization (HMO)

Health Maintenance Organizations have a network of providers. Usually, you must choose a primary care provider and may need a referral for services from other providers or to see providers not in the plan’s network. Services from providers outside the network may not be covered or you may pay more for them.

Health Maintenance Organization with a Point Of Service option (HMO-POS)

Health Maintenance Organizations with a Point Of Service option have a network of providers but HMO-POS plans allow you to see any provider without referrals. You may pay more for services from providers outside the network.

Preferred Provider Organization (PPO)

Preferred Provider Organizations have a network of doctors, hospitals and other providers. You may also use providers outside the network, although you may pay more for those services.

Medicare Advantage Prescription Drug (MA-PD)

Medicare Advantage Prescription Drug plans are HMO or PPO plans that include Part D prescription drug coverage. If you enroll in this type of plan, you’ll get benefits from one plan. If you join a Medicare Advantage plan that offers prescription drug coverage, you must get your drug coverage from that plan.

Eligibility

You are eligible for a Medicare Advantage plan if you:

Are eligible for Medicare Part A and enrolled in Part B
Live in the plan’s service area
Continue to pay your Part B premium (and Part A if applicable, if not paid by Medicaid or another third party)
Note: If you have ESRD, you may not be eligible.
Enrollment periods for Part C

Initial Enrollment Period (Part C)

If you choose to enroll when you first become eligible for Original Medicare, your effective date will depend on the month you enroll during your Initial Enrollment Period (IEP). Your coverage will start no earlier than your Part B effective date and will generally be the first of the month after your enrollment form is received by the plan.

Annual Election Period (Part C)

During the Annual Election Period from October 15 to December 7, you can enroll in or change Medicare Advantage plans with and without prescription drug coverage. Your coverage will start January 1 of the following year.

Medicare Advantage Disenrollment Period

The Medicare Advantage Disenrollment Period runs from January 1 through February 14. During this time you can disenroll from a Medicare Advantage plan and return to Original Medicare.

Special Enrollment Periods (Part C)
Some common reasons you might qualify for a Special Enrollment Period for Medicare Advantage plans include:

You become eligible for financial help from Social Security or your state, or you lose eligibility for this help

You move outside your plan’s service area

Your plan’s government contract ends, or the plan goes out of business

You lose prescription drug coverage from an employer or union, or your drug coverage is no longer as good as the standard Part D benefit

The time frame for a Special Enrollment Period can vary, but it typically begins on the first day of the month in which the qualifying event occurs and lasts for three months.

What can I do next?

Last updated May 15, 2013
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Part D: Prescription drug plans

Medicare works with health plans and other private companies to offer prescription drug coverage. These Medicare-approved plans are called stand-alone Part D plans. Some companies also offer Part D as part of a Medicare Cost or Medicare Advantage Plan.

What you should know:

Regulated by the federal government
Provide coverage for generic and brand-name drugs
Benefits, premiums and cost-sharing may change from year to year
Plans vary by types of drugs covered, how much you pay and the pharmacy network you can use
All plans must provide at least a standard Medicare-approved level of coverage

The standard Part D prescription drug plan has four stages of coverage. At each stage, you and the plan pay a different share of your prescription drug costs.

Four coverage stages

Deductible stage (2013)

You pay the first $325 of your prescription drug costs. This amount is your plan’s annual deductible.

Initial coverage stage (2013)

After you reach the deductible, your plan pays 75 percent of your prescription drug costs. You pay the remaining 25 percent. This is called “cost sharing.”

Coverage gap stage (2013)

After you and the plan have paid $2,970 for covered drugs for the year, you pay a discounted price for all generic and brand name drugs until you reach the catastrophic coverage threshold. The plan premiums you pay do not count toward the coverage gap.

Catastrophic coverage stage (2013)

When your out-of-pocket costs for covered drugs reach the catastrophic coverage threshold of $4,750, you pay a reduced coinsurance or copayment, and the plan pays the rest for the remainder of the calendar year. The amount the plan has paid and the plan premiums you pay do not count toward your catastrophic coverage threshold.

Prescription drug formulary

Every Medicare prescription drug plan has a list of drugs it covers called a formulary that is approved by the federal government. Formularies usually have different tiers of drugs that are covered. The amount you pay for a prescription drug depends on the plan you choose and the drug’s formulary tier.

Extra help

People with limited incomes may qualify for Extra Help to pay for their prescription drug costs. If you qualify, Medicare could pay for 75 percent or more of your drug costs including monthly plan premiums, annual deductibles, and coinsurance. Additionally, those who qualify will not be subject to the coverage gap or a late enrollment penalty. Many people are eligible for these savings and don’t even know it. For more information about this Extra Help, contact your local Social Security office or call 1-800-772-1213, 7 a.m. to 7 p.m. Monday through Friday. TTY users should call 1-800-325-0778.

Am I eligible?

You are eligible for a Medicare prescription drug plan if you:

Are eligible for Medicare Part A and/or enrolled in Medicare Part B, and
Live in the plan’s service area, and
Continue to pay your Part B premium (and Part A if applicable, if not paid by Medicaid or another third party)

You can join a stand-alone prescription drug plan if you have Original Medicare only or Original Medicare and a Medicare health plan that does not include prescription drug coverage.

Enrollment periods for Part D

Initial Enrollment Period (Part D)

If you choose to enroll when you first become eligible for Original Medicare, your effective date will depend on the month you enrolled in Part D during your Initial Enrollment Period (IEP). Your coverage will start no sooner than your Medicare Part A effective date and will generally be the first of the month after your enrollment.

Note: You may be charged a one percent penalty per month for each month you delay enrolling in Part D and do not have coverage that is considered creditable (as good as Medicare). This charge may increase as Medicare Part D premiums increase and will continue for as long as you are enrolled in Part D.

Annual Election Period (Part D)

During the Annual Election Period from October 15 to December 7, you can enroll in or change stand-alone prescription drug plans. Your coverage will start January 1 of the following year.

Special Enrollment Periods (Part D)

Some common reasons you might qualify for a Special Enrollment Period for Medicare Part D plans include:

You become eligible for financial help from Social Security or your state, or you lose eligibility for this help
You move outside your plan’s service area
Your plan’s government contract ends, or the plan goes out of business
You lose prescription drug coverage from an employer or union, or your drug coverage is no longer as good as the standard Part D benefit

The time frame for a Special Enrollment Period can vary, but it typically begins on the first day of the month in which the qualifying event occurs and lasts for three months.

What can I do next?

Last updated May 15, 2013
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Types of Medicare plans

Medicare Part A and Part B cover basic hospital and medical needs but will probably not cover all of the medical costs you have. Supplemental hearing screenings, vision exams and most outpatient prescription drugs are not covered. Fortunately, you can enroll in one of several private health or prescription drug plan options to reduce your out-of-pocket costs and get additional services to help you lead a healthy life.

Medicare Cost plans

What you should know:

Regulated by both federal and state governments
Pay secondary to Original Medicare for Part A services
Primary payer for most Part B services
Allow you to enroll at any time of year if you meet eligibility requirements
No “lock-in” restrictions - you may disenroll from the plan at any time
Benefits, premiums and cost-sharing may change from year to year
May or may not include Part D prescription drug coverage

You are eligible for a Medicare Cost plan if you:

Are eligible for Medicare Part A and enrolled in Part B (or enrolled in Part B only)
Live in the plan’s service area
Continue to pay your Part B premium (and Part A if applicable, if not paid by Medicaid or another third party)

Note: If you have End Stage Renal Disease, you may not be eligible.

Medigap (Medicare supplement) plans

What you should know:

Minnesota has three Medigap plans regulated by the state government: Basic, Extended Basic and Medicare Select
Medigap plans help pay the copayments, coinsurance and deductibles not covered by Original Medicare. Many plans also offer additional benefits and features.
Plan benefits are guaranteed renewable
Premiums may change each year
Helps pay for some of the health care costs or “gaps” that Medicare Part A and Medicare Part B leave behind
Each type of Medigap plan has a different set of benefits and premiums
Some Medigap plans offer optional coverage for an additional premium
Do not include prescription drug benefits; you will need to purchase a separate stand-alone Part D plan
Plans are portable. You must be a permanent resident of Minnesota to enroll in the plan, but if you move your plan goes with you

You are eligible for a Medigap plan if you:

Are eligible for Medicare Part A and enrolled in Part B
Live in the plan’s service area
Continue to pay your Part B premium (and Part A if applicable, if not paid by Medicaid or another third party)

When can I enroll in these plans?

Medicare Cost plans:

Have open enrollment year-round
If you are locked into a Medicare Advantage plan (Medicare Part C), you cannot enroll in a Medicare Cost plan until you are allowed to disenroll from the Medicare Advantage plan.

Medigap (Medicare supplement) plans:

You have a six-month Open Enrollment Period to enroll in a Medigap plan. It begins on the first day of the month your Medicare Part B coverage begins.
If you delay enrolling in Medigap coverage, you may need to provide your health history and could be denied coverage.
If you enroll in a Medigap plan, you should not enroll in a Medicare Advantage or Cost plan.

Note: If you want to enroll in a Cost or Medigap plan and a stand-alone prescription drug plan, you must enroll in each plan separately.

What can I do next?