Medicare Part A and Medicare Part B cover basic hospital and medical needs. Medicare Part A and Medicare Part B will probably not cover all of the medical costs you have or meet all the needs of your lifestyle. Hearing screenings, vision exams and most outpatient prescription drugs are not covered. You also must pay deductibles and coinsurance when you receive eligible health care services.

Fortunately you can enroll in one of several private health plan options to reduce your out-of-pocket costs and get additional services to help you lead a healthy life.

Medicare Cost plans

• Regulated by both federal and state governments
• 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

Medigap (Medicare supplement) plans

• Minnesota has three Medigap plans regulated by the state government: Basic, Extended Basic and Medicare Select
• Plan benefits will never change
• Premium may change each year
• Helps pay for some of the health care costs or “gaps” that Medicare Part A and Medicare Part B don’t cover
• 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

Medicare Advantage plans

• Regulated by the federal government
• Replace your Original Medicare benefits as long as you remain enrolled in the plan
• Provide all of your Medicare Part A and Part B benefits, plus additional medical coverage, in the convenience of one 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

• Preferred Provider Organization (PPO) plans 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.
• Health Maintenance Organization (HMO) plans 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.
• Medicare Advantage prescription drug (MA-PD) plans are PPO or HMO plans that include Part D prescription drug coverage. If you enroll in this type of plan, you’ll get all of your hospital, medical and prescription drug 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.

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.

Part D:

• Is regulated by the federal government
• Provides 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
• Plans must provide at least a standard Medicare-approved level of coverage: The standard Part D prescription drug plan has four stages of coverage; each stage, you and the plan pay a different share of your prescription drug costs

To better understand how Medicare drug coverage works, there are a few terms that you should know:

Coverage gap (2012)
Once you and your plan (together) have paid $2,930 (total drug cost) in cost sharing, you pay 86 percent for all generic drugs and receive up to a 50 percent discount on brand name drugs. This coverage gap is sometimes called the “donut hole.” The coverage gap ends when your total yearly out-of-pocket costs reach $4,700.

Catastrophic coverage (2012)
When the coverage gap ends, for the remainder of the year, you only pay a $2.60/$6.50 copay or five percent of your drug costs, whichever is greater. The plan pays the rest.

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 up to seventy-five (75) percent or more of your drug costs including monthly prescription drug 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-MEDICARE (1-800-633-4227), 24 hours per day, 7 days per week. TTY users should call 1-877-486-2048.

Eligibility and enrollment

While people with Medicare aren’t required to enroll in any other medical or prescription drug coverage, many people choose to enroll in a plan to help pay for some of the health care costs not covered by Medicare. Find out if you’re eligible and when you can enroll.