Medicare 101 for Those New to Medicare Coverage Options

Medicare Made Easy: Understanding the Basics of Medicare Parts A, B, C, D and More

If you’re approaching the age of 65, you’re about to enter a rewarding new chapter in life. For many this means retirement and for others this means grandkids. For most, however, it also means aging into Medicare eligibility.

Medicare is a great benefit in the next chapter of life, but we won’t lie… It can be a lot to learn. That’s why we’re here, to take every piece of the Medicare puzzle and put it all together into an easy-to-understand guide that you can use to navigate your Medicare experience.

From here on out, you’re free to explore, using the table of contents to quickly jump to the sections that matter to you most. Don’t forget that the Network Health team is here to help, too, so call us at 800-983-7587 with your questions.

Table of Contents

1. Medicare Explained – What Is It?
   1. Original Medicare
   2. Medicare Part A
   3. Medicare Part B
   4. Medicare Part C
   5. Medicare Part D
      1. What Isn’t Covered by Medicare Part D?
      2. How Do the Phases of Part D Work?
2. What Are Your Different Medicare Options?
   1. Original Medicare
   2. Medicare Plans Through Private Insurance Companies
      1. Medicare Advantage Plans
      2. Medicare Prescription Drug Plans
      3. Medicare Supplement Plans (Medigap)
3. When Can I Enroll in Medicare?
4. How to Enroll in Medicare
5. Medicare FAQ
   1. Do I have to enroll in Medicare?
   2. When do I need to enroll in Medicare by?
   3. Will I automatically be enrolled in Medicare?
   4. Can I stay on my employer’s health insurance?
   5. Is Medicare free?
   6. Do all health care providers accept Medicare?
   7. What is the difference between Medicare and Medicaid?

Medicare Explained – What Is It?

In the simplest terms, Medicare is the federal health insurance program meant for people who meet certain eligibility requirements. In order to be eligible, a person must fall under one of the following categories.

• Be age 65 or older
• Have a qualifying disability
• Have End-Stage Renal Disease (ESRD)

Medicare is broken up into different parts, each of which offers its own coverage benefits. What you pay for Medicare will vary based on your income and what Medicare coverage you choose, as we will explore down below. These costs can also change year-to-year.

Original Medicare

Original Medicare is health insurance offered by the federal government. It has two parts—Part A (hospital coverage) and Part B (medical coverage).

After you reach your deductible, Original Medicare covers 80 percent of your health care costs. You are responsible for the other 20 percent. It’s important to know there is no maximum out-of-pocket limit with Original Medicare. After you meet your deductible, you’ll still owe 20 percent on all Medicare-covered medical services you receive for the rest of the year.

Medicare Part A

Part A covers inpatient care, like hospital and nursing home admissions. If you are collecting Social Security, you are automatically enrolled in Part A when you turn 65. If you plan to delay Social Security, you will need to apply for Part A.

Most people don’t pay a monthly premium for their Part A because they’ve worked 40 quarters in their lifetime and paid for it through payroll deductions. Therefore, you should always take Part A, even if you are keeping your employer coverage. Most of the time, you will not pay anything for this added coverage.

Medicare Part B

Part B is coverage for anything done in an outpatient setting, like doctor visits and labs. Just like Part A, you will be enrolled automatically if you are collecting Social Security but will need to apply if you delay Social Security.

Most people will pay a part B monthly premium, so you might want to delay this coverage if you are keeping an employer plan. If you are a lower income earner you could pay less and if you are a higher income earner you could pay more. Additionally, the premium can change from one year to the next.

You’ll want to review this option carefully because there are penalties for delaying Part B if your existing coverage does not meet Medicare standards.

Medicare Part C

Once you have Medicare Parts A and B, you can enroll in a Medicare Part C plan—also called a Medicare Advantage plan. Medicare Advantage plans are purchased through private insurance companies, like Network Health. These plans are an all-in-one alternative to Original Medicare.

There are many benefits to a Medicare Advantage plan, including the simple fact that these plans offer additional coverage not found under Original Medicare. Part C plans are allowed to include extra benefits like dental, vision, hearing and fitness programs. Many Medicare Advantage plans also include your Part D drug coverage, which we will explore below.

Medicare Advantage plans also have a cap on your yearly out-of-pocket costs, while Original Medicare does not. Enrolling in Part C is a great way to keep your costs for health care services from piling up.

Ready to explore Medicare Advantage options? Find plans in Wisconsin here.

Medicare Part D

Original Medicare does not include a drug benefit, and that’s where Medicare Part D steps in, covering specific generic and brand name drugs included in the list of covered drugs. This list is also referred to as the formulary.

The Medicare formulary is a list of prescription drugs covered by the plan. Medicare sets the standard level of coverage for the types of drugs plans must cover. Plans choose the specific generic and brand name drugs on the formulary. To lower costs, many plans place drugs into different tiers within the formulary. Plans can divide tiers in different ways and each tier costs a different amount. In general, drugs in a lower tier cost less than a drug in a higher tier. At Network Health, our Medicare Advantage plans with drug coverage have five tiers.

Though Medicare Part D is available as a standalone plan, many Medicare Advantage plans include Part D in their coverage. Though a vital coverage for many, Medicare Part D isn’t without its complexities. To help you navigate the intricacies of your available drug coverage options, we recommend reading through the resources below.

What Isn't Covered by Medicare Part D?

Just as with Original Medicare, it’s just as important to understand what isn’t covered under Part D as it is to understand what is covered. Below are drugs that are not included under Medicare Part D coverage.

• Drugs that are not listed on the plan formulary
• Prescription vitamins and mineral products
• Over-the-counter medications
• Drugs that may be covered under Part A and Part B

How Do the Phases of Part D Work?

Another complexity to Part D coverage are the different phases that make up the coverage stage cycle. Throughout the year, there are four drug stages you can reach based on how much you’ve paid for drugs during the year. The stage you are in affects the amount you pay for your drug.

People who take few prescriptions may remain in the deductible stage or move to the initial coverage stage. People who spend a lot on their medications, either by having several prescriptions or using expensive drugs may move into the coverage gap or catastrophic stage. This cycle starts over each year on January 1.

Annual Deductible

If your plan has a drug deductible, you’ll pay the full cost of drugs up to the deductible amount first. Depending on your plan, drug deductibles can apply to Tier 3, 4 or 5 medications.

Initial Coverage

Once you’ve met your drug deductible, you move into the initial coverage stage. During this stage, you pay a copayment (set fee) or coinsurance (percentage of the cost) out-of-pocket and the plan pays the rest. You stay in this stage until your total drug costs—which includes the amount you and the plan have paid for your covered prescription drugs—reach the coverage gap amount. This amount is determined by Medicare each year.

Note – Your plan premium payments are not included in your total drug cost amount.

Coverage Gap—Donut Hole

Ah, the famous Medicare donut hole. Unfortunately, this isn’t the good kind of donut. While you’re in the coverage gap—also known as the donut hole—you pay a larger share of the cost for your drugs. You stay in the coverage gap stage until your total drug costs reach a certain amount. This amount is set by Medicare each year.

While in the coverage gap, your total drug costs include the amount you and the plan have paid for your covered prescription drugs, plus the discount amount drug manufacturers provide on brand name drugs.

Catastrophic Coverage

Once your total out-of-pocket costs reach a certain amount ever year, you pay a small copayment or coinsurance amount for drugs for the rest of the year. Again, the cycle resets on January 1, so you will only remain in the catastrophic coverage stage through December 31 of any given year.

What Are Your Different Medicare Options?

When it comes to Medicare, you have several options for getting your coverage. You can have Original Medicare, add coverage to Original Medicare or choose a Medicare Advantage plan.

Original Medicare

Original Medicare consists of Medicare Part A (hospital coverage) and Medicare Part B (medical coverage). You may add a standalone Medicare Part D (prescription drug) plan, a Medicare Supplement plan or both. You can also choose to get coverage through a Medicare Advantage plan.

• Medicare Part A and Medicare Part B (Original Medicare)
• Original Medicare plus a Part D prescription drug plan
• Original Medicare plus a Medicare Supplement plan
• Original Medicare plus a Part D prescription drug plan and a Medicare Supplement plan
• Original Medicare through a Medicare Advantage plan

Medicare Plans Through Private Insurance Companies

Depending on what you want to get from your Medicare coverage, you may choose to get Medicare through a private insurance company. You have three options if you purchase your coverage this way. These options include Medicare Advantage plans, prescription drug plans (Part D) and Medicare Supplement plans.

Medicare Advantage Plans

If you choose to get your benefits through a Medicare Advantage plan, like Network Health, you will have one plan for all your coverage. Medicare Advantage plans are called Medicare Part C, and they combine Part A and B coverage. Many plans include extra benefits that aren’t included in Original Medicare, such as dental, vision, hearing and fitness.

Many Medicare Advantage plans include Part D prescription drug coverage, too. However, some plans don’t, so make sure you read and understand the plan’s documents to know what’s included.

Remember, you must have Medicare Part A and B to purchase a Medicare Advantage plan.

How do I know which Medicare Advantage plan is right for me?

As you prepare to enroll in Medicare, ask yourself these questions to determine which plan will meet your needs.

• Will I have to choose a hospital and doctor from a network?
• Is my personal doctor covered?
• Will I need a referral to see a specialist?
• Will the plan cover me if I get sick in another state?
• How much will my prescription drugs cost?
• Are my medications on the plan’s drug list (formulary)?
• Does the plan have a good quality rating?

Medicare Prescription Drug Plans

Some private insurance companies offer Medicare prescription drug (Part D) coverage as a standalone plan to help you pay for your medications. This type of coverage can only be purchased if you choose Original Medicare and need prescription drug coverage. It’s also an option if you’re staying on an employer plan that doesn’t offer creditable drug coverage. (Creditable drug coverage is prescription drug coverage that is at least as good as Medicare’s standard prescription drug coverage).

If you plan to stay on an employer plan after your 65th birthday, talk to your benefits administrator to confirm your plan has creditable drug coverage so you don’t end up paying a late fee.

Medicare Supplement Plans (Medigap)

Also called Medigap, Medicare Supplement plans can be added to Original Medicare. These plans help pay for some of the out-of-pocket costs for Medicare-covered services such as hospital, skilled nursing facility, home health care and ambulance services. The out-of-pocket costs are copayments and coinsurance not covered by Original Medicare.

Most U.S. states offer 10 types of Medicare Supplement plans. In Wisconsin, plans of a certain type must offer the same coverage and benefits. All Medicare Supplement plans in Wisconsin must cover these benefits.

• Medicare Part A coinsurance for inpatient hospital care
• Medicare Part B coinsurance (usually 20 percent of the Medicare-approved amount)
• First three pints of blood each year
• Coinsurance or copayments for Part A hospice care

Wisconsin offers these types of Medicare Supplement plans.

• Medigap basic plan (beneficiaries in Wisconsin can add riders to the basic plan for an additional cost)
• Medigap plans that supplement Original Medicare benefits at 25 percent cost sharing
• Medigap plans that supplement Original Medicare benefits at 50 percent cost sharing

It’s important to note that Medicare Supplement plans do not include prescription drug coverage.

[Learn More About Medicare Advantage vs Medicare Supplement Plans]

When Can I Enroll in Medicare?

Medicare has several different enrollment periods that occur throughout the year. Many will enroll in Medicare for the first time when they turn 65. Depending on your circumstances, however, you may want to review the below enrollment period to understand when enrollment takes place and when you will have the option to change your Medicare elections.

Initial enrollment period – This is the seven-month window around your 65th birthday when you can enroll in Medicare Parts A and B. You can sign up for your Medicare benefits three months before, the month of or three months after the month you turn 65.

General enrollment period – Individuals who delay their initial enrollment period can sign up during the general enrollment period, which occurs from January 1 – March 31 each year. If you sign up during the general enrollment period, your coverage begins the month after you sign up.

Annual enrollment period – The annual enrollment period occurs each year from October 15 – December 7. During this time, you can make Medicare plan changes for the upcoming year.

Open enrollment period – During this period, you can make one change to the Medicare Advantage plan you’ve elected for the year, or you can switch to Original Medicare. It occurs each year from January 1 – March 31.

Special enrollment period –You can also make changes to your Medicare plan when certain events happen in your life, such as a move or losing other insurance coverage. The Special Enrollment Periods page on Medicare.gov contains more information about the special situations that make you eligible for a plan change.

How to Enroll in Medicare

So, you have all the background info you need and the coverage options available to you. The only step left is to enroll in Medicare when you’re ready and eligible. If that time is right now, let us walk you through your initial enrollment period so that you can ensure you have everything covered.

During your initial enrollment period, sign up for Original Medicare (also called Medicare Parts A and B). Remember, enrollment isn’t automatic and you have to sign up by visiting https://secure.ssa.gov/iClaim/rib or calling the Social Security office at 1-800-772-1213 (TTY 1-800-325-0778).

Once you’re signed up for Medicare Parts A and B, it’s time to determine if you want additional coverage through a Medicare Advantage or Medigap plan. If you decide to stay with Original Medicare, you will want to enroll in a standalone prescription drug plan (Part D) so you’re protected from the Part D late enrollment penalty.

Medicare Advantage Plans offer you all the coverage of Original Medicare, plus additional benefits like dental, vision and hearing. To review the plans available in your area, visit our Find and Compare Plans page.

At Network Health, our mission is to create healthy and strong Wisconsin communities, because we know we’re serving our neighbors, families and friends. We provide personalized service and treat you with the courtesy and respect you deserve. If you choose a Medicare Advantage plan with Network Health, you'll notice the difference.

If you have any questions about the type of plan that would be best for you, call to talk with a Network Health sales advisor at 866-623-2044 (TTY 800-947-3529), Monday– Friday from 8 a.m. to 8 p.m. From October 1 – March 31, we’re available seven days a week from 8 a.m. to 8 p.m.

Medicare FAQ

Do you have more questions that weren’t answered up above? Here are some quick answers to some common Medicare questions. Don’t forget that we’re available here at Network Health to help you, too, so feel free to call us at 800-983-7587.

Do I have to enroll in Medicare?

You are not required to enroll in Medicare. For a variety of reasons, including having health insurance through an employer, some people choose not to enroll in Medicare when they first turn 65. That said, there usually isn’t a reason to delay Medicare Part A since most people get Part A for a $0 monthly premium. If you choose to delay Medicare Part B, you may have to pay a higher premium for it.

When do I need to enroll in Medicare by?

There is a seven-month window around your 65^th birthday when you can enroll in Medicare Parts A and B. You can sign up for your Medicare benefits three months before, the month of or three months after the month you turn 65.

Will I automatically be enrolled in Medicare?

If you are receiving Social Security when you turn 65, you will automatically be enrolled into Original Medicare. Apart from this exception, you will need to enroll yourself in Original Medicare through the Social Security Administration or a Medicare Advantage plan with a health insurance company.

Can I stay on my employer’s health insurance?

If you have a health plan through your employer, you can stay on that plan. Enrollment in Medicare is not mandatory. Keep in mind, however, that it’s important to review your employer health plan to ensure it is at least as good as Original Medicare or other available Medicare options. Moreover, you should also ensure the drug coverage you have through your employer is at least as good as Medicare’s standard prescription drug coverage. This is called creditable drug coverage. If your employer’s drug coverage isn’t creditable, you will want to sign up for a Medicare Part D plan so that you don’t have to pay a penalty later. If your employer’s drug coverage is creditable, you will need a letter from your employer.

Is Medicare free?

Because Medicare is a federal health plan, many people may mistakenly believe that Medicare is free. This is not the case. Though Medicare Part A is available at no premium for many people, Medicare Part B does include a monthly premium. Additionally, Medicare also has deductibles and copayments for certain services, just like the health insurance you are likely used to. Costs for Medicare Part C, or Medicare Advantage plans, will vary based on the plan.

Do all health care providers accept Medicare?

Most health care providers will accept Medicare. If you opt for a Medicare Advantage plan, you will have in-network providers that will vary based on the company you choose your plan from.

What is the difference between Medicare and Medicaid?

Medicare is a federal health insurance program for those age 65 and older, as well as individuals with certain disabilities or conditions. Medicaid is a federal and state health coverage program for those who have limited income.

 

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