Original Medicare/Medicare Supplements
Original Medicare is managed by the federal government. Part A covers inpatient hospital stays, skilled nursing, hospice care and some home health care. Part B covers certain physician services, outpatient care, medical supplies and preventive services. Most prescriptions are not covered by Original Medicare, however, there are a few exceptions that are covered under Part B. Drug coverage can be added by enrolling in a Medicare Prescription Drug Plan (Part D). You can expect to pay deductibles, co-pays and/or coinsurance for Parts A, B, C, and D. With Original Medicare, there is no out of pocket limit for what you pay. You can also go to any provider that accepts Medicare.
Medicare Supplements, sometimes called “Medigap” are policies that help fill the gaps in Original Medicare. Medicare Supplements are sold by private insurance companies. A Medigap policy is designed to help pay deductibles, copayments and coinsurance that Original Medicare does not cover. Certain Medigap policies may also cover services such as medical care when travelling outside the United States, which is also not covered by Original Medicare. With a Medigap policy, Medicare will pay its share of Medicare-approved amounts for health care costs first, then the Medigap policy pays its share. Most claims will be processed due to the mandatory electronic crossover. You must have Medicare Part A and Part B in order to enroll in a Medigap plan as well as a Medicare Advantage Plan. It is illegal for anyone to sell you both a Medigap and a Medicare Advantage Plan at the same time. Medigap plans generally do not cover dental, hearing aids, eyeglasses, and private-duty nursing or long-term care. Most supplements are guaranteed renewable for life, however, rates can be changed on an annual basis. Medicare Advantage plans are renewed on an annual basis and are not guaranteed renewable. There are also special enrollment periods for Medicare Advantage plans, i.e., Initial, Annual, Open and Special that allow beneficiaries to enroll or make changes. Medicare supplements can be changed year round but can be subject to approval.
HMO Plans require the use of in-network providers except in emergency situations. In some situations, you may also be able to use out of network providers, but you will pay 100 percent of the service charges. HMO’s require you to choose a Primary Care Physician and some may require you to have a referral from your PCP for specialist visits. Don’t confuse referrals with prior authorizations for medically necessary services. HMO’s cover the same services that Medicare Advantage plans usually cover such as hospital and medical expenses as well as prescription drugs. For hospital and medical expenses, choosing in-network providers is critical or you may have to pay the full amount for those services. In emergency situations however, you may be covered depending on the terms of your plan. Each Medicare Advantage HMO plan is different in its coverage and out of pocket maximums may vary depending on the terms of your plan.
PPO plans cover both in-network and out of network providers. Under a PPO, you will pay more for using out of network providers. PPO’s do not require you to choose a primary care physician and also do not require referrals to see a specialist. PPO’s cover the same services that Medicare Advantage plans usually cover such as hospital and medical expenses as well as prescription drugs. Each Medicare Advantage PPO plan is different in its coverage and out of pocket maximums may vary depending on the terms of your plan.
Special Needs Plans
A special needs plan (SNP) is a Medicare Advantage (MA) coordinated care plan designed for and limited to special needs individuals. Most common plans are dual eligible (D-SNP) and chronic condition special needs plans (C-SNPS). Special needs individuals include:
- An institutionalized individual;
- A dual eligible;
- An individual with a severe or disabling chronic condition.
There are three different types of SNP’s:
- Chronic Condition SNP (C-SNP) i.e., cardiovascular, pulmonary, diabetes and renal failure;
- Dual Eligible SNP (D-SNP) Medicare/Medicaid eligible;
- Institutional SNP (I-SNP) nursing home, skilled nursing.
Prescription Drug Plans
Medicare Part D is your prescription drug coverage. Part D prescription drug coverage is provided by private insurance companies. The costs included with your Medicare Part D coverage will include monthly premiums, annual deductibles, copayments and coinsurance for prescriptions. All Medicare Part D plans must provide the minimum coverage required by the Centers for Medicare and Medicaid Services (CMS). In other words, they follow the standard model established by CMS. For the most part, variances in the different plans will be deductible, co-pays (could be percentages) depending on the terms of that plan. These plans too are renewed on annual basis.
Although you are not required to buy a Part D plan, if you go a period of time without prescription drug coverage, you may pay a late enrollment penalty (LEP) with your monthly premium if you later decide to enroll in a drug plan. The late enrollment penalty is equal to “1% of the national base beneficiary premium multiplied by the number of full, uncovered months without creditable or Part D coverage.” (www.medicare.gov) (https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty). This amount is added to your monthly Part D premium and remains permanent unless one qualifies for extra help with prescription drugs.
CMS sets minimum coverage guidelines for Part D plans which requires them to cover medications that treat most illnesses and diseases. Each Part D plan uses a prescription drug formulary which contains a list of medications covered by the plan. Each formulary will have the costs for each drug typically in a tiered copayment system. Man generic and maintenance medications will be in lower cost tiers and brand-name and specialty medications usually are in higher tiers.