Original Medicare (Part A and Part B)
Original Medicare (Part A and Part B) Original Medicare has high deductibles and coinsurance which usually change each January. Refer to your "Medicare and You" book available in September/October for the next year for the newest deductibles and coinsurance amounts. To offset these deductibles and coinsurance amounts, Medicare beneficiaries usually purchase other types of health insurance: supplements (medigap) or Medicare Advantage plans.
Medicare Advantage Plans (Part C)
1. Medicare HMOs
Medicare HMOs cover the same doctor and hospital services as Original Medicare. HMOs appeal to some people with Medicare because they may provide additional benefits, such as eyeglasses, which are not covered by the traditional Medicare program. Medicare HMOs may charge a premium that you would need to pay in addition to the Part B monthly premium. Medicare HMO members use a network of doctors, hospitals, and other providers. If the plan is "open access," you do not need a referral.
2. Medicare PPO's
Medicare PPOs, or "Preferred Provider Organizations," are offered through private health plans. PPOs differ in two key ways: Medicare PPOs do not require a referral to see a specialist. Medicare PPOs have out of network benefits. The copays will be higher than the in-network co-pays. There are Regional and Local Medicare PPOs. Regional PPO's serve a larger geographic area (either a single state or multi-state area) and offer the same premiums, benefits, and cost-sharing arrangements to all beneficiaries in the region. Regional Medicare PPOs offer all Medicare benefits, including the prescription drug benefit and possibly some value added benefits. These plans have a limit as to what you can spend out of your own pocket. If the co-pays add up to a certain amount in a calendar year, then you would not have co-pays for the remainder of the year. This is called your "out of pocket maximum."
3. Private Fee-for-Service (PFFS) Plans
Private fee-for-service plans cover Medicare benefits like doctor and hospital services, much like Medicare HMOs and PPOs. Unlike Medicare HMOs and PPOs, private fee-for-service plans do not have a formal network of doctors and hospitals. If considering enrolling in a private fee-for-service plan, make sure your doctor and hospital are willing to accept the private fee-for-service plan's payments for services before you enroll. Also, be sure you understand a plan's benefits and cost sharing requirements before you enroll because private fee-for-service plans decide how much enrollees pay for Medicare-covered services and may charge higher cost sharing for certain health care services than the original Medicare program. While private fee-for-service plans are not required to offer the Medicare drug benefit, most do. If you enroll in a private fee-for-service plans without drug coverage, you can also enroll in a Medicare stand-alone prescription drug plan for your drug coverage. These plans are mostly offered in rural areas.
4. Medicare MSA Plans
A Medicare MSA Plan is a health insurance policy with a high deductible coupled with a Medical Savings Account (MSA). Medicare pays the premium for the Medicare MSA Plan and makes a deposit to the Medicare MSA that you establish. You use the money deposited in your Medicare MSA to pay for medical expenses. If you don't use all the money in your Medicare MSA, next year's deposit will be added to your balance. Money can be withdrawn from a Medicare MSA for non-medical expenses, but that money will be taxed. If you enroll in a Medicare MSA, you must stay in it for a full year.
5. Special Needs Plans (SNPs)
Special needs plans are private plans that provide Medicare benefits, including drug coverage for beneficiaries with special needs. These include people who are eligible for both Medicare and Medicaid, those living in certain long-term care facilities (like a nursing home), and those with severe chronic or disabling conditions.
To help pay for these deductibles and coinsurance, beneficiaries of Original Medicare may buy supplemental insurance companies. Most companies offer 12 different plans but all plans are not necessarily offered in all states. The supplement plans are based on letters of the alphabet, such as Plan A, Plan B, Plan C, etc.
Whether Original Medicare alone, Original Medicare plus a Medicare Supplement plan, or a Medicare Advantage plan is right for you will depend on your unique needs and circumstances. Think about the type of plan that will meet your health and financial needs.
Prescription Plans (Part D)
If you purchase a supplement plan, in most situations, you need to buy a prescription plan. These plans vary in premiums, copays and formularies (a list of covered prescriptions). The plan, based on a calendar year, is in three "stages." Stage 1: You pay a copay and the carrier pays the balance of the cost. When these two amounts equal $2,830 (for year 2011), you enter stage 2 also known as the donut hole or gap. Stage 2: You pay 50% of the price of brand name drugs and 93% of the price of generics. The carrier pays the balance. When these two figures plus the copays you paid in Stage 1 add up to $4,550, you enter Stage 3. Stage 3: You now pay 5% of the cost of the prescriptions. In some cases the amount maybe lower.
Coordinating Medicare & Medicaid Benefits
If your income and assets are at or below the poverty level, you may qualify for Medicaid benefits in addition to your Medicare benefits. There are also Federal and State programs that will help pay some of your health care costs, such as, Extra Help, a Federal program. If you are already covered by Medicare and Medicaid, you can purchase a supplement plan or a Medicare Advantage plan. Depending upon the state you live in, the copays may be paid by that State.