Welcome to Medicare Basics!
An online experience presented by Optima Health.
Learning about Medicare – and deciding which coverage is right for you – should be easy. Our Medicare team is here with tools to help you find the right Medicare destination.
Who Medicare Helps
To be entitled to Medicare, you must be a U.S. citizen or have been a permanent legal resident for five continuous years, and also must answer yes to at least ONE of the following questions:
- Are you age 65 years or older and eligible to receive Social Security benefits?
- Are you under 65, permanently disabled and have been receiving Social Security disability insurance payments for at least two years?
- Do you receive continuing dialysis for permanent kidney failure or need a kidney transplant?
- Do you have Amyotrophic Lateral Sclerosis (ALS — Lou Gehrig’s Disease)?
Introducing Medicare Basics
Hello and welcome to Optima Health's Medicare Basics Seminar for the 2021 plan year.
Here at Optima Health, we know that transitioning to Medicare can be difficult, as there are a lot of rules and regulations to sort through. As a licensed Sales Executive, it is my job to help you understand the basics of Medicare, including the options that you have as a Medicare Beneficiary. Follow along with me, and feel free to ask me any questions about how to make the switch to Medicare easier for you.
Original Medicare was established in 1965. It is a health insurance program run by the federal government. Medicare is regulated by the Centers for Medicare and Medicaid, better known as (CMS). You may be familiar with the Social Security Administration in some capacity. How this administration ties in with Medicare is that they perform administrative functions for the Medicare program. Some of these functions include, providing general information as well as assistance with applying for Medicare parts A and/or B.
It is important to understand that Medicare is health care coverage and that is available to individuals who are either 65 or older, people with certain disabilities and to people with End Stage Rental Disease (permanent kidney failure). Medicare, in its original form, provides two kinds of insurance: Part A (hospital or "inpatient" insurance, and Part B (medical or "outpatient" insurance). There are two additional Parts to Medicare, which includes Part C and Part D. We will cover those areas of Medicare shortly.
There are a few things to remember if you become eligible for Medicare because you are turning 65. If you are within 3 months of your 65th birthday at the time you sign up, you need to contact Social Security to complete your enrollment into Medicare Parts A and B, if you are not already receiving benefits. You will not automatically be enrolled, since you were not previously collecting Social Security benefits. Your enrollment period and your first chance to sign up for Medicare will begin 3 months before you turn 65, and ends 3 months after you turn 65. You can sign up online, or contact SSA, who will review your records to see if you qualify for Medicare.
Let's discuss the 4 parts of Original Medicare. Medicare Part A, which is the hospital insurance coverage. Part A mainly covers inpatient care, skilled nursing facilities, and home health care and hospice programs. Most beneficiaries do not have to pay for Part A. Medicare Part B is your medical insurance coverage. This portion covers outpatient care, including physician services, diagnostic services, ambulance, certain limited drugs as well as durable medical equipment. In 2021 beneficiaries will pay a premium of $148.50 for Part B (upper income beneficiaries will pay more). Here’s a tip to help you remember what services are covered under these two parts of Medicare. Part A covers services that is completed in the inpatient hospital stay and follow-up care, and Part B covers services completed outside of the hospital including doctor visits and certain limited drugs.
Medicare Part C is the Medicare Advantage plan coverage, which covers Part A and Part B benefits. This is not a plan offered by Original Medicare, but rather private plans, such as Optima Health who has a contract with CMS to administer Part C plans to Medicare beneficiaries. These Medicare Advantage plans typically offer benefits beyond what is offered by Parts A and B, such as dental vision and hearing. These plans may or may not require a monthly premium. Part D covers the prescription drug benefits. You can satisfy your Part D coverage by adding it as a stand-alone Part D plan to go with your Part A and Part B coverage. You may also have the Part D coverage included in a Medicare Advantage plan. Many Medicare Advantage plans include Part D coverage. There is Extra Help available in which a beneficiary may apply for help towards plan premiums for Part D.
The Part D (prescription drug plans), have a monthly premium for coverage and four stages that make up the drug plan benefit. The monthly premium is your cost to maintain the prescription drug coverage. With an Optima Health Medicare Advantage plan, your Part D premium will be included in the overall premium. The four stages to your drug plan coverage are as follows. Stage 1 is the deductible stage. In this stage you will pay the cost for your prescriptions until your deductible for the plan is satisfied. Deductibles may apply only to certain types of drugs. Different plans have different deductibles, and some have no deductible (so you get coverage immediately and begin in Stage 2). No Part D plan may have a deductible of more than $445.
After you pay your plans deductible (if your plan has one), you will enter into Stage 2 of your Drug plan coverage. In this stage, you and your plan will share the cost of your prescription drugs. You may have a copay or coinsurance for your prescriptions. Some Part D plans have levels or "tiers" of copays and coinsurance, which set different costs for different types of drugs. It is important to remember that because you and your drug plan share the cost in this stage, you could have a $0 copay but your plan is paying a portion towards that prescription. The amount the health plan pays toward that prescription is being calculated towards your total coverage amount for stage 2. It is also important to understand the difference between copay and coinsurance. A copay is a set amount (say, $10) for all drugs in a given tier. You will pay that set dollar amount or it may be lower for generic drugs than brand-name drugs. The plan will pay the remaining cost. Coinsurance is when you pay a percentage of the cost of a drug (say, 25%) and the plan will be the difference. Once you and your plan spend $4,130 towards your prescription costs, you move to Stage 3.
Stage 3 is considered the Coverage Gap. In this stage you will pay 25% of the price for brand name drugs and 25% of the price for generic drugs, as well as a portion of the dispensing fee. Once your yearly out-of-pocket costs (including copay and coinsurance you paid back in Stage 2) reach $6,550, you enter Stage 4. Stage 4 is called the Catastrophic stage. In this stage the plan will pay most of the cost for the rest of 2021. You will pay 5% of the cost for the drug coverage or $3.70 for generic drugs and $9.20 for all other drugs, whichever is greater. Remember that your prescription drug coverage is based on a calendar year and that your drug benefit and the four stages reset every year on January 1st.
There are specific times to enroll into Medicare, and the cost can go up the longer you wait. This can mean lifetime premium penalties and delays in when your coverage can start. The Initial Enrollment Period (IEP) is the first time you can sign up for Part A and/or Part B during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65. If you sign up during the first 3 months of your IEP, your coverage typically starts the first day of your birthday month. If your birthday is on the first day of the month, your coverage will start the first day of the prior month.
The Annual Enrollment Period (AEP) occurs every year, October 15th through December 7th. During this time you may change your Medicare medical and/or prescription drug coverage for the following year. This includes returning to "original" (Parts A and B) Medicare or joining a Medicare Advantage Plan. Any changes you make during an AEP attestation, the coverage will begin on January 1st of the following year. The Open Enrollment Period (OEP) occurs every year, January 1st through March 31st. If you are in a Medicare Advantage plan, you can switch to a different Medicare Advantage plan or switch back to "original" Medicare (and join a Part D prescription drug plan) once during this period. Any changes will take effect on the first of the following month.
Special Enrollment Periods, also known as SEPs, is an enrollment period where you can make changes to your Medicare Advantage and Part D drug coverage. SEPs can be used throughout the year as certain life events occur. Examples of these life events include: you move, you lose other insurance coverage, you enter into a nursing home, or you were misinformed when you signed up for Medicare coverage.
A few things that we recommend you consider before you choose your Medicare coverage is: Medicare Supplemental plans. Medicare Advantage plans are just one way to obtain additional coverage to go along with or have in place of Original Medicare. You can explore this option and get more information on Medicare Supplement plans by contacting SSA or Original Medicare. You also want to consider what the monthly premium totals are, and if prescription drug coverage is included? Ask yourself, "Do my doctors accept this new insurance"? Does the plan offer additional benefits such as dental, vision, transportation, over-the-counter, or fitness? Feel free to ask me any questions to help you decide what coverage will be best for you.
Optima Medicare looks forward to serving you and your health care needs.
Last Updated: 5/25/2021