Learn About Medicare

Medicare is a federally managed health insurance program for people 65 or older, people under 65 who have certain disabilities, and people of any age who have permanent kidney failure requiring dialysis or a kidney transplant (a condition referred to as end-stage renal disease).

Medicare now offers four kinds of insurance: hospital (Part A); medical (Part B); Medicare Advantage, formerly Medicare+Choice (Part C); and prescription drug (Part D). For more information about the Medicare Program you may visit: www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY users should call 1-877-486-2048, 24 hours a day, seven days a week.

Part A: Hospital Insurance

Medicare Part A helps cover inpatient care services received in hospitals (includes critical-access hospitals and inpatient rehabilitation facilities), as well as intermittent inpatient care received in skilled nursing facilities. For those who meet certain eligibility requirements, Part A also covers hospice care and some home health care services. Part A does not cover custodial or long-term care.

Most people are automatically eligible for Part A when they turn 65. Part A is available at no cost to people who have worked, or whose spouses have worked, for at least 10 years and have paid Medicare taxes through their employers.

Part B: Medical Insurance

Medicare Part B helps cover medically necessary doctors’ services, outpatient care, some preventive services, and some additional services not covered by Part A (such as physical or occupational therapy). It also may cover medically required home health care services.

Medicare Part B is optional coverage. If you are interested in receiving Part B, you may sign up during your initial enrollment period, which begins three months before your 65th birthday and ends three months after your 65th birthday. Part B requires a monthly payment, or premium, for coverage. Generally, this payment is deducted from your Social Security check. The premium amount is set when a person first becomes eligible to enroll in Part B. In most cases, premium rates will increase by 10% annually for those who do not enroll when they become eligible. Therefore, it is a good idea to consider enrolling in Part B as soon as you become eligible.

You may also be eligible for a special enrollment period for Medicare Part B. This enrollment period is available if you are eligible for Medicare based on being age 65 or on disability but you waited to enroll in Medicare Part B because you or your spouse were working and you had group health plan coverage through an employer or union based on this work. If this applies to you, you may sign up for Medicare Part B anytime while you are covered by the group health plan based on current employment status or during the eight-month period following the month the group health plan coverage ends or the employment ends, whichever is first.

Part C: Medicare Advantage Plans

These plans are approved by Medicare and run by private insurance companies. When you join one of these plans (such as Keystone 65 HMO and Personal Choice 65 PPO), you are still in Medicare. Some of these plans require referrals to see specialists. They provide all of your Part A (hospital) and Part B (medical) coverage. They generally offer extra benefits, and many include prescription drug coverage usually for an additional cost. These plans often have networks, which means you may have to see doctors who belong to the plan or go to certain hospitals to get covered services. In many cases, your costs for services can be lower than in the Original Medicare plan, but it is important to check with the plan because the costs for services will vary.

Part D: Medicare Prescription Drug Plans

The Medicare Modernization Act passed in 2003 introduced Medicare prescription drug coverage, also known as Medicare Part D. Coverage began on January 1, 2006. Anyone who is entitled to Medicare Part A or enrolled in Medicare Part B is eligible to enroll in the new prescription drug coverage, which offers substantial federal help to people with Medicare by paying some of the costs of prescription drugs.

Key elements of the standard Part D coverage

In 2010, beneficiaries with standard Medicare prescription drug coverage will pay a $310 annual deductible and then 25 percent of drug costs from $310 to $2,830. When total yearly drug costs (i.e., paid by the beneficiary and the plan) reach $2,830, the beneficiary pays 100 percent of the cost of each prescription until the beneficiary’s yearly out-of-pocket costs reach $4,550. At that point, the beneficiary pays about five percent of the cost of each drug. Extra Help will be available for those with limited incomes and resources.

Here’s another way of looking at it:

Steps 2010 Standard Part D drug coverage
Step 1: Deductible
What you pay before the plan starts to pay.
Step 2: Cost-sharing
What you and the plan pay in total covered prescription drug costs up to a certain level — the Initial Coverage Limit.

You pay 25% coinsurance per prescription up to $2,830 in total drug costs (i.e., paid by you and the plan).

Step 3: Coverage gap
When you pay all drug costs until reaching the catastrophic “trigger.”
You pay 100% at discounted prices after total yearly drug costs reach $2,830.
Step 4: Catastrophic coverage
Starts after you have paid $4,550 out of pocket for covered drugs in a year.

You pay the greater of $2.50 per generic/$6.30 per brand-name drug or 5% coinsurance per prescription for the rest of the year. The plan pays the rest.

Medicare prescription drug plans provide insurance coverage for prescription drugs. Like other insurance, if you join you will pay a monthly premium and a share of the cost of your prescriptions. Costs will vary, depending on the drug plan you choose.

Under Part D, Medicare beneficiaries will have a choice of at least two plans — a drug-only benefit offered by a private plan that contracts with Medicare (prescription drug plan) or a Medicare-approved HMO or PPO plan that provides both drug coverage and other health care services (Medicare Advantage Prescription Drug Plan).

If you have a Medicare Advantage HMO or PPO plan

If you are enrolled in a Medicare Advantage plan with Independence Blue Cross, you must get your Part D prescription drug coverage through the plan. The plan may offer enhanced drug benefits for an additional cost.

Like Part B, Medicare Part D prescription drug coverage is entirely voluntary

The Part D program has an “opt-in” rule, which means that, with few exceptions, beneficiaries need to actively sign up for the drug coverage by completing an enrollment form and joining a Medicare-approved plan (either a prescription drug plan or a Medicare Advantage Prescription Drug Plan).

This is different from how you sign up for Part B, which is through the Social Security Administration. With Part D, you sign up with a private plan that has been approved by Medicare to cover prescription drugs. While some Medicare beneficiaries may be automatically enrolled in a Part D drug plan based on income level, for most people it works like this: If you don’t sign up with a drug plan, you don’t get the Part D drug benefit. If you decide not to join a Medicare drug plan when you are first eligible, and you don’t have other creditable prescription drug coverage, you will likely pay a late enrollment penalty (higher premiums) if you choose to join later.

What are the Benefits of Additional Coverage?

Original Medicare does not pay all your health care costs. People who have only Medicare coverage pay a lot of money out of their own pockets for deductibles, coinsurance payments, and services not covered by Medicare.

Here are some examples of costs you may have to pay if you have only Original Medicare Part A and Part B coverage (based on 2009 amounts).

  • Routine exams and physicals are not generally covered by Medicare. You are responsible for the entire cost of these visits.
  • Just one day in the hospital can cost you up to $1,068.
  • Skilled nursing facility care is covered by Medicare Part A for up to 20 days. From day 21 to 100, you could be responsible for $133.50 per day.
  • For medical expenses in or out of the hospital (medical and surgical services, physical therapy, diagnostic tests, and durable medical equipment), Medicare Part B requires a $135-per-year deductible. After the deductible, Medicare covers only 80% of approved charges.

How can you avoid the costs not paid by Medicare?

Independence Blue Cross offers a variety of health care options designed to fit your specific needs, wants, and budget. Comprehensive coverage is not only smart; it’s necessary.

Low-income Subsidy — “Extra Help”

If you get Extra Help from Medicare in paying for your Medicare prescription drug plan costs, your monthly plan premium will be lower than if you did not get that Extra Help. The amount of Extra Help you get will determine your total monthly plan premium as a member of our plan.

You may be able to get Extra Help to pay for your prescription drug premiums and costs. To see if you qualify for getting Extra Help, call:

  • 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day, seven days a week;
  • The Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or
  • Your State Medicaid Office.
  • People with limited incomes may qualify for Extra Help to pay for their prescription drug costs. If eligible, Medicare could pay for seventy-five percent of drug costs including monthly prescription drug premiums, annual deductibles, and co-insurance. 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.

For more information on other local, state, and federal assistance programs, check out the Low-Income Subsidy page on ibxmedicare.com.