Valuable information to help you choose the right Medicare coverage option

What is Medicare?

Medicare is a federal health insurance program for people 65 and older. It was signed into law by President Lyndon B. Johnson in July 1965 to help older adults pay their medical expenses. Over the years, Medicare has been expanded to provide coverage for people of all ages with disabilities and for those with End-Stage Renal Disease (ESRD) or Lou Gehrig's disease (ALS).

People with Medicare are called beneficiaries. In general, beneficiaries can go to any doctor, supplier, hospital, or other facility in the United States that accepts Medicare.

Medicare is made up of four parts:

Who is Eligible for Medicare Coverage?

Part A and Part B:Original Medicare

One of the two main ways to get your Medicare coverage is through Original Medicare, also called Traditional Medicare. Original Medicare consists of Part A and Part B. For some people, Original Medicare is their only health insurance. You can also use Parts A and B to complement other insurance you may have through your employer, union, spouse, or former employer. With Original Medicare, you are responsible for a deductible and either copayments or coinsurance for most services. The deductible is the amount you must pay each year before Medicare begins to pay for services and supplies covered under the program. A copayment or coinsurance is the amount you pay for covered services after you have paid the deductible. Coinsurance means you pay a percentage of the cost (normally Medicare pays 80% and you pay 20%). A copayment is a set amount that you pay for healthcare services or supplies. You must also pay a premium for Part B, which is a set amount you pay each month for your Medicare Part B insurance.

• Coinsurance means you pay a percentage of the cost (normally Medicare pays 80% and you pay 20%).

• A copayment is a set amount that you pay for healthcare services or supplies.

You must also pay a premium for Part B, which is a set amount you pay each month for your Medicare Part B insurance.

The two parts of original Medicare

Part A covers costs when you are admitted to a hospital

Medicare Part A helps pay your bills when you are admitted to a hospital, skilled nursing facility, or hospice.

Your Costs

• Monthly premium: Most people do not pay a monthly premium for Part A coverage because they or their spouse paid Medicare taxes while working.

• Deductible: Part A has an annual deductible for any hospital stay 60 days or less. For 2016, you must pay a $1 ,288 deductible before your coverage begins.

• Copayment: For any hospital stay lasting longer than 60 days, a Medicare copayment will apply:

• 61 to 90 days: $322 per day

• 91 to 150 days: $644 per day

• More than 150 days within a single benefit period: full cost

What Part A Covers

• Inpatient care in hospitals

• Skilled nursing facility care

• Hospice care and home healthcare services

Part B covers your basic medical care

Medicare Part B helps pay for basic medical care, including doctor visits, outpatient care, and preventive care and health screenings.

Your Costs

• Monthly premium: Most people pay a standard Part B premium, which is set each year by the Medicare program. For 2016, the standard Part B monthly premium is $104.90. This fee is usually deducted from your Social Security payment or retirement benefits.

• Deductible: There is also a yearly deductible for Part B services that you must pay before your coverage begins. For 2016, the yearly deductible is $166.

• Coinsurance: Once the deductible is met, you pay 20% of the Medicare approved amount charged by providers for your health care services.

What Part B Covers

• Doctor visits and physician services in the hospital

• Outpatient care (X-rays, lab tests, physical and rehabilitative therapy)

• Durable medical equipment (DME) and diabetes testing supplies

• Some preventive services, including an annual wellness exam

What Part A and Part B Does not Cover

• Miscellaneous hospital expenses, such as personal care items, private rooms (unless medically necessary), phone and television

• Custodial care, such as assistance with eating, bathing, and getting dressed

• Routine vision care (and eyeglasses), foot care and orthopedic shoes, hearing aids and related exams

• Prescription drugs, syringes, or insulin (unless used with an insulin pump)

• Dental care and dentures

• Long-term care and alternative healthcare (such as acupuncture)

• Any healthcare services while traveling outside the U.S.

Signing up for Original Medicare

Starting the month you turn 65, you will automatically get Medicare Part A and Part B if you are receiving benefits from Social Security or the Railroad Retirement Board (RRB).

If you're under 65 and disabled, you'll automatically get Part A and Part B after you get disability benefits from Social Security or certain disability benefits from the RRB for 24 months. If you have ALS, you'll get Part A and Part B automatically the month your disability benefits begin. If you are 65 and not yet receiving retirement benefits because you're still working, you will not get Part A and Part B automatically. Instead, you will need to sign up for this coverage during the following times:

Initial Enrollment Period

If you are not automatically enrolled when you are first eligible for Medicare, you have a 7-month window to sign up for Original Medicare. The Initial Enrollment Period (IEP) begins 3 months before your 65th birthday, includes the month you turn 65, and ends 3 months after you turn 65. For example, if your birthday is May 10, your IEP is February 1 through August 31.

General Enrollment Period

If you miss your Initial Enrollment Period, you can sign up from January 1 through March 31 each year. Your coverage will begin July 1 . You may have to pay a higher premium for late enrollment.

Special Enrollment Period

If you or your spouse (or a family member if you are disabled) is covered by a group health plan through an employer or union, you will be eligible for a Special Enrollment Period (SEP). You can sign up anytime you're still covered by the group plan or during the 8-month period that begins after your employment or coverage ends, whichever comes first.

Part C: Medicare Advantage Plans

Another way to get your Medicare coverage is through Part C, also known as Medicare Advantage plans (MA plans). MA plans are approved by Medicare but offered by private insurance companies.

Before enrolling in a Part C plan, you must first be enrolled in Original Medicare. You can then choose the MA plan you want and sign up directly with the private insurer. When you join a Medicare Advantage plan, you are still considered a Medicare beneficiary and you still have Medicare rights and protections, such as the right to appeal.

Medicare Advantage plans provide all of your Part A and Part B coverage, except hospice care, which is still covered under Original Medicare. These plans often provide additional benefits, including vision, hearing, and dental care, or other benefits that go beyond Original Medicare, such as lower costsharing. Many MA plans also include optional Medicare prescription drug coverage at no extra charge. Some MA plans charge a monthly premium on top of your monthly premium for Part B coverage.

The average monthly Medicare Advantage premium in 2016 was $64.92.

Types of Medicare Advantage Plans

The two most popular types of Medicare Advantage plans are Health Maintenance Organization (HMO) plans and Preferred Provider Organization (PPO) plans. Other options include Private Feefor-Service Plans, HMO Point-of-Service plans, Medical Savings Accounts, and Special Needs plans. Different types of plans offer different benefits, so it is important to compare each type of plan to make an informed decision based on your needs.

How it Works

With an HMO, you must receive services from providers in the plan's network, except for emergency room, urgent care visits, and renal dialysis services. You must also select a primary care doctor, who provides referrals to any specialists you may need.

Out-of-pocket costs are usually lower than with Original Medicare or PPO plans.

Preferred PPOs are similar to HMO plans, but you can also receive covered services outside the provider network and you typically do not need a referral for care by a specialist. Out-of-pocket costs are typically higher than with HMO plans. Your costs are also generally higher if you use providers outside the network.

Joining and Switching Medicare Advantage Plans

When you first become eligible for Medicare, you can join during your 7-month Initial Enrollment Period. If you get Medicare due to a disability, you can join during the 7-month period surrounding your 25th month of disability benefits. Anyone can join, switch, or drop a Medicare Advantage plan from October 15 through December 7 each year. This is called the Annual Election Period or Annual Open Enrollment Period.

If you want to disenroll from your MA plan and switch to Original Medicare, you can make this switch during the Disenrollment Period for Medicare Advantage, which takes place each year from January 1 through February 14.

You may also be able to join, switch, or drop a Medicare Advantage plan during a Special Enrollment Period if you:

• Move out of your plan's service area

• Have a low income and limited resources and qualify for Extra Help from Medicare

• Receive Medicaid coverage

• Receive Supplemental Security Income (SSI) benefits

• Live in a nursing home, skilled nursing facility, or rehabilitation hospital

Is Medicare Supplemental Insurance right for me? How do I choose a Medigap plan?

Medicare Supplemental Insurance

Medicare supplemental insurance (Medigap) helps pay for some of the expenses that Original Medicare does not cover, such as copayments, coinsurance, and deductibles. Some Medigap policies also help pay for services that Original Medicare doesn't cover at all, such as emergency care outside the U.S. Medigap policies are sold by private insurance companies and are available to anyone who has Medicare Parts A and B.

Currently, there are 10 standardized Medigap plans and one high deductible plan, each represented by a letter (A, B, C, D, F, G, K, L, M, N, and high deductible F). Benefits and coverage rates vary with each type of plan, but in general, all Medigap policies cover the following benefits:

• Your Part A coinsurance

• Your Part B coinsurance or copayment

• Blood (first 3 pints, if needed)

• Part A hospice care coinsurance or copayment

Part D: Medicare Prescription Drug Plans

What are my prescription drug coverage options? How do I choose a Part D plan?

Medicare Part D helps you pay for your prescription drugs. Part D plans are offered by private insurance companies that are approved by Medicare. This coverage is optional and available to anyone enrolled in Original Medicare or most Medicare Advantage plans.

If you choose to enroll in a Part D plan, you will pay a monthly premium and copayments or coinsurance for covered drugs. Many plans also have an annual deductible that you must pay before your coverage begins. Each plan varies in costs, but all Medicare prescription drug plans must provide at least the standard level of coverage set by the Medicare program.

By law, all Part D plans must cover at least two drugs in each therapeutic class of drugs, in addition to certain vaccines and diabetes supplies. Medicare also requires Part D plans to cover almost all drugs in the following six classes: anti-psychotics, anti-depressants, anti-convulsants, immunosuppressants, cancer, and HIV/AIDS drugs.

Medicare Part D Coverage at a Glance

These items are not covered by Part D:

• Drugs for anorexia, weight loss/weight gain

• Drugs that promote fertility

• Drugs for the relief of coughs and colds

• Drugs for cosmetic purposes or hair growth

• Drugs for sexual or erectile dysfunction (ED)

• Prescription vitamins and mineral products, except as noted within the plan's formulary

• Over-the-counter medications