UNDERSTANDING. MeDICARE WHAT YOU NEED TO KNOW

Transcription

1 UNDERSTANDING MeDICARE WHAT YOU NEED TO KNOW

2 Contents Understanding Medicare: What you need to know What is Medicare? Your Medicare choices Paying for Medicare Buying Medigap insurance If you can t afford Medicare payments Your Medicare answer guide 2010 AARP. Reprinting with permission only.

3 UNDERSTANDING Medicare: WHAT YOU NEED TO KNOW Health insurance is important at any age. But as you near retirement, it s especially important to make sure you have insurance to help pay for medical care once you stop working. During the working years, most people get health insurance through their job. Some people continue to get health coverage through their former employer s plan after they retire. This is called retiree health insurance. Employers don t have to provide retiree health benefits to employees. Even when employers do offer retiree health benefits, there s no federal law preventing them from cutting or eliminating those benefits. Before you retire, find out what health benefits, if any, are available to you during your retirement years. You can get this information from your employer or from the person who handles payroll and benefits. Medicare is a federal health insurance program for people who are 65 and over, for some younger people with disabilities, and for people with end-stage kidney disease. Medicare also offers coverage for prescription drugs. In addition to offering prescription drug coverage, Medicare has expanded coverage for preventive benefits. Medicare offers important preventive benefits and services such as vaccinations, bone mass measurement, glaucoma screenings, and screenings for certain cancers. Medicare also covers a Welcome to Medicare physical exam, an annual wellness visit, personalized prevention planning, and screening tests for certain cancers, heart disease and diabetes. Another source of health insurance that you ll want to get information about is Medicare. UNDERSTANDING MEDICARE 1

4 Because Medicare doesn t cover all of your health care costs, you might want to find out about Medicare supplemental insurance, sometimes referred to as Medigap. Medigap is private health insurance that supplements your Medicare coverage by helping you pay your share of health care costs. You have to buy and pay for Medigap on your own. For some people with low incomes, the Medicaid program, which is run by your state, can act like a Medigap plan by covering costs that Medicare doesn t cover. To help you become familiar with the Medicare program and your options, AARP has prepared this booklet. It also will guide you to resources that can give you more information about Medicare, Medigap, and planning for health care coverage in your retirement years. Before you retire, find out what health benefits, if any, are available to you during your retirement years. 2 UNDERSTANDING MEDICARE

5 What is Medicare? Medicare is a federal health insurance program that helps people age 65 and over. It also helps some younger people with disabilities and people with end-stage kidney disease pay for their health care. The program has several parts. Part A helps pay for inpatient hospital care and some other care, such as home health, hospice, and skilled nursing facility care. Part B helps pay for doctor visits, some home health care, medical equipment, some preventive services, outpatient hospital care, rehabilitation therapy, laboratory tests, X-rays, mental health services, ambulance services, and blood. Medicare Advantage Plans, also known as Part C, are an alternative to Original Medicare and are offered by private companies. Part D helps pay for prescription drugs. Most people don t pay for Part A because they already paid for it through their payroll taxes while working. If you do not have premium-free Part A, you may be able to buy it under certain conditions. Most people pay a monthly premium for Part B and Part D. Coverage for Part B and Part D is optional. Some people wait to sign up for Part B and Part D, but those who wait may have to pay more in monthly premiums for coverage later on. Like most other insurance, Medicare does not pay for all your health care costs. You re responsible for paying for the costs that are not covered, such as deductibles, coinsurance, or co-payments. Medicare also doesn t pay for long-term care, such as custodial care or an extended stay in a nursing home. There are other services that Medicare does not cover, such as health care when you travel outside the country, which is why some people consider Medicare supplemental insurance. Getting Medicare Once you turn 65, you re automatically signed up for Medicare Part A and Part B if you are receiving Social Security or Railroad Retirement benefits. To qualify for Medicare, you had to have earned the required quarters of coverage. This generally means paying Medicare and Social Security payroll taxes for at least 10 years of your work life or meeting other specific requirements. If you are 65 and have not earned the required number of quarters of coverage, you still may able to purchase Medicare on UNDERSTANDING MEDICARE 3

6 your own. You must be a citizen or permanent resident of the United States. If you re not sure if you re eligible for Medicare, call your local Social Security office or the Social Security toll-free telephone number at You should get a package of Medicare information, including your Medicare card, in the mail. If you don t get this information by your 65th birthday, contact the Social Security Administration at and request one. If you are about to turn 65 but not yet receiving Social Security or Railroad Retirement benefits, you need to sign up for Medicare at your local Social Security office or visit to apply online. Medicare doesn t pay for all of your health care costs. You re responsible for paying some of the costs yourself. There is a 7-month period during which you can enroll in Medicare: During the 3 months before your 65th birthday During the month of your 65th birthday During the 3 months after your 65th birthday The best time to sign up for Medicare is during the 3 months before your 65th birthday. If you re age 65 or over and still covered by a group health plan from your employer you might not need Medicare right away. Check with Medicare to find out how Medicare works with other insurance coverage that you may have. Resources Medicare has a toll-free help line you can call to get your questions about Medicare answered. Dial MEDICARE ( ) or TTY (hearing and speech impaired) or visit Support in Spanish is available. Someone at the help line can answer your questions about Medicare; give you the phone number of your State Health Insurance Assistance Program (SHIP) office, which offers free health insurance counseling to people with Medicare; and send you free Medicare booklets. 4 UNDERSTANDING MEDICARE

7 Your Medicare choices You have a choice of how you get Medicare. You can get Medicare through the Original Medicare Plan or Medicare Advantage Plans (like an HMO or PPO). You can also choose a Medicare Part D plan that helps with prescription drug coverage. Medicare has several different plan options. Your decisions about which plan you choose are important because they affect how much you pay for your health care and what is covered. Original Medicare The Original Medicare Plan, also known as traditional or guaranteed Medicare, is a fee-for-service health plan. This means you can choose any doctor or hospital under this plan. Medicare will pay its share of the doctor or hospital bill. You pay the rest. Original Medicare pays for many health care services and supplies, but it doesn t pay all of your health care costs. You get Part A and Part B of the Original Medicare Plan when you re automatically signed up for Medicare. To get drug coverage under Original Medicare, you must choose and join a Medicare-approved Part D private drug plan. Medicare Advantage Plans Medicare Advantage Plans are alternatives to Original Medicare. They also may be known as Medicare Health Plans or Medicare Part C. These Medicare plans are offered by private insurance companies and pay for the same health care services as Original Medicare. But they also might pay for additional health care services that aren t covered by Original Medicare. Examples of Medicare Advantage Plans include Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). In Medicare Advantage Plans, you usually pay a small amount, or a co-payment, when you visit the doctor. In most Medicare Advantage Plans, you can only go to doctors, specialists, UNDERSTANDING MEDICARE 5

8 and hospitals on the plan s list. Otherwise, you may pay more or you may not be covered for services at all. You choose one doctor to be your primary care doctor, or main health care provider. Usually, your primary care doctor will coordinate all of your health care, send you to a specialist when you need one, and admit you to the hospital if it becomes necessary. Medicare doesn t automatically enroll you in a Medicare Advantage Plan you need to choose a plan and sign up directly. The Medicare Advantage Plan you choose will let Medicare know that you have enrolled in one of their plans. Medicare Advantage Plans are available in most parts of the United States. You must have both Part A and Part B with a Medicare Advantage Plan. People with end-stage kidney disease may not be eligible to enroll in a Medicare Advantage Plan. In 2011, there will be changes in how Medicare Advantage Plans operate. This could result in changes to your particular plan. If your plan does change, you will have the option to stay with your current plan, switch to a new one, or move to Original Medicare. If you have questions, you can call your Medicare Advantage Plan directly or call Medicare at to find out about your options. Private Fee-for-Service Plans Private Fee-for-Service (PFFS) Plans are plans that are like the Original Medicare fee-for-service plan because you can choose your own doctors and hospitals. These plans are offered by private insurance companies. The insurance company pays its share of your doctor and hospital bills, and you pay your share. However, the private insurance company, not Medicare, decides how much you pay for your care. This means you might pay more for your health care under this plan than under Original Medicare, but you might get additional benefits. Call Medicare if you want to know whether a PFFS plan is available where you live. Like a Medicare Advantage Plan, you need to sign up for a PFFS plan. The plan will notify Medicare that you have enrolled in a PFFS plan. Medicare Prescription Drug Coverage Medicare prescription drug coverage (Part D) is insurance that helps reduce the costs of prescription drugs. Everyone with Medicare can elect to enroll in this voluntary drug coverage, regardless of income. Medicare Part D is administered by private companies that have been approved by Medicare to offer prescription drug coverage. 6 UNDERSTANDING MEDICARE

9 There are two kinds of Medicare prescription drug plans: 1. Stand alone prescription drug plans that offer only drug coverage. You can add this type of plan to Original Medicare and some types of Medicare Advantage Plans that do not cover prescription drugs. or 2. Medicare Advantage Plans (which you may also see referred to as Medicare Health Plans or Medicare Part C) such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). You may be able to get both your Medicare health care and prescription drugs through one of these plans. You can choose from many drug plans. Drug plan sponsors can offer more than one drug plan. The benefits and costs will vary between sponsors and drug plans. If you are newly eligible for Medicare, you can enroll in a Medicare prescription drug plan up to 3 months before or no later than 3 months after the month you become eligible. A late enrollment penalty may apply if you decide to enroll after this initial period. You can switch plans each year during the open enrollment period. Generally, this is also the only time you can sign up if you were eligible to enroll in a Part D plan earlier but didn t. You may still be able to enroll in a drug plan outside the open enrollment period, if you: Lose coverage that is at least as good as Medicare s from another source (such as an employer or union) through no fault of your own, or your coverage changes so that it is no longer as good as Medicare s. Move into or out of a long-term care facility such as a nursing home. Have been living in another country since the end of the last open enrollment period and move back to live permanently in the United States. Like other insurance, there is a monthly premium for plans offering Medicare drug coverage. If you have a limited income and resources, you may be able to get help with covering the costs of prescription drugs. UNDERSTANDING MEDICARE MEDICARE 7 7

10 Choosing a Plan Before you choose a Medicare plan, think about your options carefully. Read through information that is available on all the plans. Talk to your doctor and friends who have Medicare. Compare the costs, benefits, and quality of the plans you re considering. Call Medicare if you need more information. And ask yourself the following questions: What is most important to you in a Medicare plan cost, coverage, or convenience? Will you have your choice of health care providers? Will the plan you choose meet your needs? How much will you have to pay for your health care and prescription drugs? Will you have coverage if you travel frequently or leave your hometown for long periods of time? Resources The Centers for Medicare & Medicaid Services has a number of publications on Medicare choices. Call the Medicare help line at to get their latest publications, or view or order them online at www. medicare.gov/publications/home.asp. Find out what options are available to you and what is covered under the Medicare program at Maximize your Medicare choices by using the Medicare Interactive Tool at interactive. Use the Medicare Prescription Drug Plan Finder to compare Part D prescription drug plans at home.asp. Medicare Options Compare provides detailed information about the Medicare plans available in your local area. To access this information, go to the Medicare website at www. medicare.gov/mppf/home.asp. 8 UNDERSTANDING MEDICARE

11 Paying for M EDICARE Generally, how much you pay for Medicare depends on: Which Medicare plan you choose How often you go to the doctor or hospital Whether you have other health insurance Whether you qualify for help with Medicare costs Medicare does not cover all of your health care costs. Depending on which plan you choose, you might have to share in the cost of your care by paying premiums, deductibles, co-payments, and coinsurance. The amount of some of these payments can change. Most people who qualify for Medicare don t pay a monthly premium for Part A, but they do for Part B and Part D or a Medicare Advantage Plan. You can call Medicare at or go to to check current deductibles, co-payments, and premiums, and what you will need to pay. There are options for helping you pay your share of health costs if you have Medicare. For instance, your out-of-pocket costs might be lower and more predictable under a Medicare Advantage Plan, such as an HMO, but these plans usually limit your choice of doctors and hospitals. Retiree health insurance can help pay some of the costs (when you retire at age 65 or over, retiree health insurance becomes the second payer to any Medicare coverage you have). So can Medicare supplemental insurance, or Medigap. Also, if you qualify, you might be able to get help through the Medicaid program or other public programs. Medicaid is a program funded by the federal and state governments to help people with low incomes pay for health care. AARP has more information on what your costs would be under Original Medicare on its website. Go to medicare. AARP s Doughnut Hole Calculator helps you find ways to lower your drug costs. The calculator is available in English and Spanish. UNDERSTANDING MEDICARE 9 UNDERSTANDING MEDICARE 9

12 Buying Medigap INSURANCE If you have Original Medicare, you might decide to buy Medicare supplemental insurance, or Medigap. Medigap insurance is sold by private companies. It helps you pay for costs that Medicare doesn t cover, such as your share of doctor and hospital services. Insurance companies in most states can offer up to 11 standard Medigap plans to people on Medicare. These standard plans are labeled Plan A G and K N. Each one offers a different set of benefits, fills different gaps in Medicare coverage, and varies in price. Generally, standard Medigap policies cover some or all of the cost of: Hospital coinsurance for Medicare covered hospital stays Medicare coinsurance on your doctor s bills and all other Medicare Part B services The first three pints of blood you need each year Hospice care coinsurance There are some things you should consider when buying a Medigap plan: Do you have a retiree health policy? If you have a comprehensive retiree health plan through your former employer or union that supplements Original Medicare, you might not need a Medigap plan. If your retiree policy provides more generous benefits or benefits not covered by Medicare or Medigap, you should think about your options carefully before dropping the policy for a less expensive choice. You might not be able to get it back once you disenroll from your retiree health plan. Check with your union or your former employer s health plan first. Can you accept some limits on your care? Medicare Select is a Medigap policy that limits the providers you can see. Costs can be lower than standard Medigap policies because Medicare Select policies cover care only at certain hospitals and might be limited to using specific doctors. Your state insurance department can tell you if there are Medicare Select plans in your state and give you more information about them. 10 UNDERSTANDING MEDICARE

13 Remember your rights If you think you want to buy a Medigap policy, remember that you have the right to review your new Medigap policy for 30 days. You must cancel it during that time for a full refund if you decide it doesn t meet your needs. You also have the right to cancel your Medigap policy at any time. In most cases, as long as you pay your premium, your Medigap coverage will continue year after year. Enrolling in Medigap You have the right to enroll in a Medigap plan of your choice during the 6 months following your initial enrollment in Medicare Part B at age 65 and over. This is called the open enrollment period. It s available only once. Generally, if you re on Medicare, have a disability and are under age 65, you aren t able to enroll in Medigap as a part of the open enrollment period. You are entitled to get Medigap as part of open enrollment only when you turn 65. However, some states require insurers to sell Medigap to people under age 65 with disabilities. Contact your state insurance department for more information. After your open enrollment period, depending on the state, insurance companies may be able to refuse you Medigap coverage. Other Insurance and Ways to Pay Health Care Costs In addition to Medicare, you may be eligible for other health care coverage such as employer retiree health care, union health coverage, veterans benefits, military retiree benefits (TRICARE), Federal Employee Health Benefits Program (FEHB), and long-term care insurance. UNDERSTANDING MEDICARE 11

14 Remember that you choose your Medicare plan. Regardless of which plan you choose, you re part of the Medicare program. Resources You can find more information on Medigap insurance on AARP s website. Go to www. aarp.org/health/insurance. Medicare Options Compare provides detailed information about Medigap plans available in your local area. To access this information, go to the Medicare website at The site also has Medigap publications from the Centers for Medicare & Medicaid Services that you can view online at gov/publications/home.asp. You can also call to order publications. State insurance departments are responsible for licensing and regulating insurance companies that do business in their state and for approving their Medigap policies. They often have consumer information and can help with complaints. The National Association of Insurance Commissioners links you directly to your state insurance department through its website at For more information about how other kinds of insurance work with Medicare, visit call your State Health Insurance Assistance Program (SHIP), or call MEDICARE ( ). 12 UNDERSTANDING MEDICARE 12 UNDERSTANDING MEDICARE

15 If you can t afford Medicare payments If you can t afford to pay your share of Medicare payments, there are other programs besides Medicaid that can help you. They include: Extra Help with Medicare Prescription Drug Plan Costs Medicare Savings Programs State Prescription Drug Assistance Programs These programs help people with limited incomes pay for Medicare coverage. To qualify, you must meet certain income and resource guidelines. To find out if you are eligible for one of these programs, you can contact your local State Health Insurance Assistance Program (SHIP) at You can also contact the Social Security Administration at (TTY ) or go to The PACE Program (Programs of Allinclusive Care for the Elderly) Resources The Centers for Medicare & Medicaid Services has information on programs that can help you pay for Medicare at Basics/HelpToPay.asp. You also can call AARP s Public Benefits Outreach Program informs people with limited incomes and resources about public benefits for which they might be eligible. The program helps people learn about public benefits and encourages and helps them apply if they appear to be eligible. For more information about this program, contact AARP at UNDERSTANDING MEDICARE 13

16 Your Medicare answer guide Your Medicare Rights Everyone enrolled in Medicare has certain rights. These include the right to: Receive information and assistance Receive reasonable and necessary Medicare services Choose and switch between Original Medicare and other Medicare plans offered locally by private companies Buy Medicare prescription drug coverage Buy Medigap insurance Choose and switch doctors Appeal denials of care and coverage Your Medicare rights can vary, depending on whether you have Original Medicare, a Medicare Advantage Plan (like an HMO), or another option. There are many things to learn about the Medicare program. Fortunately, there are also many resources to turn to for information and help. Listed in a nutshell below are 12 basic facts you should know about Medicare. Medicare in a Nutshell 1. Medicare is a federal health insurance 2. program. Medicare helps pay for your hospital and doctor bills. If you purchase Medicare prescription drug coverage, it also helps pay for your prescription drug costs. 3. Medicare Part A helps pay for hospital bills, and Medicare Part B helps pay for doctor bills. Medicare Advantage Plans, also known as Part C, are private health plans, like HMOs or PPOs. Medicare Part D helps pay for prescription drugs. Medicare offers preventive benefits such as screenings for heart disease, diabetes, and some types of cancer, as well as an annual wellness visit and personalized prevention plan. Most people who are 65 and over are entitled to get Medicare. Some younger people with disabilities can also get Medicare Most people get Medicare Part A automatically. Other people have to sign up. You need to tell Medicare if you don t want Part B. You need to sign up if you want Part D (prescription drug coverage). 8. You can sign up for Medicare Part B and 9. Part D even after you turn 65, but you might pay more for your monthly premium and be limited in the times of year in which you can enroll. Depending on where you live, you might have a choice about how you get your health care under Medicare. 14 UNDERSTANDING MEDICARE

17 10. You can change your Medicare health care plan and your Medicare drug plan each year. 11. Medicare does not pay for all your health care costs. You can get other kinds of insurance to help pay for some of your health care costs. 12. Assistance is available for people with limited incomes and resources to help pay for health care and prescription drug costs. Medicare Tips The following consumer tips can help you get the most out of Medicare: If you have Medicare and you re satisfied with your coverage, you don t need to make any changes. If you re thinking about changing from one Medicare plan to another, don t rely only on information from the plan. Get additional information from people and organizations you trust, such as your doctor, your friends, the State Health Insurance Assistance Program (SHIP), and the Medicare Program. You can switch from Original Medicare to another Medicare plan. But if you drop your Medigap insurance or retiree health insurance, you might not be able to get it back. Check with your former employer or union before you make any changes. There are laws that limit your opportunity to get Medigap coverage. If you don t enroll in Medicare Part B or Part D when you re first eligible and don t qualify for an exemption or special enrollment period, you will pay a penalty if you decide to enroll later. You might also be limited in terms of which time of the year you can later enroll. Some doctors opt out of Medicare. They can charge you whatever they want for their services, but only if you sign a contract with them before they provide the services. Medicare won t pay for any of the care you get from these doctors. Regardless of the plan you choose, everyone enrolled in Medicare has a right to receive reasonable and necessary services covered by Medicare. Everyone has a right to appeal denials of care and coverage. You may be able to buy Medicare insurance if you don t qualify for it. You ll have to pay premiums for both Part A and Part B, as well as for Part D. The Medicare-approved amount is the amount Medicare says is a reasonable payment for a medical service. Medicare Advantage plans must include both Part A and Part B. If you re age 65 or over, you have a 6-month period in which to buy any Medigap policy you choose once you sign up for Medicare Part B. During this enrollment period, you can t be turned down or charged more because of past or present health problems. By law, Medigap providers aren t allowed to sell more than one Medigap plan to the same beneficiary. UNDERSTANDING MEDICARE 15

18 Resources For more information about your Medicare rights, call Medicare at and ask for the publication, Your Medicare Rights and Protections. You can also order or view it online at it Publications/Home.asp. Your State Health Insurance Assistance Program (SHIP) offers free one-on-one health insurance counseling to people with Medicare. Go to You can find the number for your state SHIP office by calling Medicare at , searching the Helpful Contacts section of the Medicare website at gov/contacts, or looking in the back of the Medicare Handbook, Medicare and You. Before you call for help, be sure to write down any other questions that come to mind. Be ready to take notes when you get answers to your questions. 16 UNDERSTANDING MEDICARE

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20 601 E Street, NW, Washington, DC AARP.org OUR-AARP ( ) toll-free learn more Visit Write AARP, 601 E Street, NW, Washington, DC Call OUR-AARP ( ) TTY D19327 (510) AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world s largestcirculation magazine with over 35.7 million readers; AARP Bulletin, the go-to news source for AARP s millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.