What Is Medicare? How It Works And What It Covers

Navigate the world of healthcare with confidence using our in-depth guide to Medicare. Uncover essential information on Medicare plans, coverage options, and enrollment details. Stay informed about the latest updates and changes in Medicare policies. Whether you’re approaching eligibility or seeking to optimize your current plan, our resource provides expert insights for informed decisions. Explore the benefits, costs, and supplementary coverage options available through Medicare. Empower yourself with the knowledge to make the most of your healthcare journey. Dive into our comprehensive Medicare guide now!

Medicare

Medicare is a federal medical expense insurance program for people age 65 and older even if the individual continues to work. Medicare benefits are also available to anyone, regardless of age, who has been entitled to Social Security disability income benefits for 2 years or has a permanent kidney failure (End Stage Renal Disease – ESRD).

Persons age 65 years or older who are recent green card holders (permanent residents) or new immigrants to the U.S. and never worked in the U.S. may not immediately qualify for Medicare. If they don’t qualify for free Medicare, they can still purchase it, if the following eligibility requirements are met:

  • Are 65 years of age or older;
  • Have recently become a U.S. citizen by naturalization and haven’t worked enough quarters to have social security coverage; and
  • Are lawfully admitted aliens (green card holders) who have constantly lived in the United States for 5 years or longer and don’t qualify for the Social Security benefits.
 

Nature, Financing and Administration

Medicare is administered by The Center for Medicare and Medicaid Services (CMS), which is a division of the United States Department of Health and Human Services. Medicare is divided into 4 parts:
  1. Part A (Hospital Insurance) is financed through a portion of the payroll tax (FICA);
  2. Part B (Medical Insurance) is financed from monthly premiums paid by insureds and from the general revenues of the federal government;
  3. Part C (Medicare Advantage) allows people to receive all of their health care services through available provider organizations; and
  4. Part D (Prescription Drugs) is for prescription drug coverage.

Note, however, that the term Original Medicare refers to Part A – Hospital Insurance, and Part B – Medical Insurance only. It covers health care from any doctor, health care provider, hospital or facility that accepts Medicare patients. It usually does not cover prescription drugs. Original Medicare does not require the patient to choose a primary care doctor, nor does it require a referral to see a specialist, as long as the specialist is enrolled in Medicare.

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Part A is hospital insurance; Part B is medical insurance.
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Ethan Wrenn

Part A - Hospital Insurance

Medicare Part A helps pay for inpatient hospital care, inpatient care in a skilled nursing facility, home health care, and hospice care.

Individual Eligibility Requirements

An individual is eligible for Medicare Part A, Hospital Coverage, by qualifying for one of the following conditions:

  • A citizen or a legal resident of the United States age 65 or over and qualified for Social Security or Railroad retirement benefits — Aged;
  • Is 65 years old or over and entitled to monthly Social Security benefits based upon the spouse’s work record, and the spouse is at least 62;
  • Is younger than 65, but has been entitled to Social Security disability benefits for 24 months — Disabled;
  • Has End Stage Renal Disease (ESRD) — permanent kidney failure that requires dialysis or a transplant; and/or
  • Has ALS (Amyotrophic Lateral Sclerosis, or Lou Gehrig’s disease) — automatically qualifies for Part A the month disability benefits begin.

Individuals who are not receiving those types of benefits need to sign up for Part A, even if they are eligible for premium-free Part A.

In addition, monthly Part A premiums are required when a beneficiary is not “fully insured” under Social Security, meaning they have not earned 40 quarters of coverage (the equivalent of 10 years of work), and therefore, are entitled to receive Social Security retirement, premium-free Medicare Part A, and survivor benefits. If the beneficiary has paid Medicare taxes for fewer than 30 quarters, the standard Part A premium is $506. If Medicare taxes have been paid for 30-39 quarters, the standard Part A premium is $278.

Enrollment

Those who want to sign up for Medicare Part A have the following three options:

  • Initial enrollment period: when an individual first becomes eligible for Medicare (starting 3 months before turning age 65, ending 3 months after the 65th birthday);
  • General enrollment period: between January 1 and March 31 each year;
  • Special enrollment period: at any time during the year if the individual or his/her spouse is still employed and covered under a group health plan.

Those who are not eligible for premium-free Part A can purchase the coverage for a monthly premium. If individuals fail to sign up for Part A when they are first eligible, the monthly premium may go up 10% unless the person becomes eligible for a special enrollment period.

Coverages and Cost-sharing Amounts

Inpatient Hospital Care — Hospital insurance helps pay for up to 90 days in a participating hospital in any benefit period, subject to a deductible. The first 60 days are covered at 100% of approved charges after the deductible is met. The next 30 covered days are paid, but they are paid with a daily copayment. Every Part A insured has a lifetime reserve of 60 days of hospital care. The lifetime reserve days have a copayment that is twice that of days 61 through 90, and they are nonrenewable. Covered services include semi-private room, meals, regular nursing services, operating and recovery room costs, hospital costs for anesthesia, intensive care and coronary care, drugs, lab tests, X-rays, medical supplies, appliances, rehabilitation services, and preparatory services related to kidney transplant surgery. Blood is also covered, except for the first 3 pints.

Under the inpatient hospital stay, Part A does NOT include private duty nursing, a television or telephone in your room. It also does not include a private room unless medically necessary. In addition, inpatient mental health care in a psychiatric facility is limited to 190 days in a lifetime.

Sixty (60) days of non-use of the inpatient hospital benefit starts a new benefit period and a new deductible.

Skilled Nursing Facility Care — Part A helps pay for up to 100 days in a participating skilled nursing facility in each benefit period, following a 3-day inpatient hospital stay for a related illness. To get this type of care, the insured’s doctor must certify that daily skilled care is necessary. Covered expenses include semi-private room, meals, regular nursing and rehabilitation services, and other supplies.

Home Health Care — For an individual confined to the home and meeting certain other conditions, hospital insurance can pay the full approved cost of home health visits from a participating home health agency. There is no limit to the number of covered visits. Covered services include part-time skilled nursing care, physical therapy, and speech therapy. Hospital insurance also covers part-time services of home health aides, occupational therapy, medical social services and medical supplies and equipment.

Hospice Care — Under certain conditions, hospital insurance can help pay for hospice care for terminally ill insureds, if the care is provided by a Medicare-certified hospice. Covered services include doctor services, nursing services, medical appliances, supplies including outpatient drugs for pain relief, home health aide, homemaker services, therapies, medical social services, short-term inpatient care including respite care, and counseling.

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Medicare Part A does not cover outpatient hospital care. That's covered under Medicare Part B.
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Ethan Wrenn

The benefit period begins when the insured is admitted
as an inpatient in a hospital or a skilled nursing facility. It ends
when the insured have not received any inpatient hospital care for
consecutive 60 days. If the insured goes to a hospital or a SNF after
one benefit period has ended, a new benefit period begins. There is no
limit to the number of benefit periods; however, the inpatient hospital deductible applies to each benefit period.

Part B - Medical Insurance

Medicare Part B pays for doctor’s services and a variety of other medical services and supplies that are not covered by hospital insurance. Most of the services needed by people with permanent kidney failure are covered only by medical insurance.

Individual Eligibility Requirements

Part B is optional and offered to everyone who enrolls in Part A. Part B is funded by monthly premiums and from the general revenues of the federal government. Most people enrolled in Medicare Part B pay the standard monthly premium. However, if an insured’s modified adjusted gross income reported on IRS tax return is above a certain amount, the insured may be required to pay a higher premium.

Enrollment Periods

When you become eligible for Part A, you are told that you will get and have to pay for Part B unless you decline it. If you later decide you want Part B after initially declining it, you must wait until the next general enrollment period (Jan. 1 through Mar. 31) to enroll.

HIC Certification and Regulation

Dental plans can be found in the form of individual plans or as group plans provided through the employer. Generally included in an employer group dental insurance plan is preventive care for up to two visits per year. However, it will not provide coverage for cosmetic treatment, and there may be limits on procedures such as braces or other appliances.

1. Integrated Deductibles vs. Stand-Alone Plans

Dental expense may be packaged or integrated with other health insurance benefits like major medical. In that case the integrated plan may have a common deductible. On the other hand, some integrated plans maintain separate deductibles for the medical and dental portions of the contract.

2. Minimizing Adverse Selection

Dental plans attempt to minimize adverse selection by utilizing probationary periods, where insureds that had no prior dental coverage are likely to have a large number of untreated dental problems. There can also be a limitation on benefits for late enrollees where benefits may be reduced for the first year. Even though dental coverage is regulated by COBRA continuation rules, it is seldom convertible like individual health insurance.

Pediatric Dental Coverage

Pediatric dental coverage is an essential health benefit under the Affordable Care Act that must be available as part of a health plan or as a stand-alone plan for children 18 or younger. However, insurers do not have to offer adult dental coverage.

Depending on the state, pediatric dental benefits may be offered through one of the following types of plans:

  • A qualified health plan that includes dental coverage;
  • A stand-alone dental plan purchased in conjunction with a qualified health plan; or
  • A contracted/bundled plan.

Initial enrollment period (IEP) is a 7-month period during which an individual may enroll into Medicare Part B program that usually begins 3 months before the month in which the individual turns age 65, and ends 3 months after that after the birthday month.

If a person enrolls in Medicare after the Initial Enrollment Period ends, the person may have to pay a late enrollment penalty.

General Enrollment period runs from January 1 through March 31 of each year. The individuals who did not sign up for Medicare Part B when they were first eligible, may sign up during this enrollment period. However, the cost of Medicare Part B goes up 10% for each full 12-month period that the individual could have had Medicare Part B but didn’t. The enrollee will have to pay this penalty each time they pay premiums, for as long as they have Part B (lifetime penalty). In addition, the penalty increases the longer an individual goes without Part B coverage.

Special enrollment period (SEP) is available to individuals who are eligible for Medicare Part B based on their age, but who waited to enroll because they had a group health plan through their own or their spouse’s employer. These individuals may sign up for Part B anytime while they are still covered by the group health plan, or they may sign up during the 8 months following either the termination of the group plan or employment (whichever is first).

Coverages and Cost-sharing Amounts

After the annual medical insurance deductible is met, medical insurance will generally pay for 80% of the approved charges for covered expenses for the remainder of the year. There is no maximum out of pocket limit on the 20% coinsurance payable for Part B expenses.

Doctor Services — Part B covers doctor services no matter where received in the United States. Covered doctor services include surgical services, diagnostic tests and X-rays that are part of the treatment, medical supplies furnished in a doctor’s office, and services of the office nurse.

Outpatient Hospital Services — Part B covers outpatient hospital services received for diagnosis and treatment, such as care in an emergency room, outpatient clinic, or a hospital.

Home Health Visits — Medicare will pay for home health services as long as these services are recommended by the insured’s doctor and the insured is eligible. However, these services are provided on a part-time basis with limits on the number of hours per day and days per week. The services that are not fully covered by Medicare will get coverage from Medicaid.

Other Medical and Health Services — Under certain conditions or limitations, medical insurance covers other medical services and supplies. Some examples are as follows: ambulance transportation; home dialysis equipment, supplies, periodic support services, independent laboratory tests, oral surgery, outpatient physical therapy, speech pathology services, and X-rays and radiation treatments.

Prescription Drugs (limited coverage) — Only medicines that are administered in a hospital outpatient department under certain circumstances, such as injected drugs at a doctor’s office, some oral cancer drugs, or drugs that require durable medical equipment (like a nebulizer or infusion pump), are covered. Other than the examples above, insured under Part B will have to pay 100% for most prescription drugs, unless covered by Part D.

Outpatient Treatment of Mental Illness — Medicare covers outpatient treatment of an approved condition (such as depression or anxiety) in a doctor’s office or other health care provider’s office or hospital outpatient department. Generally, the enrollee pays 20% of the Medicare-approved amount (coinsurance); Part B deductible also applies. Note that inpatient mental health care is covered under Part A.

Yearly “wellness” visit — In addition to a “Welcome to Medicare” preventive visit available during the first 12 months, Medicare Part B covers annual “wellness” visit during which the insured and the provider can develop or update a personalized plan for disease prevention. There is no out-of-pocket cost for the insured for these visits if the doctor or other qualified health care provider accepts assignments. If the doctor or the health care provider performs additional tests or services during the same visit that are not covered under this preventive benefit, the insured may have to pay coinsurance, and Part B deductible may also apply.

Exclusions

Medical insurance under Part B of Medicare does not cover the following:

  • Private duty nursing;
  • Skilled nursing home care costs over 100 days per benefit period;
  • Intermediate nursing home care;
  • Physician charges above Medicare’s approved amount;
  • Most outpatient prescription drugs;
  • Care received outside the United States;
  • Custodial care received in the home;
  • Dental care (except dental expenses resulting from an accident only), cosmetic surgery, eyeglasses, hearing aids, orthopedic shoes, acupuncture expenses; or
  • Expenses incurred due to a war or act of war.

Claims Terminology and Other Key Terms

The following are claims terminology and other key terms applicable to Medicare:

  • Actual Charge — The amount a physician or supplier actually bills for a particular service or supply.
  • Ambulatory Surgical Services — Care that is provided at an ambulatory center. These are surgical services performed at a center that do not require a hospital stay unlike inpatient hospital surgery.
  • Approved Amount — The amount Medicare determines to be reasonable for a service that is covered under Part B of Medicare.
  • Assignment — The physician or a medical supplier agrees to accept the Medicare-approved amount as full payment for the covered services.
  • Carriers — Organizations that process claims that are submitted by doctors and suppliers under Medicare.
  • Coinsurance — The portion of Medicare’s approved amount that the beneficiary is responsible for paying.
  • Comprehensive Outpatient Rehabilitation Facility Services — Outpatient services received from a Medicare participating comprehensive outpatient rehabilitation facility.
  • Deductible — The amount of expense a beneficiary must first incur before Medicare begins payment for covered services.
  • Durable Medical Equipment — Medical equipment such as oxygen equipment, wheelchairs, and other medically necessary equipment that a doctor prescribes for use in the home.
  • Excess Charge — The difference between the Medicare-approved amount for a service or supply and the actual charge.
  • Intermediaries — Organizations that process inpatient and outpatient claims on individuals by hospitals, skilled nursing facilities, home health agencies, hospices and certain other providers of health services.
  • Limiting Charge — The maximum amount a physician may charge a Medicare beneficiary for a covered service if the physician does not accept assignment.
  • Nonparticipating — Doctors or suppliers who may choose whether or not to accept assignment on each individual claim.
  • Outpatient Physical and Occupational Therapy and Speech Pathology Services — Medically necessary outpatient physical and occupational therapy or speech pathology services prescribed by a doctor or therapist.
  • Pap Smear Screening — Provides for a pap smear to screen for cervical cancer once every 2 years.
  • Partial Hospitalization for Mental Health Treatment — A program of outpatient mental health care.
  • Participating Doctor or Suppliers — Doctors and suppliers who sign agreements to become Medicare-participating. For example, they have agreed in advance to accept assignment on all Medicare claims.
  • Peer Review Organizations — Groups of practicing doctors and other health care professionals who are paid by the government to review the care given to Medicare patients.

Part C - Medicare Advantage

The Medicare Modernization Act of 2003 changed the name of Part C from Medicare+Choice to Medicare Advantage. Medicare Advantage plans must cover all of the services covered under the Original Medicare except hospice care and some care in qualifying clinical research studies. However, Part C plans may have lower out-of-pocket costs than Original Medicare. They may also offer extra coverage, such as vision, hearing, dental, and other health and wellness programs.

To be eligible for Medicare Advantage, beneficiaries must also be enrolled in Medicare Parts A and B. Medicare Advantage is Medicare provided by an approved Health Maintenance Organization or Preferred Provider Organization. Many HMOs or PPOs do not charge premiums beyond what is paid by Medicare. The advantages of an HMO or PPO for a Medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care.

Most Medicare HMOs require that medical services be received through the plan, except in emergencies. A few allow greater freedom of choice through point-of-service plans.

A Medicare Private Fee-for-Service Plan is a Medicare Advantage Plan offered by a private insurance company. Medicare pays a set amount of money every month to the private insurance company to provide health care coverage. The insurance company decides how much enrollees pay for the services they get.

Another section of Medicare Advantage Plan (Part C), Special Needs Plans, provides more focused and specialized health care for specific groups of people. This includes people who have both Medicare and Medicaid, who reside in a nursing home, or have certain chronic medical conditions.

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Medicare Part C expands Original Medicare benefits through private health insurance programs.
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A Medicare Medical Savings Account (MSA) is a consumer-directed Medicare Advantage Plan that combines a high-deductible insurance plan with a medical savings account. The high-deductible insurance plan portion of an MSA covers costs once a high yearly deductible has been met. Medicare deposits money into the savings account, which can be used to pay health care costs, prior to meeting the deductible requirement.

In addition to coverage provided by Medicare Advantage Plans, Medicare MSAs may cover the following extra benefits for an extra cost:

  • Dental;
  • Vision; and
  • Long-term care not covered under Medicare.

Medicare MSAs do not cover Medicare Part D – Prescription Drug Insurance.

Enrollment Timelines

The enrollment period for a Medicare Advantage Plan is dependent on eligibility factors and current Medicare coverage.

Newly eligible individuals may sign up for a Medicare Advantage Plan 3 months before turning age 65 and up to 3 months after turning age 65. Depending on the elected date, coverage will begin:

  • On the first day of the month the individual turns 65, if elected prior to their birthday; or
  • On the first day of the following month, if elected during the individual’s birth month or up to 3 months after.

If an individual is eligible for Medicare as a result of a disability, he or she may join 3 months before the individual’s 25th month of receiving Social Security or Railroad Retirement Board (RRB) disability benefits, or up to 3 months after. Coverage begins:

  • On the first day of the 25th month of disability payments, if elected before receiving Medicare; or
  • On the first day of the following month of election, if elected during the 25th month of disability benefits or up to 3 months after.

If an individual already has Medicare Part A coverage and has enrolled in Medicare Part B during the general enrollment period, the individual may sign up for a Medicare Advantage Plan between April 1st and June 30th.

During the Medicare Annual Enrollment Period (October 15 through December 7), individuals may do the following:

  • Switch between Original Medicare to a Medicare Advantage Plan;
  • Switch between a Medicare Advantage Plan without drug coverage to a plan with drug coverage;
  • Join a Medicare Prescription Drug Plan;
  • Switch from a Medicare Drug Plan to another Medicare plan; or
  • Disenroll from Medicare drug coverage.

During the Medicare Advantage Open Enrollment Period (January 1 through March 31), enrolled individuals may:

  • Switch to another Medicare Advantage Plan (with or without drug coverage); or
  • Disenroll from their current Medicare Advantage Plan and return to Original Medicare (with eligibility for a Medicare Prescription Drug Plan).

If an individual enrolled in a Medicare Advantage Plan during the initial enrollment period, he or she may switch to another Medicare Advantage plan or disenroll within the first 3 months of coverage.

If already enrolled in an Original Medicare plan, individuals are not allowed to switch to a Medicare Advantage plan, join a Prescription Drug Plan, or switch from one Medicare Prescription Drug Plan to another during the Medicare Advantage Open Enrollment Period.

Coverages and Cost-Sharing Amounts

Cost sharing refers to the allocation of funds for healthcare and prescriptions through copayments, coinsurance, and deductibles. Out-of-pocket costs under Medicare Advantage vary by plan and are dependent on the following factors:

  • Monthly premiums;
  • Monthly Medicare Part B premiums paid by the plan;
  • Annual deductibles;
  • Additional deductibles;
  • Cost for each visit or service (total copayment or coinsurance);
  • Rate in which health care services are needed;
  • Compliance with plan rules (utilization of network providers);
  • Potential extra benefits and associated costs;
  • Out-of-pocket annual limits; and
  • Assistance through Medicaid or the state.

Supplemental Benefits

Supplemental benefits are those not covered by Medicare Part A or Part B. Medicare Advantage Plans may offer coverage for supplemental benefits, as long as the items or services covered are medically necessary for the prevention, curing, or diminishing of an illness or injury. Benefits must incur direct medical costs, in addition to potential administrative costs.

Examples of supplemental benefits include:

  • Acupuncture;
  • Alternative therapies;
  • Bathroom safety devices;
  • Routine chiropractic services;
  • Counseling services;
  • Eligible preventive benefits;
  • Fitness benefits;
  • Enhanced Disease Management (EDM);
  • Health education;
  • In-home safety assessments;
  • Meals;
  • Nutritional/dietary benefits;
  • Over-the-counter (OTC) drugs/items;
  • Personal Emergency Response Systems (PERSs);
  • Medical nutrition therapy (MNT);
  • Physical exams;
  • Point-of-service (POS) benefits;
  • Post-discharge in-home medication reconciliation;
  • Readmission prevention;
  • Remote access technologies;
  • Repairs;
  • Telemonitoring services;
  • Transportation services;
  • Visitor/travel benefit;
  • Weight management programs;
  • Wigs for chemotherapy caused hair loss; and
  • Worldwide emergency/urgent coverage.

Excluded from supplementary benefits under a Medicare Advantage plan are the following:

  • Cosmetics services;
  • Homemaker/maid services;
  • Massage benefits;
  • Smoke detectors;
  • Fire extinguishers;
  • Pap or pelvic screenings more frequent than every 24 months;
  • Electronic medical records;
  • Electronic data storage devices;
  • Loaner DME items;
  • Stand-alone memory fitness benefits; and
  • Case management or care coordination services.

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Part D - Prescription Drug Insurance

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) was passed in November 2003. This act implemented a plan to add a Part D – Prescription Drug Benefit to the standard Medicare Coverages. This optional coverage is provided through private prescription drug plans (PDPs) that contract with Medicare. To receive the benefits provided, beneficiaries must sign up with a plan offering this coverage in their area and must be enrolled in Medicare Part A or in Parts A and B. In areas where no private plans are offered, the government will offer a standard plan. Medicaid recipients are automatically enrolled.

If Medicare beneficiaries don’t enroll when they are first eligible, they must pay a 1% penalty for each month they delayed enrollment.

Medicare beneficiaries may choose between stand-alone plans that offer coverage on a fee-for-service basis, or integrated plans that group coverages together, including PPOs and HMOs (known as Medicare Advantage).

The plans offered by private companies are restricted by some standards set by Medicare, but still have freedom to personalize their plans. Providers must cover drugs for certain classes, but do not have to cover every drug in each class.

Those who sign up for the standard Prescription Drug Benefit plan will have a monthly premium and a deductible. The monthly premium varies by plan. After the deductible is paid, the plan would provide prescription drug costs coverage until a benefit limit is reached. Once the beneficiary and their plan spend $4,660 combined on drugs (including deductible), the beneficiary will generally pay no more than 25% of the cost for prescription drugs until their out-of-pocket spending is $7,400 (for 2023), under the standard drug benefit.

Once the beneficiary has reached their out-of-pocket spending, catastrophic coverage begins automatically. Catastrophic coverage will cover 95% of prescription drug costs. In most cases, the beneficiary will pay no more than 5% of the cost for covered drugs for the rest of the year.

Additional assistance will be available for those with low income. There will be no gap in coverage for these beneficiaries.

After the initial benefit limit is reached, a Prescription Drug Benefit plan will pay 75% of all generic and brand name drug costs.
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Coverage, Formulary, Tiering

Each Medicare drug plan must provide at least a standard level of coverage set by Medicare. Plans can vary the list of prescription drugs they cover and how they place drugs into different “tiers” on their drug lists (called formularies).

As defined by Medicare, a formulary is a list of prescription drugs covered by a prescription drug plan, also known as a drug list. Each plan has its own formulary that must be filed annually. Whenever the plan makes changes to the formulary, the insureds must be notified. Medicare drug plans categorize drugs into different tiers, each with a different cost. Drugs in a lower tier will cost less than drugs in a higher tier. A formulary must include at least 2 drugs in each treatment category, but it is not required to include all drugs.

Formulary = drug list; must have at least 2 drugs in each treatment category
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To lower costs, many plans place drugs into different “tiers” on their formularies (drug lists). Each tier costs a different amount. A drug in a lower tier will cost the insured less than a drug in a higher tier. Here is an example of how a plan may divide its drugs into tiers:

  • Tier 1 – Generic drugs (least expensive);
  • Tier 2 – Preferred brand-name drugs (cost more than Tier 1); and
  • Tier 3 – Nonpreferred brand-name drugs (most expensive).

Limitations – Prior Authorization, Step Therapy, Quantity Limits

Prior authorization means approval from a Medicare drug plan before insureds may fill their prescription in order for the prescription to be covered by the plan. Medicare drug plan may require prior authorization for certain drugs.

Step therapy is a type of prior authorization. In most cases, Medicare requires the insured to first try a certain, less expensive drug on the plan’s Formulary that has been proven effective for most people with the same condition before the insured can move up a “step” to a more expensive drug. For example, some plans may require to first try a generic drug (if available), then a less expensive brand-name drug on their drug list before the insured can get a similar, more expensive, brand-name drug covered.

Quantity limits: for safety and cost reasons, plans may limit the amount of drugs they cover over a certain period of time. For example, most people prescribed heartburn medication take one tablet per day for 4 weeks. Therefore, a plan may cover only an initial 30-day supply of heartburn medication.

If the prescriber believes that it is medically necessary for the insured to be on a particular drug even though the insured doesn’t meet the prior authorization criteria, the insured and the prescriber can contact the plan to request an exception. The prescriber must give a statement supporting the request. If the request is approved, the plan will cover the particular drug, even without prior authorization for the drug, or without trying a less expensive drug first.

Preferred Network Pharmacies

A pharmacy that is part of a Medicare drug plan’s network is called a preferred cost sharing pharmacy. Insureds may pay lower out-of-pockets costs (such as copayment or coinsurance) for some of their prescription drugs if they get them from a preferred cost sharing pharmacy instead of a standard cost sharing pharmacy.

Low-Income Subsidy

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) provides assistance to low-income individuals through federal government subsidies. These subsidies cover premiums, deductibles, and copayments under Medicare Part D. Individuals may apply for a Low-Income Subsidy (LIS) through the Social Security Administration (SSA) or through the State Medicaid agency.

During the application process, the applicant’s income (along with the applicant’s spouse’s income if married) is compared to the Federal Poverty Level (FPL). Included in the applicant’s income are resources or assets that can be readily converted into cash within 20 days, along with property outside of the applicant’s primary residence.

To qualify for full low-income subsidies, applicants must meet the following requirements:

  • Have a total income of no more than 135% of the FLP;
  • Have less than $8,400 in resources (bank accounts, stock, and bonds), or $12,600 for married couples; and
  • If beneficiaries notified the Social Security Administration (SSA) that they expect to use some of their resources for burial expenses, the resource limits are $9,900 for a single person and $15,600 for married couples.

To qualify for partial low-income subsidies, applicants must meet the following requirements:

  • Have a total income of between 135-150% of the FLP; and
  • Have less than $14,010 in resources (or $27,950 if married), or $15,510 (or $30,950 if married) if planning to use some of the resources for burial expenses.

It is important to note than these dollar amounts include $1,500 for burial allowance per person. If an applicant or spouse have no intent to use burial or funeral arrangements, qualifying totals are reduced by $1,500.

Some individuals are automatically eligible for drug coverage subsidies and do not need to submit an application for assistance. These include:

  • Individuals eligible for both Medicare and Medicaid benefits (full-benefit dual eligible (FBDEs));
  • Supplemental Security Income (SSI) recipients, including those who do not qualify for Medicaid; and
  • Medicare beneficiaries who are participants in the Medicare Saving Programs.

Eligibility under LIS may be denied if individuals:

  • Are not eligible for Medicare;
  • Failed to complete the application process;
  • Have an annual income exceeding 150% FPL;
  • Have total resources exceeding $15,510/$30,950;
  • Are not a resident of the state;
  • Are not a resident of the United States; or
  • Are incarcerated.

Primary, Secondary Payor

While an individual becomes eligible for Medicare upon turning age 65, federal laws extend primary coverage benefits under the employer’s plan to active older employees regardless of age. In other words, employer plans usually continue to be primary coverage, and Medicare is secondary coverage.

Medicare and the Affordable Care Act

Medicare is not part of the Health Insurance Marketplace, which is a key component of the Affordable Care Act that allows qualified individuals, families, and employees of small businesses to obtain health insurance. When considered eligible for Medicare Part A, a person will not qualify for Marketplace tax credits to help pay for premiums or reductions in cost-sharing. An insured can keep a Marketplace plan after Medicare coverage starts; however, any premium tax credits and reduced cost-sharing through the Marketplace will stop.

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Secure your future with comprehensive insights into Long-term Care (LTC) Policies. Navigate the complexities of long-term healthcare planning with our guide, exploring the benefits and coverage options these policies offer. Stay informed about the latest...

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EthanWrenn is a YouTube channel that offers a unique blend of finance, investing, and gaming content. Hosted by Ethan, an expert in finance and investment, this channel provides valuable insights and tips on how to navigate the world of finance and investing. But that’s not all, EthanWrenn also showcases Ethan’s passion for gaming, as he shares his thoughts and experiences playing a variety of video games. With a mix of informative and entertaining content, EthanWrenn is the perfect channel for anyone looking to learn about finance and investing or for those who simply love video games. So, if you’re ready for an entertaining and educational journey, be sure to subscribe to EthanWrenn on YouTube today! Make sure to leave a like, comment and subscribe to stay up to date with the latest information available.

Make sure to check out our merch store at:
https://ethanwrenn.com/shop/

Consider joining our FREE community Discord server at:
https://discord.com/invite/pmpWcHs

Donate using Stream Labs and have your message appear on stream by clicking here:
https://streamlabs.com/ethanwrenn

Follow me across my various social media profiles!

Website: https://ethanwrenn.com/
Twitch: https://www.twitch.tv/ethanwrenn
YouTube: https://www.youtube.com/c/EthanWrenn
Reddit Community: https://www.reddit.com/r/EthanWrenn/
Personal Reddit: https://www.reddit.com/user/EthanWrenn
LinkedIn: https://www.linkedin.com/in/EthanWrenn
Ebay: https://www.ebay.com/usr/ethanwrenn
Twitter: https://twitter.com/ethanxwrenn
Instagram: https://instagram.com/ethanxwrenn/
TikTok: https://www.tiktok.com/@ethanxwrenn
Parler: https://parler.com/ethanwrenn
Dlive: https://dlive.tv/Intellx
Periscope: https://www.periscope.tv/EthanWrenn
SnapChat: https://www.snapchat.com/add/ethannn_619

Gaming Profiles

Steam Community: https://steamcommunity.com/id/ethanwrenn
League of Legends: https://na.op.gg/summoners/na/ethanwrenn
World of Warcraft: https://worldofwarcraft.com/en-us/character/us/sargeras/int%C3%AAllx
World of Warcraft Guild: https://worldofwarcraft.com/en-us/guild/us/sargeras/wrenn

Follow the official WrennLLC social media profiles!

Website: https://wrennllc.com/
Twitch: https://www.twitch.tv/WrennLLC
Twitter: https://twitter.com/WrennLLC
Instagram: https://www.instagram.com/WrennLLC/?hl=en
Reddit Community: https://www.reddit.com/r/WrennLLC/
Business Reddit: https://www.reddit.com/user/WrennLLC
SnapChat: https://www.snapchat.com/add/WrennLLC

Q: What brokerages do you recommend?
A: The following companies offer brokerage services.

Join Robinhood today using my link to receive a FREE stock to have in your portfolio:
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Sign up for Webull and receive 4 FREE stocks, limited time!
https://act.webull.com/te/m3fVcVFQYG41/gje/inviteUs/

CashApp is offering new users who sign up with my link $5 FREE!
https://cash.app/app/DNBFZKD

Sign up to Coinbase to receive $10 in FREE Bitcoin!
https://www.coinbase.com/join/wrenn_k

What Is Medicare? How It Works And What It Covers

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This Post Has 2 Comments

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