Medicare is a medical insurance program sponsored and managed by the federal government in the US. All Americans who are 65 or older are eligible for Medicare. There are some exceptions, such as people with disabilities, terminal illnesses or chronic conditions like End Stage Renal Disease (ESRD), and those people are eligible for Medicare at an age younger than 65.

Here, we discuss the various aspects of Medicare, with particular reference to the different parts and what they mean. There are also different Medicare plans; we will elaborate on the different plans, and how to know under which plan or category you fall.

  • Medicare is subdivided into four parts: A, B, C and D:Medicare Part A: This part covers hospitalization costs – it is hospital insurance, in short. You are entitled to full benefits under this part, if you have contributed to Social Security Services for a minimum of 40 calendar quarters, which is an equivalent of ten years.
  •  Medicare Part B: Here, several miscellaneous medical insurance issues are covered like doctor’s services, preventive care, diagnostic tests, equipment costs, and even mental health care, ambulance services and home health services. A separate premium needs to be paid to be covered under Medicare Part B.
  •  Medicare Part C: This is an entirely different type of Medicare category, where you get medical benefits paid for through your employee. A private company draws out a contract with Medicare, through which all your Medicare Part A and B benefits are administered. Through this type of Medicare plan, you get some extra advantages like access to Health Maintenance Organization, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. You can opt for a Medicare Advantage Plan, to get added benefits, and almost all Medicare services.
  •  Medicare Part D: This category primarily relates to prescription drug coverage, but is linked to specific plans, like Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. Such plans are usually available through private insurance companies and are governed by Medicare medical insurance rules.

Now let us have a look at some of the various plans that fall under the purview of Medicare:

Health Maintenance Organization (HMO)

With HMO, you get the same benefits that are available under Original Medicare, Part A and Part B. The difference here is that hospice care is also included. A Medical Advantage HMO also has additional features like dental care and vision care, although there can be some difference in the benefits between different plans.

For example, drugs are covered in some plans. So if you are anticipating the need for prescription drugs in the future, a Medical Advantage HMO will be useful. However, please be warned that there are penalty clauses, attached to those who allow their plan to lapse for over 63 days. So you need to be sure of when to apply for Medicare prescription drug coverage.

Preferred Provider Organization (PPO)

Here is a plan that gives you relatively more flexibility in your choice of doctors and hospitals. Under PPO, there is a fixed network of doctors and hospitals to choose from. There is also the facility to opt for doctors and hospitals out of the network at higher rates. PPOs are further divided into Regional PPOs and Local PPOs.

A regional PPO is fixed by Medicare, and will be part of a group of 26 regions, whereas a Local PPO is a part of different PPOs spread over different counties.

Private Fee for Service plan (PFFS)

With a Medical Advantage Private Fee for Service plan, you get linked to a private health insurance company which is authorized by the state. It is basically a Medicare Part C plan. The insurance company has a yearly contact with the Medicare department for provision of coverage to the beneficiaries. You need to go the Medicare-approved doctors or hospitals, but at a higher cost, you can avail of some which are outside the network.

You would do well to know the following points before enrolling for a PFFS plan:

  • There is a difference between PFFS and Original Medicare, Part A and Part B and Medicare Supplement Plans.
  • The amount that you pay for services is unique to your specific Medicare Advantage PFFS plan.
  • There are some network providers who will be available to you, even if you have not visited them previously, in line with their contract with their contract with Medicare.
  • On the other hand, there may be some network providers who will NOT be willing to treat you, even if you have visited them previously.
  • You may end up spending more, if you decide to get treated by doctors or hospitals outside the network.
  • Be aware of the doctors and/or hospitals that are bound to treat you under your Medicare Advantage PFFS plan.
  • Doctors and hospitals that are outside the network are still bound to treat you in case of an emergency.

Medicare Advantage Special Needs Plans (SNP)

There are three types of Medicare Advantage (Medicare Part C) Special Needs plans. As indicated by the name, these plans are designed to cater to the needs of patients who have special requirements. The three types are:

  • Chronic Care SNPs (for patients who are severely disabled)
  • Institutional SNPs (for patients who are institutionalized) and
  • Dual-Eligible SNPs (where the patients are eligible for both Medicaid and Medicare)

Although SNP plans come under Medicare Part C, due to the special nature of the patient’s condition, it is possible to also get Medicare Part A, B and C as well, so that all the categories are available under a single plan.

Another advantage of having an SNP is that it may result in being relatively cheaper, which makes sense, especially due to the fact that visits to the doctor or hospital are likely to be more frequent or a greater use of prescription drugs may be called for.

The main factor that needs to be considered is that although an SNP gives you some extra coverage, you need to be sure that you have adequate coverage of Original Medicare, as well as Medicare Parts A, B and D as well, to be sufficiently covered for your needs.

Medicare Supplement Insurance (Medigap)

This Medicare-related plan, commonly known as Medigap is coverage sold by private parties, helps in covering costs that are not usually covered by Medicare, such as co-payments, coinsurance, and deductibles. You can also get the benefit of some services that are not provided by Medicare like medical insurance while travelling abroad.

Here are a few facts about Medigap policies:

  • To be eligible for a Medigap Policy, you need to be covered under Medicare Part A

and B.

  • Those with Medicare Advantage plans can also apply for Medigap Policies, but they should be able to leave the Medicare Advantage Plan before commencement of the Medigap policy.
  • Premiums have to be paid towards both Medigap and Medicare Part B policies.
  • There is only provision for single-life coverage under Medigap policies.
  • A Medigap Policy can be bought from any licensed insurance provider.
  • A Medigap Policy cannot be cancelled due to escalation of health problems, as long as premiums are up to date.
  • Although Medigap policies previously used to cover prescription drugs, policies sold after 1 January 2006 do not cover prescription drugs. Hence, in such cases, additional coverage is required from a Medicare Prescription Drug Plan (Part D).

These are the general features of Medigap policies; there are several variations to these policies depending on specific needs, so if you are applying for a Medigap Policy, ensure that you discuss the further options that are available to you, depending on your specific circumstances.

Also, you need to be sure of the exact nature of coverage that is being offered to you, because, there should not be any duplication of coverage between your Medicare and Medigap plans. If this occurs, it amounts to miss-selling, and your insurance provider could be liable to be penalized.

A Final Word

As in all insurance coverage, you need to be aware of the benefits that you get from your health insurance policies, whether Medicare, Medigap or any other category of health insurance provided by a private insurance provider. While purchasing any insurance policy, the principle of “Caveat Emptor” applies, which is a Latin phrase commonly used in legal circles, which means, “Let the buyer beware”.

This implies that if a product is being offered, in this case an insurance policy, the buyer (you), should be aware of the terms and conditions, so that you can enjoy the full benefit of the health insurance coverage for which you are entitled.

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