To get the most out of the Medicare Program, it’s important to understand the key terms that are used to describe different parts of the program. A basic knowledge of Medicare terminology will ensure you know exactly what you are signing up for during this year’s Open Enrollment Period and that you are able to make the most of your benefits. Let’s dive into the alphabet soup of Medicare Parts and abbreviated terms and get acclimated to the world of Medicare.
Annual Election Period (AEP)
The end of the year is an important time for existing Medicare members who are looking to make changes to their existing plans. This time period runs between October 15 and December 7. During this time you can add, drop or switch your Medicare Advantage or Part D prescription drug plans.
Annual Notice of Change (ANOC)
If you have a Medicare Advantage plan or a Part D drug plan you will receive an “Annual Notice of Change” letter each year in September. Also known as “Evidence of Coverage” or EOC this document will detail any upcoming changes to your plan which go into effect January 1st of the following year. Be on the lookout for increases in monthly premiums, copays and deductibles and well as decreases in service area and drug formulary coverage.
Coinsurance can be a misleading term as it actually describes the amount you—not Medicare—will pay. Medicare pays up to 80% for many treatments and services, which means your coinsurance payment would be about 20%. Many people choose to purchase Medicare Supplement policies which help to pay the coinsurance amounts that Original Medicare doesn’t cover. Some Medicare Advantage plans also require you to pay limited coinsurance amounts for certain services, like durable medical equipment or diagnostics.
In Medicare terminology “coinsurance” refers to the amount you pay____?
after Medicare pays its share
for secondary insurance
your partner or spouse’s coverage
your car insurance payment
Coinsurance is the amount you are asked to pay for medical services after Medicare pays its share. For most doctor’s visits this is usually 20% of the total fee.
If you have a Medicare Advantage Plan you may be responsible for certain set fees when receiving care, such as doctor’s visits or lab tests. These amounts are set yearly and you can find them in your “Summary of Benefits”, “Evidence of Coverage” or “Annual Notice of Change” documents. Common copay amounts are $20, $30 or $40. If you have Original Medicare and visit doctors that accept Medicare assignment there should be coinsurance requirements, but not copays.
A formulary—also referred to as a “drug formulary” or “drug list”—refers to the list of prescription drugs covered by a Medicare Advantage or separate Part D prescription drug coverage plan. Though all approved Part D plans must offer a minimum standard of coverage set by Medicare most formularies have pricing tiers or levels that indicate the costs of specific drugs. When researching potential plans it’s important to find out if the drugs you regularly take are on the formulary and what your copayment will be when filling a prescription. It is also important to carefully review formularies because they may contain restrictions for certain drugs, such as quantity limits and prior authorization requirements. Some plans also include “step therapy” for more expensive drugs, which means they may require you to try one or more less expensive drugs before they will cover the originally prescribed drug.
Medicare Part A
Medicare Part A helps to cover costs associated with inpatient hospitalization, skilled nursing facility care, some home health care and hospice care. Also known as “Premium Free Part A” this benefit does not require monthly premium payments for most qualifying individuals. With Original Medicare, Part A generally covers roughly 80% of associated approved costs and enrollees are responsible for any remaining unpaid costs. Supplement policies can be purchased to cover the unpaid amounts.
Part A deductible
The Part A deductible is the amount beneficiaries with Original Medicare are required to pay for each hospitalization within a benefits period. A benefits period begins with the first day of admission and ends 60 days after discharge. As of 2020, the Part A deductible was $1,408 and it covers up to 60 days of inpatient hospitalization. Many people purchase supplement insurance to help defray these potential costs.
If you are hospitalized for any reason you may be required to pay up to $1,408. This is known as what?
Part A deductible
Part B deductible
Medicare appeal process
As of 2020, the Part A deductible was $1,408 and is the amount beneficiaries with Original Medicare are required to pay for each hospitalization. This amount covers up to 60 days of inpatient hospitalization
Medicare Part B
Medicare Part B covers many of the outpatient services that Part A does not, including doctor’s visits, tests, ambulance services, urgent care, physical and occupational therapy, some home health care and durable medical equipment. Most people pay the standard monthly premium of $144.60, but you may be responsible for a larger premium if you fall into a higher income bracket. Part B also only covers up to 80% of approved services after you have paid your annual deductible, so many people choose to purchase supplement policies to cover the difference.
Part B Deductible
The Part B deductible is the amount beneficiaries are required to pay annually before Medicare begins paying its share of Part B costs. The 2020 Part B Deductible amount is $198 and is not allowed to be covered by supplemental insurance for new Medicare beneficiaries. Part B includes most outpatient care and durable medical equipment.
Medicare Advantage Open Enrollment Period (MA-OEP)
This period runs for the first three months of every year, from January 1st through March 31st. During this time people who are already enrolled in a Medicare Advantage plan can switch plans or switch back to Original Medicare.
Medicare Supplement Open Enrollment (Medigap OE)
The Medicare Supplement Open Enrollment period occurs when you turn 65 or enroll in Part B, whichever one is later. During this 6-month window you are able to enroll in any Medicare Supplement plan available in your area without being disqualified or penalized for having preexisting health conditions. After this one-time 6-month window passes, you may be required to answer health history questions or to undergo medical underwriting when applying for Medicare Supplement plans, the results of which may be used to increase your premiums or deny you coverage.
Medicare Part C
More commonly known as Medicare Advantage, these are plans offered by private companies that contract with Medicare. Medicare Part C plans are required by law to offer everything Original Medicare Parts A and B would and often include extra perks such as vision, dental and prescription drug coverage. The most common Medicare Advantage plans are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) which operate similarly to employee sponsored plans you may have previously been enrolled in. While original Medicare allows you to see any doctor that accepts Medicare, most Medicare Advantage plans have required networks and some require referrals before you may see a specialist. You are still required to pay your Part B monthly premium when enrolled in these plans, unless you qualify for special assistance programs.
Medicare Part D
Medicare Part D is the stand alone prescription drug coverage that many people purchase to help cover the majority of prescriptions that Original Medicare does not. The average monthly premium for this type of coverage is about $40. Many Medicare Advantage plans already include Part D coverage.
Original Medicare is the government sponsored health insurance program available to qualified individuals and people 65 years and older. Original Medicare consists of Parts A and Parts B, which together cover medically necessary and approved inpatient and outpatient services. Original Medicare generally covers up to 80% of approved care and has no out-of-pocket spending maximums. Many people choose private healthcare options such Medicare Supplement Insurance or Medicare Advantage in order to lower unexpected medical bills.
Medicare Supplement Insurance
Medicare Supplement Insurance policies are designed to help pay for the portion of your medical expenses that Original Medicare doesn’t cover. Also known as Medigap these policies are offered by private companies, but are standardized by the government. This means that depending on the plan you choose you will receive the same basic benefits, though pricing may vary. Some Medicare Supplement Insurance policies also cover overseas emergency care.
Take our Medicare quiz now to find out if you go to the head of the class or need to head back to study hall.