Terms, definitions to help with understanding Medicare
Every day in our practice, we help folks who are eligible for Medicare. Whether they are just turning 65 or on Medicare due to disability, understanding the different terms that are associated with Medicare can be a little confusing.
The following is a list of terms and definitions that we feel are important in helping you to understand Medicare:
• Assignment – An agreement by your doctor, provider, or supplier to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.
• Benefit Period – The way Original Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you’re admitted as an inpatient in a hospital or SNF and ends when you haven’t received any inpatient hospital care or SNF care for 60 days in a row. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.
• Coinsurance – An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example 20 percent).
• Copayment – An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit, hospital outpatient visit, or prescription drug. A copayment is usually a set amount like $10 or $20.
• Creditable Prescription Drug Coverage – Prescription drug coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. Folks who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.
• Deductible – The amount you must pay for health care or prescriptions before Original Medicare, your prescription drug plan, or your other insurance begins to pay.
• Extra Help – A Medicare Program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductibles and coinsurance.
• Formulary – A list of prescription drugs covered by a prescription drug plan.
• Initial Enrollment Period – When you’re first eligible for Medicare, you have a seven-month Initial Enrollment Period to sign up for Part A and/or Part B. It starts three months before your 65th birthday, the month of your birthday and ends three months after your birthday. Some folks are eligible for Medicare before age 65 if they receive disability benefits for more than two years or have amyotrophic lateral sclerosis or end-stage renal disease.
• Late Enrollment Penalty – An amount added to your monthly premium for Part B or a Medicare drug plan (Part D) if you don’t join when you’re first eligible. You pay this higher amount as long as you have Medicare. There are some exceptions.
• Lifetime Reserve Days – In Original Medicare, these are additional days that Medicare will pay for when you’re in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.
• Medicare Advantage Plan – A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Some Medicare Advantage Plans include prescription drug coverage.
• Medicare Approved Amount – In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference.
• Medicare Part A (Hospital Insurance) – Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
• Medicare Part B (Medical Insurance) – Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
• Medicare Supplement Plan (Medigap) – Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage. There are 10 different plans to choose from which help pay for deductibles, copays and coinsurance.
• Open Enrollment for a Medicare Supplement Plan(Medigap) – A one-time-only, six-month period when federal law allows you to buy any Medigap policy you want that’s sold in your state. It starts in the first month that you’re covered under Part B and you’re age 65 or older. This also applies to folks under age 65 on disability and who are first eligible for Part B. During this period, you can’t be denied a Medigap policy or charged more due to past or present health problems.
• Original Medicare – Original Medicare is a fee-for-service health plan that has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). After you pay a deductible, Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance and deductibles).
Although there are lots of other Medicare terms, these are the ones that we are asked about most often. We also have a limited supply of “2017 Medicare & You” handbooks. If you would like to come by our office and pick one up, give us a call, and we will save one for you.
Mike Zimmer is President of Bay State Insurance Agency Ltd. in Centreville. He is available to answer your questions or speak to your groups regarding Medicare, Medicare Advantage, Medicare Supplements and Medicare Part D (Prescription Plans). He may be reached at 410-758-1680.