Medicare

Medicare is a federal health insurance program providing insurance coverage to people 65 and older, certain individuals with disabilities, or individuals with end-stage renal disease (kidney failure). Medicare offers four Parts. These include original Medicare, which consists of Parts A and B, along with the optional purchase of Part D (the prescription-drug plan).

Individuals can also purchase a supplemental Medigap policy with original Medicare. This policy may provide increased coverage for things such as co-pays and co-insurance that original Medicare doesn’t cover.

Part C is considered an alternate type of policy, and this is referred to as a Medicare Advantage Plan. People participating in original Medicare (Parts A and B), cannot participate in a Medicare Advantage Plan (Part C). However, if their Part C plan does not include prescriptions, they may purchase an optional Part D plan for prescription drug coverage.

While you will find that many decisions need to be made when selecting a Medicare policy, the biggest decision is the selection between an Original Medicare policy and a Medicare Advantage Plan (Part C). To find out which option may be best for you, please visit these specific sections within MSAA’s online guide to learn the differences between these types of policies.

MSAA’s online My Health Insurance Guide provides additional information on all of these plans available through Medicare. This guide also includes details on how the Affordable Care Act (ACA) has impacted Medicare.

Important Terms

Co-insurance – Your share of the costs of a covered healthcare service, calculated as a percentage (for example, 20 percent), after you have met your deductible. For example, if the health-insurance plan’s allowed amount for an office visit is $100 and you’ve met your deductible, your co-insurance payment of 20 percent would be $20. The health insurance pays the balance of the allowed amount.

Co-pay – A pre-determined amount (for example, $20) that you pay for a covered healthcare service, usually at the time of the service. The amount can vary by the type of covered healthcare service.

Deductible – Out-of-pocket healthcare costs for which individuals are responsible, before their health-insurance plan will pay for health expenses.

Durable Medical Equipment (DME) – Equipment and supplies ordered by a healthcare provider for everyday or extended use. Equipment may include items such as:

• Wheelchairs
• Crutches
• Commode chairs

Formulary – A list of prescription medications your insurance provider will cover.

Medicare – Federal health-insurance program providing insurance coverage to:

• People 65 and older
• Certain individuals with disabilities
• Individuals with end-stage renal disease (kidney failure)

Out-of-pocket limit (maximum) – The total amount that needs to be paid by an individual before the health-insurance plan provides 100 percent in coverage for medically necessary costs.

Premium – Amount of money charged by the insurance company for coverage. It may be paid in a lump sum or periodic monthly payments, dependent upon the insurance plan.

Step Therapy – When a prescription-drug plan requires an individual to try one or more other, lower-cost medications before covering the prescribed drug.

For an expanded list of insurance terms, please go to MSAA’s Healthcare Insurance Glossary.