7 Frequently Used Medicare Terms and Definitions
If you choose the Medicare Supplement route, then you might want to consider enrolling in a Prescription Drug Plan, also known as your Part D. To obtain a Prescription Drug Plan, you must be enrolled in Part A and Part B of Original Medicare. Each plan has a list of specific medications it will cover. This is called the plan’s formulary. The formulary can change year-to-year with every drug plan; therefore, it is important to review your plan every year. For instance, if you are prescribed a specific medication for blood pressure, it may be covered for that calendar year with your drug plan, but when January comes, it may not be covered at all! During October 15th through December 7th, you can see which plan covers which medications and can change your plan during this time.
Another type of cost-sharing option is called a deductible. The word may not be a new term for you, and it is not exclusive to Medicare; however, it is important to know how the deductible works with your Medicare coverage because once these terms are used at one time, they can get confusing, and it will be hard to tell them apart. Think of your deductible as a set amount you must meet out-of-pocket before Medicare or your supplemental plan will begin paying for your covered services. Once you meet that deductible, then you will start to see your side of the costs begin to subside. Keep in mind that these deductibles also change year-to-year.
The Part A (hospital) deductible for 2021 is $1,484.
The Part B (doctor’s office) deductible for 2021 is $203.
Time for the good news! If you choose to enroll in a Medicare Supplement plan, they all have some type of coverage towards your Part A deductible. Depending on which plan you choose, they will either cover your Part A deductible fully, or they will cover it partially, usually 50% or more. Recently, the two Medicare Supplement plans that covered the Part B deductible (Plans F and C) are no longer available to individuals who were eligible for Medicare after January 1, 2020. If you were eligible for Medicare before this date or currently have one of these plans, you can enroll or keep it.
If you choose to enroll in a stand-alone Prescription Drug Plan (Part D), you may come across the term copayment often. This term is a good thing when referring to a Prescription Drug Plan! When you purchase a plan, there are different stages you may go in and out of. If your plan has a deductible, then this will be the first stage. As stated before, a deductible is a set amount you pay out-of-pocket before your plan begins payment towards your medical expenses. Once out of the deductible stage, you will go into your initial coverage stage, meaning you will begin paying copayments. Copayments are a set dollar amount you must pay for covered medications or services. It is a type of cost-sharing option under Medicare. Typically, when you are in the initial coverage phase and are paying copayments for medications, your costs will be lower; this will also depend on what tier level your medications are in.
Another type of cost-sharing option with Medicare is called coinsurance. Unlike a copayment which is a set dollar amount, coinsurance is a percentage of costs you are responsible for. Since this is a percentage, the amount may vary each time. However, similar to a copayment, you will pay a percentage once the deductible has been met. Deductible always comes first! The higher your coinsurance percentage is, the higher the cost is for you.
- Excess Charges
Under Original Medicare, you have Part B which is your coverage for when you visit a doctor’s office. Not all doctors are the same under Medicare – there are participating doctors, non-participating doctors, and doctors who have opted out. If your doctor is non-participating doctor, this means that they do not accept Medicare assignment, meaning they can charge what they would like for services. This is where an excess charge comes in. An excess charge is when your doctor may overcharge the Medicare rate for a certain service a maximum of 15%. If you find that your doctor is not a participating doctor, you may be interested in looking into a Medicare Supplement plan that covers excess charges at 100%, such as a Plan G.
- Guaranteed Issue
You have certain rights when enrolling in Medicare and exploring your supplemental options. For example, your guaranteed issue rights are rights you that prevent an insurance company from refusing to sell you a Medicare Supplement policy. The plan must cover all your pre-existing health conditions and cannot charge more due to previous health conditions. There are no health questions involved. In most cases we see, you have a guaranteed issue right when coming off or losing another health coverage plan. You also have these rights if you first purchased a Medicare Advantage plan after you lose your other health coverage, but it is only for a specified length of time. If you purchase a Medicare Advantage plan, you have a “trial” that allows you to try it, and if you decide you would rather have a Medicare Supplement plan, you will be able to switch.
The opposite of a guaranteed issued plan would be a plan that requires you to go through underwriting. When you are switching from one Medicare Supplement plan to another, you are required to go through underwriting, which is where you will be asked a series of health questions. Then, it is up to the company whom you are purchasing the plan through to either approve or deny your enrollment in the plan you choose to switch to. If you are interested in switching to another Medicare Supplement plan but wondering if you will be approved once you go through underwriting, call us at (877) 759-5760 opt. 2. Our advisors can walk you through the process of looking into a new Medicare Supplement plan – which we recommend if you have had your plan for over a certain number of years, due to a high rate increases. Note that if you are not approved with a new Medicare Supplement, it does not affect your current plan at all. If you do not have time to call or you are reading this after-hours, click here to fill out our short form and request a quote: https://mwgseniorservices.com/medsupp.