How Medicare Works

Original Medicare is the federally administered health-care program for adults over 65. You may also be eligible for Medicare at any age if you qualify through disability or have certain conditions, including amyotrophic lateral sclerosis (also known as Lou Gehrig’s disease) or end-stage renal disease. To qualify, you must be either a United States citizen or legal permanent resident of at least five continuous years.

Here’s an overview of how Medicare works if you’re enrolled in Original Medicare, including answers to common questions such as the doctors you can use, what your costs may be, and how prescription drug coverage works.

What’s covered by Original Medicare?

Original Medicare comes in two parts. Medicare Part A covers hospital services, skilled nursing facility care, hospice, and some home health care. Medicare Part B covers medical services, including doctor visits, preventive screenings, certain vaccinations, lab tests, and durable medical equipment.

Original Medicare doesn’t cover everything. Medicare doesn’t cover the following:

  • Acupuncture
  • Long-term care or nursing home care
  • Personal nursing
  • Routine vision care, including eye exams, glasses, and contact lenses
  • Routine dental care, including cleanings and fillings
  • Hearing aids
  • Dentures
  • Cosmetic surgery

You’ll usually have to pay the full cost for health-care services that Original Medicare doesn’t cover. Medicare Advantage plans may include coverage for some services that Original Medicare doesn’t pay for, such as routine vision or dental, or hearing care.

Does Original Medicare include prescription drug coverage?

Original Medicare, Part A and Part B, offers limited prescription drug coverage. You’ll be covered by Medicare Part A for prescription drugs for treatment during a covered inpatient hospital or skilled nursing facility stay. Medicare Part B covers certain medications you get in an outpatient setting (such as a doctor’s office). However, these are usually the types of prescription drugs you can’t give yourself, such as chemotherapy drugs or medications given by infusion.

For coverage of all other prescription drugs, you’ll need to enroll in Medicare Part D and sign up for a Medicare Prescription Drug Plan. This is a stand-alone Medicare plan that works alongside Original Medicare to help cover certain prescription drug costs. In addition to a monthly premium for your Medicare Part D coverage, you may also have cost-sharing expenses, such as deductibles, copayments, and coinsurance.

Which doctors, providers, and hospitals can I use with Original Medicare?

Original Medicare doesn’t have provider networks. Instead, you can generally use any doctor, health-care professional, or hospital that accepts Medicare patients. This can be especially helpful if you travel frequently or are a “snowbird” who lives in different parts of the country at certain times of the year.

Your costs will generally be lowest if you use a provider that “accepts Medicare assignment.” Here’s how it works: Original Medicare has set approved prices that providers can charge for Medicare-covered services and supplies. If your doctor accepts assignment, this means that he or she agrees to only charge you the Medicare-approved cost for the service. Doctors who don’t accept assignment but still agree to treat you may charge up to 15% above the amount Medicare has approved. You’re responsible for paying this 15% extra charge, on top of your share of the cost.

For example, you’ll usually pay 20% of the Medicare-approved cost for most Part B-covered services, including outpatient care like doctor visits. Let’s say that the Medicare-approved cost for a doctor appointment is $100. If you see a doctor that accepts Medicare assignment, Medicare Part B covers 80% of the cost, or $80, and you’re responsible for a 20% coinsurance, or $20. However, if you see a doctor who doesn’t accept Medicare assignment, he or she may charge you up to 15% more above the Medicare-approved charge, or $115 in this example. Your total bill will include the $20 coinsurance cost, plus the extra $15 charge, for a total of $35.

You can use “participating” providers, which are doctors and hospitals that sign a contract to accept assignment for all Medicare-covered services. Medicare.gov has a Physician Compare tool that makes it easy to find doctors and hospitals that are enrolled in the Medicare program and accept Medicare. If you like, you can filter your search to only show participating providers.

Do I need a primary care doctor if I have Original Medicare?

No, you can see any doctor who is enrolled in the Medicare program.

Do I need a referral to see a specialist if I have Original Medicare?

No, You don’t need a referral for a specialist if you have Original Medicare. The specialist needs to be enrolled in the Medicare program and takes Medicare patients.

How does Medicare work if I have other insurance?

You may have other insurance besides Medicare, such as:

  • Veterans benefits
  • TRICARE
  • Employer group coverage
  • Retirement benefits
  • Medicaid
  • COBRA
  • Workers’ compensation

When you have Medicare and other types of coverage, Medicare works with your other insurance to coordinate who pays first. The primary payer is the insurance that pays for your medical bills first, up to the coverage limits and then sends the remaining balance to the secondary payer.

If you’re still working when you’re eligible for Medicare and have group coverage through your work,  consider delaying Medicare Part B not only since comes with a monthly premium, but you also have the opprtunity to preserve your guaranteed issue period when you leave your group coverage later. There is no premium for Medicare Part A if you’ve worked at least 10 years (40 quarters) and paid Medicare taxes; otherwise, you may  may want to consider waiting to enroll if you have employer-sponsored coverage as you will owe a premium for Part A. You can sign up for Medicare Part A and/or Part B later through a Special Enrollment Period without paying a late-enrollment penalty once you stop working or that coverage ends.

Your benefits administrator can help explain how your insurance works with Medicare. You should not drop your coverage without understanding the consequences as you may not be able to get it back.

What will my costs be in Original Medicare?

Your costs may vary, depending on the type of health-care services you use and how often you need them. However, in general, some of your costs in Original Medicare may include:

  • Monthly premium for Medicare Part B*
  • Medicare Part A deductible
  • Medicare Part B deductible
  • Copayments or coinsurance costs

* As s reminder  there is no premium for Medicare Part A if you worked at least 10 years or 40 quarters under Medicare-covered employment. Otherwise, you will  pay a monthly premium for Part A which will vary depending on the number of work quarters you have.

Original Medicare doesn’t have an annual out-of-pocket limit- there is no maximum cap, no matter how high your health-care costs get each year.

Keep in mind that your costs will be lower if you use providers that accept Medicare assignment. The state may help pay for certain out-of-pocket costs If you’re eligible for Medicaid.

How can I get help with Medicare costs?

You have the option to enroll in  Medicare Supplement (Medigap) insurance to help with costs that Original Medicare doesn’t cover, such as copayments, coinsurance, and deductibles. Medigap plans are designed to help  fill the coverage gaps in Original Medicare.

If you have limited income, you may be eligible for a Medicare Savings Program, which has four different programs offering different levels of assistance depending on your income and eligibility that helps with out-of-pocket cost such as premiums, copayments, coinsurance, and deductibles.

If you’re enrolled in Medicare Part D and have limited income, the Extra Help program (also known as the Low-Income Subsidy) may help pay for certain out-of-pocket prescription drug costs, such as premiums, copayments, coinsurance, and deductibles. The Low-Income Subsidy program is run through Medicaid just as the Medicare Savings program is.

Do I have other coverage options besides Original Medicare?

Original Medicare  may not be your only coverage option as a Medicare beneficiary. Medicare Supplement plans are also available to help with out-of-pocket costs in Original Medicare as well as standalone Prescription Drug Plans, which you will need with your Supplement plan. Medicare Advantage plans are an option also as these plans are a version of Original Medicare that is sold by a private insurer to provide Part A and Part B benefits. You may get additional coverage not covered by Original Medicare, such as gym memberships, routine vision or dental, hearing, wellness programs, and prescription drugs.

Need help finding Medicare plan options that may work for your situation? call us today to get help.

Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program.

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