Individuals over the age of 65 and younger people with certain disabilities or conditions may suddenly be coping with a loss of insurance coverage that had previously been provided by employer health plans. This means that they must make other plans to ensure that they remain covered for medical expenses. For many people this means looking to the government health-care program referred to as Medicare. In fact, many people postpone their retirement until after they have reached the age of 65 merely because it is at this age that they can become eligible for Medicare coverage.
Understanding Medicare coverage can be rather complicated, particularly in light of modifications to the program that have been the result of recent legislation. It is essential, however, for anyone interested in applying for coverage to become well informed regarding the details, limitations, and benefits of the program in order to not only make a confident decision but to glean the maximum benefit from the program.
What is now deemed “Original Medicare” is the program consisting of Medicare Parts A and B, which were designed to cover health-care expenses including hospital, skilled nursing, home health, hospice, outpatient, and laboratory tests. In the past 15 years the Medicare program has undergone tremendous modifications, which have provided additional options and benefits to beneficiaries of the program. Two of the primary modifications involved in “new Medicare” are referred to as Parts C and D, or Medicare Advantage Plans and Drug Coverage.
Medicare Part C: Medicare Advantage Plans
Medicare Advantage Plans are specific types of Medicare coverage that are offered by private insurance companies. These companies are contracted with Medicare to provide all of a beneficiary’s Part A and Part B benefits. There are several different types of Medicare Part C plans, each of which offers a different range of benefits to beneficiaries who choose to enroll in that option. These options include:
Health Maintenance Organization Plan (HMO)—These plans require that a beneficiary go to a doctor, health-care provider, or hospital that is included on the list of that specific plan except in the case of an emergency. Should treatments or services be required that are outside of the approved network, the beneficiary’s primary physician will likely need to provide a referral in order for those treatments or services to be covered.
Preferred Provider Organization Plan (PPO)—These plans offer reduced costs if a beneficiary uses services from doctors, hospitals, or other health-care providers that are included in the plan’s network. Should the beneficiary choose to use a provider who is not in this network he or she will be required to pay more. Some of these programs also include prescription drug coverage. Beneficiaries who want to participate in a PPO and also want drug coverage must be sure that they have chosen a PPO that offers such coverage, because they will not have access to drug coverage through the
Medicare Part D Prescription Drug Plan.
Private Fee-for-Service Plan (PFFS)—These plans are different from Medigap and other programs in that the plan itself determines how much of a beneficiary’s health-care costs will be paid by the plan, and how much the beneficiary will be responsible for on a service-by-service basis.
Medicare Special Needs Plans (SNP)—These plans limit membership to those beneficiaries who are dealing with specific diseases or conditions. The benefits, drug formularies, and choices of providers are then tailored to meet the specific needs of these special groups.
Medicare Part D: Prescription Drug Coverage
A relatively new feature of the Medicare program is Part D, which offers prescription drug coverage. This portion of Medicare coverage allows beneficiaries to pay additional monthly premiums in order to receive varying levels of prescription drug coverage. There are rules that apply to the use of Medicare Part D. These include:
Prior Authorization—A beneficiary or his or her prescriber must contact the drug plan prior to filling certain prescriptions. There must be evidence that the drug is medically necessary in order for the Part D plan to cover the prescription.
Quantity Limits—The amount of medication that can be filled at any given point may be limited by the terms of the plan.
Step Therapy—A beneficiary may be required to try one or more less expensive but similar drugs before the Part D plan will cover the prescription.
The majority, if not all, drugs within the six therapeutic categories must be covered, but if there is any question regarding whether a beneficiary’s plan covers a particular drug, he or she can consult the comprehensive list provided by the plan.