Overview

Medicare Program Basics

Part 1
Version 12
June 18, 2018

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Terms and Conditions
This training program is protected under United States Copyright laws, 17 U.S.C.A.
§101, et seq. and international treaties. Except as provided below, the training
program may not be reproduced (in whole or in part) in hard paper copy,
electronically, or posted on any web site or intranet without the prior written
consent of AHIP. Any AHIP member company in good standing sponsoring a
Medicare Advantage or Part D plan may reproduce the training program for the
limited purpose of providing training and education to the company’s own
employees and contractors on the subject matter contained in the training program.
Employees or contractors participating in such training may not further reproduce
(in whole or in part) the training program. No changes of any kind may be made to
the training program and any reproduction must include AHIP's copyright notice.
This limited license is terminable at will by AHIP.
The training program is intended to provide guidance only in identifying factors for
consideration in the basic rules and regulations governing coverage, eligibility,
marketing, and enrollment for Medicare, Medicare supplement insurance, Medicare
health plans, and Part D prescription drug plans and is not intended as legal advice.
While all reasonable efforts have been made to ensure the accuracy of the
information contained in this document, AHIP shall not be liable for reliance by any
individual upon the contents of the training program.

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Learning Objectives
 After reviewing “Part 1: Medicare Program Basics” you will be
able to explain:
▪ The different ways to get Medicare;
▪ Entitlement to Original Medicare;
▪ Medicare premiums;
▪ Eligibility for Medicare Advantage and prescription drug
plans;
▪ Help for beneficiaries with limited income;
▪ Original Medicare benefits;
▪ Combining Original Medicare and Part D; and
▪ Medigap coverage.

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Training Roadmap: Part 1
 Medicare Program Basics and Ways to Get Medicare
 New Medicare Identification Cards
 Medicare Entitlement, Premiums & Eligibility
 Help for Individuals with Limited Income
 Original Medicare Benefits
 Original Medicare and Part D
 Medigap Coverage

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Medicare Program Basics
 Medicare is a health benefits program for U.S. citizens or
permanent residents who meet certain work history
requirements:
▪ Age 65 or older
▪ Under age 65 with certain disabilities
• All who get disability benefits from Social Security or certain disability benefits from
the Railroad Retirement Board for 24 months.
• Individuals with Amyotrophic Lateral Sclerosis (ALS), often referred to as Lou
Gehrig’s Disease
▪ Individuals with end-stage renal disease (ESRD)
 History – Medicare was signed into law in 1965. A brief history
of Medicare is available at http://www.cms.gov/History/
 Medicare is administered by the Centers for Medicare &
Medicaid Services, an agency of the U.S. Department of Health
and Human Services
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New Medicare Identification Cards
 Every Medicare beneficiary receives a Medicare identification
card.
 During the next year, Medicare will stop using Social Security
numbers for identification. For beneficiaries who already have
their Medicare identification card with their Social Security
number, Medicare will mail them new cards with Medicare ID
numbers. Mailing will begin in April 2018 and be completed by
April 2019.
 The change is intended to protect beneficiaries from identity
theft.
 After they receive them, beneficiaries need to bring their new
cards whenever they get care.
 Beneficiaries should also destroy their old cards after they receive
their new cards.

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Medicare Law -- Title XVIII of the
Social Security Act (Parts A, B, C, D, & E)
 Medicare statutes are found under Title XVIII of the Social
Security Act: “Health Insurance for the Aged and Disabled.”

 Title XVIII is split by topic into several subsections:

▪ Part A – Hospital
▪ Part B – Medical
▪ Part C – Medicare health plans, which must cover Part A
and Part B benefits
▪ Part D – Prescription drug coverage
▪ Part E – Miscellaneous Provisions, including Medigap
coverage

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Overview of Different Ways to Get Medicare
 Original Medicare (Part A and Part B)
 Medicare Advantage Plans (Medicare Part C, with or
without Part D)
 Medicare Cost Plans
 PACE Plans
 Medicare-Medicaid Plans
 Medicare Prescription Drug Plans (Medicare Part D)
 Medigap

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Overview of Different Ways to Get Medicare -
Examples
 Mr. Jones has Original Medicare. He has purchased a Medigap
plan to cover some of the Medicare cost sharing and a stand-
alone prescription drug plan to cover his drugs.
 Mrs. Hernandez has purchased a Medicare Advantage plan that
includes Part D coverage to cover her Medicare benefits, drugs
benefits and some of the Medicare cost sharing.
 Mr. Watanabe receives both Medicare and Medicaid benefits.
He has enrolled in a single Medicare-Medicaid plan that
furnishes both Medicare and Medicaid services for him.
 Ms. Krauss has purchased a Medicare Advantage plan without
Part D coverage because she has a generous drug plan that is
offered by her former employer.

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Different Ways to Get Medicare: Original Medicare

 Original Medicare (has two Parts – Part A and Part B)

▪ Part A – Hospital, skilled nursing facility, hospice, and home
health services
▪ Part B – Professional services such as those provided by a
doctor or non-physician professional, outpatient care,
clinical lab services and other medical services

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Different Ways to Get Medicare, continued: Medicare
Advantage Plans-Part C
 Part C - Medicare Advantage Plans (Medicare Advantage plans
must cover all Part A and Part B services)
▪ Health Maintenance Organizations (HMOs) (some plans also
include Part D)
▪ Preferred Provider Organizations (PPOs) (some plans also
include Part D)
▪ Private Fee-for-Service Plans (PFFS) (some PFFS plans may
offer Part D, however PFFS plans are not obligated to offer
Part D)
▪ Special Needs Plans (SNPs) (all plans include Part D)
▪ Medical Savings Account Plans (MSAs) (do not include Part
D)
▪ Employer or Union Group Plans
Note: See “Part 2, Medicare Health Plans,” for more information.

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Part C Medicare Health Plans
 All Medicare Advantage (MA) plans must:
▪ Cover all Part A and Part B benefits;
▪ Provide plan cost-sharing actuarially equivalent to cost sharing
under Medicare Parts A and B, but may be different for specific
services; and
▪ Include an annual maximum out-of-pocket (MOOP) limit on total
enrollee cost sharing (deductibles, coinsurance, and copayments)
for Part A and Part B services
• Original Medicare does not have such a cap.
▪ Cover the following services even when provided by non-network
providers:
• emergency services;
• out-of-area (and in limited circumstances, in-area) urgently
needed services; and
• out-of-area renal dialysis.

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Part C Medicare Health Plans, continued

Extra Benefits–Medicare health plans also may cover extra

benefits not covered by Original Medicare, such as:
▪ Vision Services
▪ Hearing Aids
▪ Routine Dental Services and/or Dentures
▪ Routine Transportation to Medical Appointments
▪ Chiropractic Services
▪ Annual Physical Exams*
▪ In Home Safety Assessments and fall prevention devices
▪ Worldwide Urgently Needed and Emergency Services.
▪ Over the Counter Drugs

* An annual physical is different from the annual wellness visit

covered under Medicare, which does not include a physical exam.
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Different Ways to Get Medicare, continued

 Other types of Medicare Health Plans:

▪ Medicare Cost Plans (some also include Part D)

▪ PACE Plans (includes Part D)

▪ Medicare-Medicaid Plans (includes Part D)

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Different Ways to Get Medicare, continued: Medicare
Cost Plans
Medicare Cost Plans are a type of Medicare health plan that are not
Medicare Advantage Plans. They are only available in certain areas of the
country.
 Individuals can enroll even if they have Part B
and not Part A.
 If enrollees who have both Part A and Part B and go to a non-
network provider, the services are covered under Original
Medicare. In these cases, enrollees pay Part A and Part B
coinsurance and deductibles.
 Individuals can join anytime the plan is accepting new members.
 Enrollees can leave anytime and return to Original Medicare.
 Enrollees can get prescription drug coverage from the plan (if
offered) or join a Medicare Prescription Drug Plan (Part D).

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Different Ways to Get Medicare, continued: PACE
Plans
Programs for All-Inclusive Care for the Elderly (PACE) is a Medicare
and Medicaid program offered in many states that allows people
who otherwise need a nursing home level of care to remain in the
community. To qualify an individual must meet these conditions:

 Be age 55 or older,
 Live in the service area of a PACE organization,
 Be certified by the state as needing a nursing home level of
care, and
 At the time the individual joins, he or she is able to live
safely in the community with the help of PACE services.

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Different Ways to Get Medicare, continued : Medicare-
Medicaid Plans
 Medicare-Medicaid Plans serve individuals eligible for both
Medicare and Medicaid.

 The individuals are sometimes referred to as dual-eligibles.

 Medicare-Medicaid Plans include Part D Prescription Drug

coverage.

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Different Ways to Get Medicare, continued: Part D
 Part D – Prescription Drug Coverage
▪ Stand-alone Prescription Drug Plan (PDP) or
▪ Coverage under a Medicare health plan

Example: Mr. Ing decides to obtain stand-alone Part D coverage to

use with his Original Medicare instead of enrolling in a Medicare
Advantage plan that offers Part D coverage. If Mr. Ing decides to
enroll in a Medicare Advantage HMO plan, he can only receive Part
D coverage from the Medicare Advantage plan.

Note: See “Part 3, Medicare Part D Prescription Drug Coverage,” for more
information.

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Medigap (Medicare Supplement Insurance)
 Medigap insurance:
▪ Is sold by private insurance companies to fill “gaps” in Original
Medicare coverage;
▪ Works only with Original Medicare;
▪ Covers all, or a portion, of Part A and Part B cost sharing
(coinsurance, copayments, or deductibles) for beneficiaries in
Original Medicare.
• Does not cover Medicare benefits, but works in tandem with
Original Medicare coverage.

 Some Medigap policies cover benefits not covered by Part A or Part

B of Original Medicare, such as extra days of coverage for inpatient
hospital care or foreign travel emergency care.

Note: See section titled “Medigap Coverage” for more information on Medigap.

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Entitlement to Original
Medicare, Premiums, &
Eligibility

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Medicare Entitlement – Part A

 Most individuals get Part A coverage without having to pay a

Part A premium. This is because they or a spouse paid
Medicare taxes while working for a specified duration of time.
This duration is generally 40 quarters (10 years).

 For those individuals who do not automatically qualify for

premium-free Part A coverage, the monthly Part A premium in
2018 is up to $422 depending on an individual’s duration of
Medicare-covered employment.

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Medicare Entitlement – Parts A and B

 At Age 65
▪ Individuals who are already getting benefits from Social
Security or the Railroad Retirement Board (RRB) will
automatically get Part A and Part B starting the first day of
the month they turn 65. These individuals are also given the
opportunity to refuse Part B coverage.
▪ Individuals who are not getting benefits from Social Security
or the Railroad Retirement Board (RRB) may sign up for
Parts A and B during their initial enrollment period, which
begins 3 months before their 65th birthday, includes the
month they turn 65 and ends 3 months after.

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Medicare Entitlement – Parts A and B, continued
 Individuals with disabilities who are under age 65 are automatically
enrolled in Parts A and B the month after they have received Social
Security or Railroad Retirement disability benefits for 24 months.
They also are given an opportunity to refuse Part B coverage. [Note:
Disabled individuals who live in Puerto Rico automatically get Part A
after 24 months but need to sign up for Part B if they want it.]

 Individuals with ALS (Amyotrophic Lateral Sclerosis, also called Lou

Gehrig’s disease) get Part A and Part B automatically the month their
Social Security disability benefits begin.

 Individuals with end-stage renal disease (ESRD) may sign up for

Medicare at any time. However, the date on which their Medicare
coverage begins usually on the fourth month after dialysis treatments
begin, but may be earlier if certain conditions are met.

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Enrollment in Part B After the Initial Entitlement Period

 Individuals who do not enroll in Part B when first eligible can

enroll during a General Enrollment Period each year from
January 1 – March 31.
▪ Part B coverage begins on July 1 of the year they enroll.
 Individuals who have group health plan coverage based on their
own current employment or the employment of a spouse may
enroll in Part B anytime while covered under the group health
plan or during a special enrollment period that occurs during the
8-month period immediately following the last month of the
group coverage.

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Medicare Premiums for Part B
Beneficiaries enrolled in Part B must pay a monthly premium.

▪ In 2018, the standard monthly premium for Part B is $134

(or higher depending income). However, some people who
get Social Security benefits pay less than this amount.
▪ Those who pay the standard monthly premium or higher
include individuals who:
• enroll in Part B for the first time in 2018;
• don’t get Social Security benefits;
• are directly billed for Part B premiums (e.g. do not have
it taken out of their Social Security check);
• have Medicare and Medicaid, and Medicaid pays the
premiums (the state will pay the premium); or
• have a modified adjusted gross income on their IRS tax
return from 2 years ago above a certain amount.
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Medicare Premiums for Part B, continued
 Individuals who pay their Part B premium through their
monthly Social Security benefit pay less ($130 on average).
 Individuals with income over $85,000, or filing jointly with
incomes over $170,000, pay more, up to $428.60 a month in
2018 based on the income related monthly adjustment amount
(IRMAA).

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Medicare Premiums for Part B, continued

 Part B premiums may be deducted from Social Security checks,

Railroad Retirement checks or Office of Personnel Management
(civil service annuity) checks.
 Employers may pay monthly Part B premiums on behalf of
retirees.

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Medicare Premiums for Part B, continued

 For individuals who do not enroll in Part B when first eligible,

the Part B premium is increased 10% for each full 12-month
period the beneficiary could have had Part B but, did not
enroll. This is known as a “late enrollment penalty.”
 Exception: Individuals who have group health plan coverage
based on their own current employment or the employment of
a spouse are not subject to the premium increase if they enroll
in Part B anytime while covered under the group health plan or
during the special enrollment period that occurs during the 8-
month period immediately following the last month of the
group coverage.

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Medicare Premiums for Part B, continued

Example: Ms. Stein retires from her job when she is 69. She did
not previously enroll in Part B because she had employer group
coverage. Her last month of group coverage is February. She has
until October to enroll in Medicare Part B without incurring a late
enrollment penalty.

Example: Mr. O’Hare, who is 70 and does not have Part B, is

retired, but he has health coverage through his wife’s current
employer. If Mr. O’Hare decides to get Part B now he can do so
without incurring a late enrollment penalty.

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Medicare Eligibility – Part C/Part D
 Part C Medicare Advantage Health Plan
▪ Individuals who are entitled to benefits under Part A and
enrolled under Part B are eligible to enroll in a Medicare
Advantage plan.
 Part D Prescription Drug Benefits
▪ Individuals who are entitled to benefits under Part A and/or
enrolled under Part B are eligible for Part D prescription
drug benefits.
Example: Ms. Gray did not have the required work history to
automatically get Part A without a premium. She has chosen not
to enroll in Part A, but has enrolled in Part B. Ms. Gray is not
eligible to enroll in a Medicare Advantage plan but she can get
Part D.
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Help for Individuals
with Limited Income

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Help for Individuals with Limited Income/
Resources–Apply to State Medicaid Office

 Beneficiaries with limited income and resources should be

encouraged to apply to their State Medicaid office to
determine eligibility for various (Federal or State) programs.

 Beneficiaries may qualify for help to pay the Medicare Part A

(if any) and Part B premium, the Part A and Part B deductibles
and cost sharing, and/or some Part D prescription drug costs.

 Tell them to call or visit their Medicaid office, and ask for
information on Medicare Savings Programs. To get the phone
number for the state, visit Medicare.gov/contacts or call 1-
800-MEDICARE (1-800-633-4227), and say “Medicaid.”

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 Help for Individuals with Limited Income/
Resources–Apply to State Medicaid Office, continued
 Beneficiaries may qualify for these programs by applying to the State
Medicaid office.
▪ Medicaid: help with health care costs.
▪ Medicare Savings Program: help paying for the Medicare Part B
premium and, in some cases, deductibles and coinsurance.
▪ Part D low-income subsidy: help paying for prescription drug
coverage. The State Medicaid office will check eligibility for this and
other programs such as the Medicare Savings Program. Persons
interested in Part D help only may call the Social Security
Administration (SSA) at 1-800-772-1213 or apply online at
www.ssa.gov/prescriptionhelp.
▪ Persons who do not qualify for the Part D low-income subsidy but are
of limited means may qualify for help in paying Part D drug costs
through a State’s Pharmaceutical Assistance Program.
▪ Supplemental Security Income (SSI) benefits: help with cash for basic
needs. You also may apply through SSA.
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Original Medicare
Benefits

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Medicare Part A Benefits
 Part A helps cover medically necessary inpatient care in
hospitals. In 2018, for each benefit period (as defined by
Medicare) in a year, beneficiaries pay:

▪ $1,340 deductible and no coinsurance for a stay of up to 60

days
▪ $335 coinsurance per day for days 61-90 of a hospital stay
▪ $670 coinsurance per “lifetime reserve day” after day 90
each benefit period (up to 60 days over a beneficiary’s
lifetime)
▪ All costs for each inpatient day beyond 150 days

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 Medicare Part A Benefits, continued
 Part A also helps cover:
▪ Blood
▪ Hospice care
▪ Home health care
▪ Skilled nursing and rehabilitative care only after a three day
hospital stay, up to 100 days in a benefit period (as defined by
Medicare). In 2018, beneficiaries pay $167.50 coinsurance for
days 21-100 each benefit period. (Medicare Advantage Plans
may waive the prior three day hospital stay requirement.)
▪ Inpatient psychiatric care (up to 190 lifetime days)
 Part A does not cover custodial or long-term care
 Cost-sharing may differ for enrollees of Medicare health plans.

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Medicare Part B Benefits
 Part B generally covers:
▪ medically necessary physician and other health care
professional services;
▪ outpatient hospital;
▪ clinical lab and diagnostic tests, therapies, mental health
care;
▪ medical equipment; and
▪ medications and supplies provided incident to a physician’s
service.
 Beneficiaries pay a deductible each year ($183 in 2018), and
after the deductible is satisfied, 20% coinsurance on most Part
B covered services.
 Cost-sharing may differ for enrollees of Medicare health plans.
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Medicare Part B Benefits - Preventive Services and
Screenings (1 of 4)
 Beneficiaries covered under Original Medicare and Medicare
Advantage plans will have no cost-sharing for most preventive
services.

 Preventive Services include:

▪ One-time “Welcome to Medicare” preventive visit
▪ Annual wellness visit after 12 mos. enrolled in Part B and
annually thereafter
▪ Immunizations – pneumococcal, hepatitis B, annual flu shot
(shingles shots are covered under Part D, not Part B)
▪ Abdominal aortic aneurysm screening – one time, with referral
▪ Alcohol misuse screening – every 12 months for certain
individuals
▪ Bone mass measurement – every 24 months for certain
conditions or meets certain criteria

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Medicare Part B Benefits – Preventive Services and
Screenings (2 of 4)
▪ Cardiovascular screening blood tests – every five years for
all persons
▪ Colorectal cancer screening – five different tests, vary in
frequency
▪ Depression Screening – every 12 months
▪ Diabetes screenings – up to two per year for those with
risk factors
▪ Diabetes self-management training – for persons with
diabetes
▪ Glaucoma testing – once per year for those at high risk
▪ Hepatitis C test – once, if certain conditions are met. For
certain people at high risk Medicare also covers yearly
repeat.

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Medicare Part B Benefits - Preventive Services
and Screenings (3 of 4)
▪ HIV Screening – every 12 months if certain conditions are
met.
▪ Intensive Behavioral Therapy for Cardiovascular Disease –
one face-to-face visit annually in a primary care setting
▪ Lung Cancer screening – every 12 months if certain
conditions are met.
▪ Mammogram (Breast Cancer Screening) – annual
screening for most women
▪ Medical nutrition therapy – for those with
diabetes/kidney disease or kidney transplant
▪ Obesity Screening and counseling – for certain individuals
▪ Pap test and pelvic examination – every 24 mos. for all
women; every 12 mos. for those at high risk

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Medicare Part B Benefits - Preventive Services
and Screenings (4 of 4)
▪ Prostate cancer screening – every 12 mos. for men over
age 50
▪ Screening for Sexually Transmitted Infections (STIs) and
High Intensity Behavioral Counseling to Prevent STIs – for
certain individuals
▪ Smoking and tobacco-use cessation counseling – for any
illness related to tobacco use
 Note that beneficiaries may have cost sharing if they receive
non-preventive services during an appointment for preventive
services. For example, if they receive diagnostic lab tests
during their annual wellness visit.

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Other Part B Items and Services, Part 1 of 2
 Ambulance services
 Ambulatory surgical center fees
 Blood
 Cardiac rehabilitation–for certain situations
 Chiropractic services–for limited situations
 Chronic care management services
 Clinical research studies–some costs of certain care in
approved studies
 Defibrillator (implantable automatic)
 Diabetic supplies
 Durable medical equipment–restricted to certain suppliers in
some areas
 Emergency room services
 Eyeglasses after cataract surgery–limits apply

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Other Part B Items and Services, Part 2 of 2
 Foot exams and treatment for certain diabetics
 Hearing and balance exams (no hearing aids) if needed for
medical treatment
 Home health services in certain situations
 Kidney dialysis and disease education–certain situations
 Mental health care (outpatient)–limits apply
 Occupational and physical therapy–limits apply
 Prosthetic/Orthotic items
 Pulmonary rehabilitation for COPD
 Second surgical opinions
 Speech-language pathology services
 Telehealth services in some rural areas
 Tests like X-rays, MRIs, CT scans
 Transplant physician services and drugs

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 Not Covered by Medicare Part A & B
 Acupuncture  Routine eye care and
 Routine dental care/dentures eyeglasses
 Cosmetic surgery  Some screening tests and labs
 Custodial care  Vaccines, except as previously
 Health care while traveling listed (those not covered under
outside the US–exceptions Part B are covered under Part
apply D)
 Hearing aids  Syringes and insulin unless
 Orthopedic shoes (with limited used with an insulin pump (this
exceptions) is covered under Part D)
 Outpatient prescription drugs
(this is covered under Part D)
 Routine foot care

For example, Medicare does not cover routine screening tests for thyroid
dysfunction or eye examinations for purposes of prescribing eyeglasses.
However, Medicare may pay for eye exams that are part of the diabetes
services benefit, a glaucoma test, or for macular degeneration.
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Original Medicare
and Part D

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Original Medicare and Part D Prescription Drug
Coverage
 A beneficiary in Original Medicare may receive Part D prescription
drug coverage through a stand-alone prescription drug plan (PDP).

 A beneficiary may also leave Original Medicare and receive drug

coverage through a Medicare Advantage health plan (MA-PD) or
sometimes through a Medicare Advantage (MA) plan and a separate
PDP.

 Generally, with the exception of those dually eligible for Medicare and
Medicaid, Medicare beneficiaries must actively select a Part D plan.

 In selecting a Part D plan, beneficiaries should consider expected

premiums and cost sharing, formulary, and network pharmacies
among other factors.

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Original Medicare and Part D Prescription Drug
Coverage, continued
 Annual Election Period - is October 15 to December 7
 Cost - Beneficiaries who enroll in Part D typically pay a monthly
premium, annual deductible and per-prescription cost-sharing.
▪ Extra help is available for low-income beneficiaries.
▪ Beneficiaries with income above $85,000 (individual) or
$170,000 (couple) pay an income-related monthly adjustment
amount (IRMAA) in addition to the Part D premium.
 Penalty for late enrollment:
▪ There is a permanent premium penalty of 1% of the national
standard premium for every month that a beneficiary could
have had Part D coverage, or equivalent creditable coverage
and choses not to enroll. There is no penalty for individuals
who qualify for low-income assistance or for individuals who
join a Part D plan within 63 days of losing creditable coverage.

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For More Information about Medicare
 Centers for Medicare & Medicaid Services (technical information)
www.cms.gov

 Medicare (beneficiary audience) www.medicare.gov

 Medicare & You Handbook

https://www.medicare.gov/pubs/pdf/10050-Medicare-and-
You.pdf

 Your Medicare Benefits

https://www.medicare.gov/Pubs/pdf/10116-Your-Medicare-
Benefits.pdf

Note: Original Fee-for-Service (FFS) Medicare is also referred to as

Original Medicare or the Original Medicare Plan
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Medigap Coverage

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Further Information on Medigap (Medicare
Supplement Insurance)
 Medigap is health insurance sold by private insurance companies to fill
gaps in Original Medicare coverage.
 Medigap helps pay all, or a portion, of Part A and Part B coinsurance,
copayments, and/or deductibles when Original Medicare determines
that a benefit is medically necessary.
 Some Medigap plans also cover benefits not covered by Original
Medicare, such as foreign travel.
 Medigap policies are available in standardized benefit plans, identified
by certain letters between A and N (different plans are offered in
Massachusetts, Minnesota, and Wisconsin).
 Turning age 65 and signing up for Part B triggers a six-month Medigap
open enrollment period when Medigap plans must be issued,
regardless of any pre-existing conditions, called a guaranteed issue
right. In limited circumstances, leaving a Medicare Advantage plan will
trigger a guarantee issue opportunity. Some states have guarantee
issue for Medicare beneficiaries under age 65.

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Medigap Coverage
Most Medigap plans pay for some or all of the following costs:
Part A Part B
 Part A Coinsurance and  Part B Coinsurance or
Hospital Benefits Copayment
 Part A Deductible  Part B Deductible
 Coverage for 365  Part B Excess Charges
Additional Hospital Days  Blood (First 3 pints) (also
when Medicare coverage under part A)
ends Other
 Hospice Care Coinsurance  Foreign Travel Emergency
or Copayment not covered by Medicare
 Skilled Nursing Facility  Non-Medicare-covered
Care Coinsurance Preventive Services

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Beneficiaries in Original Medicare with Medigap
Drug Coverage
 Medigap plans H, I, and J offer non-Medicare drug coverage. These
plans could no longer be sold as of January 1, 2006. However, some
beneficiaries may have decided to keep their H, I, or J policy with the
drug coverage they had before January 1, 2006.
 Individuals who are enrolled in Medigap plans may only obtain
Medicare drug coverage (Part D) through a stand-alone prescription
drug plan.
 To enroll in Part D, individuals who have Medigap plans H, I or J may:
▪ Keep their Medigap coverage with the drug portion of the
coverage removed and enroll in a Part D PDP plan; OR
▪ Drop their Medigap coverage and enroll in a MA-PD or other
health plan with a PDP.
Note: See also Part 3, “Medicare Part D Prescription Drug Coverage.”

AHIP©2018. All rights reserved.

Beneficiaries in Original Medicare with Medigap Drug
Coverage, continued
 If the Medigap coverage was not “creditable coverage” (i.e.,
covered at least as much as Part D), an individual dropping
Medigap coverage and enrolling in Part D will have to pay a late
enrollment penalty unless they qualify for ‘Extra Help.”

Example: Mr. Green purchased Medigap policy J in 2005 and has

remained continuously enrolled. Under policy J, after a deductible
of $250.00 is met, 50% of prescription drug charges are covered up
to a maximum amount of $3,000.00 yearly. The Medigap plan
determined that the coverage is not creditable. Thus, if Mr. Green
wishes to enroll in Part D, he will incur a late enrollment penalty
unless he qualifies for extra help.

AHIP©2018. All rights reserved.

Beneficiaries in Original Medicare
with Medigap Drug Coverage, continued
 Non-Medicare insurers (including Medigap plans) are required
to notify beneficiaries annually whether or not the prescription
drug coverage they have is creditable (coverage that expects to
pay, on average, at least as much as Medicare’s standard Part D
coverage expects to pay).
 All beneficiaries who do not maintain creditable coverage must
pay a Part D late enrollment penalty if they wish to enroll in
Part D.
 Beneficiaries who are informed that their non-Medicare drug
coverage is no longer creditable will have a special enrollment
period to enroll in a Part D plan without the obligation to pay a
Part D late enrollment penalty.

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Medigap is NOT

 Medigap is NOT a Medicare Advantage health plan or other

Medicare health plan.

 Medigap supplements Original Medicare benefits only.

 In addition,
▪ A Medigap plan cannot be used with a Medicare
Advantage health plan.
▪ It is illegal to sell a Medigap plan to someone already in a
Medicare Advantage health plan.

AHIP©2018. All rights reserved.

Medigap is NOT, continued

 Types of coverage that are NOT Medigap policies

▪ Medicare Part A or Part B
▪ Medicare Advantage Plans (Part C), such as an HMO, PPO,
PFFS, SNP, or MSA
▪ Medicare Cost Plans
▪ Medicare Prescription Drug Plans (Part D)
▪ Medicaid
▪ Employer or union plans
▪ TRICARE
▪ Veterans’ Administration (VA) benefits
▪ Long-term care insurance policies
▪ Indian Health Service, Tribal and Urban plans

AHIP©2018. All rights reserved.

Changes in Medigap
 Plans E, H, I, and J are no longer sold, but beneficiaries with those
plans may keep them.
 New policies effective on or after June 1, 2010, will cover Hospice Part
A coinsurance or copayment. (Plan K will cover 50%, and Plan L will
cover 75% of these costs.)
 Plans D and G bought on or after June 1, 2010 have different benefits
than D or G plans bought before June 1, 2010, but benefits won’t
change for beneficiaries who had these policies before June 1, 2010.
 All plans pay 100% of the Part B coinsurance except:
▪ Plans K and L pay a portion of Part B coinsurance until
beneficiaries reach their out of pocket limit (in 2018, $5,240 for K
and $2,620 for L). Then they pay 100%.
▪ Plan N requires beneficiaries make copayments for office and
emergency room visits.

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 Medigap Plans
Medigap Benefits A B C D F1 G K4 L4 M N

Part A Coinsurance and X2 X X X X X X X X X

Hospital Benefits
Part B Coinsurance or X X X X X X 50% 75% X X3
Copayment
Blood (First 3 pints) X X X X X X 50% 75% X X

Part A Hospice Care X X X X X X 50% 75% X X

Coinsurance/ Copayment
Skilled Nursing Facility X X X X 50% 75% X X
Care Coinsurance
1. Plan F also offers a high-deductible plan. In 2018, a policyholder pays $2,240 before the Medigap policy pays anything.
2.“X” indicates that coverage is 100% of the Medicare allowable amount. A percentage number indicates the proportion of the Medicare allowable
amount covered.
3. Plan N has a copayment of up to $20 for physician office visits and up to $50 for emergency room visits (waived in certain circumstances).
4. Plans K and L pay 100% after out-of-pocket limit is reached. In 2018 the out-of-pocket limits for Plan K and Plan L are $5,240 and $2,620,
respectively.

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 Medigap Plans
Medigap Benefits A B C D F1 G K4 L4 M N

Medicare Part A Deductible X X X X X 50% 75% 50% X

Medicare Part B Deductible X X

Medicare Part B Excess X X

Charges
Foreign Travel Emergency (up 80% 80% 80% 80% 80% 80%
to plan limits)3

1. Plan F also offers a high-deductible plan. In 2018, a policyholder pays $2,240 before the Medigap policy pays anything.
2 .“X” indicates that coverage is up to 100% of the Medicare allowable amount. A percentage number indicates the proportion
of the Medicare allowable amount covered, except for foreign travel.
3. The foreign travel benefit pays 80% of charges after a $250 deductible, up to a $50,000 lifetime maximum.
4. Plans K and L pay 100% after out-of-pocket limit is reached. In 2018 the out-of-pocket limits for Plan K and Plan L are
$5,240 and $2,620, respectively.

AHIP©2018. All rights reserved.

Medigap Plans – Case Study

Ms. Smith wishes to buy a Medigap plan. She explained that she
wishes to get a plan with a lower premium and doesn’t mind
paying more when she uses services, up to a limit. The agent
correctly directed her to choose between Plans K and L to meet her
needs.

AHIP©2018. All rights reserved.

Changes coming to Medigap

The Medicare Access and CHIP Reauthorization Act of 2015

(MACRA) will make changes to Medigap plans effective 2020.
Specifically, for individuals newly eligible to Medicare, the Part B
deductible cannot be covered. Therefore, Plans C and F will no
longer be an option for newly eligible individuals starting January
1, 2020. However, individuals who already have Plans C and F will
be able to keep their current versions of the plans and individuals
eligible for Medicare prior to January 1, 2020, can purchase the
current version of Plans C and F on or after January 1, 2020.

AHIP©2018. All rights reserved.

For More Information about Medigap

 Centers for Medicare & Medicaid Services:

http://www.cms.gov/Medigap/

 2017 Choosing a Medigap Policy: A Guide to Health Insurance

for People with Medicare:
https://www.medicare.gov/Pubs/pdf/02110-Medicare-Medigap.guide.pdf

AHIP©2018. All rights reserved.