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Understanding Medicare

Medicare can seem a bit overwhelming when it comes to what is and isn't covered. The first step in understanding Medicare is learning about its four "parts"— each of which covers a different area of health care costs and is designated by a letter, A through D.

Part A - Hospital Insurance

Medicare Part A helps cover your inpatient care in hospitals and skilled nursing facilities, excluding custodial and long-term care. It also helps cover hospice and some home health care. Typically, you become eligible for Part A when you turn 65, even if you’re still working. During your working years, you have probably paid for Part A through payroll deductions. For this reason, most people don’t pay a premium for Part A. You should be aware that Part A does not pay all of your hospital expenses; you are responsible for copayments and a deductible.

Part B - Doctor and Medical Insurance

Medicare Part B helps cover doctors’ services and outpatient care. It also helps pay for some preventive care and services Part A doesn’t cover, including physical and occupational therapy and some home health care (if these services are considered medically necessary). Most people must pay a monthly premium for Part B coverage. It’s important that you sign up for Part B when you become eligible; otherwise your Part B premium may be higher if you sign up late.

Parts A and B together cover much of the medical care you need, but not all of it. For example, Parts A and B (called Original Medicare) do not cover prescription drugs. This is where Parts C and D come into the picture.

Part C - Medicare Advantage

Medicare Part C, more commonly known as Medicare Advantage coverage, acts as an alternative to Parts A and B. This coverage is offered by private companies approved by and under contract with The Centers for Medicare and Medicaid Services (CMS). To join a Medicare Advantage plan, you must be enrolled in both Medicare Parts A and B. You must continue to pay your Part B premium and, usually, a monthly premium for the coverage.

  • Medicare Advantage plans provide all of the benefits of Part A and Part B coverage. Plus, they usually offer extra benefits not covered by Original Medicare, such as vision, hearing, dental, wellness programs and disease management programs.
  • Part D prescription drug coverage is often included in Medicare Advantage plans.
  • Unless your plan also provides out-of-network benefits, care is received from a primary care doctor, specialist or hospital in the plan’s network, except for emergencies and urgently needed care.

You have the convenience of one ID card, and you don’t have to pay separate premiums for your medical and prescription drug coverage.

Part D - Prescription Drug Coverage

It’s important to know that Original Medicare does not cover most prescription drugs. Medicare Part D was created to help lower your current prescription drug costs and help protect against higher costs in the future. Like a Medicare Advantage plan, Part D coverage is only available from private insurers that contract with Medicare.

  • Part D plans provide benefits for both brand name and generic prescription drugs at participating pharmacies.
  • Many people pair a Medicare Prescription Drug Plan with a Medicare Supplement plan.

When it comes to your health insurance coverage, you have a lot of choices. But did you know that Original Medicare does not cover prescriptions? That’s why a Horizon Medicare Advantage plan gives you the peace of mind that you have prescription coverage. This is also known as Medicare Part D.

It’s important that you understand how prescription drug coverage works, including how much you’ll pay for medicines, so you can get the most from your plan.

There are four stages that make up Part D coverage. These stages determine how much your plan pays and the amount you’ll be responsible to pay out of pocket for your prescription medicines.

Remember to review your Explanation of Benefits statement that’s sent to you each month. Your coverage stage is in section two of the statement.

The dollar amounts included in this video are only examples to help you understand how coverage stages work. Your actual amounts may be different depending on your Horizon Medicare Advantage plan.

The first stage is the Deductible Stage. A deductible is the total amount you must pay out of pocket for your medicines before your insurance begins to pay.

Your deductible must be met each year.

Once you meet your deductible, you’ll move into the Initial Coverage Stage. This means you’ll only pay the copayment or coinsurance – depending on the medicine. Your Horizon Medicare Advantage plan will pay the rest of the eligible cost for any covered medicine.

Your total drug cost – what you and your plan have paid for your medicines – add up during the Coverage stage.

Once you meet a specific dollar amount for the year, you’ll move into the Coverage Gap Stage, also known as the donut hole. You generally pay more for medicines during this stage.

So, how do you get there? Let’s take a look at an example of medicine that costs $100. If your copayment is $10 and your plan pays the remaining $90, the total cost of $100 is the amount that goes toward the Coverage Gap Stage. So, if you take more than one medicine, you may reach this stage quickly.

The good news is that during this stage, you only pay a percentage of the cost of the drug.

However, both your monthly premium and the amount paid for medicines not covered by your Horizon Medicare Advantage plan do not count towards the coverage gap total.

Once in the donut hole, you get a 70 percent manufacturer’s discount on covered brand name medicines and your plan pays an additional 5 percent. This means you’ll only have to pay 25 percent of the agreed cost of a brand name medicine. And, you can save more by getting generic medicines.

Once you have paid the maximum out-of-pocket costs set by Medicare, you will move to the Catastrophic Coverage Stage. You’ll then pay less for covered medicines for the rest of the year.

Making sense of Part D can be complicated. We want to make it easy.

At Horizon Blue Cross Blue Shield of New Jersey, we want to help you understand your choices on your journey to better health.

Frequently Asked Questions

A.

“Original Medicare” is what most people refer to as simply “Medicare.” The term Original Medicare came into use after Medicare Advantage plans were introduced as an alternative to traditional/original Medicare benefits offered through the federal government.

A.

When you are enrolled in Original Medicare, you are free to use any doctor, hospital or other health care provider who accepts Original Medicare. This applies to Medicare Supplement as well. With a PPO (Preferred Provider Organization) or POS (Point of Service) plan, you have the freedom to use any Medicare provider—even one that is not in your network. However, you may have higher out-of-pocket expenses if you use a non-network provider.

A.

Original Medicare provides very limited coverage for prescription drugs, so most people find it helpful to have additional coverage. That’s why Medicare Part D was introduced. Medicare members now have the opportunity to get prescription drug coverage through a stand-alone Medicare Prescription Drug Plan (PDP), or as part of a Medicare Advantage plan that includes drug coverage (MAPD).

A.

With Original Medicare and Medicare Supplement coverage, you do not need to choose a Primary Care Physician (PCP). With Medicare Advantage coverage, it depends on the specific type of plan. With HMO (Health Maintenance Organization) plans, you must select a PCP who will coordinate all of your care.

A.

No referrals required for in-network specialists.

A.

If you enroll in a plan that you feel is not meeting your needs, you may switch (or drop) your coverage during Medicare’s Annual Enrollment Period, which generally runs from October 15 through December 7 each year. Your coverage will begin on January 1 of the following year. In most cases, you must stay enrolled for that calendar year, starting with the date your coverage begins. In certain situations, however, you may be able to join, switch or drop plans during a special enrollment period. You can also make changes to your coverage during the Medicare Advantage Open Enrollment Period (MA OEP) which runs from January 1 through March 31 every year. Individuals may make only one election during the MA OEP.

A.

Yes. If you're under 65 and have been approved for Social Security disability benefits, you automatically get Medicare Part A and Part B. Your Medicare benefits will begin after you have received disability benefits from Social Security or, if applicable, certain disability benefits from the RRB (Railroad Retirement Board), for 24 months.

A.

Yes. You can register at www.medicare.gov for convenient and secure access to your personal Medicare information. You can use the site to track your health care claims; check your Part B deductible status; get information on your prescription drug coverage; sign up to get your "Medicare & You" handbook electronically; and much more.

A.

Original Medicare pays for many health care services and supplies, but it doesn’t cover all your costs. Most people need additional private coverage to help pay for out–of–pocket costs.

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