1. Medicare Components
Traditional Medicare covers some of the following expenses:
- Part A - costs of hospital, hospice, some rehabilitation and
some home health care.
- Part B - costs of doctors & other outpatient providers, some home health care.
(Beneficiaries may opt out of Part B but will have
a permanent increase in premiums if they decide
to enroll after the initial eligibility period.)
- Option - Optional Medicare Supplement ("Medigap") policies from private insurers cover costs not covered by Medicare
- Beneficiaries may choose from policies
designated "A" through "J". ( "K" and "L" not
available in Alabama.)
- A and B policies pay basic benefits (like
hospital deductible
- C - J add other benefits, supposedly more
generous as you proceed up the alphabet
- Benefits for each category are outlined by law.
- More generous policies are more costly, and
some added features are of dubious value to
many consumers.
- There are about two dozen companies offering
Medigap policies in Alabama. Not every company
offers all policies.
- Premiums vary widely
- Complete list at: www.aldoi.gov/Consumers/
SeniorHealthInsurance.aspx )
Participants in Traditional Medicare may choose any
provider who accepts Medicare payment (almost all do).
New option: They may also want to select a separate
Prescription Drug Plan (Part D).
Participation in a PDP is optional, failure to enroll during the initial seven-month eligibility period will result in a monthly penalty if the beneficiary decides to enroll later.
Other Parts:
- Part C
- Medicare Advantage. Managed care plans provided
through private insurers.
- Plans include all benefits included in Part A and
Part B, some benefits offered by Medigap policies,
and some MA plans include Part D (prescription
drug coverage)
- All services from providers in the plan's network.
- If a MA plan is selected that does not include drug
coverage, the enrollee will also need to choose a
stand-alone Prescription Drug Plan.)
- There are more than 40 MA plans available in
Alabama, at least two in each county.
- Premiums vary widely, and choices are confusing.
- Complete list of plans in brochure "Medicare
200[9], mailed to Medicare beneficiaries late each
year.)
- Many observers predict substantial increases
in MA premiums in 2010
- Part D
- Coverage of some prescription drugs is provided through private companies approved by Medicare to offer a prescription drug plan.
- There are 49 plans offered in Alabama in 2009,
some incorporated in Medicare Advantage plans,
some standing alone.
- Monthly premiums range from $17.60 to $100.60.
- Complete list of providers & plans in annual booklet
"Medicare 200[9], mailed to beneficiaries each fall.)
- Expectations are that PDP premium increases in
2010 will be small.
- Medicare mandates a "Standard Drug Plan" as the
minimum to be provided by an approved PDP.
- Under the 2009 SDP the enrollee pays the first
$295 in drug costs (deductible), plus 25% of the
next $2,405; the Plan pays 75% of the $2,405
($896 out of pocket for enrollee; $1,804 for plan.)
- Then there is a gap (the "doughnut hole"), during
which the enrollee pays 100% until total drug costs
reach $6,153. ($4,350 out of pocket for enrollee.)
- After that the enrollee pays 5% of costs, the Plan
15%, Medicare 80%.
- For 2010, the breakdown points are:
$305 deductible; $2,780 initial coverage limit;
$6,356.25 second coverage limit; out of
pocket limit for enrollee, $4,500.
- Few PDPs offer the Standard Plan. Most pay some
or all of the deductible. 11 plans provide coverage
for the "doughnut hole", but they are expensive.
(Premium range, all PDPs: $17.60 - $100.60;
average about $31.00.)
- Most PDPs used a tiered drug cost system, with generics and "preferred" drugs in lowest tiers. Other
drugs can still be quite expensive. (Help is available
for low-income seniors. See Section # 5)
Part C and Part D companies submit annual bids to Medicare outlining their plans, based on general federal requirements. Participants must be eligible for Parts A & B, and be residents of the area served by the plan. There are subsidies available for low-income Part D beneficiaries.
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