By
Sachi Fujimori
We’ve
all experienced challenges in life, from moving to a new community to starting
a new job to learning a new skill. At first, these experiences may have seemed
a little daunting. But once you grasped the basics, they likely became easier.
Then one day they became second nature.
The
same can be said for mastering Medicare. By choosing a plan that best fits your
needs, you’ll be better equipped to achieve your personal health goals. But
selecting the right coverage starts with understanding the basics.
Read on
to decode some of the more commonly misunderstood Medicare terms. (You might
even be surprised to realize how much you already know!)
What’s the difference
between Medicare and Medicaid?
Medicare
is the federal health insurance program for people 65 and older and younger people
with certain disabilities. Read more on getting Medicare when you have a disability.
Medicaid is a joint federal and state program that provides health coverage for
people with limited incomes.
What’s the difference
between Original Medicare and Parts A and B?
They
mean the same thing. Original Medicare, the federal health program, includes
two parts: Part A (hospital coverage) and Part B (medical care). Part A
typically covers inpatient care in a hospital or skilled nursing facility, and
home health care. Part B usually covers doctor visits and preventive
services. Visit “Unpacking the Parts of Medicare” to
learn more.
What’s the difference
between Medicare Part C and Medicare Advantage?
Both
terms refer to the same thing. Instead of Original Medicare from the federal
government, you can choose a Medicare Advantage plan (Part C) offered by a
private insurance company. These plans include all of the benefits and services
of Parts A and B. They may include prescription drug coverage as part of the
plan. In addition, Medicare Advantage plans may offer extra benefits and
services, such as vision, dental and hearing coverage, and fitness
memberships. Visit “Unpacking Medicare Advantage” for more
info.
What’s the difference
between Medicare Supplement and Medigap?
Don’t
be confused by these terms — they mean the same thing. For those on Original
Medicare, you can buy additional coverage through private insurance companies
to help pay for costs that are not covered, such as copayments, coinsurance and
deductibles.
What is the donut hole in
Medicare?
The
donut hole refers to a gap in coverage, during which you may have to pay more
for your prescription drugs. Here’s how it works:
·
Once you and your drug plan spend a certain amount towards your
prescription drug costs, you enter the donut hole or coverage gap.
·
While in the donut hole, you may pay a higher percentage of the
cost of your prescription drugs until you pay enough out of pocket to exit this
level.
What is a formulary?
This is
a list of prescription drugs that’s covered by the plan. To lower costs, many
plans place drugs into different tiers — or pricing categories — on their
formularies. Drugs on each tier cost a different amount, and plans can
structure their tiers in different ways. Generally, the lower the tier, the less
you pay.
We’ve
also included some basic health insurance terms that are
helpful for understanding your Medicare coverage.
·
A premium is a monthly amount you pay for
coverage.
·
A deductible is the amount you must pay for
covered health care services or prescriptions before Original Medicare, your
Medicare Advantage plan or your prescription drug plan begins to pay.
·
Coinsurance is the percentage
of what you pay (for example, 20 percent).
·
A copayment or copay is a set amount that you
pay (for example, $40).
·
An out-of-pocket maximum or limit is
the most you’ll pay during a policy period (usually a year) for covered medical
services. Once you reach your out-of-pocket maximum, your plan pays 100 percent
of medical covered services.
Now
that we’ve covered the basics, you should be better prepared to make the right
decisions to reach your health goals.
For a
more complete list of terms, visit our Medicare glossary.
About the author
Sachi
Fujimori is a writer and editor based in Brooklyn who focuses on writing
about science and health. A good day is one where she eats her vegetables
and remembers to live in the moment with her baby girl.
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