Medicare Basics

What is Medicare?

Medicare is a federal health insurance program. In order to qualify, you must be a U.S. citizen or lawfully present in the United States. You must also:

  • Be age 65 or older, or
  • Be under age 65 with certain disabilities, or
  • Have permanent kidney failure requiring dialysis.

Medicare has four parts:

Part A hospital coverage

Most people do not pay a monthly premium for Part A. If you or your spouse worked for 10 years and paid Medicare taxes, you will not have to pay a premium.

Part A helps cover:

  • Inpatient hospital care.
  • Skilled nursing facility care.
  • Home health care.
  • Hospice care.

Your costs under Part A include:

  • Inpatient hospital deductible.
  • Inpatient hospital copays.
  • Skilled nursing copays.
  • Monthly premium, if applicable.

Part B medical coverage

Part B requires you to pay a monthly premium along with a yearly deductible before coverage begins. You are also responsible for paying part of the costs that Part B does not cover.

Part B helps cover:

  • Doctor and other health care provider services.
  • Outpatient surgery.
  • Lab and x-ray services.
  • Ambulance services.
  • Preventive services.
  • Durable medical equipment like prosthetics, wheelchairs, and hospital beds.

What costs are you responsible for under Part B?

  • Your Medicare Part B monthly premium, if applicable
  • Yearly deductible (paid before Medicare begins paying)
  • Coinsurance (percentage of the cost that Medicare does not pay)

Services that are NOT covered by Medicare include:

  • Routine hearing, dental, and vision exams.
  • Hearing aids or glasses (except for glasses after cataract surgery).
  • Emergency assistance while traveling outside the U.S.
  • Fitness club membership.
  • Long-term care (such as a nursing home).
  • Prescription drug coverage.

Part C Medicare Advantage plans

Part C is referred to as Medicare Advantage plans. Medicare Advantage plans are Medicare-approved private health plans. Medicare Advantage plans work differently from Supplement plans. They allow you to get all of your Part A Hospital, Part B Medical, and, sometimes, Part D Prescription Drug coverage combined into one plan. They can also provide you with some additional benefits and services that Original Medicare does not cover.

To join a Medicare Advantage plan, you must:

  • Be a U.S. citizen or lawfully present in the United States.
  • Be enrolled in Medicare Parts A and B.
  • Live for six months or more each year in the plan’s service area.
  • Not have permanent kidney failure (some exceptions may apply).

Medicare Advantage plans help cover:

  • All services that Parts A and B cover, except hospice care (which is covered by Medicare).
  • Additional benefits and services that Medicare does not cover, such as:
    • Routine hearing, dental, and vision exams.
    • Hearing aids or glasses (except for glasses following cataract surgery).
    • Emergency medical assistance while traveling outside the U.S.
    • Fitness club membership.

Your costs when enrolled in a Medicare Advantage plan:

  • Part A (if applicable) and Part B monthly premiums, if applicable
  • Medicare Advantage plan monthly premium, if applicable
  • Any out-of-pocket costs such as copays, deductibles, and coinsurance (these costs vary according to the plan you choose)

Medicare Advantage plans can have lower out-of-pocket costs than Original Medicare.

Two types of Medicare Advantage plans

  • Health Maintenance Organization (HMO)
    • HMO plans use a network of participating hospitals and doctors for your care.
    • You must receive services from participating hospitals and doctors, except for emergency care, out-of-area urgent care, and out-of-area kidney dialysis.
    • Make sure your current doctors are included in the plan’s provider network before joining a plan.

  • Preferred Provider Organization (PPO)
    • PPO plans offer coverage for services received both in and out of the plan’s provider network.
    • You may pay a higher coinsurance, copayment, or deductible for care received outside of the plan’s participating provider network.

Part D prescription drug coverage

Part D coverage is offered through Medicare-approved private insurance companies. You can receive Part D coverage through a prescription drug plan (PDP) or by including it in a Medicare Advantage prescription drug plan (MAPD).

Part D helps cover brand-name and generic medications. Prescription coverage varies by plan; each plan has a formulary that lists the drugs that are covered by that plan.

Your costs when enrolled in a Part D plan:

  • Your Part D plan monthly premium, if applicable
  • Any out-of-pocket costs such as copays, coinsurance, and deductibles included with the prescription drug plan that you choose
  • A late enrollment penalty (this only applies if you have a period of 63 days without Part D coverage)

Stages of prescription drug coverage

Initial Coverage Stage
You pay: The deductibles, copays, and coinsurance for your prescription drug plan, as applicable.

Costs that apply in this stage: Your out-of-pocket costs plus the costs paid by your prescription drug plan. Once these costs reach $3,820, you move to the Coverage Gap Stage.

Costs that apply to the Catastrophic Coverage Stage: Only your out-of-pocket costs.

Coverage Gap Stage
You pay: A maximum of 37 percent of the cost for generic drugs and 25 percent of the total cost of brand-name drugs (plus a portion of the dispensing fees).

Costs that apply in this stage: Your out-of-pocket costs for generic drugs. Your out-of-pocket costs plus 70 percent of the total cost for brand-name drugs.

Costs that apply to the Catastrophic Coverage Stage: The costs that apply in this stage plus your total out-of-pocket costs from the Initial Coverage Stage. Once these costs reach $5,100, you leave the Coverage Gap Stage. This applies to all prescription drug plans.

Catastrophic Coverage Stage
You pay: A reduced copay or coinsurance on all covered drugs until the end of the year.

Prescription drug coverage example

Stages Example
Initial Coverage Stage In this example, the total cost of a Tier 2 generic drug is $30.

You pay: Your plan’s deductible first (if applicable). Then you pay your plan’s Tier 1 generic drug copay of $9.
Plan pays: the remaining $21 for the same generic drug.

A total of $30 ($9 your cost plus $21 plan’s cost) is accumulated. You have $3,790 ($3,820 - $30) left in the initial coverage stage.
Coverage Gap Stage You pay: A maximum of 37% of the total cost of $30. Your cost would be $11.10.

A total of $11.10 is accumulated in the coverage gap stage. Only your costs are accrued in this stage.
Catastrophic Coverage Stage You pay: The greater of 5% or $3.40 for a generic drug or a drug treated like a generic drug and 5% or $8.50 for all other drugs.

Extra help with prescription drug costs

Centers for Medicare & Medicaid Services
The government offers extra help for Part D prescription drug costs. To see if you qualify, call 1-800-MEDICARE (1-800-633-4227), 24 hours a day, seven days a week. TTY users should call 1-877-486-2048. Or you can visit online at www.medicare.gov.

Medical Assistance (Medicaid)
To see if you qualify for medical assistance from the state (Pennsylvania), call 1-800-692-7462 Monday through Friday from 8:30 a.m. to 4:45 p.m. TTY users should call 1-800-451-5886.

To see if you qualify for medical assistance from the state of Ohio, call 1-800-324-8680 Monday through Friday from 7 a.m. to 8 p.m. and Saturday from 8 a.m. to 5 p.m.

PACE/PACENET
Pennsylvania offers help to older adults for prescription drug coverage. Call 1-800-225-7223 from 8:30 a.m. to 8 p.m., Monday through Friday, and 9 a.m. to 3 p.m. on Saturday. TTY users should call 1-800-222-9004. Or you can visit online at https://pacecares.magellanhealth.com/.

Veterans Administration (VA)
To see if you qualify for Veterans Administration benefits, visit online at www.va.gov or go to your local VA facility.

Links:
www.medicare.gov
https://pacecares.magellanhealth.com/
www.va.gov

This information is not a complete description of benefits. Call 1-866-405-8762 (TTY: 711) for more information. Out-of-network/non-contracted providers are under no obligation to treat UPMC for Life members, except in emergency situations. Please call our customer service number or see your Evidence of Coverage for more information, including the cost-sharing that applies to out-of-network services. Other physicians/providers are available in the UPMC for Life network.

This information is available for free in other languages. Please call our customer service number at 1-877-539-3080 (TTY: 711). We are available October 1 through March 31, seven days a week from 8 a.m. to 8 p.m. From April 1 through September 30, we are available Monday through Friday from 8 a.m. to 8 p.m. and Saturday from 8 a.m. to 3 p.m.

UPMC for Life has a contract with Medicare to provide HMO, HMO SNP, and PPO plans. The HMO SNP plan has a contract with the PA State Medical Assistance program. Enrollment in UPMC for Life depends on contract renewal. UPMC for Life is a product of and operated by UPMC Health Plan Inc., UPMC Health Network Inc., UPMC Health Benefits Inc., and UPMC for You Inc.

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Last Updated: 10/01/2018
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