MEDICAREUNDERSTANDING

BENEFITS

YOUR GUIDE TO UNDERSTANDING MEDICARE AND CHOOSING THE BEST PLAN

The content of this guide is furnished for informational use only, is subject to change without notice, and should not be construed as a commitment by your employer. Your benefit plans may not include all material referenced herein. You should read your benefit plan summaries for a full explanation of your coverage. The unauthorized reproduction of this guide is prohibited.

Taking the Mystery Out of Medicare...... . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Three Ways to Get Health Coverage...... . . . . . . . . . . . . . . . . . . . . . . . . . .5

What is Medicare?...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Understanding Prescription Drug Options...... . . . . . . . . . . . . . . . . . .7

Original Medicare and Part D...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Medicare Supplement Policy...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Medicare Advantage...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Enrolling in Medicare...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Enrollment Periods...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Employer Health Plan...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Final Considerations...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Medicare Resources...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Medicare Worksheet...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

TABLE OF CONTENTS .

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TAKING THE MYSTERY OUT OF MEDICARE .

The #1 question everyone asks: Am I required to enroll in Medicare when I turn 65?For many years, when you turned 65, you retired, collected Social Security income, and were automatically enrolled in Medicare. Now folks are working past age 65; some because they want to, some because their Social Security retirement age for full benefits is age 66 or older, and some because they are covering younger dependents.

If you continue to work beyond age 65, you do not have to enroll in Medicare while you are covered under your employer’s group health plan as an active employee (as long as the employer has 20 or more employees). Please note that COBRA continuation is not considered active employee coverage. While you work and remain covered, you have a protected right to enroll in Medicare without penalty after your coverage ends.*

While you are not required to enroll in Medicare, you may be enrolled automatically. If you signed up for Social Security income before age 65, the government will automatically enroll you in Medicare Part A when you turn 65. You cannot refuse enrollment or disenroll.

*Centers for Medicare & Medicaid Services. Medicare and You. See Special Enrollment Period Part A and Part B.

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THREE WAYS TO GET HEALTH COVERAGE .There are three ways to get your health coverage: An employer-sponsored health plan, Original Medicare with a drug plan and a supplement, or a Medicare Advantage Plan.

MEDICARE ADVANTAGE

PLAN

PART DPrescription Drug

Coverage (if not already included)

ORIGINAL MEDICARE

PART DPrescription Drug

Coverage

PART B

MEDIGAP(Medicare Supplement

Insurance Policy)

PART A

EMPLOYER HEALTH PLAN

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WHAT IS MEDICARE ?Medicare is a federal health insurance program for people age 65 and older. You can also qualify for Medicare if you are younger than 65 and Social Security disabled.

Medicare is made of four sections, known as Parts:

Medicare expensesAll Medicare expenses must be “medically necessary.” Medicare

generally does NOT cover most dental care, routine eye and foot care, custodial care (help with bathing, dressing, eating), long-term care,

routine hearing tests, and most chiropractic services.

Part AHelps pay for inpatient hospital and skilled nursing facilities, which include expenses for semi-private room and board, general nursing services and supplies, home health care, and hospice care.

Part BHelps pay for physicians’ visits, outpatient hospital services and supplies, physical or speech therapy, durable medical equipment (i.e., wheelchairs), and ambulance services.

Parts A and B together are sometimes referred to as Original Medicare.

Part CAlso known as Medicare Advantage, this covers all services that Parts A and B cover, but through private insurance carriers or Health Maintenance Organizations (HMO). Many also include Part D drug coverage.

Part DHelps pay for prescription drug expenses and provides creditable drug coverage for people enrolled in Medicare. These plans are offered by private companies that have met government standards.

Medicare requires that anyone enrolled in Medicare have a certain level of prescription drug coverage called “creditable” drug coverage, or pay a penalty. All Part D plans provide creditable drug coverage, but there are other options.

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UNDERSTANDING PRESCRIPTION DRUG OPTIONS .Medicare requires that anyone enrolled in Medicare have a certain level of prescription drug coverage called “creditable” drug coverage, or pay a penalty.

Three ways to get creditable drug coverage

The requirement to have creditable drug coverage or pay a penalty only applies once you are actually enrolled in Medicare. If you don’t have creditable coverage at the time you enroll in Medicare, you will pay a cumulative 1% of premium penalty* for each month you should have had creditable coverage and didn’t. The penalty accumulation stops when you get creditable drug coverage; however, you pay the penalty forever.

A standalone Medicare Part D prescription drug plan. To enroll in a Medicare Part D plan, you must be enrolled in Medicare Part A or Part B.

As part of a Medicare Advantage Plan. Again, to enroll in a Medicare Part D plan, you must be enrolled in Medicare Part A or Part B.

Your employer’s group medical plan. The Heritage Group health plans include creditable drug coverage.

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*Based on the Part D National Base Premium

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ORIGINAL MEDICARE AND PART D .

What does Original Medicare cost?• Part A is free if you or your spouse have worked and paid Social Security taxes

for at least 10 years.

• Part B has a monthly premium that is based on your income.

• Part D has a monthly cost determined by the drug plan provider and the specific prescriptions you take. Monthly premiums can range from $15 to over $300. In addition to a monthly premium, plans can have a deductible, copays, and coinsurance.

How do I find a Part D plan?There are hundreds of Part D drug plans, and each has its own drug terms and formulary. The Medicare website, Medicare.gov, allows you to explore the cost and benefits of plans in your area. If you enter the prescriptions you take, the website will tailor plan selections specifically for you. When you enter your prescriptions, please remember to write down your drug list number and date of entry. That way you can go back and modify your drug list anytime in the future without re-entering all your prescriptions. Your drug list number is found on the page where you enter your drugs in a box on the upper right side.

To compare the prescription drug plan benefits, deductibles, copays, coinsurance, formulary, and costs, go to Medicare.gov. The drug plans listed have been checked out and approved by Medicare. Plans are listed by cost and service rankings. You can also contact an insurance agent who is licensed to sell Medicare products, or you can contact the drug plan directly.

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As you consider which plan is the best for you, ask yourself the following questions:

• Do I have to use a particular pharmacy?

• What if I’m out of town and need a refill?

• Does the plan have mail order?

• Do any of my prescriptions have a generic I can take?

Drug plan premiums vary according to prescription type, strength, and dosage. If your prescriptions change during a year, the drug plan you selected at the beginning of a year may or may not provide adequate coverage. You can change plans once a year during the Medicare Open Enrollment Period, which is October 15 through December 7, effective for January 1.

Parts A and B together are sometimes referred to as Original Medicare.

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MEDICARE SUPPLEMENT POLICY .

What is a Medicare Supplement Policy?A Medicare Supplement Policy pays for Medicare-covered expenses and services that are not paid by Medicare, like deductibles and copays. For example, Medicare covers about 80% of your Part B expenses. Having a supplement can help you with the 20% of out-of-pocket expenses. You must have Medicare Parts A and B before you can purchase a supplement.

Medicare Supplement coverage and costMedicare Plans

There are 10 standard Medicare Supplement Plans. “Standard” means that regardless of which insurance carrier offers a supplement, the benefits are the same.

For example, a Supplement G purchased from AARP provides the same benefits as a Supplement G purchased from Mutual of Omaha; however, each carrier prices its supplements differently.

Pricing

Pricing depends on your location, age, gender, and tobacco usage. It is worth your time to investigate the cost of a supplement from various insurance carriers.

Also, check on the carrier’s financial stability and when it last increased its supplement premiums. Not all plans are available in every state or from every insurance carrier. Prescription drug, dental, and vision benefits are not provided with any Medicare Supplement Plan.

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Medicare Supplement Plans

You can purchase a Medicare Supplement during your Initial Enrollment Period or Special Enrollment Period. Outside of these two enrollment periods, the insurance carrier will ask you health questions and may not offer you a policy.

SUPPLEMENT PLANSA B C D F G K L M N1

Part A Hospital Coinsurance and 365 Extra Hospital Days

100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Part A Deductible 100% 100% 100% 100% 100% 50% 75% 50% 100%

Part B Coinsurance 100% 100% 100% 100% 100% 100% 50% 75% 100% 100%

Part B Annual Deductible 100% 100%

Part B Excess Charges 100% 100%

Blood Transfusion (first three pints) 100% 100% 100% 100% 100% 100% 50% 75% 100% 100%

Foreign Travel Emergency Cost (up to plan limits) 100% 100% 100% 100% 100% 100%

Hospice Care Coinsurance 100% 100% 100% 100% 100% 100% 50% 75% 100% 100%

Preventive Care Coinsurance 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Skilled Nursing Facility Care Coinsurance 100% 100% 100% 100% 50% 75% 100% 100%

Out-of-Pocket Limit (2018) $5,120 $2,560

1 Except certain copays – $20 copay for doctor visit; $50 copay for ER visit.

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MEDICARE ADVANTAGE .

What is a Medicare Advantage Plan?Medicare Advantage Plans (Medicare Part C) are health plans approved by Medicare, but offered through private insurance carriers and HMOs. Medicare pays a fixed fee to the insurance carrier or HMO, which then pays the doctors and hospitals. They are required to provide services that are similar to Original Medicare (Parts A and B), and many plans include prescription drugs (Part D).

When you join a Medicare Advantage Plan, you are substituting the plan for Original Medicare (Parts A, B, and D, if the Medicare Advantage plan includes prescription drug coverage). You must continue to pay your Medicare Part B premium, in addition to any premium charged by the Medicare Advantage plan.

How much does Medicare Advantage cost?Part C monthly premium is determined by the individual insurance carrier or HMO. You can get estimates from Medicare.gov, by contacting an insurance agent that is licensed to sell Medicare products, or by contacting the insurance carrier or HMO directly. Even though a Medicare Advantage Plan is provided by a private insurance carrier or HMO, you must still pay your Part B premium.

Plan changesIf your doctor leaves your plan’s network, you can’t change plans

until the next Medicare Open Enrollment. Open Enrollment begins October 15 and ends December 7, effective January 1.

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How does a Medicare Advantage Plan work?

Referrals. Some Medicare Advantage Plans require referrals to see specialists.

Premiums. Medicare Advantage Plan monthly premiums can be low, sometimes even free, depending on where you live and what prescriptions you take. Medicare Advantage Plans pay differently for services, so it is important to check the plan’s benefits (not just the cost) before you join.

Networks. Medicare Advantage Plans provide your Part A and Part B services as long as they are medically necessary; however, your deductibles or copays may be higher than Original Medicare. Medicare Advantage Plans often have networks, which means you may have to see doctors who belong to the plan or go to certain hospitals to receive covered services. Make sure the network has the specialists or doctors you need. If you want to change plans, you can only change once a year, even if your doctor leaves the network.

Extra benefits. Medicare Advantage Plans may offer extra benefits, such as dental, vision, or hearing services.

Prescriptions. If the Medicare Advantage Plan includes Part D drug coverage, your costs for prescription drug coverage can be higher or lower than in a standalone Medicare Part D Prescription Drug Plan. It’s important to understand how a plan pays for the drugs you use as you consider which plan you want.

Medicare Supplement Policy. You may not keep (or even buy) a Medicare Supplement Policy if you are enrolled in a Medicare Advantage Plan. If you already have a Medicare Supplement Policy when you enroll in a Medicare Advantage Plan, you will not be able to keep it and may not be able to get it back if you decide to switch back to Original Medicare at a later date.

Plan changes. You can change from one Medicare Advantage plan to another each year during Medicare Open Enrollment, October 15 through December 7, effective for January 1.

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ENROLLING IN MEDICARE .

Types of enrollmentThere are two ways in which you can enroll in Medicare:

Automatic enrollment in Medicare happens when you sign up to receive Social Security income. If you enroll in Social Security before age 65, when you turn 65, you will be automatically enrolled in Parts A and B. If you don’t want Part B, you will have to tell Social Security.

Currently, there is no way to disenroll from Part A. A simple way to think about it is that Social Security income and Medicare Part A are joined.

If you didn’t sign up for Social Security and you want Medicare, then you need to actively enroll.

Active enrollment occurs when you call Social Security to enroll in Medicare or enroll online at SocialSecurity.gov. You can enroll during your Initial Enrollment Period or Special Enrollment Period.

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ENROLLMENT PERIODS .Initial Enrollment Period – At Age 65

Your initial Medicare effective date is the first day of the month of your 65th birthday. If you want Medicare to be effective when you turn 65, you must sign up during the Initial Enrollment Period.

Your Initial Enrollment Period is seven months long. It begins the third month BEFORE the month of your 65th birthday, and includes the month of your 65th birthday and the three months AFTER your 65th birthday. If you sign up any time during the three months before your 65th birthday, Medicare will be effective the first day of the month in which you turn 65. If you sign up during the month of your 65th birthday, your Medicare will be effective the first day of the next month.

If you plan to retire or reduce your working hours so you aren’t eligible for your employer’s group health plan, you can enroll in Medicare Parts A, B, C, and D during your Initial Enrollment Period (as described above). Plan ahead so you don’t have a break in coverage. If you delay past your Initial Enrollment Period, you may have to pay a penalty for that delay unless you qualify for a Special Enrollment Period.

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Special Enrollment Period – After Age 65

If you (or your spouse) are still working and covered in an employer’s group health plan due to active employment, you do not have to enroll in any part of Medicare if the employer has 20 or more employees. Once you no longer have active employee coverage, you have a right to enroll in Medicare during a Special Enrollment Period. Your Special Enrollment Period begins at the end of active employment or the end of health plan coverage, whichever occurs first, and lasts for eight months.

A Special Enrollment Period is based on active employment beyond age 65 and coverage under the employer’s group health plan (provided the employer has 20 or more employees). If you enroll during your Special Enrollment Period, you will not pay a penalty for your delay.

A common misconception is that COBRA continuation of the employer group health plan counts as coverage due to active employment. It does not. If you elect COBRA and miss your Initial or Special Enrollment Period, you will pay a penalty for Part B when you do enroll.

Enrolling in Part D

You can enroll in a Part D drug plan on Medicare.gov or by phone. If you don’t have Internet access, you can call Medicare at 1.800.633.4227 and talk with a customer service representative who can help you find a plan and enroll.

Important informationAlthough you have an eight-month Special Enrollment Period to enroll

in Medicare Parts A and B, it is better to think of your Special Enrollment Period as 60 days to enroll in a Part C Plan (Medicare Advantage), a Part

D drug plan, and to purchase a Medicare supplement.

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EMPLOYER HEALTH PLAN .The decision to stay on your employer group health plan or drop it in favor of Medicare depends on your own unique family, health, and financial situation.

Questions to ask yourself• Does my employer have 20 or more employees?

• Am I covering another person and what is the age of that person?

• How long do I want to continue working?

• How many prescriptions do I take?

• What are my annual out-of-pocket expenses?

• Does my employer plan provide creditable or non-creditable prescription drug coverage?

• How much do I pay for my employer coverage?

Medicare and Health Savings Accounts (HSA)*If you are 65 years old, but have decided to wait to sign up for Medicare and are currently covered by a qualified High Deductible Health Plan (HDHP), you can open and contribute to a HSA.

If you are enrolled in Medicare, you may not contribute to a HSA. If you previously opened a HSA, you are able to spend that money, but cannot add additional money. You are eligible for employer-funded seed money, but the seed money is taxable income to you in the year it is deposited into your account. You will need to withdraw the money from your HSA and report it on your tax return.

Remember, if you’re age 65 or older and receiving Social Security income, you are automatically enrolled in Medicare Part A. You may not contribute to a HSA. You are eligible for employer-funded seed money, but you will need to withdraw the money from your HSA and report it on your tax return.

After you enroll in Medicare, you can still use your HSA to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare; but you cannot use your account to purchase a Medicare Supplement Policy. You can also continue to use your account tax-free for eligible health expenses.

* Please consult your tax advisor for more information.

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FINAL CONSIDERATIONS .

How much can I afford?• What will I pay out-of-pocket, including premiums, deductibles, and other

cost-sharing (copays or coinsurance)?

What benefits are important to me?• Are extra benefits and services, such as eye exams, dental benefits,

hearing aids, or emergency health care outside the United States, covered? (These may be covered by some plans.)

What doctors do I see regularly?• Can I see the doctor(s) I want?

• Do I need a referral to see a specialist?

• Can I go to the hospital I want?

• Do I pay less to go to certain doctors or hospitals?

Do I travel? • Will my plan cover me in another state?

• What about outside the United States?

What about my prescription drug coverage?• Are my drugs covered under the plan’s formulary (list of covered drugs)?

• What will my prescription drugs cost under the plan?

• What is the premium for the plan?

• What is the deductible for the plan?

• Do I have to use particular pharmacies?

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MEDICARE RESOURCES .

State Health Insurance Assistance ProgramThe State Health Insurance Assistance Program (SHIP) is a national program that offers one-on-one counseling and assistance to people and their families eligible or enrolled in Medicare. Each state has its own SHIP, and the services provided by SHIP are FREE. The volunteers are not sales people, merely trained experts in the field of Medicare ready to assist you. These counselors can:

• Answer questions about Medicare, Medicare Supplement Insurance, Medicare Advantage, and prescription coverage.

• Provide you with educational materials.

• Educate you on how Medicare claims are filed and how you can appeal Medicare decisions.

• Teach you to assess your needs so you can make informed decisions.

Visit ShipTalk.org for more information.

Medicare Rights CenterFounded in 1989, Medicare Rights Center is an independent source of free Medicare information and assistance. Counselors are available between 9:00 am–5:00 pm EST, Monday through Friday.

• 1.800.333.4114

• MedicareRights.org

Additional ResourcesSocial Security

• 1.800.722.1213

• SocialSecurity.gov

Medicare

• 1.800.633.4227

• Medicare.gov

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MEDICARE WORKSHEET .Wondering how the cost of Medicare will affect your pocket book? Complete the worksheet below to compare the costs of the available healthcare options.

Employer Health Plan• Employer health plan coverage only

If I have Medicare Part A:

• Employer health plan coverage

• Part D Prescription Drug Coverage

Original Medicare• Part A

• Part B

• Part D Prescription Drug Coverage

• Medicare Supplement Insurance Policy

Medicare Advantage Plan• Part A

• Part B

• Medicare Advantage Plan (Make sure prescription drug coverage is included)

TOTAL $ ____________

$ ____________

+ $ ____________

TOTAL $ ____________

$ ____________

$ ____________

$ ____________

+ $ ____________

TOTAL $ ____________

$ ____________

$ ____________

+ $ ____________

TOTAL $ ____________

0.00

0.00

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NOTES.

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NOTES.

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NOTES.

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Version 1 • Effective December 1, 2018