Medicare Basics 101

UNDERSTANDING MEDICARE

Medicare is health insurance offered through the Federal Government.  It is available when:

  • You turn 65 years old
  • You are disabled
  • You have End Stage Renal Disease (ESRD)

When you first enroll, you will be covered by Original Medicare.  You can choose different ways to receive the services covered by Original Medicare.  Original Medicare is a fee-for-service plan that pays for many health are services and supplies, but it doesn’t pay all of your healthcare costs.  These are out of pocket costs, like coinsurance, copayments and deductibles.  These are called “gaps” in Medicare coverage.

To fill these gaps, you can choose to receive additional coverage through a Medicare Advantage plan (HMO, PPO, MSA) or Medigap supplemental insurance.

Original Medicare covers many services and supplies, but not everything, which is why there are additional options for Medicare health coverage.  Original Medicare includes:

  • Medicare Part A, which covers inpatient hospitalization, skilled nursing facilities, and hospice. Generally, you don’t pay a premium for Part A, but you will have deductibles and copayments or coinsurance.
  • Medicare Part B, which covers outpatient care and doctor services, such as a visit to your primary doctor or a specialist. Part B has a premium, deductible, and coinsurance.

Medicare Advantage plans cover the same services as Original Medicare and usually more.  What are the benefits of Medicare Advantage plans?

  •  Medicare Advantage plans combine Part A, Part B, and sometimes Part D (drug coverage) into one plan.
  • With a Medicare Advantage plan, your costs will usually be lower than with Original Medicare.
  • These plans can include extra benefits, such as health and wellness programs, vision, and fitness.
  • You join a Medicare Advantage plan through a Medicare-approved private insurance company (like BlueCross BlueShield).
  • There are different types of Medicare Advantage plans, giving you options to find the plan that’s the right fit for you.

Medicare Part A includes hospital insurance.  Most people do not pay a monthly Part A premium, because they or their spouses have 40 or more quarters of Medicare-covered employment. 

What should you know about Medicare Part A?

  • Provides partial coverage for inpatient hospitalization and skilled nursing facility care.
  • Has deductibles and copayments for which you will be responsible for unless they are covered by a separate health insurance plan.
  • Part A is required to qualify for Medicare Advantage programs.

Medicare Part B includes medical insurance.  The monthly plan premium provides partial coverage for inpatient hospitalization and skilled nursing facility care and has deductibles and copayments for which you will be responsible for unless they are covered by a separate health insurance plan. 

What should you know about Medicare Part B?

  • Provides partial coverage for doctor office visits and other medical services.
  • Has deductible and coinsurance
  • Although Part B is optional, there is a penalty if you sign up after your initial enrollment period
  • Part B is required to qualify for Medicare Advantage programs.

Medicare Part C includes Medicare Advantage Plans such as HMOs, PPOs, and MSAs.  Some plans offer $0 monthly premiums, while others vary by plan.

What should you know about Medicare Part C?

  • Combines your part A and Part B benefits.
  • Private insurance companies approved by Medicare provide this coverage.
  • Costs may be lower than in the Original Medicare Plan, and you may get extra benefits.

Medicare Part D includes prescription drug coverage.  Some prescription drug plans have separate premiums, while others do not.  The monthly premium will vary by plan. 

What should you know about Medicare Part D?

  • Sold by private insurance companies, some Part C plans include Part D
  • Part D is optional for most people, with a penalty for late enrollment
  • Part D plans can have a deductible
  • After your total yearly drug costs reach the initial coverage limit of $2,850, you enter the coverage gap (donut hole) where you receive a 52.5% discount on brand name drugs and pay 72% of the plan’s costs for all generic drugs until your yearly out-of-pocket drug costs reach $4,550.

After your yearly out-of-pocket drug costs reach $4,550 (catastrophic phase), you pay the greater of 5% coinsurance or $2.55 copay for generic (including brand drugs treated as generic), and a $6.35 copay for all other drugs

The Medicare Program rates all health and prescription drug plans each year based on a plan’s quality and performance.  Medicare Plan Ratings help you know how good a job our plan is doing.  For full details on Medicare Plan Ratings, please review the Medicare Plan Ratings.

Enrollment Time Frame and Process

You may enroll in a Medicare Advantage plan only during specific times of the year:

  • When you first become eligible for Medicare, the seven month period  beginning three months before you turn 65, the month you turn 65 and three months after you turn 65
  • If you get Medicare due to a disability
  • During the Annual Enrollment Period from October 15, 2013 and December 7, 2013

In most cases, you must stay enrolled for the calendar year that starts the date your coverage begins.  In certain situations, however, you may be able to join, drop or switch a Medicare Advantage Plan, excluding BlueSaver MSA, at other times.

Some of these situations include the following:

  • During the Medicare Advantage Disenrollment Period, between January 1 and February 14, you may drop your Medicare Advantage Plan and return to Original Medicare (does NOT apply to the BlueSaver MSA plan)
  • If you move out of the plan’s service area
  • If you have both Medicare and Medicaid
  • If you qualify for extra help to pay for your prescription drugs
  • If you live in an institution

 

Becoming a member of Senior Blue HMO or Forever Blue Medicare PPO from BlueCross BlueShield is easy. You can use our online application or print off, complete and mail in the paper-based application. Use the links below to make your choice.

Medicare beneficiaries may also enroll in Senior Blue HMO, Forever Blue Medicare PPO or BlueSaver Rx PDP through the CMS Medicare Online Enrollment Center located at http://www.medicare.gov.


If you have any questions, please call Customer Service at 1-800-329-2792, TTY: 1-877-834-6918.

We are open:

October 1 - February 14

8 a.m. to 8 p.m., 7 days a week

February 15 - September 30

8 a.m. to 8 p.m., Monday-Friday


During non-business hours, your call will be answered by our automated phone system.  A Customer Service Representative will return your call on the next business day.

You may also chat online with a representative in a secure online chat room. 

We also welcome any suggestions you may have for improving our plan or to make recommendations regarding the Member Rights and Responsibilities Policy (Please see the Member Rights and Responsibilities section of your Evidence of Coverage for more information

Medicare Advantage Plans

When you turn 65, you’ll be eligible for Medicare, and you’ll need to make some important decisions about how you receive your health care.  Beginning three months before your 65th birthday, you will be eligible to enroll in Medicare.  Your eligibility will last for seven months - including the three months before your birthday month, your birthday month, and the three months after.  Before or during those seven months, you will need to decide:

  • What healthcare benefits are most important to you
  • How you want to get Medicare coverage:

            - Original Medicare alone

            - A Medicare Advantage Plan, like Senior Blue HMO, Forever Blue Medicare PPO, or  BlueSaver MSA.

            - Original Medicare plus a supplemental insurance policy (Medigap)

  • Whether you need prescription drug coverage

You must live in one of the following Western New York counties to be eligible for enrollment in one of BlueCross BlueShield’s Medicare Advantage plans:

  • Allegany
  • Cattaraugus
  • Chautauqua
  • Erie
  • Genesee
  • Niagara
  • Orleans
  • Wyoming

To fill the gaps in Medicare coverage you can select from different types of Medicare plans.  Medicare plans offered by BlueCross BlueShield include:

  • Health Maintenance Organization (HMO)
  • Preferred Provider Organization (PPO)
  • Medical Savings Account (MSA)
  • Medigap Supplemental Insurance

A Health Maintenance Organization (HMO) is a type of Medicare Advantage plan that takes the place of Original Medicare (Medicare Advantage Plan is primary).  With an HMO plan, you must receive care from doctors and hospitals in the plan’s network, except for emergency or urgent care. Prescription drug coverage is included with some plans.

A Preferred Provider Organization (PPO) is a type of Medicare Advantage plan that takes the place of Original Medicare (Medicare Advantage Plan is primary).  With a PPO plan, you can receive care within a network of doctors and hospitals or use out-of-network doctors and hospitals for covered services, usually for a higher cost.  Prescription drug coverage is included with some plans.

A Medical Savings Account is a type of Medicare Advantage plan that takes the place of Original Medicare (Medicare Advantage Plan is primary). 

An MSA combines a high deductible Medicare Advantage plan with a bank account. The plan deposits money from Medicare into the account. MSA deposits are not taxed if the money is used toward IRS-defined qualified medical expenses. Use the money in this account to pay for your health care costs, but only Medicare-covered expenses count toward your annual deductible. The amount deposited is usually less than your deductible amount, so you generally will have to pay out-of-pocket before your coverage begins. After the annual deductible is met, all Medicare A and B medical expenses are covered in full. If the full deposit is not used, the remainder is rolled over to the next year. MSA plans do not have a network, allowing you to receive care from any doctor or hospital that accepts Medicare assignment nationwide. Medicare MSA plans do not cover prescription drugs.

If you join a Medicare MSA plan, you can also join a Medicare prescription drug plan to receive drug coverage.

Medigap Supplemental Insurance works with Original Medicare (Medicare is primary).  It covers some of the health care costs that the Original Medicare Plan does not.  Plans are standard between companies and you can receive care from any doctor or hospital that accepts Medicare assignment nationwide.  Medigap plans don’t cover prescription drugs. Therefore, ff you join a Medigap plan, you can also join a Medicare prescription drug plan to receive drug coverage.

How Medicare Advantage Drug Coverage (Part D) Works

You pay a copay or coinsurance.  BlueCross BlueShield pays the remaining cost.  You start in the initial coverage stage and generally stay in this payment stage until your year-to-date total drug costs (what you pay plus what BlueCross BlueShield pays) reach $2,850. After you reach $2,850, you will enter the “coverage gap” or “donut hole”. 

When you are in the coverage gap (donut hole):

  • You pay 72% of BlueCross BlueShield’s cost for all covered generic medications. The cost you pay at the pharmacy applies toward your out-of-pocket costs.
  • You pay no more than 47.5% of BlueCross BlueShield’s cost for covered brand name medications.* The total cost of the medication (before the discount) applies toward your out-of-pocket costs.
  • The discounts are automatically applied at the point of sale.

    You generally stay in this stage until your year-to-date out-of-pocket costs reach $4,550

After you reach $4,550, you enter the catastrophic coverage stage.  In this stage, you pay the greater of 5% coinsurance or $2.55 for generic medications and $6.35 for all other medications.  BlueCross BlueShield pays the remaining cost.   Once you are in this payment stage, you will remain in it for the rest of the calendar year (through December 31).

* As defined by the Centers for Medicare and Medicaid Services (CMS), a dispensing fee will apply

BlueSaver MSA

1) Funding:

After you join BlueSaver MSA for $0 per month1, Medicare gives us $3,000 to deposit into your medical savings account. Funds in the account earn interest tax-free.9  This amount is prorated if you enroll after January 1.

2) Before deductible:

You have a $4,750 deductible. A deductible is an amount you pay before your health insurance plan begins to pay.  In this stage, each time you receive Medicare Part A and B  services, the amount you pay counts toward your deductible.  The good news—you can use the money in your account to pay  for services while you meet your deductible. And you can see any  doctor or hospital that accepts Medicare.6

3) After deductible:

After you meet your deductible, we cover all Medicare Part A and B services 100%.

4) Funds left in your account:

If you have money left in your account at the end of the year, it rolls over to next year and can be used for health care costs in the future.

Members can enroll in an MSA plan during the 2014 Annual Enrollment Period (AEP) from October 15 through December 8 or during their  Initial Coverage Election Period (ICEP)*

You cannot enroll in an MSA plan during a Special Election Period (SEP) unless you are requesting enrollment in an employer/union sponsored MSA plan using the Employer Group Health Plan Special Enrollment Period (EGHP SEP).

* The ICEP is the period during which an individual newly eligible for Medicare Advantage (MA) may make an initial election to enroll in an MA plan. This is a seven (7) month election period beginning three months immediately before the individual's entitlement to both Medicare Part A and Part B and ending the last day of the third month following the month of entitlement.

You are not eligible to join an MSA plan if you:

  • Have health coverage that would cover Medicare MSA plan deductibles, including benefits under an employer or union group health plan.
  • Are eligible for health care benefits through the Department of Defense (TRICARE) or the Department of Veteran Affairs (VA).
  • Are enrolled in a Federal Employees Health Benefits Program (FEHBP).
  • Are dual eligible and entitled to coverage of Medicare premium and/or cost-sharing under a Medicaid State plan;
  • Have end stage renal disease (permanent kidney failure requiring dialysis or a kidney transplant).
  • Are currently getting hospice care.
  • Live outside of the United States more than one hundred eighty three (183) days a year.

Qualified medical expenses can be reimbursed from a Medicare Medical Savings Account (MSA).  Qualified medical expenses are the same types of services and products that otherwise could be deducted as medical expenses on your yearly income tax return.  Download a quick reference list of MSA Qualified Medical Expenses.


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The benefit information provided is a brief summary, not a complete description of benefits.  For more information, contact the plan.  Limitations, copayments, and restrictions may apply. Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year.

BlueCross BlueShield of Western New York is a Medicare Advantage plan with a Medicare contract. Enrollment in BlueCross BlueShield of Western New York depends on contract renewal.

Y0086 H9788_MRK1284 Approved
Content last updated October 1, 2013