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A Patient's Guide to Health Insurance

Frequently Asked Questions About Health Insurance

What are my health insurance options?

High Risk Insurance Pools - Health insurance risk pools are private, self funded health insurance plans organized by state governments to provide a safety net for people who have been denied health insurance due to pre-existing medical conditions. In most states, they are independent entities governed by their own board and administrators, but in some states, they function as part of the state department of insurance. Most high risk pools offer benefits similar to basic private market plans, but at a much higher cost.

“Guaranteed Issue” Health Insurance – Guaranteed Issue requires an insurer or health plan accept everyone, regardless of health, income, or age, who applies for coverage and guarantees the renewal of that coverage as long as the premium is paid. Guaranteed issue policies offer immediate coverage to persons without pre-existing conditions and without any waiting period. As with other policies, coverage is usually very expensive.

“Open Enrollment” – Open enrollment policies are mandated by states. Usually one insurance company is contracted to offer a policy to persons with medical histories. In exchange for assuming high risk patients, the state provides tax incentives to the insurer. While these policies provide comprehensive coverage, they usually have lifetime caps and very expensive premiums.

Medicaid – Medicaid is the U.S. health insurance program for individuals and families with low incomes and resources. It is jointly funded by the states and federal government, and is managed by the states. Among the groups of people served by Medicaid are eligible low-income parents, children, seniors, and people with disabilities. Medicaid is the largest source of funding for medical and health-related services for people with limited income.

Medicare – Medicare is the nation’s largest health insurance program. Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment. You are eligible for Medicare if you are 65 years old, blind or disabled, and a citizen or permanent resident of the United States. You might also qualify for coverage if you are a younger person with a disability or chronic kidney disease.

Individual Health Insurance – Individual health insurance is health insurance that insures you in the event that you are uninsured or underinsured. Individual health insurance is a prudent investment if you are self-employed or work for a company that does not offer health insurance. Buying an individual policy requires careful shopping because coverage and costs vary from company to company.

Group Health Insurance – Group health insurance is exactly what it sounds like, one insurance policy covering a group of people. Usually a company establishes a group health insurance plan to cover its employees, however, health insurance plans are not limited to companies and many different groups can obtain health insurance. Many times, clubs/organizations, chambers of commerce, special interest groups, trade associations, and church/religious groups organize health care for their members.

Medigap/Supplemental – Medigap or Supplemental policies are private insurance companies which sell a policy to help you supplement Medicare benefits. These are applied because Medicare does not cover all expenses. Private insurers sell Medigap (also called Medicare Supplement Insurance) policies to supplement federal insurance benefits and to fill in the gaps left by Medicare. If you are on Medicare disability, there are only 24 states which offer Medigap or supplemental policies, leaving 26 states that do not offer this policy.

States with Medigap Coverage for Disabilities

California
Colorado
Connecticut
Kansas
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
New Hampshire
New Jersey
New York
North Carolina
Oklahoma
Oregon
Pennsylvania
South Dakota
Texas
Vermont
Washington
Wisconsin

States without Medigap Coverage for Disabilities

Alabama
Alaska
Arkansas
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Iowa
Kentucky
Montana
Nebraska
North Dakota
New Mexico
Nevada
Puerto Rico
Rhode Island
South Carolina
Tennessee
Ohio
Utah
Virginia
Washington, DC
West Virginia
Wyoming

There may also be other options in which you might become insured through a college or university as a student or as a member of a professional association or trade union. Be sure to verify that your insurance plan is valid and that it covers hospitalizations.

What types of health insurance plans are available?

There are various health care plans offered by insurance companies and the type of plan may impact your health care. The most well-known are:

            Health Maintenance Organizations (HMO’s) – These plans require you to choose a doctor as your primary physician in order for your insurance to pay the bill.

            Preferred Provider Organizations (PPO’s) – These plans require you to use any of the doctors on their provider list.

Both of these types of plans endeavor to manage your care by making cost agreement contracts with specific doctors, pharmacies, and hospitals. If you use any of the doctors, pharmacies, or hospitals outside this list, you may end up paying more of your co-payment. Make sure these plans will cover your specific prescription medication and injectables. Call your plan’s customer service representative to determine if your prescriptions are covered.

Can I obtain health insurance, even if I’m considered “high risk”?

Thanks to federal legislation, you can find health insurance, regardless of your income situation or “risk factor.” Let us explain:

In 1996, Congress passed the Kassebaum-Kennedy Act, which became known as the Health Insurance Portability and Accountability Act (HIPAA). In addition to making insurance “portable” or transferable from one group policy to another without meeting a pre-existing condition waiting period, this law requires each state to offer a health insurance policy that mirrors the “standard” policy offered by insurance companies doing business in that particular state. Some of these insurance policies are known as Open Enrollment, Guaranteed Issue and High-Risk Health Insurance Pools.

How could HIPAA benefit me?

You can take advantage of the HIPAA law when the following situations arise:

1. Leaving a group insurance policy and going to another group policy. When you switch group insurance policies, you are entitled to a “certificate of creditable coverage” from your former employer, which shows how many months you were covered under your old plan. Upon leaving your employment, make sure you ask your Human Resources Department for this “certificate.” This certificate will give you credit towards any pre-existing condition imposed on the new group plan. In most cases, if you have been with the old company longer than a year, there will not be a pre-existing waiting period.

2. Leaving a group insurance policy and going to an individual policy.
When you switch from a group to an individual policy you must meet certain criteria. First, you must have been covered by the group insurance for 18 months without a 63-day lapse in coverage. Second, you must have elected and exhausted COBRA coverage. Third, if a state does not elect HIPAA, then it must offer a designated alternative major medical policy that is most commonly sold to persons. In these cases, you will not need to meet a pre-existing waiting period.

3. Leaving Medicaid and/or Medicare and going to a group policy.
If your situation or health changed, and you were able to go back to work and obtain group health insurance, you would receive “creditable coverage” toward your health insurance policy if you have been on one of these public assistance programs for at least 18 months. However, Medicaid and Medicare usually do not count as “creditable coverage” toward individual policies and, in some cases, self-insured policies. Also, programs such as Children with Special Health Care Needs programs are not usually considered “creditable coverage” unless they provide general health care coverage or cover major medical conditions.

What are “High-Risk Health Insurance Pools”?

High-risk insurance pools are “standard” health insurance policies for individuals with high-risk health conditions (pre-existing conditions) who are turned down when trying to buy health insurance. These policies consist of pooled money by insurance companies doing business in the state and by other state/federal funding mechanisms, thus, the name health insurance pools. In return for funding these high-risk policies, participating insurance companies receive tax incentives.

High-risk insurance policies, for the most part are good comprehensive policies with $1 million lifetime maximum (caps). However, high-risk insurance typically costs more, which creates a paradox for most middle class families. The policies are available, but not affordable.

State-by-State HIPAA Comparison

My state has “Open Enrollment.” What does that mean?

Open enrollment policies are most often health insurance programs mandated by individual state legislatures and regulated through each state’s department of insurance.

Often, only one insurance company obtains the contract to provide a “standard” health insurance policy to anyone with a medical history or pre-existing condition. In return for accepting the risk of carrying “high risk” patients, the legislators give the company tax incentives or breaks.

Obtaining a health insurance policy through open enrollment is usually available anytime during the year. In a few cases, open enrollment is only available to you either once or twice a year. The “standard” policy offered usually is comprehensive, covers prescriptions, and has an average lifetime maximum (i.e., $1,000,000). The cost of these policies can often be expensive, depending upon your age, choice of deductible, and whether it is an individual or family policy.

Is there really no “waiting period” with Guaranteed Issue Insurance?

Guaranteed issue health insurance is an essential plan for people who have a chronic illness and need health insurance coverage immediately or have lost their COBRA due to some disqualifying issue or non-payment. These plans do not require a mandatory waiting period.

As you may be aware, if you obtain a policy that has a pre-existing waiting period, then you must wait 6 to 12 months before your newly diagnosed condition or illness will be covered by your insurance policy. If this happens, you will need to pay for your treatment out of your own pocket. The high cost could result in a choice of financial devastation or neglected treatment, neither of which is acceptable. So, living in a state where guaranteed issue health insurance is offered is a wonderful benefit.

What are COBRA benefits?

The federal law known as COBRA (Consolidated Omnibus Reconciliation Act of 1985) requires employers to give qualified employees and their families who lose their health benefits the legal right to continue or extend insurance (continuation coverage) that otherwise might be terminated. The COBRA law usually applies to group health plans offered by companies with more than 20 employees. The purpose of COBRA is to protect the employee while looking for another job and/or health policy in the midst of crisis, such as unemployment or divorce.

In general, three groups of people, known as beneficiaries, are eligible for COBRA continuation coverage: employees or former employees (retirees), their spouses, and their dependent children. Circumstances that trigger COBRA are known as “qualifying events.” A qualifying event must cause an individual to lose health insurance coverage. Events that trigger COBRA include voluntary or involuntary termination of employment (other than gross misconduct) or reduction in work hours. An employee’s spouse or dependents can qualify for coverage upon the employee’s death, the couple’s separation or divorce, or a loss of dependent child status under a parent’s health insurance policy.

The duration of COBRA coverage can vary, depending on the qualifying event. When the qualifying event is termination or reduction in hours of employment, the beneficiaries may be entitled to continued coverage for a maximum of 18 months. For all other qualifying events, the beneficiaries may be provided with 36 months. In certain circumstances, qualified beneficiaries entitled to 18 months of continuation coverage may become entitled to a disability extension of an additional 11 months (for a total maximum of 29 months) or an extension of an additional 18 months due to the occurrence of a second qualifying event (for a total maximum of 36 months). If a covered employee becomes eligible for Medicare, the COBRA provisions will end.

Upon termination of employment, the employer notifies the employee of COBRA benefits. Each qualified beneficiary is given up to 60 days to choose whether or not to elect COBRA. Once COBRA is elected, benefits will become effective on the date the coverage would have been lost. COBRA participants have 45 days from the time they elect coverage to make the initial premium payment. If the employee waits to choose the COBRA benefit on the 60th day, then when the payment bill comes 45 days later, it would be for 3 ½ months (60 days plus 45 days). The bill at this point is often unaffordable.

Health coverage for COBRA participants is usually more expensive than health coverage for active employees. Individuals who elect COBRA pay 100 percent of the cost of health insurance coverage, plus a 2 percent surcharge to help the employer cover administrative expenses. Nonetheless, the premiums are usually substantially lower than the cost of an individual plan of equal coverage.

12 Important Questions to Ask Before Choosing a Health Insurance Policy

Deciding whether a health insurance policy is right for you is similar to shopping for the right car to buy. It may look appealing, but does it have what you need or does it have the proverbial “bells and whistles”? The same is true when deciding upon a health insurance policy. The following are the most important questions you should ask before signing on the dotted line.

1. Does the policy cover my chronic illness or condition?

You should ask the agent if your chronic illness is covered both for outpatient and inpatient services.

2. Does the policy cover the prescription drugs and treatments for my chronic illness or condition?

Sometimes health insurance policies will limit the amount of prescription/treatment coverage allowed for your illness or condition. Make sure you ask if there is a limit on prescription drugs and treatments.

3. Is there a waiting period (pre-existing condition) before my condition or illness will be covered and services paid?

This will be important for you in order to plan how you will pay for the service you need during the waiting period.

4. Does the policy cover injectables?

At times health insurance policies will cover prescription drugs, but will not cover injectable prescription drugs. In a similar way, some policies cover the administration of blood and blood products, and some do not. Make sure you ask specifically if the policy covers your injectables, infusions, and blood/blood products.

5. Does the policy allow you to use both an “in-network” and “out-of-network” provider, physician, and pharmacy?

Some policies have what they call in-networks and out-of-network providers. In-network providers or physicians make cost-saving contracts with the insurance company, which in turn saves you money. If you use a provider or physician outside this group (out-of-network), then you may be responsible for more costs.

6. Does their specialty pharmacy have experience providing services to people with your condition?

Believe it or not, sometimes providers don’t even know how to spell your condition or know how serious it may be. They just process your claim in the most cost-efficient manner.

7. Does the policy have a lifetime maximum (cap) amount? If so, how much?

You need to ask, “Will the lifetime maximum cover you for a reasonable amount of time?” Insurance policies have a limited amount they will pay out during the lifetime of the policy. These lifetime maximums usually range from $500,000 to $5,000,000. There are some policies that have no lifetime maximums.

8. Is your prescription/treatment charged to a prescription drug plan?

Often when the prescription/treatment is charged to a prescription drug plan, the costs do not count against the annual limit or lifetime maximum. With prescription drug plans, the co-payments are often $25 to $70 per prescription. If the prescription/treatment is charged against your major medical, then it will count against your allowable lifetime maximum amount of coverage. With prescriptions charged against major medical, the co-insurance is usually 20 percent of the cost of your prescriptions, which are usually expensive.

9. Does the policy have a deductible? How much?

The deductible is the amount of money you pay in costs before the policy starts paying the claims.

10. Does the policy have a specified “out-of-pocket” amount? If so, how much?

The out-of-pocket means the amount you have to pay toward your co-payments until your insurance covers the cost 100 percent.

11. Will the company inform me in writing of changes to my policy?

In most states it is the law to provide to you in writing, any changes to the policy.

12. Will the company send me a copy of my policy for my files?

Your policy is a contract between you and your insurer. Make sure you keep a copy of the policy with your important papers. Read and highlight the details that apply to your condition and treatment.

Variables to Consider Before Choosing a Health Insurance Policy

1. What is the monthly premium?
2. How much is the deductible?
3. Will this policy allow the patient to receive care from their current physician and hospital?
4. Does the plan require a referral to see a specialist?
5. Does this policy provide coverage for the medications needed?
6. Are specialty drugs covered as a prescription benefit or a major medical benefit?
7. Is there a lifetime cap on the medical or prescription benefits?
8. Are patients required to use a specialty pharmacy?
9. What is the patient’s co-pay or co-insurance responsibility for medications and other health services?
10. Is there a maximum out-of-pocket limit per year?

Important Terms You Should Know

Beneficiaries: A person who receives health insurance through a plan.

Catastrophic Coverage: Insurance designed to protect you from having to pay very high out-of-pocket costs. Catastrophic coverage usually begins after you have spent a pre-determined amount. The new Medicare prescription drug benefit (Part D) does offer catastrophic coverage. After you have spent a certain amount out-of-pocket ($3,850 in 2007, $4,050 in 2008), you will only pay 5 percent of the cost of each prescription (in addition to your monthly plan premium) after you have spent a pre-determined amount.

COBRA: A federal law guaranteeing employees and their families at risk of losing health coverage—due to termination of employment, death, divorce, or other circumstances—the right to purchase continued coverage under the employer’s group health plan for limited periods of time.

Co-insurance: The amount the patient may be required to pay for a covered service, Rx, or treatment after the insurance plan pays. For example: Patient pays 20 percent and Insurance pays 80 percent.

Co-payment: A fee that many insurance plans require a patient to pay for certain medical services (such as a physician’s office visit), or an amount that the patient must pay toward the cost of each prescription under a prescription drug plan.

Coverage Gap: Also called a “Donut Hole.” A gap in insurance coverage during which a patient must pay 100 percent of all drug costs followed by “catastrophic coverage” from the insurance plan.

Deductible: The set dollar amount the patient must pay for health care or prescriptions before the insurance plan begins to pay. These amounts can change every year.

Explanation of Benefits (EOB): An insurance statement mailed to a member or covered insured explaining why a claim was or was not paid.

Free Look: A period of time when you can try out a Medicare supplemental insurance (Medigap) policy. During this time (usually 30 days), you can cancel the policy and get a full refund.

Guaranteed Issue Rights: Rights you have in certain situations when insurance companies are required by law to sell or offer a Medigap policy. In these situations, an insurance company cannot deny a policy, or place conditions on a policy, such as exclusions for pre-existing conditions, and cannot charge more for a policy because of past or present health problems.

Group Health Plans: A medical benefit offered to employees and their dependents as a benefit of working with that particular employer. The employer may pay for part or all of the insurance cost (premium).

Health Insurance: Insurance that pays for all or part of a person’s health care bills. The types of health insurance are group health plans, individual plans, workers’ compensation, and government health plans such as Medicare and Medicaid.

Health Insurance Portability and Accountability Act (HIPAA) of 1996: A federal law that allows persons to qualify immediately for comparable health insurance coverage when they change their employment relationships. The law also mandates the use of standards for the electronic exchange of health care data, and specifies the types of measures required to protect the security and privacy of personally identifiable health care information.

Insurance Renewal Date: The specified date of when the health insurance coverage will renew for another period, typically one year.

Lifetime Max: The maximum amount a plan will pay towards health care services over the course of the insured’s lifetime.

Medicaid: A government (state and federal) health insurance program for people who live in poverty. Eligibility is based on income.

Medicare: A government (federal) health insurance program made up of two parts: hospital insurance (Part A) and medical insurance (Part B).

Medicare Prescription Drug Plan (Medicare Part D): Drug plans offered by private companies contracted to administer Medicare benefits to help Medicare recipients pay for their prescriptions. Each Part D plan has its own formulary, which is a list of government-approved medications the plan will cover. This list may also be referred to as a Prescription Drug List (PDL) or a Covered Medications List (CML). These lists will vary from one plan to another, so a patient considering a Part D plan, may wish to review the plan’s prescription drug list to be sure it will meet their needs. Types of plans: standard, equivalent/alternative, and enhanced.

Medicare Savings Program (MSP): Medicaid programs that help pay some or all Medicare premiums and deductibles.

Medigap/Supplemental: A supplemental insurance policy sold by private insurance companies to fill “gaps” in original Medicare Part A-C plan coverage. Except in Massachusetts, Minnesota, and Wisconsin, there are 10 standardized plans labeled Plan A through Plan J. Medigap policies only work with the original Medicare plan.

Out-of-pocket expenses: Any medical cost not covered by the insurance. The patient must pay (including the deductible) before insurance will cover the service or Rx at 100 percent.

Pre-existing condition: Illnesses, conditions, or disabilities for which you were diagnosed or treated prior to making application for a health insurance policy. An unreported preexisting condition can result in cancellation of the policy.

Prescription Drug Coverage: A type of specified expense coverage that provides benefits for the purchase of drugs and medicines prescribed by a physician and not available over-the-counter. Often plans will contract with a specialty pharmacy or mail order pharmacy that allows the insured to obtain medications by simply paying a co-payment at that pharmacy.

Premium: A monthly payment to an insurance company or a health care plan for health care or prescription drug coverage.

Qualified Medical Beneficiary (QMB): Federal program administered by each state’s Medicaid program that helps people with Medicare with low incomes pay their coinsurance, deductibles, and premiums.

Qualifying Individual 1 Program: Federal program administered by each state’s Medicaid program that pays the Part B premium for people with Medicare with low incomes.

State Health Insurance Assistance Program (SHIP): A federally-funded program in each state that answers questions about Medicare free of charge.

Social Security Disability Income (SSDI): A wage replacement income for those who pay FICA taxes when they have a disability meeting Social Security disability rules. SSDI provides a variety of benefits to family members when a primary wage earner becomes disabled or dies.

Social Security Income (SSI):  A federal income support program for low income aged, blind, or disabled persons administered by the Social Security Administration.

Specified Low-Income Medicare Beneficiary Program (SLMB): Federal program administered by each state’s Medicaid program that pays the Part B premium for people with Medicare with low incomes.

Pharmacy/Prescription benefit Manager (PBM): A pharmacy/prescription benefit manager is usually contracted by your health insurance company to administer your prescription drug insurance program. PBM’s are usually responsible for processing and paying your prescription drug claims.

Resources: www.medicarerights.org, www.hhd.gov, www.medicareinteractive.org

A Look at Medicare Parts A & B

Medicare is a health insurance program for people 65 years of age and older, blind or disabled people, and people with End-Stage Renal Disease (permanent kidney failure treated with dialysis or a transplant).

Medicare Part A pays for most inpatient hospital care, some inpatient skilled nursing home care, some health care, and hospice care.

Medicare Part B pays for doctors’ services, outpatient hospital care, outpatient physical and speech therapy, some home health care, ambulance services, and some medical equipment and supplies. Part B coverage is voluntary.

Medicare Part D: A Patient’s Guide to Costs

What is Medicare Part D?

Part D is Medicare’s new prescription drug coverage for persons 65 years of age or older and persons with disabilities. This program was designed in 2006 to help those persons on Medicare who did not have prescription drug coverage.

Medicare Part D Plans

According to the Center for Medicare and Medicaid Services (CMS), your plan may consist of one or more payment requirements. For the most part, all Medicare Part D plans will have four main payment requirements, which we will call “Steps.” Your financial responsibilities for these Steps will depend upon the plan you choose and whether or not you have low financial income.

Step One: The Deductible

This is the amount you must pay for health care and or prescription costs BEFORE your Medicare Part D plan begins to pay a percentage of your prescription. With the traditional Medicare Part D plan, this amount would be $275. Depending upon the plan you choose, the premium amount you pay, or your low income, this deductible amount could be greatly reduced or non-existent. Dollar amounts are based on 2008 projections.

Step Two: The Co-insurance/Co-payment

The co-insurance is the percentage of the total prescription drug costs, which you may have to pay. This could be a percentage ranging from 25 percent to 33 percent, depending upon the plan you choose, the amount of premium you pay, or your low income. The co-payment is a set dollar amount you may have to pay toward the cost of your prescription drug. For example, the set dollar amount could range from $10-$70 for each prescription filled, depending upon the plan you choose.

Step Three: The Coverage Gap

This is the period of coverage in which you are responsible for paying up to 100 percent of your drug costs. This applies once you have paid the required amount specified by your Medicare Part D plan. You may have heard this step described as a “Donut Hole” but “Coverage Gap” is more accurate.

Step Four: The Catastrophic Coverage

This is the step in your coverage where you pay only a small share of your drug expenses. Depending upon the plan you choose, the plan can pay most or all of your drug expenses until the end of the year. You may pay from nothing up to 5 percent of your drug costs each time your prescription is filled.

This catastrophic coverage amount if reached ONLY after you pay your “True Out-Of-Pocket” (TrOOP) costs. In a Medicare Part D plan, your TrOOP includes the cost of your deductible, co-insurance/co-payment, and the cost you pay while in the “Gap.” This TrOOP could add up to $4,050 depending upon the plan you choose, the cost of your premium, or your low income. Dollar amounts are based on 2008 projections.

What might my Medicare Part D Plan “look” like?

Standard or “Traditional” Plans – Based on 2008 Projections

You pay: $275.00 (deductible with drug cost of $100)
            + $627.50 (co-payment – 25% of $2,510 Rx costs)
            + $3,147.50 (coverage gap – 100%)
            ---------------
Total:    $4,050.00 (your true out-of-pocket [TrOOP] costs)

Alternative Plans – Based on 2008 Projections

You pay: $275.00 (deductible)
            + $627.50 (co-payment – 25% of $2,510 Rx costs)
            + $3,147.50 (coverage gap – 100%)*
            ---------------
Total:    $4,050.00 (your true out-of-pocket [TrOOP] costs)

* For a Tier 1 drug cost of $50, you are still responsible for paying the TrOOP, but the cost to you is LESS. This plan will save you money but take you longer to get to the catastrophic stage. Also, with this type of plan, you may pay a smaller catastrophic coverage co-payment.

Premier Plans

These plans may offer a low or not deductible cost, low co-insurance or co-payment arranged by Tiers or Classes, and no cost in the coverage gap. However, these plans require participants to pay much more in premiums to offset lower deductibles, co-insurance/co-payments, gap coverage, and catastrophic coverage. Read the policy carefully.

Medicare Part D: Terms You Should Know

Assets: Property you own that the government may review when you apply for assistance. For help with a Medicare Part D prescription drug plan’s costs, the government counts cash or any property that can be turned into cash within 20 days. This includes checking and savings accounts, certificates of deposit, IRA’s and 401 (k)’s, stocks, bonds, and similar items. It does not include your primary home or certain property related to burial expenses. It does include a second home.

Benefit: Another name for coverage. See “Coverage.”

Brand-name Drugs: Prescription drugs that are sold under a trademarked brand name.

Catastrophic Coverage: A name for the step of a Medicare Part D prescription drug plan in which the plan pays for nearly all your drug expenses until the end of the year, with no upper limit, after your out-of-pocket costs have exceeded $4,050. In this step, you pay only a small share of your drug expenses (approximately 5 percent).

Centers for Medicare and Medicaid Services (CMS): The federal agency that runs the Medicare program and works with the states to manage the Medicaid program.

Co-insurance: A kind of cost sharing where costs are split on a percentage basis. For example, a plan might pay 75 percent, and you would pay 25 percent. See “Cost Sharing.”

Co-payment: A kind of cost sharing where you pay a pre-set, flat amount for each service. In a Medicare drug plan, for example, you might pay $10 to $70 for each prescription you receive and the plan would pay the remaining cost of the drug. See “Cost Sharing.”

Cost Sharing: A term for the way an insurance plan shares its costs with someone. The most common types of cost sharing are co-insurance and co-payments. See “Co-insurance” and “Co-payments.”

Coverage: The benefits you receive from an insurance plan. In a Medicare Part D prescription drug plan, the prescription drug costs that are paid by the plan are your benefits or coverage.

Coverage Gap: A name for the step in a standard Medicare Part D prescription drug plan in which you pay 100 percent of your expenses for eligible drugs until your out-of-pocket drug costs have reached $4,050. Some people call this the “donut hole.”

Deductible: The amount you must pay out-of-pocket before your plan starts to pay. In a standard Medicare drug plan, you must pay the first $275 of your eligible drug expenses for the year as your deductible.

Donut hole: See “Coverage Gap.”

Dual Eligibles: People with both Medicare and Medicaid.

Eligible Drugs: Drugs that are covered by a prescription drug plan. In a Medicare drug plan, eligible drugs are listed on the plan’s formulary. See “Formulary.”

Exclusions: Items that are not covered by an insurance policy. Medicare drug plans have two types of exclusions. The first type is drugs that Medicare has excluded from coverage, such as weight-loss drugs. The second type is drugs that are excluded from a plan’s list of covered drugs, or formulary. See “Eligible Drugs” and “Formulary.”

Formulary: A list of prescription drugs that are covered by a Medicare Part D prescription drug plan.

Generic drugs: Prescription drugs covered by the Medicare prescription drug plan that have the same active ingredient formula as a brand name drug. Generic drugs covered by Medicare Part D prescription drug plans usually cost less than brand-name drugs and are approved by the Food and Drug Administration (FDA) to be as safe and effective as brand-name drugs.

Medicaid: A program that pays for medical assistance for certain individuals and families with low incomes and resources. Medicaid is jointly funded by the federal and state governments to assist states in providing assistance to people who meet certain eligibility criteria.

Medicare Advantage Plans: Health plans offered by private insurance companies that contract with Medicare to provide Medicare coverage. Depending on where you live, Medicare Advantage Plans may be available both with and without Medicare Part D prescription drug plans. You may also hear Medicare Advantage Plans referred to as Medicare Health Plans. The Medicare Advantage Plans used to be called the Medicare+Choice plans.

Medicare: The federal government health insurance program for people age 65 and older, blind people, people with certain disabilities, and people of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or kidney transplant).

Medicare Prescription Drug Coverage: Insurance plans offering prescription drug coverage that meets the standards established by Medicare. Other names for these plans include Medicare Drug Plans, PDP’s, or MA-PD’s. However, not all private insurance plans offering prescription drug coverage are Medicare Part D prescription drug plans. Pay close attention to whether a plan is a Medicare Part D prescription drug plan.

Medicare Supplement Policy: The traditional federal Medicare insurance program does not pay the total amount of medical expenses. Expenses that are not covered are called “gaps” in Medicare coverage. Private insurance companies sell insurance policies that fill some of these gaps and pay for some of these expenses. These policies are known as Medicare supplement or “Medigap” policies.

Medigap: See “Medicare Supplement Policy.”

Medication Therapy Management: The term used to describe the type of extra help that people with multiple prescriptions, chronic diseases, and high drug costs may receive to help them manage all of their medications. The purpose is to make sure that all of a patient’s drugs work well together, he or she understands his or her medications, and knows how to manage potential side effects.

Network: The group of doctors, hospitals, and pharmacies who have contracts with an insurance plan to provide care to that plan’s members. You should use your Medicare Part D prescription drug plan’s network of pharmacies to maximize the money you save on your drugs.

Out-of-pocket Costs: The amounts you pay as your share of your prescription drug costs. Out-of-pocket costs include deductibles, co-insurance, and the amounts you pay in any coverage gap. In a Medicare Part D prescription drug plan, any amounts you pay that are later reimbursed by someone else (such as an employer’s insurance plan) do not count as part of your out-of-pocket costs. The out-of-pocket costs you pay, for which you are not reimbursed, are called your “true out-of-pocket costs” or “TrOOP.” When your TrOOP costs have exceeded $4,050, you are eligible for the additional coverage. See “Catastrophic Coverage.”

Premium: The monthly costs you pay to have an insurance plan. In a Medicare Part D prescription drug plan, this is usually a monthly fee.

Resource: Medicare Glossary. A Part D Glossary of Terms. May 2007, libertymedical.com

Medicare Part D Resources

PSI: A Patient’s Guide to health Insurance
www.uneedpsi.org

For nearly two decades, PSI, a national non-profit, charitable 501(c)3 organization, has successfully offered a “safety net” to persons with specific chronic condition and those who fall through the financial cracks of government health care programs, often helping them avoid financial ruin. PSI provides peace of mind to its clients by locating health insurance solutions, subsidizing the cost of premiums, providing pharmacy and treatment co-payment assistance, and assisting with Medicare Part D co-payments.

The Official U.S. Site for People with Medicare
www.medicare.gov

MyMedicare.gov provides direct Internet access to your Medicare benefits, eligibility, enrollment (including prescription drug plans), and preventive health information – 24 hours a day, 7 days a week. MyMedicare.gov also allows you to view your adjudicated claims information, access online forms and publications, and receive important messages from Medicare.

Centers for Medicare and Medicaid Services (CMS)
www.cms.hhs.gov

The Centers for Medicare and Medicaid Services website provides general information regarding Medicare Part D as well as additional resources regarding Medicare enrollment and benefits.

National Council on Aging – My Medicare Matters
www.mymedicarematters.org

The MyMedicareMatters website is designed to help individuals learn more about the Medicare Prescription Drug Coverage. The National Council on Aging’s mission is to improve the lives of older Americans.

Center for Medicare Advocacy, Inc.
www.medicareadvocacy.org

The Center for Medicare Advocacy works to increase access to comprehensive Medicare coverage and excellent health care for the elderly and people with disabilities by providing the highest quality analysis, education, and advocacy.

Social Security Online
www.ssa.gov/medicareoutreach2

This website is designed to provide information to organizations about SSA’s Medicare Outreach products. An online application is provided for help with Medicare prescription drug costs. It is not an application for coverage under a prescription drug plan. Also, an online tool is available to help people decide if they qualify for help with Medicare prescription drug costs.

State Health Insurance Assistance Programs (SHIP)
www.shiptalk.org

The State Health Insurance Assistance Program, or SHIP, is a national program that offers one-on-one counseling and assistance to people with Medicare and their families.

AARP Health Care Options
www.aarpmedicarerx.com

AARP Health Care Options provides an introduction to how the new Medicare prescription drug plans work and explains the decisions you will need to make along with providing other information you may find helpful in better understanding the Medicare prescription drug plans.

Medicare Issues Confronted in our Newsletter

Medicare: What many GISTers need to know-May 2008

What is the Medicare lottery?-July 2004