Is Medicare Part D Necessary

Not Medically Necessary Services And Supplies

The Medicare program covers many services and supplies that are needed to diagnose or treat medical conditions. Most beneficiaries do not have problems receiving covered services and treatments they need for their health. However, it is important to understand the types of services and supplies that are considered not medically reasonable and necessary.

According to CMS, some services not considered medically necessary may include:

• Services given in a hospital that, based on the beneficiarys condition, could have been furnished in a lower-cost setting
• Hospital services that exceed Medicare length of stay limitations
• Evaluation and management services that exceed those considered medically reasonable and necessary
• Therapy or diagnostic procedures that exceed Medicare usage limits
• Screening tests, examinations, and therapies for which the beneficiary has no symptoms or documented conditions, except for certain screening tests, examinations, and therapies
• Services not called for based on the diagnosis of the beneficiary
• Items and services administered to a beneficiary for causing or aiding in causing death

C: Medicare Advantage Plans

With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were formally given the option to receive their Original Medicare benefits through capitated health insurance Part C health plans, instead of through the Original fee for service Medicare payment system. Many had previously had that option via a series of demonstration projects that dated back to the early 1970s. These Part C plans were initially known in 1997 as “Medicare+Choice”. As of the Medicare Modernization Act of 2003, most “Medicare+Choice” plans were re-branded as “Medicare Advantage” plans . Other plan types, such as 1876 Cost plans, are also available in limited areas of the country. Cost plans are not Medicare Advantage plans and are not capitated. Instead, beneficiaries keep their Original Medicare benefits while their sponsor administers their Part A and Part B benefits. The sponsor of a Part C plan could be an integrated health delivery system or spin-out, a union, a religious organization, an insurance company or other type of organization.

The intention of both the 1997 and 2003 law was that the differences between fee for service and capitated fee beneficiaries would reach parity over time and that has mostly been achieved, given that it can never literally be achieved without a major reform of Medicare because the Part C capitated fee in one year is based on the fee for service spending the previous year.

What Medicare Part D Plans Cover

Medicare drug plans cover both generic and brand-name drugs. All plans must meet a standard level of coverage set by Medicare. This means they must all cover the same categories of drugs, such as asthma or high blood pressure medicines, but plans can choose which specific drugs are covered in each drug category.

Each Medicare Part D plan lists the drugs it covers in whats called a formulary. This list will likely include both brand-name and generic drugs and includes at least two drugs in the most commonly prescribed categories. A formulary may not include your specific medication but may include a similar option. Formularies change from year to year and even within the year, so its important to check regularly that the medicines you need are included in your Part D coverage. If they aren’t, check with your physician to see if an alternative drug might work for you.

You may also want to check the insurers you are considering for any restrictions they put on drug coverage. This may include prior authorization before a drug is prescribed, limits on the quantity of certain drugs and step therapy in which generic and lower cost brand-name drugs are required before the most expensive drug is used.

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Penalties If You Dont Enroll In A Part D Plan

If you do not enroll in a plan and do not have creditable coverage for your drugs, you will incur a penalty of 1% of the average national premium for every month you were eligible and did not enroll. This amount is added on to your drug plan premium. Note: Medicare waives this penalty for anyone who qualifies for Extra Help, also known as the Low-Income Subsidy program.

In addition, if you do not enroll into a Part D plan when you are first eligible, you will generally only be able to enroll during certain enrollment periods.

The Part D Standard Benefit

At a minimum, plan sponsors must offer a standard benefit package mandated by law. The standard benefit includes an annual deductible and a gap in coverage, previously referred to as the Donut Hole. Sponsors may also offer plans that differ from but are actuarially equivalent to the standard benefit. Finally, they may also offer enhanced plans that provide benefits in addition to the standard benefit. Typically, the enhanced plans offer some coverage during the Donut Hole.

The Standard Benefit is defined in terms of the financial structure of the cost-sharing, not the drugs that must be covered under the plan.

Medicare does not establish premium amounts for plans. Instead, premiums are established through an annual competitive bidding process and evaluated by CMS. Premiums vary from plan to plan and from region to region. Medicare does establish the maximum deductible amount, the Initial Coverage Limit, the TrOOP threshold, and Catastrophic Coverage levels every year. The table below shows the standard benefit for this year .

Standard Part D Benefit 2020-2021

Alternatives to the Standard Benefit

Income-Related Monthly Adjustment Amount Part D

Income-Related Adjustments 2021

Drug Tiers

The Donut Hole

TrOOP

Once beneficiaries reach their out-of-pocket threshold costs), they move out of the Donut Hole and into Catastrophic Coverage.

EOBs

The Donut Hole Discount

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Medicare Advantage Vs Medigap

People who only have Medicare Parts A, B, and D may incur sizable bills not covered by Medicare. To close these gaps, recipients can enroll in some form of Medigap insurance or in a Medicare Advantage plan .

One important thing to know about Medigap: It only supplements Medicare and is not a stand-alone policy. If your doctor doesn’t take Medicare, Medigap insurance will not pay for the procedure.

Insurance agents are not allowed to sell Medigap to participants of Part C, Medicare Advantage.

Medigap coverage is standardized by Medicare but offered by private insurance companies. According to, Patrick Traverse, founder of MoneyCoach, Mt. Pleasant, S.C.,

“I recommend that my clients purchase Medigap policies to cover their needs. Even though the premiums are higher, it is much easier to plan for them than what could be a large out-of-pocket outlay they might have to face if they had lesser coverage.”

Avoid The Part D Late Enrollment Penalty

Dont get caught off guard by Part D like Mike or Kate. Keep these three tips in mind to avoid the Part D late enrollment penalty.

As a final note, if you are confused or worried about your options, its always a good idea to talk to employers benefits administrator when you become Medicare eligible.

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What Is The Medicare Part D Late Enrollment Penalty

Its a good idea to sign up for a Part D plan when you become eligible, even if youre not taking any prescription medications. Why? Medicare adds on a permanent 1 percent late enrollment penalty to your premiuif you dont enroll within 63 days of your initial eligibility period.

The penalty rate is calculated based on the national premium rate for the current year multiplied by the number of months you didnt enroll when you were eligible. So, if you wait, your extra penalty payment will be based on how long you didnt have PartD coverage. This can add up.

The base premium changes year to year. If the premium goes up or down, your penalty changes, too.

If you have a Medicare Advantage plan, when you turn 65, you still need to have Part D coverage.

You can avoid the penalty if you have Medicare from another plan. This means you have drug coverage thats at least equal to the basic Medicare Part D coverage from another source, like an employer.

Since the penalty can add to your premium cost, it makes sense to buy a Part D plan at low cost when you become eligible. You can change plans during each open enrollment time if you need different coverage.

Medicare Prescription Drug Coverage Explained

Navigating Medicare can be confusing! What coverage do you need? What does your plan cover? How much will everything cost? At Time for 65, were here to help you answer all of your Part D prescription drug coverage questions so that you can effectively plan for your future health.

What is Part D?

Part D is a federal program administered through private insurance companies. These companies offer retail prescription drug coverage to Medicare beneficiaries. Prior to 2006 when Part D was instituted, tens of thousands of Medicare beneficiaries in America had little or no help with retail drug costs, often resulting in thousands of dollars in out-of-pocket costs each year.

Fortunately for today’s Medicare beneficiaries, Part D plans offer comprehensive retail drug coverage. Beneficiaries can enroll in a standalone Part D drug plan that goes alongside their Original Medicare benefits, or they can choose a Part D drug plan that is built-in to a Medicare Advantage plan.

How does Part D work?

Part D is, simply put, insurance for your medication needs. You pay a monthly premium to an insurance carrier for your Part D plan. In return, you use the insurance carrier’s network of pharmacies to purchase your prescription medications. Instead of paying full price, you’ll pay a copay or percentage of the drug’s cost. The insurance company will pay the rest.

There are four stages to a Part D drug plan:

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What Will It Cost

• Part D requires a monthly premium for most people. The average premium is about $33 per month.
• You may also have copays and out-of-pocket costs.

• Your prescription drugs.
• If you have a Part C plan, it may already include prescription drug coverage.
• To find out which plans cover your drugs, go to the Medicare.gov Plan Finder . Enter your ZIP code and your prescription drugs.

If you already have drug coverage thats as good as Part D, you wont have any penalty if you decide to enroll in Part D later.

If youre covered by employer or retiree insurance and enroll in Part D, you risk permanently losing your coverage. Check with your current plan administrator before you make any decisions.

Important: If you don’t have drug coverage, avoid lifelong penalties by enrolling in a Part D plan or a Part C plan with drug coverage during your Initial Enrollment Period. Even if you dont have prescribed medications now, enrolling may save you money in the long run. If you suddenly need prescriptions, you might have to wait to sign up for coverage and you’ll probably pay more.

Services That Are Not Considered Medically Necessary

Services that arent deemed medically necessary are not covered by Original Medicare, Part A and Part B. Its possible that some of these services may be covered by a Medicare Advantage plan, but that depends on your specific plan benefits. Non-medically necessary services according to CMS include, but may not be limited to, the following:

• Times where your hospital service surpasses the Medicare-approved stay length
• Physical therapy treatment that surpasses Medicares usage limit
• Hospital-administered treatment that could have been delivered in a lower-cost setting
• Prescription of drugs to treat fertility, sexual or erectile dysfunction, weight loss or weight gain, and cosmetic purposes

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What Drugs Does Part D Cover

The federal government requires that certain, common types of drugs be covered by Medicare Part D, but each individual plan may choose which specific drugs of each type it will cover. A plan may include both generic and brand-name drugs. The list of drugs a plan offers is called a formulary.

Because Part D and Medicare Advantage plans are provided by private insurers, any drugs not listed on the formulary will not be covered.

Should I Take Medicare Or Just Keep Fehb

Are federal employees better off with Medicare or FEHB in retirement? These are some considerations.

Open season is finally here, allowing federal employees to revisit their health insurance coverage. FEHB offers a variety of plan types suitable for many different families and health circumstances. If youre curious about how they compare, read this article to learn more.

FEHB is available to active employees and certain FERS/CSRS retirees. To keep your FEHB in retirement, youll need to meet two conditions:

• Eligible for an immediate, unreduced pension
• Enrolled in FEHB for the last 5 years, including your last day.

Medicare is available when you turn 65 years old. Your window for applying starts 3 months before your 65th birthday month and ends 3 months after the month in which you turn 65. If you have not applied by then, it is considered late. If youre still in-service, you may forego applying for Medicare until you retire, at which point you have 8 months to apply before being considered late. If you miss that enrollment window, there is a permanent penalty equal to 10% for each year that you were late enrolling.

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Do You Have Creditable Prescription Drug Coverage

A creditable prescription drug plan is one that provides coverage that’s at least as good as Medicare Part D.

You may have through a current or former employer or trade union. These entities also offer creditable coverage:

• Federal Employee Health Benefits Program
• Veterans’ Benefits
• Civilian Health and Medical Program of the Department of Veterans Affairs
• Indian Health Services

You also might have creditable coverage if you get health insurance coverage through your spouse’s employer or if you’re on a COBRA plan.

Make sure you get proof of your creditable coverage in writing. Hang onto it in case you need to prove you dont owe penalties later.

How Does Part D Work

Unlike Part A and Part B of Medicare, Part D is administered by independent, private insurance companies. This means you have a lot of choices with Part D, because the monthly costs and pricing methods arent standardized as they are with Original Medicare.

To get prescription drug coverage under Part D, you will have to research Part D plans in your area. Because there may be a variety of them, its important to make sure you properly compare the options available to you. Its also important to remember that if you have Medicare Advantage, your prescription drugs may be covered under that plan, even if you dont have a Part D plan.

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Medicare Explained: Understanding The Basics From Part A To Part D

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Part B coverage requires a monthly premium that varies depending on your income level. Individuals with yearly income in 2011 of $85,000 or less, or joint tax-return filers with $170,000 or less in income, all pay $104.90 in monthly premiums for Part B. Above those levels, premiums are higher, topping out at $335.70 per month for incomes above $214,000 for singles and $428,000 for joint filers. Private insurance for Medicare Advantage and prescription drug coverage involves paying monthly premiums to the insurers that provide your policy. What you’ll pay in premiums depends in large part on the extent of the coverage the policy provides, with more all-inclusive policies charging higher monthly premiums.In addition to premiums, you may also be responsible for deductibles, copayments, and other costs. For instance, hospital stays and covered skilled-nursing care often requires a per-day copayment from the patient.Adding It All TogetherMedicare is a complex system that has many interlocking parts. By understanding how they all work, however, you’ll be in the best position to get everything you’re entitled to receive under Medicare.

The Solvency Of The Medicare Hi Trust Fund

This measure involves only Part A. The trust fund is considered insolvent when available revenue plus any existing balances will not cover 100 percent of annual projected costs. According to the latest estimate by the Medicare trustees , the trust fund is expected to become insolvent in 8 years , at which time available revenue will cover around 85 percent of annual projected costs for Part A services. Since Medicare began, this solvency projection has ranged from two to 28 years, with an average of 11.3 years. This and other projections in Medicare Trustees reports are based on what its actuaries call intermediate scenario but the reports also include worst-case and best-case projections that are quite different .

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How Much Does Part D Cost

Part D costs will vary by plan, provider and location. Costs may include premiums, deductibles, copayments and coinsurance. The amount you pay will also change based on how a plans drug formulary is organized. Part D and Medicare Advantage plans organize their drug lists in a tiered format. Generally, the lower the tier, the lower the cost of the drug. For example, a generic drug will usually live on a lower tier and cost less than a brand-name drug.

Finally, if you enroll in Part D late, you will also have to also pay a Part D premium penalty, which is 1% of the average Part D premium for each month you delay enrollment. This penalty is paid as long as you have Part D.