QUESTION: I am attempting to help several older members of my family with their health care coverage and trying to understand various concepts such as Medicare fee-for-service, original Medicare, health maintenance organization plans, Senior Advantage plans, and Medicare Part A, Part B, Part C and Part D. Can you help?
ANSWER: This is an excellent question, especially since we are in the annual open enrollment period and people should be reviewing their health care coverage to determine whether they need or want to change their coverage for the coming year. A review of terms can’t hurt anyone.
Terminology, no matter what the subject, can be very confusing and in some cases very subtle. Also, over time, Medicare has included new types of services and older titles have been changed to incorporate these changes.
First, let’s look at original Medicare and Medicare fee-for-service. When Medicare was first signed into law in 1965, there was only one choice enrollees had for coverage. That was the plan that allowed them to go to any doctor, hospital or other health care supplier who accepted Medicare payments.
The term “fee-for-service” comes from the method those health care providers billed and were reimbursed. They provided a service to the Medicare beneficiary and directly billed Medicare for that service. Medicare then paid 80 percent of the approved amount and the beneficiary or their secondary insurance, if they had such insurance, was responsible for the remaining 20 percent of the approved amount. This method remains today and is known as original Medicare or fee-for-service.
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Medicare Part A, Part B, Part C and Part D relate to the different types of services covered. Medicare Part A covers hospital services, Medicare Part B covers medical (doctors, tests, etc.) services, Part C (added in 1985) covers the Senior Advantage plans and Part D (added in 2006) covers prescription drug costs.
In 1985, the Medicare program was amended to include a different type of coverage. Congress added federally approved health maintenance organizations, known as HMOs, to the plan. This provided the Medicare beneficiary with a choice of how he or she wanted health care provided. This type of coverage is available today and included under Part C – Senior Advantage plans.
Advantage plans must follow Medicare’s rules. Each month, Medicare pays a fixed amount to the plan for each enrollee in that plan. However, each plan can charge different out-of-pocket costs known as co-pays to the enrollee for services received.
As inroads were made in health care, new plans were developed, such as Medicare preferred provider organizations (PPOs), Medicare special needs plans (SNP), Medicare private fee-for-services plans (PFFS) and Medical savings account plans (MSA).
If you are considering one of this type of plan, it is important that you review the information you receive from that plan, which should give you details about what the plan covers, who can enroll and how much you will need to pay out of pocket.
In 2006, Medicare added Medicare Part D – Prescription Drug Coverage. Part D oversees private insurance plans that meet Medicare’s requirements and provide beneficiaries with the option of selecting the plan that meets their needs for the least amount of money. Each insurance plan has a premium and co-pay for the drugs selected. These amounts vary.
To summarize, Medicare has four distinct parts: Medicare Part A – hospital insurance, Medicare Part B – medical (doctors, tests, etc.) coverage, Part C – Senior Advantage Plans and Part D – Prescription Drug Coverage.
I hope this very simple explanation helps in understanding a very complex health care coverage system.
Happenings
WEDNESDAY: 1:30-3 p.m., seminar on Medicare 2017 at the Westlake Village Civic Center, 31200 E. Oak Crest Drive in Westlake Village.
THURSDAY: 10:30 a.m. to noon,“Will You Pass Your Next Driving Test?” seminar at the Goebel Adult Community Center, 1385 E. Janss Road in Thousand Oaks. Call 381-2744 for reservations.
TUESDAY: 5:30-7 p.m., Empowered Caregiver Series’ “Mindfulness and Your Money” seminar at Senior Concerns Day Care Center, 401 Hodencamp Road in Thousand Oaks. Call 497-0189 for reservations.
TUESDAY: 6:30 p.m., Camarillo community meeting on “Neighbors Together” a new concept for aging in place, sponsored by the Camarillo Council on Aging at the Camarillo Library, 4101 Las Posas Road.
Oct. 27: 10 a.m. to noon, “Local Safety Nets for Seniors” panel presentation in the Camarillo City Council chambers, 601 Carmen Drive in Camarillo. Call 388-5397 for information.
