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There are key terms you should know when researching Medicare options.
Medicare: The federal program that helps people over 65 and some people with disabilities pay for their health care. It is structured as an insurance program with several “parts.” Each covers a different type of cost.
Part A: Covers hospital stays, selected costs of continuing care after a hospital stay, some home health services and hospice.
Part B: Covers doctor visits and services, preventive care, lab tests and screenings, medical equipment and supplies, and some home health care.
Part C: Allows private health insurance companies to provide Medicare benefits. Known as Medicare Advantage plans, they are often HMOs or PPOs offering comprehensive health coverage that includes the services covered by parts A and B and sometimes more. Most also cover prescription drugs (Part D).
Part D: Covers outpatient prescription drug costs.
Supplemental Insurance, also known as Medigap: This is optional private insurance that Medicare recipients can buy to pay for out-of-pocket expenses (such as coinsurance costs) that traditional Medicare doesn’t cover.
Coinsurance: The percentage of the cost that you pay for a medical service or equipment. For example, for many Part B services, Medicare pays 80 percent of the cost; your coinsurance in those cases is 20 percent.
Copay: A specific dollar amount that you pay as your share of the cost of a medical service or equipment. For example, in a Medicare Advantage plan, you might have a $25 copay for a doctor visit; under Part D, you might have $10 copay for a particular prescription each time you get a refill.
Coverage gap: Also called the doughnut hole, this kicks in when you and your prescription drug plan costs reach a coverage limit that the government sets each year — $3,750 for 2018. After that, you pay a larger share of your prescription drug costs until your out-of-pocket costs reach a government-set threshold — $5,000 in 2018. After that, the government picks up most of the tab for your drugs. Under the Affordable Care Act, this coverage gap will be eliminated in 2020.
Deductible: The amount you must pay before insurance pays anything. For example, the Part B deductible in 2017 was $183; that means you must pay for the first $183 in expenses that fall under Part B before it will begin covering costs.