More Helpful Medicare Definitions

Q: When I go to read the material that I am receiving about Medicare, I can’t seem to understand what they are trying to say. Can you help?

A: The following list of terms and definitions are continued from last week’s article. There are so many words to define, it could not all be contained in one article. I would recommend keeping these articles to refer to in the future.

Referral: A written order from your primary physician allowing you to see a specialist or get services from another source. Plans that require this referral may not pay for services you get without this written referral from your primary physician.

Creditable coverage: This term is used to define the level of prescription drug coverage available to you. All prescription drug plans available to those with Medicare have to define themselves as either being “Creditable” or “not Creditable.” If Creditable, the prescription drug plan must pay out on average as much as or more than Medicare’s Standard Prescription Drug Coverage. To say it differently, your current plan must be equal to or better than Medicare’s Standard Prescription Plan. If your current plan is “Creditable” you do not have to join an additional Medicare Part D plan. If your current plan is not “Creditable” you do have to join an approved Medicare Part D plan or pay a premium penalty when you decide to join Medicare Part D. Examples of Creditable coverage are veterans benefits, and sometimes employee and retiree benefits. Not all employee and retiree prescription drug plans are creditable. Each plan must send you a letter stating their “Creditable” status, or include this information in their plan booklet.

HIPAA: The Health Insurance Portability and Accountability Act was passed on Aug. 21, 1996. This act included rules covering administrative simplification, portability of medical coverage for pre-existing conditions and standardization of electronic transmittal of billing and claims information. The electronic means of data collection, claims and paying of claims increases the potential for abuse of people’s medical information. HIPAA has become the standard for increasing confidentiality and security of personal health information. It has limited the access to this information to only those authorized by the individual.

PHI – Protected Health Information: This is the information protected by HIPAA. This is personal health information that you would not want others to have about you. If you are going to see your doctor for a particular diagnosis, you may not want everyone to know that. When you pick up your prescriptions you do not want everyone to know what you are taking and why you are taking it. If you want to tell them, that is your business, but you don’t want them to find out through another source.

Initial Enrollment Period (IEP): For individuals just becoming eligible for Medicare, this is the period of time usually around their 65th birthday. It is a seven-month period of time an individual can enroll in Medicare. It is the three months prior to your birthday month, your birthday month and three months after your birthday month. For example if you are born in March, your IEP would be December, January, February, March, April, May and June.

Open Enrollment Period (OEP): Each year there is an annual open enrollment period for each part of Medicare coverage. The Open Enrollment Period for Medicare Part B is January February and March each year. If you don’t join during your Initial Enrollment Period you can join during this three-month period. There will be penalties if you enroll late, and your benefits will not begin until July 1 of that year. The OEP for Medicare Part D plans and Medicare Advantage Plans is Oct. 15 to Dec. 7. If you had Creditable coverage prior to that enrollment there is no penalty; if you didn’t have Creditable coverage there is a penalty for late enrollment. Your new plan choice will start Jan. 1. If you make no changes during this OEP each fall your current plan will continue into the next year.

Special Enrollment Period (SEP): This enrollment period is available based on special circumstances you may have. The SEP means different things to different people, and can waive rules that would normally apply to enrollment at that time of year. One example: individuals and their spouses who receive benefits through an employer, and are eligible for Medicare. Once these benefits end, they have an SEP, eight months from the end of the Employee Group Health Plan (EGHP) to enroll in Medicare Part B. This health insurance must be from active employment benefits, not COBRA or retiree benefits. This SEP would allow those individual who “qualify” to enroll in a product (Part B) that is not in its annual Open Enrollment Period.

For Medicare Part D there are more SEPs than could be listed in this article. There are publications available that help to determine the many SEPs available. Examples of SEPs are the following:

If you have EPIC, you are allowed one SEP each year. That is one time to change the Part D plan you have or enroll for the first time into Medicare Part D.

When you leave a skilled nursing facility, you have 63 days to find a new/different Medicare Part D plan.

Outpatient Services: Those services (tests, lab work, procedures, etc.) that are conducted outside of a hospital stay. These services may in fact be conducted inside a hospital building, but they are not part of a hospital stay.

Co-pay limits: Some health insurance plans and prescription plans indicate they have co-pay limits. In a calendar year, this is a maximum dollar amount that you will pay “out of pocket.” For example, if your plan states that you have a $3,000 co-pay limit for your medical/health coverage, you will not pay more than $3,000 for approved services in a calendar year. This maximum out of pocket is not a limit for unapproved or uncovered services, but just approved/covered services with the plan.

Premium waived: In some situations premiums for insurance coverage are waived. These situations are usually when someone has qualified for an entitlement program. An example of this: Long Term Care Insurance often waives the premiums you would pay once you begin receiving benefits from the plan.

Low Income Subsidy (LIS): This subsidy is available through the Social Security Administration. It is a relatively easy application to complete and would give those who are entitled the ability to join Benchmark Medicare Part D plans with no premiums to pay and reduced co-pays at the pharmacy. Individual and couple annual income levels are $16,752 and $22,692 respectively. There are also asset limits of $13,070 and $26,120. There are two levels of benefit for this program: Full LIS and Partial LIS. Further information is available from the Social Security Administration for this benefit.

Benchmark Medicare Part D plans: CMS each year reviews all the plans submitted to provide coverage and approves or denies their right to cover you. Once this submission is completed, CMS looks at the plans that provide the minimum coverage as determined by the regulations (Standard Plan). CMS then averages the monthly cost of these plans and comes up with a “Benchmark Cost.” This Benchmark determines the LIS subsidy levels paid that year. For the current year of 2013, the Benchmark is $43.22. Any plan costing less than $43.22 monthly, offering the minimum standard plan, will be considered a Benchmark plan. Any plans that qualify for this determination tend to have a higher enrollment rate than more expensive plans. (This benefit was defined in Low Income Subsidy).

CMS: Centers for Medicare and Medicaid. CMS is within the Department of Health and Human Services. This is the administrative branch of the Federal Government which oversees the Medicare and Medicaid programs.