Medicare is a federal health insurance program for people 65 years old or over and for certain disabled people under 65 years of age. You are automatically enrolled in Medicare hospital insurance (Part A) when you apply for Social Security benefits. Part A covers inpatient care in a hospital or a limited stay in a skilled nursing facility. Part B covers physician and outpatient hospital services.  The premium you pay for Part B is deducted from your Social Security benefits.

Medicare pays for many health care services and supplies, but it doesn’t cover all of your health care costs. For example, you pay a deductible for each hospital stay and coinsurance anytime you use the services of a physician or surgeon.  Also, drug coverage is limited. Because Medicare rarely pays the full cost of covered services, you may want to consider a Medicare Advantage plan instead.

Medicare Advantage is the new name for Medicare + Choice plans.
This type of health plan is an alternative to Original Medicare and was
created by the Balanced Budget Act of 1997
and the Medicare Modernization Act of 2003.
Some examples of Medicare Advantage plans are:

• Medicare Health Maintenance Organization plans (HMO)
  
  
• Medicare Preferred Provider Organization plans (PPO)
  
  
• Medicare Private Fee-for-Service plans (PFFS)

Medicare Advantage plans feature prescription drug benefits,
fixed costs, limits on out-of-pocket expenses, and worldwide
coverage for emergency and urgent care.

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An HMO is an alternative to Original Medicare and features specific lists of doctors, hospitals, and other providers that you must use to receive benefits. HMOs often provide additional benefits not found in Original Medicare, including coverage for deductibles, steep reductions in co-insurance when you use doctors, a drug benefit plan and wellness or fitness programs. If you select a Medicare Advantage HMO, it replaces your Original Medicare coverage. However, you can return to Original Medicare down the road if you wish.

With a Medicare Advantage PPO, you can see any doctor you want. However, if you use a doctor who participates in the network, you get a better benefit and lower copayment than if you visit a non-network doctor. Plus, referrals aren’t needed and you don’t have to see a primary care doctor first. In addition to prescription drug benefits, Medicare Advantage PPOs may offer additional benefits such as dental, vision, and nutritional supplements. If you select a MedicareAdvantage PPO , it replaces your Original Medicare coverage. However, you can return to
Original Medicare down the road if you wish.

In 2006, regional Medicare Advantage PPO plans became available to
consumers eligible for Medicare. Check out the key features
and advantages of these plans:

With a Medicare Advantage PFFS plan, you have the freedom to select any doctor, hospital, or health care provider who accepts the PFFS ’s payment terms and conditions, without worrying about referrals or a list of doctors
who participate in the plan’s network. PFFS plans feature limits on out-of-pocket expenses, coverage for emergency and urgent care, and in some cases, a prescription drug benefit. If you select a PFFS plan, it replaces your Original Medicare coverage. However, you can return to Original
Medicare down the road if you wish.

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A Medicare Supplement insurance plan helps cover the “gaps” in coverage
that are left unpaid after Original Medicare pays its portion of your health care expenses. For this reason, these plans are often referred to as Medigap plans. Unlike a Medicare Advantage plan, which replaces your Original Medicare
benefits, a Medicare Supplement plan is purchased in
addition to your Original Medicare benefits.

Medicare Supplement policies are standardized into twelve plans
– labeled “A” through “L,” each with its own set of benefits. Plan A covers the most basic benefits.  Plans "B" through "L" provide additional coverage beyond the basics. Plans "K" through "L" are new plans that help limit out-of-pocket
costs for doctor's services and hospital care.

Medicare Supplement policies are sold by private insurance companies. While the costs of these policies may vary, individual insurance companies must provide the same standardized benefits as outlined by law. In order to purchase a policy, in general you must be enrolled in Medicare Part A and Part In addition to paying the monthly Medicare Part B premium to Medicare, you will have to pay a premium to the insurance company providing your coverage.

Medicare is contracting with insurance companies,
to offer prescription drug plans (PDPs). The PDPs replace the drug discount cards. If you’re considering a PDP, please keep the following in mind:

• Optional plan.
  A PDP is an option – not a requirement. However, if you don’t join a PDP
  when you become eligible, you’ll have to pay a higher
  premium if you join later.
  
  
• Monthly premium.
  PDPs have a monthly premium in addition to the Medicare premium you already pay. However, some Medicare Advantage plans, including many of our plans’s, have a PDP included as a benefit without an
  additional monthly premium.
  
  
• No overlap with Medicare Advantage.
  If you’re enrolled in a Medicare Advantage plan, such as an HMO through a
  private insurance company, you may already have prescription drug coverage. If that’s the case, choosing the PDP isn’t necessary – in fact, getting the PDP would require you to drop your
  Medicare Advantage coverage.
  
  
• Benefits and costs.
  PDP plan benefits vary, but companies offering these plans are required to offer the minimum benefits listed below. many of our plans benefits 
  are equal to, or better than, these required minimums.

With a PDP, you pay the first $265 of prescription costs –
the annual PDP deductible. After the deductible, your costs are:

• 25 percent of prescription drug costs from $265 to $2,400
  
  
• 100 percent of prescription drug costs until
  your out-of-pocket costs reach $3,850
  
  
• After that, the insurance company pays 95 percent,
  and you pay the greater of $2.15 for generic
  (including brand drugs treated as generic)
  and $5.35 for all other drugs, or 5% coinsurance.

• PDP enrollment.
  If you’re a current Medicare beneficiary and want PDP coverage,
  enrolling in the plan by May 15, 2006 gave you the lowest premium.
  Enrollment is automatic for consumers who are “Qualified Medicare Beneficiaries” – those on a limited income who receive assistance with
  their Medicare premiums and copayments.

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For more Medicare information you can call
– or go online – for answers about your coverage.

• Centers for Medicare and Medicaid Services
  7500 Security Blvd.
  Baltimore, MD 21244-1850
  1-800-633-4227
  TTY 1-877-486-2048
  24 hours a day; seven days a week
  www.medicare.gov
  
  
• Social Security Administration
  Office of Public Inquires
  Windsor Park Blvd.
  6401 Security Blvd.
  Baltimore, MD 21235
  1-800-325-0778
  TTY 1-800-325-0778
  7 a.m. – 7 p.m.
  www.ssa.gov
  
  
• Railroad Retirement Board
  Chicago District Office
  844 N. Rush Street
  Ninth Floor
  Chicago, IL 60611-2092
  1-800-808-0772
  TTY 312-751-4701
  24 hours a day, 7 days a week