Understanding

MedicareParts A, B, C & D

is a community outreach program that offers educational seminars as well as personal Medicare and insurance counseling.

For individual insurance counseling you can find us at:• Community Events such as local health fairs, senior expos, county and state

events, conferences

• Convenient Medicare Help Desks located in various senior centers, retail outlets and other venues

Just look for the Service in the Neighborhood Sign on the table and let us help you! Please call usat 1-800-382-4548 for the schedule in the El Paso and Houston area.

In addition, if you belong to a senior group or organization that is looking for a speaker program,we offer a variety of free educational seminars...

Understanding Medicare...an easy to understand overview of Medicare Part A,B,C and Dincluding annual changes in Medicare.

Preventive Benefits...an informative program on Medicare's important preventive benefitsincluding what is covered, how often and what you pay.

Medicare Bingo....a fun, rousing game of BINGO Medicare style...everyone is a winner!

Prescription Drug Review...an opportunity to hear from a licensed, local pharmacist to address common pharmacy topics.

And More...Call us to schedule your free presentation today! Some programs are available in Spanish.

To learn more about us or to schedule a program call

1-800-382-4548.

Blue Cross and Blue Shield of Texasis in your community.

www.bcbstx.com

New to Medicare? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1• Eligibility• Enrollment• Your Card

Medicare Part A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5• Inpatient Hospital• Skilled Nursing Facility• Additional Benefits

Medicare Part B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8• Assignment• Medicare Summary Notice• Preventive Benefits

Medicare Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13• Standardization• Filling the Gap• What to look for

Medicare Part C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17• Part C Medicare Advantage Plan• Definitions

Medicare Part D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20• Part D Prescription Drug Plans• Penalty• Tips on Selecting a Plan

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Frequently Asked Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Contents

1

New to Medicare?

Medicare Was Developed by the Federal Government to ProvideBasic Health Coverage to:• People age 65 and over

• Disabled people

2

Eligibility is determined by Social SecurityEligible US residents include:• persons age 65 or older, and eligible for benefits under Social Security or the Railroad

Retirement System,

• a Federal, State, or local government employee insured on his or her own work record or that of a spouse,

• persons receiving disability benefits under Social Security or Railroad Retirement System for 24 months or more,

• persons receiving regular dialysis or has received a kidney transplant due to end stage renaldisease (ESRD),

• persons diagnosed with Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gehrig’s disease.

Note: Persons age 65 and older not eligible for Medicare on the basis of Social Security or Railroad Retirementmay purchase Medicare coverage. They must be a U.S. citizen or be a lawfully admitted alien residing in the U.S.for five consecutive years.

If you have not earned enough work credits on your own work record, you may qualify for Medicare benefits onyour spouse’s work record.

Signing up for Medicare Part A - Hospital InsuranceIf you are already receiving your Social Security Benefits or Railroad Retirement benefits, you will receive apackage of information from Medicare at the beginning of your Initial Enrollment Period. This periodbegins three months before your birthday month and extends three months after, totaling seven months.The package will contain your Medicare card as well as additional information about your benefits. Atthis time, you will be automatically enrolled into Medicare Part A, with your benefits beginning the first dayof the month you turn age 65. Most people do not have to pay a monthly premium for Part A becausethey or their spouses paid Medicare taxes while working.

Signing up for Medicare Part B - Medical InsuranceYou are automatically enrolled into Medicare Part B at the same time as Part A, unless you declineMedicare Part B. Some people choose not to enroll in Medicare Part B because either they or theirspouse are still working and have coverage, or they choose not to sign up because of the premium. If youdecline Medicare, you will need to return your Medicare card with the box “I do not want medicalinsurance” checked. If you decline Medicare Part B during this Initial Enrollment Period, you will haveanother opportunity to enroll during the “General” Enrollment Period. This period begins January 1each year and lasts through March 31 with coverage beginning July 1st. However, the cost of your Part B could go up 10 percent each year you were eligible for Part B, but didn’t sign up for it. You willhave to pay this extra cost as long as you remain on Medicare, unless you had other coverage.

How to enroll in Medicare…it’s easier than you think

3

New

to M

edic

are

Mrs. Reyes birthday is May 15. Her initial enrollment period forMedicare starts February 1 and extends to August 31.

Why would I decline Medicare Part B Insurance?If you or your spouse are still working and are enrolled in a group health plan, you may decide todelay enrolling in Part B until you retire. This is because you are already receiving medical benefitsthrough your employer. If this applies to you, then you may be eligible for a “Special EnrollmentPeriod.” During the Special Enrollment Period, you can sign up for Medicare Part B at any time orup to 8 months following the end of the group health coverage or end of employment, whichevercomes first. If you enroll during this “Special Enrollment Period” you do not have to pay the penaltywhich results in a higher premium.

Your Medicare Card…red, white, and blueYour Medicare card will have your Medicare health insurance number on it. This number identifiesyou to Medicare when you go to the doctor or hospital. Your Medicare number is usually a nine-digitnumber with one or two letters. On some cards, there will be another number after the letter. Whenboth a husband and wife have Medicare, each receives a separate card and Medicare number. If youare receiving Medicare benefits under your own work history, then your number will typically befollowed by the letter “A”. If you are receiving Medicare benefits under a spouse’s work history thenyour Medicare number will typically be followed by the letter “B”.

You should keep your card in a safe place. If it is lost or stolen, you can apply for a replacement bycontacting Social Security at 1-800-772-1213 or visiting its website at www.socialsecurity.gov.

Note: Even though the full Social Security retirement age is no longer 65, you are still eligible for Medicare at age 65.

4 www.bcbstx.com

New

to Medicare

Although Medicare insurance is a very good program, it was neverdesigned to pay all of your health care bills. Most people will want tosupplement Medicare with secondary insurance.

Where do you fit?

• Group retiree medical insurance, also known as secondary insurance, which youmay receive as a retiree benefit from your company or your spouse’s company

• Medigap insurance, also known as supplemental insurance, you buy directlyfrom a health insurance company like Blue Cross and Blue Shield of Texas

• Tricare (military retiree insurance) or VA benefits that you earned as a benefitfor serving your country

• Qualify for assistance through federal or state programs, i.e., SLMB or QMB

• Other

Let’s talk about Medicare first. Remember, in most cases Medicare Part Aand Part B pays primary (or first) before your other insurance coverage

In general, Medicare has four major components:• Part A — Inpatient Hospital and Skilled Nursing Facility

• Part B — Medical Doctors, Surgeons, Outpatient Care, Lab Tests & X-rays, Medical Services

• Part C — Medicare Advantage Plans

• Part D — Prescription Drug Coverage

5

Medicare Part A

Hospital Insurance• All eligible persons are automatically enrolled. You typically are not charged premiums by

the federal government.

Medicare Part A Provides Coverage for:• Hospital Stays — semi-private room and board charges, and general in-hospital expenses

• Skilled Nursing Facility Stays — not custodial or long term care

• Home Health Care — services provided in the home by an RN or LPN, therapist, or homehealth aide when recommended by a doctor

• Hospice Care — for treatment of the terminally ill

• Blood — received during hospital or skilled nursing facility stay

Med

icar

ePa

rt A

6 www.bcbstx.com

Medicare Part A Deductible

The amount you must pay under Traditional Medicare for hospital carebefore Medicare begins paying benefits

Inpatient hospital benefits• Hospital Stay — Days 1 – 60: Deductible $

• Days 61 – 90: $ co-payment per day. 30 days = $

• Days 91 – 150 Lifetime Reserve Days: $ co-payment per day. 60 days = $

Benefit PeriodThe way that Medicare measures the use of hospital and skilled nursing facility services. The benefitperiod begins the first day you receive in-patient hospital care and ends when you have been out ofthe hospital or skilled nursing facility for 60 consecutive days.

Lifetime Reserve DaysAn extra 60 days of inpatient hospital coverage when you are in the hospital for more than 90days. These 60 reserve days can be used only once during your lifetime. Medicare pays all coveredcosts except for a daily copayment.

1966 1975 1985 1995 2006 2007

$40 $92

$400

$716

$952 $992 $

7

Med

icar

ePa

rt A

Skilled Nursing Facility (SNF)Care Benefits• Short-term

• Rehabilitative

• Skilled level of care

A Skilled Nursing Facility staycould take place in a hospital,nursing home or other Medicareapproved facility• Requires a three-day hospital stay and

entrance to a facility within 30 days afterhospital discharge

• Must be ordered by a doctor

• Must take place in aMedicare-approved facility

Skilled Nursing Facility (SNF)• Days 1 – 20

No co-payment

• Days 21 – 100$ co-payment per day

• Days 101+Medicare pays no benefit

For example Mrs. Ramirez is hospitalized for kneesurgery and is in the hospital for four days. She isdischarged but not ready to return home. The doctorindicates that she requires physical therapy in an inpatientsetting so he prescribes SNF stay for one week. Medicarepays in full as long as she is improving from thisskilled care.

What is covered?• Semi-private room and board

• Regular nursing services

• Rehabilitation therapies

• Drugs furnished by the SNF during the stay

• Medical supplies

• Use of medical appliances, i.e.,wheelchair, walker

Also Covered Under MedicarePart A Insurance• Home Health Care: Skilled nursing care

and certain other health care you receivein your home for the treatment of anillness or injury. Medicare pays 100% ofthe approved charges for medicallynecessary services; 80% for durablemedical equipment.

• Hospice Care: A special way of caringfor people who are terminally ill whichincludes physical care and counseling.Medicare pays all but limited costs foroutpatient drugs and inpatient respitecare, providing the doctor certifies theneed for hospice care.

• Blood: Medicare does not cover thefirst three you get at a hospital or skillednursing facility during a covered stay.

8 www.bcbstx.com

Medicare Part B

Medicare Part BDoctor/Medical Insurance• Part B monthly premium coverage

*

• Payment will be deducted from yourmonthly Social Security check.

• Annual deductible based on acalendar year from 01/01 through 12/31

*If your annual income exceeds a certainamount $ , you may be required to pay a higher percentage of the MedicarePart B premium based on the DeficitReduction Act of 2005. The majority ofMedicare beneficiaries will continue to pay 25% of the cost of coverage.

Medicare Part B InsuranceProvides Coverage for:• Doctor’s care

• Surgery

• Outpatient care

• Lab tests and X-rays

• Home Health Care

• Durable Medical Equipment (DME)

• Other medically necessary servicesand supplies

• Preventive Benefits

• Mental Health

9

Med

icar

ePa

rt BWhen a Doctor Accepts Assignment...

…the doctor agrees to accept the Medicare-approved charge as full payment for services. Medicaresends the payment directly to the doctor – 80% of the approved charges after the deductible. Youare responsible for the 20% co-insurance.

When a Doctor Does Not Accept Assignment...…the doctor can charge the patient no more than 15% over the Medicare approved amount. This iscalled the Limiting (Excess) Charge*. Usually Medicare sends payment directly to you. You areresponsible for the 20% coinsurance plus the Limiting (Excess) Charge.

*Note: For doctor’s charges, the percent over Medicare-approved charges must be in compliance with Medicare’sPhysician Payment Reform formula.

Limiting Charge (Excess Charge): The highest amount of money you can be charged for a covered service bydoctors and other health care providers who do not accept assignment. The limit is 15% over Medicare’sapproved amount.

Example: Assume Part B Deductible has been met

Doctor’s Bill Medicare Medicare YourApproved Amount Pays Responsibility

Doctor A $1,150 $1,000 $800 20% ofAccepts Assignment approved = $200

Doctor B $1,150 $1,000 $800 20% of Doesn’t Accept approved + 15%Assignment excess = $350

Medicare Provides Part B Benefits Based on the Medicare-Approved Charge.Medicare-Approved Charges• Are the reasonable charges as determined by Medicare

• Can be less than what the doctor/provider actually charges

10 www.bcbstx.com

Part B Claims• Your health care provider must complete all paperwork and send your claim

directly to Medicare. You are not responsible for filing your own Part B claim.

• Medicare sends you a Medicare Summary Notice (MSN) statement under certaincircumstances. This is not a bill.

• Crossover: Once Medicare processes a claim, it is forwarded to most supplemental insurancecompanies, such as Blue Cross and Blue Shield, through an automatic electronic system, knownas “crossover.” When health care services are rendered, the claim is first submitted to Medicare.

• Appeal: A special kind of complaint you make if you disagree with a decision forpayment or services.

> Traditional Medicare Beneficiaries will find instructions on how to file an appeal on theMedicare Summary Notice.

> Medicare Advantage Members will find instructions in their Health Plan materials.

> Your health provider can supply you with supporting documentation.

• If you suspect unnecessary or inappropriate services/charges from your provider, report thisinformation to Medicare 1-800-447-8477

When Medicare is Not Your Primary Payer.• When you, your spouse or disabled dependent have coverage through an employer-based

group health plan

• When your medical expenses are the result of an accident covered by an insurance company(i.e. car accident)

• You receive benefits at a Veterans hospital or clinic

11

Med

icar

ePa

rt BMedicare Summary Notice

CUSTOMER SERVICE INFORMATIONYour Medicare Number: 111-11-1111AIf you have questions, write or call:

Medicare Customer ServicePO Box XXXXCity, State, Zip

Local: (XXX) XXX-XXXXToll-free: X-XXX-XXX-XXXXTele-Device for the Deaf: X-XXX-XXX-XXXX

BENEFICIARY NAMEADDRESSCITY, STATE, ZIP

HELP STOP FRAUD: Protect yourMedicare Number as you would a creditcard number.

This is a summary of claims processed from Mo/Dy/Yr through Mo/Dy/Yr.

PART B MEDICAL INSURANCE – ASSIGNED CLAIMSDates

ofServices

AmountCharged

$55.00 $44.35 $0.00 $44.35 b

a

MedicareApproved

MedicarePaid

Provider

YouMay BeBilled

SeeNotes

SectionServices Provided

Your Doctor, M.D., AddressChicago, IL 60601

Mo/Dy/Yr 1 Office/Outpatient Visit, ES (99214)

Notes Section:a This information is being sent to your private insurer(s). Send any questions regarding your benefits to them.b This approved amount has been applied toward your deductible.

Deductible Information:You have now met $44.35 of your $_____ Part B deductible for _____ .

General Information:Please notify us if your address has changed or is incorrect as shown on this notice.

Appeals Information – Part BIf you disagree with any claims decision on this notice, you can request an appeal by Mo/Dy/Yr. Follow theinstructions below:

• Circle the item(s) you disagree with and explain why you disagree.• Send this notice, or a copy, to the address in the “Customer Service Information” box on Page 1.

• Sign here__________________________________________Phone number (_____)__________________

Dates andservice

provided

Amountaccrued

toward yourPart B

deductible

Appealsinformation

Amountbilled

Amountapproved by

Medicare

Amounteither youor your

insurancecompanymust pay

Medicare Summary Notices (MSNs) are usually mailed out on a quarterly basis throughout the year.Each quarter is defined as:

First Quarter: January-March Third Quarter: July-September

Second Quarter: April-June Fourth Quarter: October-December

What is a Medicare Summary Notice (MSN)?A Medicare Summary Notice (MSN) provides an explanation of the claims that are billed to aMedicare contractor for Part A (hospital and home health and hospice), Part B (medical), andDME (durable medical equipment) services. It also provides detailed information on whetherthe service or supply was paid, denied, adjusted, etc. The Medicare Summary Notice (MSN)will help ensure a person on Medicare pays the correct amount with the provider of service.

12 www.bcbstx.com

MedicarePart B

New EnrolleesWelcome to Medicare Physical Exam – one time review of health and medical history during the first six months you have Medicare Part B.

Every 12 Months

• Mammograms

• Fecal occult blood test (colon cancer)

• Prostrate cancer screening

• Glaucoma test is at high risk

• Pap test if at high risk

Every 24 Months

• Bone mass measurement for people withcertain medical conditions

• Pap test and pelvic exam cancer screen

• Colonoscopy if at high risk

Every 48 Months

• Flexible sigmoidoscopy (colon cancerscreening) or

• Barium exema (colon cancer screening)

Every 5 Years

• Cardiovascular screenings for cholesterol,lipid and triglyceride levels

Every 10 Years• Colonoscopy unless high risk

Ask Your Doctor

• Diabetes screening – blood sugar

• Diabetes self-management test training

• Medical nutritional therapy services fordiabetes and kidney disease

• Hepatitis B Shots

• Smoking cessation counseling to quitsmoking for people with a smokingrelated illness or who take medicineaffected by tobacco

Once a Flu Season• Flu shots

Once in a Lifetime• Pneumonia shot

In addition, Medicare does notcover these medical expenses:• Dental

• Routine eye exams

• Eyewear

• Hearing aids

• Hearing tests

• Health care outside the United States

Preventive BenefitsAsk your doctor about the Medicare covered tests and screenings that might be right for you.

Coinsurance and deductibles may apply. You may need to meet certain criteria for coverage.

13

Medicare Supplement

Med

icar

eSu

pple

men

t

StandardizationHow to fill the gapTo help compare health plans move easily, a law was passed stating that all “Medigap” plans offeredafter January 1992 must be identical.

If you or someone you know purchased a “Medigap” policy prior to 1992, those policies would notbe affected by standardization.

14 www.bcbstx.com

Medicare Supplement insurance can be sold in only 12 standardplans, plus two high deductible plans. This chart shows thebenefits included in each plan. Every company must makeavailable Plan “A”. Blue Cross and Blue Shield of Texas offersplans A, D, F, K and L.

Medicare Supplement Insurance - Filling the “Gap”

Traditional Medicare Only - Medicare Part A and Part B• This is fee-for-service Medicare.

• When you go to a doctor or hospital who accepts Medicare, Medicare will pay aportion of the cost for each approved service. You are responsible for all deductiblesand co-payments.

Traditional Medicare With a Medicare Supplement Policy• You have Traditional Medicare and purchase a Medicare Supplement policy to help pay

the expenses Medicare leaves you to pay.

• You have the freedom to choose any doctor or specialist you wish without restrictions orreferrals. You manage your care.

Note: To apply and be considered for coverage, you must be a Texas resident age 65 or over and covered byMedicare Parts A and B. If you are approved for coverage, you will receive a policy package to review.

15

Med

icar

eSu

pple

men

t

Basic BenefitsIncluded in all plans. Plans K and L include benefits at different levels of cost sharing.

HospitalizationPart A coinsurance plus coverage for 365 additional days after Medicare benefits end.

Medical ExpensesPart B coinsurance (generally 20% of Medicare-approved expenses), or in the case of hospitaloutpatient department services under a prospective payment system, applicable copayments.

BloodFirst three pints of blood each year.

*Plans F and J also have an option called a high deductible Plan F* and a high deductible Plan J.* These high deductible plans pay the same benefits asPlans F and J after one has paid a calendar-year $______ deductible. Benefits from high deductible Plans F and J will not begin until out-of-pocketexpenses are met. Out-of-pocket expenses for this deductible are expenses that would ordinarily be paid by the policy. These expenses include theMedicare deductibles for Part A and Part B, but do not include the plans’ separate foreign travel emergency deductible.

**Plans K and L provide for different cost-sharing for items and services from Plans A-J. Once you reach the annual limit, the plan pays 100% of theMedicare copayments, coinsurance and deductibles for the rest of the calendar year. The out-of-pocket annual limit does NOT include charges fromyour provider that exceed Medicare-approved amounts, called “excess charges.” You will be responsible for paying excess charges.

***The out-of-pocket annual limit will increase each year for inflation.

A B C D E F/F* G H I J/J* K** L**

Basic Benefits � � � � � � � � � � � �

Skilled Nursing Coinsurance � � � � � � � � � �

Part A Deductible � � � � � � � � � � �

Part B Deductible � � �

Part B Excess � � � �

Foreign Travel Emergency � � � � � � � �

At-Home Recovery � � � � �

Preventive Care �

Annual Out-of Pocket Limit �*** �***

16

Medicare

Supplement

Features to look for in Medicare Supplement Plans• Reliable benefits that begin where Medicare ends

• Freedom to choose the family doctor, specialist and hospital you want

• Affordable, competitively priced premiums

• The reputation of the insurance company

Distinguishing features of the most common Blue Cross and Blue Shield of Texas Medicare Supplement Plans• D - Pays At Home Recovery

• F - Pays Medicare Part B deductible and excess charges if your doctor does not accept Medicare assignment

17

Medicare AdvantageMedicare Part C

Medicare Advantage Plans - Part C or MA PlansMedicare Advantage plans are health plan options (like HMOs and PPOs) approved by Medicareand are run by private companies. They manage the Medicare coverage for their members.Medicare pays an amount for your care every month to these private health plans. Once you makea choice to go with a Medicare Advantage plan, you must receive all of your care according to theplan. Co-payments and/or co-insurance can vary depending on the plan. Medicare Advantageplans are an alternative to the original Medicare Plan. They aren’t supplemental insurance.

Med

icar

ePa

rt C

18 www.bcbstx.com

Medicare

Advantage Plans

Compare How Three Types of Medicare Advantage Plans WorkSince each plan can vary, it’s important for you to read the plan materials carefully.

Medicare AdvantagePlans

Preferred Provider Organization (PPO) Plan

Are prescription drugs covered? In most cases. If you want prescription drug coverage, you must get itfrom the plan. The cost for coverage will be included in the premium.

Do I need to choose a primarycare doctor?

No.

Can I get my health care fromany doctor or hospital?

Yes. PPOs have network doctors and hospitals, but you can also use out-of-network providers for covered services, usually at a higher cost.

Do I have to see a primary caredoctor to get a referral to see aspecialist?

No.

What else do I need to knowabout this type of plan?

• Contact the plan before you get a service to find out if the service is covered and how much it costs. Follow the plan’s rules when needed.

• Regional PPOs (which serve an entire state or multi-state area)limit your out-of-pocket costs but may have a higher yearlydeductible and/or premium than other PPOs.

• Extra benefits are often offered for an extra premium.

19

Med

icar

eA

dvan

tage

Pla

ns

Health Maintenance Organization Private Fee-for-Service Plan (PFFS)(HMO) Plan

In most cases. If you want prescription drug coverage,you must get it from the plan. The cost for coveragewill be included in the premium.

Sometimes. If your plan doesn’t offer drug coverage,you can join a Medicare Prescription Drug Plan in your area.

Yes. In most cases you must see a primary care doctorto get a referral before you see any other health careprovider.

No.

No. You generally must get your care and services fromdoctors or hospitals in the plan’s network (exceptemergency or ugent care). If the plan has a Point-of-Service (POS) option, you can go out-of-network, butyou will pay more than for services in-network.

In most cases. You can go to any Medicare-approveddoctor or hospital that accepts the plan’s paymentterms for covered services.

In most cases. Women don’t need a referral for a yearly screening mammogram or an in-network paptest and pelvic exam (at least every other year)

No.

• If your doctor leaves, your plan will notify you.You can choose another plan doctor.

• If you get health care outside the plan’s network, you may have to pay the full cost of the services yourself.

• Follow the plan’s rules, like getting prior authorization when needed.

• Extra benefits are often offered for an extra cost.

PFFS plans are different from the Orginal MedicarePlan. PFFS plans are offered by private companies. The private company, rather than Medicare, decideshow much it will pay and how much you will pay forthe services you get. Extra benefits are often offeredfor an extra cost.

20

Medicare Part D

MedicarePart D

Medicare Part D is a part of the Medicare Prescription Drug, Improvement and Modernization Actof 2003 (MMA). Medicare offers prescription drug coverage for everyone with Medicare. Thiscoverage is called Part D.

Medicare does not sell a Part D plan, Medicare approves insurancecompanies to sell Part D plansThere are two primary ways to get Medicare Prescription Drug coverage.

1. Join a Medicare Prescription Drug Plan - also known as PDP. These plans add prescriptiondrug coverage to the Original Medicare Plan.

2. Join a Medicare Advantage Plan - typically an HMO or PPO. You get all of your Medicarecoverage, Part A and B, including prescription drugs through these plans. Also known as MAPD’s.

Note:• Enrollees with low income and limited assets may get extra help. Refer to Social Security for

eligibility information.

• Remember: If you have drug coverage through a previous or current employer or union, contactyour benefits administrator before you make any changes to your prescription coverage. You mayhave creditable coverage that is as good as or better than Medicare’s standard prescription drugcoverage. Therefore, you may decide not to enroll in Part D.

21

Who is eligible to enroll in Medicare (Part D) Drug Coverage?Everyone with Medicare can get prescription drug coverage.

Do I have to enroll in Medicare (Part D) Drug Coverage?No, this is a voluntary program. However, if you don’t join a plan when you are first eligible for MedicarePart A and/or Part B and you go without creditable Part D coverage for 63 continuous days or more, youmay have to pay a late enrollment penalty to join a plan later.

What is the Penalty?1% of the national base premium for the current year multiplied by the number of full months you wereeligible to join a plan but didn’t. This penalty is added to your premium for as long as you have a plan.

Tips on Selecting a Plan• How much does it cost? (monthly premium, yearly deductible, co-payment, coinsurance)

• What drugs are covered? All Medicare drug plans must cover at least two drugs in eachcategory of drugs, but Plans can choose which specific drugs to cover. Note: Plans arerequired to cover almost all drugs in six classes that include: antipsychotics,antidepressants, anticonvulsants, immunosuppressants, cancer, HIV/AIDS

• How do I get my medication and which pharmacies will accept the card? Check with yourplan to see if the pharmacies you want to use are in your plan’s network. Check to see ifyour plan has a mail order option.

• Is there coverage in the Gap? Some plans may offer generic and/or brand coverage.These plans may charge a higher premium.

Many Medicare drug plansplace drugs into different“tiers.” Drugs in each tierhave a different cost. Someplans may have more tiersand some may have less.Here is an example:

Med

icar

ePa

rt D

Tip – Take your Formulary to the doctor!

Tier You Pay What is Covered?

1 Lowest copayment Most generic prescription drugs

2 Medium copaymentPreferred, brand-name

prescription drugs

3 Higher copaymentNon-preferred, brand-name

prescription drugs

SpecialtyTier

Highest copayment orcoinsurance

Unique, very high-cost drugs

22 www.bcbstx.com

Glossary

Advance Beneficiary Notice (ABN): Advance Beneficiary Notice – ABN is used withthe Traditional Medicare Plan. It is a notice that a doctor or supplier may give to the beneficiarystating that Medicare probably will not pay for a service/supply. If you still want the service/supplyyou will be asked to sign the ABN agreeing to pay for the service/supply yourself.

Appeal: A special kind of complaint you make if you disagree with a decision for paymentor services.

Assignment: In the Traditional Medicare Plan, assignment is an agreement between Medicareand doctors, other health care providers, and suppliers of health care equipment and supplies,to accept the Medicare-approved amount as payment in full for Part B services and supplies.

Benefit Period: The way that Medicare measures the use of hospital and skilled nursing facilityservices. The benefit period begins the first day you receive inpatient hospital care and ends whenyou have been out of the hospital or skilled nursing facility for 60 consecutive days.

Catastrophic Coverage: Medicare covers almost all your approved drug costs after you’vereached your true out-of-pocket for the year.

Coinsurance: The percent of the Medicare-approved amount that you are responsible for afteryou pay the deductible for Part A and/or Part B.

Copayment: Set amounts for some inpatient and outpatient services for which you are responsible.

Creditable Coverage: Drug coverage offered that is at least as good as standard MedicarePart D coverage.

Crossover: Once Medicare processes a claim, it is forwarded to most supplemental insurancecompanies, such as Blue Cross Blue Shield, through an automatic electronic system.

Custodial Care: Non-skilled personal care of daily living like bathing, dressing and eating.

Date of Service: Date that services were provided.

Deductible: The set amount you must pay for health care before Medicare begins to pay.

Formulary: The drugs that the Medicare Part D plan covers.

Home Health Care: Skilled nursing care and certain other health care you receive in yourhome for the treatment of an illness or injury. Medicare pays 100% of the approved charges formedically necessary services; 80% for durable medical equipment.

Hospice Care: A special way of caring for people who are terminally ill which includes physicalcare and counseling. Medicare pays all but limited costs for outpatient drugs and inpatient respitecare, providing the doctor certifies the need for hospice care.

Lifetime Reserve Days: An extra 60 days of inpatient hospital coverage when you are in thehospital for more than 90 days. These 60 reserve days can be used only once.

Medically Necessary: Services or supplies that are proper for the diagnosis or treatmentof your medical condition, meet the standards of good medical practice and are not mainlyfor convenience.

Limiting Charge (Excess Charge): The highest amount of money you can be chargedfor a covered service by doctors and other health care providers who do not accept assignment.The limit is 15% over Medicare’s approved amount.

Medicare Advantage: Introduced by the federal government as part of the Balanced BudgetAct of 1997, Medicare Advantage was intended to help the government save money in theMedicare program, as well as offer choices for Medicare beneficiaries.

Medicare Approved Charges: The fee Medicare sets as reasonable for a coveredmedical service.

Medicare Supplement - Medigap: A Medicare supplement insurance policy sold byprivate-insurance companies such as Blue Cross and Blue Shield to fill “gaps” in traditional Medicare.

Preventive Services: Health care to keep you healthy or prevent illness.

Standardization: A law passed in 1990 stating all Medicare Supplement plans offered afterJanuary 1, 1992 must be identical to those offered by other Medigap insurers.

23

Glo

ssar

y

24 www.bcbstx.com

FrequentlyAsked Questions

Q: Once I am eligible for Medicare Parts A and B, do I need additional insurance coverage?

A: Although Medicare is a very good program, it was never designed to cover all your medicalneeds. Because of Medicare’s deductibles and co-payments, you will want to consider buying aMedicare Supplement plan to help pay for these out-of-pocket expenses. Blue Cross and BlueShield of Texas sells Medicare Supplement plans (also known as Medigap plans) to help coverthese costs. (See page 15)

Q: Should I sign up for Medicare Parts A and B if I am still working?

A: Even if you keep working after you turn 65, you should sign up for Medicare Part A. If youhave health coverage through your employer or union, Part A may still help pay some of thecosts not covered by your group health plan. However, you may want to wait to sign up forMedicare Part B if you or your spouse are working and have group health coverage throughyou or your spouse's employer or union. You would have to pay the monthly Medicare Part Bpremium, and the Medicare Part B benefits may be of limited value to you as long as thegroup health plan is the primary payer of your medical bills .

Note: If you are age 65 or older and working for a small company (less than 20 employees), you shouldtalk to your employee health benefits administrator before making any decision not to take Medicare PartB. If your employer has less than 20 employees, Medicare is the primary payer and your group healthinsurance would be the secondary payer.

Q: Do I still get Medicare if I am not yet eligible for Social Security retirement benefits?

A: Although the retirement age is rising, 65 remains as the starting date for Medicare eligibility.You will be eligible to apply for Medicare if you have paid into Social Security for at least 10years or you are eligible to receive Social Security benefits on your spouse’s earnings. If you donot meet these requirements, you can still get Medicare hospital insurance (Part A) by payinga monthly premium if you are a citizen or a lawfully admitted alien who has lived in the U.S.for at least five years. And remember, you do not have to be retired to enroll in Medicare.

Q: Does a spouse, age 62, receive Medicare benefits when his/her aged 65 husband/wife does?

A: Generally not. The minimum age for Medicare eligibility is 65. But, if you've been gettingSocial Security disability benefits for 24 months you can receive Medicare at any age. You canpurchase coverage from a private insurance company for your spouse until he/she turns age 65and becomes eligible for Medicare. Blue Cross and Blue Shield of Texas sells direct insurancefor those under age 65.

Q: What do people with Medigap policies need to do to get Medicare prescription drug coverage?

A: You will want to identify and purchase a separate Part D drug plan from an approved companythat meets your needs during the enrollment period for which you qualify. Medigap policiessold today do not include a drug benefit.

Q: Do I have to join a Medicare drug plan?

A: No. Joining a Medicare drug plan is your choice. However, if you don’t currently have a drugplan that, on average, covers at least as much as standard Medicare prescription drug coverage,you will have to wait until the annual enrollment period to join. When you do join, your premium cost will go up at least 1% per month for every month that you wait to join. Likeother insurance, you will have to pay this penalty as long as you have Medicare prescriptiondrug coverage.

Q: When can I switch drug plans?

A: Generally if you join a Medicare Prescription Drug Plan, you can only change plans undercertain circumstances. You can choose to switch your current plan from November 15 throughDecember 31 of every year. Enrollment is generally for the calendar year. In certain cases, suchas if you move or enter a nursing home, you can switch your plan at other times.

If you have both Medicare and Medicaid, you can change plans at any time.

Q: What tax year will be used to determine my Income Related Part B premium?

A: To determine your Part B premium, the most recent tax return information provided by the IRS is used. For 2008, your tax return information for 2006 is generally used.

Q: What if my income has gone down?

A: If your income has gone down due to various circumstances such as retirement, divorce,death, change in pension, etc. contact Social Security as soon as possible and tell them you want a new decision about your Income Related Part B Premium.

25

Freq

uent

lyA

sked

Que

stio

ns

26

Notes

Blue Cross and Blue Shield of TexasBlue Medicare RxMonday - Friday, 8 a.m. to 8 p.m.1-888-579-9373TTY/TDD: 1-888-579-9375

Blue Cross and Blue Shield of Texas1-800-654-9390TDD: 1-800-735-2989Individual Products (inquiry): 1-800-531-4456www.bcbstx.com

Medicare Inquiries for Part A, Part B,Part D and Durable Medical Equipment1-800-633-4227www.medicare.gov

Social Security Administration1-800-772-1213www.socialsecurity.gov

Texas Department of Insurance1-800-252-3439www.tdi.state.tx.us

Department of Veterans Affairs1-800-827-1000www.va.gov

Department of Agingand Disability Services (DADS)Information & Referral: 1-800-252-9240Hotline: 1-800-252-2412www.dads.state.tx.us

30451.0108

Blue Cross and Blue Shield of TexasService in the Neighborhood

1-800-382-4548

Houston Representative1-713-354-7240

El Paso Representative1-915-496-6751

A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association® Registered Service Marks of the Blue Cross and Blue Shield Association, An association of Independent Blue Cross and Blue Shield Plans®’ Registered Service Marks of Blue Cross and Blue Shield of Texas, An Independent Licensee of the Blue Cross and Blue Shield Association