South Dakota · Life Insurance & Annuities Sample Interactive Mind Map
Medicare Part C & Part D
A visual breakdown of Medicare Part C & Part D — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the South Dakota Life Insurance sample is Medicare Part C & Part D — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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Medicare Advantage REPLACES Original Medicare — it does not supplement it.
A private insurer takes a fixed monthly payment from CMS and delivers all your Part A and B benefits (often plus extras) through its own plan.
A private insurer takes a fixed monthly payment from CMS and delivers all your Part A and B benefits (often plus extras) through its own plan.
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How Medicare Advantage (Part C) Works
Private plan, in place of Original Medicare
- Must already be enrolled in both Part A and Part B to join
- Must live in the plan’s service area — MA plans are local, not national
- Plans must cover all Part A and B benefits, but may use different copays, deductibles, and coinsurance
- Often add dental, vision, hearing, fitness, and transportation — and may bundle Part D (an MA-PD plan)
The required out-of-pocket maximum
Every MA plan must include an annual out-of-pocket maximum for Part A and B services — a real advantage over Original Medicare, which caps nothing.
How they test thisTwo anchors: MA plans must have an annual OOP max (Original Medicare does not), and Medigap cannot be used with Medicare Advantage — Medigap works only with Original Medicare.
Medicare Advantage comes in the same flavors as ordinary managed care — plus a special-needs variety.
The plan type controls networks, referrals, and how much freedom the member has.
The plan type controls networks, referrals, and how much freedom the member has.
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HMO
The most common MA type. Network only, with a primary care physician and referrals; out-of-network care isn’t covered except emergencies. Lowest premiums and predictable copays.
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PPO
Use any Medicare provider, but pay less in network. No PCP requirement. Higher premiums and cost sharing than an HMO.
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PFFS
Private Fee-for-Service. The plan sets payment rates; the member may see any Medicare provider who accepts the plan’s terms.
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SNP
Special Needs Plan — tailored to a defined group: chronic conditions, institutional needs, or dual Medicare/Medicaid eligibility.
Also note HMO-POS: an HMO that lets members go out-of-network for some services at higher cost sharing — the point-of-service add-on.
How they test thisMatch the tells: HMO = PCP + referrals, network only; PPO = any provider, no PCP, pay more out of network; SNP = built for chronic, institutional, or dual-eligible members. A “dual eligible” stem points to an SNP.
Two enrollment windows look alike — but only one lets you join MA from Original Medicare.
Know which window does what; the exam lives on the distinction.
Know which window does what; the exam lives on the distinction.
🗓️ Annual Enrollment (AEP)
🔄 MA Open Enrollment (MA OEP)
Dates
Oct 15 – Dec 7; coverage begins January 1.Dates
Jan 1 – Mar 31 each year.Who & what
Anyone may join, switch, or drop a Medicare Advantage or Part D plan.Who & what
Only current MA enrollees may switch MA plans or return to Original Medicare.Join MA from Original?
Yes — this is the window to enter MA for the first time.Join MA from Original?
No — cannot be used to enter MA from Original Medicare.
Special Enrollment Periods (SEPs) open for qualifying events — moving out of the service area, losing employer coverage, or dual-eligibility changes — allowing plan changes outside the annual windows.
The trap they setA stem asks how a current MA member can switch plans or go back to Original Medicare — both the AEP and the MA OEP work for them. But someone in Original Medicare cannot use the MA OEP to join MA; they must wait for the AEP.
Part D is voluntary drug coverage — but wait too long without creditable coverage and the penalty is permanent.
Delivered by private insurers as a stand-alone PDP or bundled into an MA-PD plan.
Delivered by private insurers as a stand-alone PDP or bundled into an MA-PD plan.
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Part D Prescription Drug Coverage
Tiered formulary, late penalty, catastrophic cap
- Tiered formulary — preferred generics (lowest) up through specialty drugs (highest coinsurance, ~25–33%)
- Late enrollment penalty — 1% of the national base premium per month without creditable coverage, added permanently; 63 days without coverage triggers it
- Creditable coverage (employer, VA, TRICARE) at least as good as Part D avoids the penalty
- Donut hole eliminated (2024) — beneficiaries pay 25% until catastrophic coverage; after ~$8,000 OOP, they pay $0 or a small copay
The trap they setThe Part D penalty accrues by the month (1% each), unlike the Part B penalty’s 12-month increments. Nine months late = a 9% permanent surcharge. Watch for stems that try to apply the Part B “10% per year” rule to Part D.
Low-income beneficiaries get help paying for Part D — the Low Income Subsidy, also called Extra Help.
It does not replace Part D; it subsidizes the premiums, deductibles, and copays within a regular private plan.
It does not replace Part D; it subsidizes the premiums, deductibles, and copays within a regular private plan.
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Automatic Qualifiers
Beneficiaries on Medicaid, SSI, or a Medicare Savings Program qualify for Extra Help automatically — no separate application needed.
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Apply Through SSA
Others may qualify by applying through the Social Security Administration based on income and resource limits.
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Year-Round Enrollment
Extra Help cuts or eliminates premiums, deductibles, and copays — and lets recipients enroll or change Part D plans any time, free of the usual annual-window limits.
How they test thisExtra Help helps pay Part D costs and allows year-round enrollment — it does not create a separate free drug program, and it does not erase every cost. Medicaid and SSI recipients get it automatically.
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Top Exam Tips — Medicare Part C & Part D
1. Medicare Advantage replaces Original Medicare A and B — it does not supplement it, and Medigap cannot be used with MA.
2. Every MA plan must include an annual out-of-pocket maximum; Original Medicare has none.
3. Plan types: HMO (PCP + referrals), PPO (any provider, no PCP), PFFS, and SNP (chronic/institutional/dual-eligible).
4. AEP (Oct 15–Dec 7): anyone joins/switches/drops. MA OEP (Jan 1–Mar 31): current MA members switch or return to Original — cannot join MA from Original.
5. Part D penalty: 1% of the base premium per month without creditable coverage, permanent; 63 days triggers it.
6. Creditable coverage (employer, VA, TRICARE) avoids the penalty.
7. Extra Help (LIS) subsidizes Part D costs and allows year-round enrollment; Medicaid/SSI recipients qualify automatically.
2. Every MA plan must include an annual out-of-pocket maximum; Original Medicare has none.
3. Plan types: HMO (PCP + referrals), PPO (any provider, no PCP), PFFS, and SNP (chronic/institutional/dual-eligible).
4. AEP (Oct 15–Dec 7): anyone joins/switches/drops. MA OEP (Jan 1–Mar 31): current MA members switch or return to Original — cannot join MA from Original.
5. Part D penalty: 1% of the base premium per month without creditable coverage, permanent; 63 days triggers it.
6. Creditable coverage (employer, VA, TRICARE) avoids the penalty.
7. Extra Help (LIS) subsidizes Part D costs and allows year-round enrollment; Medicaid/SSI recipients qualify automatically.
Exam vocabulary
Key Terms to Know
Medicare Advantage (Part C)
A private-insurer plan that replaces Original Medicare Parts A and B; must cover all A and B benefits; requires an annual OOP max; may add dental/vision/hearing.
MA-PD Plan
A Medicare Advantage plan that also includes Part D prescription drug coverage — an integrated Medicare solution.
Annual Enrollment Period (AEP)
October 15 – December 7; anyone may join, switch, or drop Medicare Advantage or Part D; coverage begins January 1.
MA Open Enrollment Period (MA OEP)
January 1 – March 31; current MA enrollees may switch MA plans or return to Original Medicare; cannot be used to join MA from Original.
Special Needs Plan (SNP)
A Medicare Advantage plan for individuals with chronic conditions, institutional needs, or dual Medicare/Medicaid eligibility.
Medicare Part D
Voluntary prescription drug coverage through private insurers; late enrollment penalty applies after 63 days without creditable coverage.
Creditable Drug Coverage
Drug coverage from a non-Medicare source at least as good as standard Part D; prevents the Part D late enrollment penalty.
Part D Late Enrollment Penalty
1% of the national base beneficiary premium per month without creditable coverage; permanent; triggered after 63 days.
Formulary (Part D)
The insurer’s approved drug list organized into cost-sharing tiers; must include at least two drugs per drug class.
Low Income Subsidy (LIS / Extra Help)
Federal subsidy helping low-income beneficiaries pay Part D costs; automatic for Medicaid/SSI recipients; allows year-round enrollment.
Catastrophic Coverage (Part D)
After total out-of-pocket drug costs exceed the threshold (~$8,000 in 2024), the beneficiary pays $0 or a small copay for the rest of the year.
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