Medicare 101

Medicare Part A is one of the four components of the Medicare program, which provides healthcare coverage primarily for hospital services and related care.  

• What Medicare Part A covers: Part A covers expenses associated with hospital care. It includes coverage for services like nursing care and hospital stays. It also covers some hospital-related care that takes place outside a hospital setting. For example, skilled nursing care after you leave the hospital. 

• What Medicare Part A costs: You generally won’t have to pay a monthly premium for Medicare Part A if you or your spouse paid Medicare payroll taxes for 40 quarters or more. But you do need to pay deductibles before Medicare will cover any hospitalization costs.  

Medicare Part B is outpatient medical coverage. Part B helps pay for medically necessary services performed on an outpatient basis that are needed to diagnose and treat medical conditions. 

• What Medicare Part B covers: 
  • Doctor visits
  • Durable medical equipment
  • Outpatient procedures (even if they occur at a hospital)
  • Lab services 
  • Other testing 
  • Additional services

• What Medicare Part B costs:  Most people need to pay a monthly premium to maintain their Part B coverage. You also need to pay a deductible before Part B begins paying for services. And if your income exceeds a certain amount, you pay the premium plus an extra charge. This is called an Income Related Monthly Adjustment Amount (IRMAA).

Medicare Part C, also known as Medicare Advantage, is made up of plans approved by Medicare that are offered through private insurance companies. Before enrolling in a Medicare Advantage plan, you’ll need to sign up for both Part A and Part B. You can then choose a Medicare Advantage plan that’s right for you. This means that to get a Medicare Advantage plan, you have to sign up directly with the private insurer that offers the plan you want. But you can only sign up after you’ve enrolled in Parts A and B. 

• What Medicare Part C covers: All Medicare Part C, or Medicare Advantage, plans cover everything Original Medicare covers. But Medicare Advantage plans can also cover more. Examples of additional benefits include:
  • Dental, vision or hearing services
  • Prescription drug coverage
  • Fitness club memberships
  • Over-the-counter benefits (OTC)

• What Medicare Part C costs: Once you have a Medicare Advantage plan, you continue to pay a monthly Part B premium to Medicare. In some cases, you may also pay an additional premium to the insurance company that provides your Part C plan. The amount of the premium varies among Medicare Advantage plans. You may also have other out-of-pocket costs, including copayments, coinsurance and deductibles. Medicare Advantage puts a limit on the amount you pay for your covered medical care in a given year. This limit is known as an out-of-pocket maximum. Original Medicare does not have this feature.

Medicare Advantage plans can offer additional benefits because the plans are made up of networks of health care providers. And these networks can be more efficient in delivering care. As a result, they reduce overall health care costs. Some Medicare Advantage plans require you to use their network of providers. Others allow you to go to out-of-network providers, usually for a higher cost.

As you explore your options, consider whether you want to continue seeing your current doctors when you make the switch to Medicare. If you do, find out if they accept Medicare and are open to new patients. Or, if they are in the Medicare Advantage plan’s network.

Medicare Part D, also known as the Medicare Prescription Drug Benefit, is a program designed to assist Medicare beneficiaries in affording their prescription medications. Medicare Part D plans are offered by private insurance companies that are approved by Medicare. Prescription drug benefits are often included as part of Medicare Advantage plans. However, if you choose to enroll in Original Medicare, you can add prescription drug coverage to your Original Medicare coverage. You can do this by purchasing a stand-alone Part D plan from a private insurer.

• What Medicare Part D covers:  Part D covers prescription drugs. Every Medicare prescription drug plan has a list of drugs that it agrees to cover. This list is known as a formulary. When you research a plan, check your list of medications against the prescription drugs in your plan’s formulary. 
  
• What Medicare Part D costs:  Depending on the Part D plan you choose, you usually pay a monthly premium and sometimes a deductible. If your income exceeds a certain amount, you’re also responsible for an extra monthly charge. It’s called a Part D Income Related Monthly Adjustment Amount (IRMAA), and it’s on top of your premium. In addition, you’re responsible for out-of-pocket costs for your drugs. But keep in mind each plan varies in the cost of premiums, the prices of drugs and the list of drugs covered.

Medicare Supplement plans are sometimes called Medigap plans. They’re sold by private insurance companies, just like Medicare Advantage and Medicare Part D prescription drug plans. 

• What Medicare Supplement plans cover: Medicare Supplement plans help manage some out-of-pocket costs that Original Medicare doesn’t cover, including copayments and deductibles. That means Medicare Supplement plans are only available to people who are covered by Original Medicare. If you opt for a Medicare Advantage plan, you’re not eligible to buy a Medicare Supplement plan.  

• What Medicare Supplement plans cost: Medicare Supplement plans charge a monthly premium. The cost of the premium varies with the plan.

The answer to this may be easy to say but maybe not as easy to do. You need to understand your personal health care needs and choose Medicare coverage to help meet them. For example, if you take prescription drugs right now, when you get Medicare, you need to make sure you get Part D prescription drug coverage through either a stand-alone Part D plan or a Medicare Advantage plan. 

You will likely pay the Part B premium to Medicare. Beyond that, you may pay other premiums, deductibles, co-pays and co-insurance. The total amount you pay will depend on the type of Medicare plan(s) you choose and the health care services you use during the year. 

If you plan to work past 65, you may be able to delay enrolling in Medicare. Or, you may have to enroll during your Initial Enrollment Period in Parts A, B and D if you want to avoid late penalties.  It will depend on your employer and if your employer coverage is creditable.

Some people who can delay Medicare still choose to enroll in just Part A when they turn 65 in addition to their employer coverage. Part A is premium free if you or your spouse worked and paid Medicare taxes for at least 10 years. Note though, if you do get Part A, you can no longer contribute to your HSA.

As long as your employer offers “Creditable Coverage”, you will not have a penalty if you delay taking your Medicare.

• If your employer has under 20 employees, their employer group insurance will be secondary to Medicare. In this situation, you will have to sign up for Medicare Part A and Part B in order to avoid a penalty.

• If your employer has 20+ employees, their employer group insurance coverage will be primary. In this situation, it often does not make sense to get sign up for Medicare and you will not receive a penalty for delaying.

Learn more about how Medicare coordinates with other health coverages.

Original Medicare (Parts A & B) does not cover routine dental or vision care; however, some Medicare Advantage (Part C) plans do. Plans include all the coverage provided by Parts A and B, and often additional benefits like dental, vision, hearing and gym memberships, all in one plan.

No part of Medicare is mandatory, but if you choose to enroll in any part of Medicare after your Initial Enrollment Period, you could face financial penalties unless you qualify for a Special Enrollment Period with creditable employer coverage. 

A Medicare Advantage HMO plan usually helps pay only for care you receive from providers in the plan network. A PPO plan will generally help pay for care received outside the plan network, but it may pay less than for the same care received within the network. 

Financial assistance programs for people with limited income and assets include Extra Help for prescription drugs, Medicare Savings Programs and Medicaid, to name a few. Qualifications for each program and the level of help offered vary. 

Your Medicare coverage choices will stay in place year after year unless you change your plan. This ensures that your coverage continues, but even if a plan renews, the plan benefits and costs may still change each year. It’s a good idea to review your Medicare choices every year during the Medicare Annual Enrollment Period each fall, which runs Oct. 15 – Dec. 7. 

Medicare and Medicaid are both government health care programs, but they are very different. Medicare is generally for people who are 65 or older, or who have a qualified disability. Medicaid is a state-governed program for people with limited income and resources.  Some people are eligible for both Medicare and Medicaid. These people are considered “dual eligible” and are often qualified for special Medicare plans. 

In general, you are eligible for Medicare after receiving Social Security disability benefits for 24 months. There are exceptions for people with certain medical conditions. Get your enrollment dates and learn more about Medicare and disability.