Last Updated on August 13, 2024 by Chris Franchina
Last Updated: August 13th, 2024
Medicare made simple
- Medicare: A Step-by-Step Guide
Navigating the complexities of Medicare can be overwhelming, but understanding your options is crucial for making informed decisions about your healthcare coverage. In this blog, we will break down the four parts of Medicare—Parts A, B, C, and D—and explain Medigap plans to help you better understand and navigate the system.
What is Medicare?
Medicare is health insurance for individuals aged 65 and older, as well as for those under 65 with disabilities and individuals of any age with End-Stage Renal Disease. It is important to note that while many individuals choose Original Medicare for their Parts A and B benefits, it may not provide sufficient coverage, leading to significant out-of-pocket costs.
1. Who is Eligible for Medicare?
- 65 years old or older
- Under 65 years old and have a disability.
- Receiving Social Security Disability Insurance (SSDI) or Railroad Retirement Board (RRB) Disability Insurance (DI) benefits
- Have End-Stage Renal Disease (ESRD)
- US Citizen
2. What Are The Parts Of Medicare?
Medicare Part A: Hospital Insurance
Medicare Part A is often referred to as hospital insurance. It covers:
- Inpatient Hospital Stays: This includes semi-private rooms, meals, general nursing, and other hospital services and supplies.
- Skilled Nursing Facility Care: After a hospital stay, Part A covers skilled nursing care in a facility for a limited time.
- Hospice Care: For those with a terminal illness, Part A covers hospice care, including support services for the patient and their family.
- Home Health Care: Part A also covers certain home health services if you meet specific criteria.
Key Points about Medicare Part A
- Most people don’t pay a premium for Part A if they have paid Medicare taxes for a sufficient period while working.
- There are deductibles and coinsurance costs associated with services covered by Part A.
Medicare Part B: Medical Insurance
Medicare Part B covers:
- Doctors’ Services: This includes visits to your doctor and outpatient care.
- Outpatient Care: Medical services or supplies needed to diagnose or treat a medical condition.
- Medical Supplies: Items such as wheelchairs and walkers that are medically necessary.
- Preventive Services: Screenings, vaccinations, and other preventive services to help prevent illness or detect it at an early stage.
Key Points about Medicare Part B
- Part B has a monthly premium, which varies based on your income.
- There is an annual deductible and coinsurance, which is typically 20% of the Medicare-approved amount for services.
Medicare Part C: Medicare Advantage
Medicare Part C, also known as Medicare Advantage, offers an alternative to Original Medicare (Parts A and B). These plans are offered by private insurance companies approved by Medicare and often include additional benefits such as:
- Prescription Drug Coverage: Many Medicare Advantage plans include Part D coverage.
- Extra Value Adds: Many plans offer areas of coverage not covered by Original Medicare, adding value with various extra features and services.
- Wellness Programs: Access to fitness programs and wellness services.
Key Points about Medicare Part C
- You must be enrolled in both Part A and Part B to join a Medicare Advantage plan.
- Medicare Advantage plans often have networks of doctors and hospitals you must use to get the lowest costs.
Medicare Part D: Prescription Drug Coverage
Medicare Part D provides prescription drug coverage and is available through private insurance companies. This coverage helps lower the cost of medications and protects against higher costs in the future.
Key Points about Medicare Part D
- Part D plans have a monthly premium, an annual deductible, and copayments or coinsurance.
- Coverage and costs can vary widely between different Part D plans, so it’s important to compare options.
Medigap Plans: Supplemental Insurance
Medigap, or Medicare Supplement Insurance, helps cover some of the healthcare costs that Original Medicare doesn’t cover, such as copayments, coinsurance, and deductibles. Medigap plans are sold by private insurance companies and can offer different levels of coverage.
Key Points about Medigap Plans
- You must have Medicare Part A and Part B to buy a Medigap policy.
- Medigap policies are standardized, meaning that each plan of the same letter offers the same basic benefits, regardless of the insurance company.
- Medigap policies do not cover prescription drugs (you need Part D for that).
Medicare Prescription Drugs (part D)
Medicare Part D is a prescription drug program offered by private insurance companies approved by Medicare. It helps cover the cost of prescription drugs that are not covered by Medicare Part A or Part B.
There are different costs associated with Medicare Part D, including premiums, deductibles, copayments, and coinsurance. Premiums are the amount you pay each month to have Part D coverage. Deductibles are the amount you pay out of pocket before your plan begins to cover your prescriptions. Copayments and coinsurance are the amounts you pay for each prescription or refill.
Part D coverage costs vary depending on the plan you choose and the medications you take. Each plan has a formulary, which is a list of covered medications and their costs. It’s important to review each plan’s formulary to make sure the medications you need are covered and to review costs.
3. Medicare enrollment periods
You can enroll in Medicare during the following times:
- Initial Enrollment Period: Lasts for seven months; your sign-up window is from 3 months before your birth month when you turn 65 to 3 months later. It would be best if you enrolled in Medicare Part A and Part B during this sign-up window to avoid penalties. If you don’t register in time, you may have to pay the penalty for parts B and D.
- Annual Enrollment Period: Anyone can use the Annual Election Period (AEP) to make changes to their Medicare coverage – October 15 to December 7
- Open Enrollment Period: January 1 to March 31
Lock-in Period: April 1 to December 31 - Special Enrollment Period (SEP): Special circumstances within the year, You may qualify for a SEP if you have a qualifying life event, such as moving, losing your job, or getting married.
- Medicare Birthday Rule: The Medicare birthday rule allows consumers to change to an equal or lesser benefit Medigap policy within a 60-day window without medical underwriting (not available in all states).
4. Ways to Sign up for Original Medicare:
Enrolling in Medicare is straightforward and can be done online via the Social Security website (SSA.gov). Here’s how:
- Online Enrollment: This is usually the easiest and fastest way to enroll. Visit the Social Security website and follow the instructions.
- In-Person or Phone Enrollment: You can also enroll by visiting your local Social Security office or calling the Social Security Administration.
For more detailed guidance on the enrollment process, visit our website, where we provide step-by-step instructions and tips.
How To Sign Up for an Additional Medicare Plan
- With our Medicare plan finder tool, you can review the available plans in your zip code. You can do this yourself or with the help of a licensed agent. Determine the type of insurance you need by entering your doctors, prescriptions, etc…
- Check the star rating when selecting a Medicare plan. These ratings are updated every year and will help you review them.
- Complete an online application yourself or schedule a virtual meeting to enroll with a licensed insurance agent from Policy Engineer.
5. Medicare Penalties
Medicare Part B and Part D have late enrollment penalties if you don’t enroll when you’re first eligible.
Medicare Part B
If you don’t enroll in Medicare Part B when you’re first eligible, you may have to pay a late enrollment penalty. The penalty is 10% of the monthly premium for each 12-month period that you could have enrolled but didn’t. For example, if you don’t enroll in Part B until you’re 70, you’ll have to pay a 30% penalty on your monthly premium for the rest of your life.
Medicare Part D
If you don’t enroll in Medicare Part D when you’re first eligible, you may have to pay a late enrollment penalty. The penalty is 1% of the “national base beneficiary premium” for each full, uncovered month you didn’t have Part D or creditable prescription drug coverage. The national base beneficiary premium is $32.74 in 2023. The monthly penalty is rounded to the nearest $0.10 and added to your monthly Part D premium.
How to avoid the penalties
The best way to avoid the late enrollment penalties is to enroll in Medicare Part B and Part D when first eligible. You can enroll in Part B online or by phone, or by visiting your local Social Security office. You can enroll in Part D online, by telephone, or by visiting your local Medicare plan.
If you miss your initial enrollment period, you may still be able to enroll in Part B or Part D during a Special Enrollment Period (SEP). SEPs are available if you have a qualifying life event, such as moving, losing your job, or getting married.
Understanding Medicare is essential for making informed decisions about your healthcare coverage. By breaking down Parts A, B, C, and D, and explaining Medigap plans, we hope to make Medicare easier to navigate. Utilize the available resources, stay informed about your options, and choose the coverage that best fits your needs.
Remember, the right Medicare plan can provide peace of mind and ensure you have access to the healthcare services you need. Start planning today by exploring your options and seeking professional advice if needed.
Free Resources and How to Enroll in Medicare
Navigating Medicare can be complex, but there are resources available to help:
Free Resources
- Medicare 101 Handbook: Visit policyengineer.com/medicare for our comprehensive Medicare 101 handbook, covering all parts of Medicare, plan options, and common changes in the system.
- Weekly Live Events: Join our weekly live events to get a comprehensive overview of Medicare and the latest updates.
Medicare Part A Guide
