Breaking Down the Different Medicare Parts

breaking-down-the-different-medicare-parts

Medicare is how you will receive health care coverage in your later years. To cover Medicare costs, your entire working life you’ve been contributing a part of your paycheck to Medicare. But did you know that you must enroll in Medicare at age 65 if you receive Social Security benefits, and if you do not enroll in at least Medicare Part A coverage, you won’t receive your social security benefits?

Understanding Medicare and all its parts can be overwhelming. But don’t worry – you can use this helpful guide to break down the different Medicare Parts and how they apply to you, understand required enrollment, what different Medicare parts cost, and when and how you should enroll.

What are the Medicare Parts?

Medicare is broken up into four parts. There is also an option for additional coverage available, known as Medicare supplement:

Medicare Part Function Provider
Original Medicare:

  • Medicare Part A
  • Medicare Part B
Part A = Hospital Insurance
Part B = Medical Insurance
Medicare through the Federal government
Medicare Advantage:

  • Medicare Part C
A combination plan that can take the place of Original Medicare and includes parts A + B coverage, usually along with dental, prescription and vision insurance Private insurance companies approved by the Medicare program
Medicare Part D Prescription Drug Coverage Private insurance companies approved by the Medicare program
Medicare Supplement Coverage for Medicare-approved services not included in your Original Medicare coverage Private insurance companies approved in your state

What is Medicare Part A?

Medicare Part A, the first part of Original Medicare, is your hospital insurance.

This part of Medicare covers the care you receive while you’re in the hospital, including inpatient nursing care and supplies. Medicare Part A will also cover hospice care and home health services. Medicare Part A will cover 80% of these expenses, meaning that you will pay the remaining 20%.

Medicare Part A coverage is free for the majority of Medicare enrollees.

What is Medicare Part B?

Medicare Part B, the second part of Original Medicare, is your medical insurance.

This includes doctor services and supplies, outpatient care and preventative services. These services and supplies include, among other things: ambulance service, lab tests, surgeries, and wheelchairs. Like Medicare Part A, Part B covers 80% of these expenses, leaving you with the remaining 20% of the bill.

There is always a monthly premium associated with Medicare Part B coverage, and it’s typically deducted from your monthly social security benefits.

What is Medicare Part C?

Medicare Part C is also known as Medicare Advantage. It’s provided by private insurance companies and features a combination of Medicare Part A and B coverages along with additional benefits and services. Having Part C takes the place of Part A and Part B coverage.

Most Medicare Part C plans include Medicare Part D (prescription drug) coverage. Many Medicare Advantage plans also provide preventive care, which includes things like hearing, dental or vision care and coverage.

Often, a Medicare Advantage plan may help you reduce some of the costs associated with Original Medicare and provide you with more benefits.

What is Medicare Part D?

Medicare Part D is a la carte coverage for prescriptions.

This coverage is not provided under Original Medicare. If you have a Medicare Advantage plan, you likely already have Medicare Part D coverage in your plan. But, if you have Original Medicare, you may wish to add a Part D to your coverage package to help cut down on prescription drug costs.

Each Part D plan has a list of covered drugs, known as drug formularies, often organized into “tiers” by cost. No Part D plan covers all drugs, so it’s important to make sure the medications you need are covered by the plan you select.

What is Medicare Supplement?

Medicare Supplement, also known as Medigap, is an additional insurance policy that can help offset the Medicare-approved costs that Original Medicare does not cover. These costs are typically copays, deductibles and the additional 20% of costs left to pay once Original Medicare is finished paying for 80% of your coverage needs.

Like Medicare Advantage, Medigap plans are not a part of the federal government’s Medicare program but are instead sold by private insurance companies. There are several standard Medicare Supplement plans to choose from. These plans are labeled Plan A – Plan N and offer the same basic benefits, though the costs of the policies may be different with each provider. For example, Plan F will give you the same benefits no matter which company you choose; but, the costs can vary depending on your choice.

Who is Eligible for Each Part of Medicare?

To be eligible for Original Medicare, you must meet one or more of the following criteria:

  • Be 65 or older
  • Have end-stage renal disease
  • Have ALS, also known as Lou Gehrig’s disease
  • Receive disability benefits

To be eligible for Medicare Part C (Medicare Advantage), you must meet both of the following criteria:

  • Be enrolled in Medicare Part A and Medicare Part B plans
  • Not have end-stage renal disease

To be eligible for Medicare Part D prescription drug coverage you must:

  • Be enrolled in Medicare Part A or Medicare Part B, or have a Medicare Part C plan that includes Part D coverage.

When Can You Enroll in Each Part of Medicare?

There are four time periods when you could be eligible to enroll in Medicare Parts A and B:

  • Initial Enrollment Period: The time period that spans the 3 months before and 4 months after your 65th birthday.
  • General Enrollment Period: The time period between January 1 and March 31 when you are able to sign up for Medicare if you miss your initial enrollment. You may face a penalty at this time.
  • Annual Enrollment Period: The time period between October 15 and December 7 when you may sign up for Medicare or Prescription drug coverage to begin January 1.
  • Special Enrollment Period: If you lose health insurance coverage from your employer, you may qualify for a Medicare Special Enrollment period.

There are three periods when you can enroll in Medicare Part C:

  • Initial Enrollment Period: The time period that spans the 3 months before and 4 months after your 65th birthday.
  • Annual Enrollment Period: The time period between October 15 and December 7 when you may sign up for or change your Medicare Advantage coverage, which will begin on January 1.
  • Special Enrollment Period: If you lose health insurance coverage from your employer, you may qualify for a Medicare Special Enrollment period. You may also qualify for a Special Enrollment period if:
    • You move to an area that your current plan’s service area does not cover
    • You move into a nursing home
    • You are on Medicare and Medicaid
    • Your current plan is terminated

You may be eligible to enroll in Medicare Part D during one of these three periods:

  • Initial Enrollment Period: The time period that spans the 3 months before and 4 months after your 65th birthday.
  • Annual Enrollment Period: The time period between October 15 and December 7 when you may sign up for a Prescription Drug plan, which will begin on January 1.
  • Special Enrollment Period: If you lose health insurance coverage from your employer, you may qualify for a Medicare Special Enrollment period. You may also qualify for a Special Enrollment period if:
    • You move to an area that your current plan’s service area doesn’t cover
    • You are no longer eligible for Medicaid
    • You lose prescription coverage from your current plan involuntarily
    • You are newly enrolling from an employer plan
    • Your current plan is terminated or changes its contract with Medicare.

You can enroll in a Medicare Supplement plan year-round, though enrolling when you’re first eligible will save you money:

  • Open Enrollment Period: The time period of 6 months when you can apply for a Medicare Supplement policy. Your Open Enrollment period will begin on the first day of the month of your 65th birthday. During this period, you will receive the best possible rates for your policy.
  • After this period, you can purchase a Medicare Supplement plan at any time; however, your rates may be higher.

As you can see, Medicare has lots of moving parts. But once you understanding each piece of the puzzle, including how the pieces work together, you can begin selecting the plan type that best fits your unique coverage needs.

To learn more about Medicare, check out Medicare Basics, which further details each Medicare part and how it works, as well as how Medicare Supplement fits into the puzzle.

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