As you approach age 65, your mailbox starts to fill with pamphlets detailing the four types of Medicare and supplemental health insurance. If you start reading, you may feel like you’ve fallen into a bowl of alphabet soup. You’ll see Parts A, B, C, and D and supplemental plans ranging from A to N.
The first step to help you determine which plan is right for you is to learn what Medicare is and what it covers.
Medicare is a federal health insurance program. It’s managed by the Center for Medicare and Medicaid Services (CMS) under the Department of Health and Human Services (HHS). All U.S. citizens become eligible for Medicare when they reach age 65; however, those individuals with disabilities or end-stage renal disease who are under age 65 are also eligible for the program.
Medicare has four parts – Part A, Part B, Part C, and Part D – and each covers different expenses.
Medicare Part A is part of the federal, original Medicare through CMS. It provides coverage for inpatient hospital stays, care in a skilled nursing facility, nursing home care, hospice care, and home health care. Some of these services may have exceptions and may not be fully covered. Supplemental insurance, such as Hospital Indemnity and Medicare Supplement insurance, can help fill Part A gaps.
Most people don’t need to pay for Medicare Part A if they paid Medicare taxes for a certain amount of time while working. But if you don't qualify for premium-free Part A, you can buy it and pay a monthly premium. If you choose not to buy Part A, you can still buy Part B. But in most cases, if you choose to buy Part A, you must also buy Medicare Part B. Contact Social Security for more information about the Part A premium.
Medicare Part B is also part of the federal, original Medicare through CMS. It’s used to cover medically necessary services and preventative health care. It has a monthly premium that is determined by your income. After its deductible is met, coinsurance is 20% of the Medicare-approved amount for most services. Purchasing Medicare Supplement or a Gold or Platinum Dental Plan can help fill Part B gaps.
Medicare Part C — also known as Medicare Advantage — provides both Part A and Part B coverage and is sold by Medicare-approved private insurance companies that must follow rules set by Medicare. Medicare Advantage costs and benefits vary. Some plans may include additional benefits for dental, hearing, vision, and/or health and wellness programs. Most Part C plans also include Medicare Part D, but not all do. If you purchase a Medicare Advantage plan, then you can’t purchase a Medicare Supplement plan, but you can buy Hospital Indemnity insurance, which has riders that pair well with Medicare Advantage.
Medicare Part D covers prescription drug costs. You may pay a premium, annual deductible, copayments, or coinsurance, depending on which plan you choose. Your actual drug coverage costs will vary depending on your prescriptions, pharmacy, and any extra payment assistance you receive.
You have different ways to sign up, depending on which Medicare parts and plans you want to enroll in. You can enroll in Medicare Parts A and B through Social Security. But if you aren’t already receiving Social Security, then you’ll need to enroll in Medicare yourself. Parts C and D (along with any other supplemental insurance plans) are offered through private insurance companies that follow Medicare guidelines, so you would purchase plans directly through them.
You have a seven-month window in which you can sign up for original Medicare, starting three months before you turn 65 and ending three months after you turn 65. These seven months are called the Initial Enrollment Period, and you can sign up for Medicare Advantage or Part D then too. You can also sign up for Medicare Advantage during the General Enrollment Period or the Annual Enrollment Period. The General Enrollment Period is for individuals who have Part A coverage and sign up for Part B coverage for the first time, thus making them eligible for Medicare Advantage or Part D. The Annual Enrollment Period happens each year from Oct. 15 to Dec. 7, and during that time you can join, switch, or drop a Medicare Advantage or Part D plan.
Having second thoughts? If you’re a Medicare Advantage-eligible beneficiary, you can disenroll from a Medicare Advantage plan and enroll in another Medicare Advantage plan, or you can switch back to Original Medicare, with or without Part D prescription drug coverage, during the Open Enrollment Period, Jan. 1 to March 31.
If you’re unsure whether original Medicare or Medicare Advantage is right for you, read the difference between Medicare Advantage and Medicare Supplement plans.
If you’re ready, sign up for Medicare with this step-by-step guide to get started.
Speak to an agent to learn how to add supplemental health insurance to Medicare plans to help round out your insurance coverage in retirement so you can protect both your health and financial well-being.
Photo credit: iStock
Kelly Rayburn, AVP national sales and distribution at Wellabe, and Olga Villaverde, from Lifetime TV’s The Balancing Act, discuss what Medicare Supplement insurance is and how it differs from Medicare Advantage.
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