Are you new to Medicare?

If you are feeling a bit confused about your Medicare coverage options, you’ve come to the right place.

This article explains in detail what Medicare Part A and Medicare Part B (often called “Original Medicare”), Part C (often called “Medicare Advantage”), and Part D (the part of Medicare that helps cover the cost of your prescription medications), have to offer. We will also go over the costs of Medicare.

Let’s get started!

Medicare sign


Original Medicare

What is Original Medicare?

Both Medicare Part A and Medicare Part B are often referred to as Original Medicare.

Original Medicare provides Medicare eligible individuals with coverage for, and access to, doctors, hospitals, and any other health care provider who accepts Medicare. These plans are managed by the federal government.

Medicare Part A

Often thought of as “hospital insurance”, Medicare Part A helps cover services such as (but not limited to):

  • Skilled nursing facility care
  • Hospice care
  • Inpatient hospital care
  • Home health services

Generally speaking, most people don’t have to pay a monthly premium for Medicare Part A. You shouldn’t have to pay a Part A premium, as long as you or your spouse paid Medicare taxes for a minimum of 10 years (40 quarters) when you were working. Although you may not have a monthly premium with Part A, your coverage may still include other out-of-pocket costs. These can range from deductibles, copayments and/or coinsurance – billed at the time you use the coverage.

Medicare Part B

Commonly thought of as “medical insurance”, Medicare Part B helps cover services and supplies needed for the treatment or diagnosis of a health condition. These include, but are not limited to:

  • X-rays and laboratory tests
  • Ambulance services in the case of an emergency
  • Specialized doctor visits
  • Durable medical equipment
  • Various preventive tests

Unlike Part A, Medicare Part B users typically pay a monthly premium for coverage. The amount you pay varies from person to person, and is based off of your individual situation.

People with Part B coverage also have a yearly deductible and coinsurance, in addition to their monthly premium. Before you’ve met your deductible, you’ll be expected to pay the full Medicare-approved cost of any medical services you receive throughout the year. Keep in mind, the deductible does not apply to every single service, and some services are available at no cost to you.

Once your deductible is met, you’ll generally pay only 20% of the Medicare-approved amount for services covered by Part B for the rest of the year.


Medicare Part C (Often Referred to as “Medicare Advantage”)

According to the U.S. Centers for Medicare and Medicaid Services, roughly one in every three Medicare enrollees has a Medicare Advantage plan. These plans are popular, partly because they often have lower out-of-pocket costs – compared to Original Medicare (Part A and Part B only).

Medicare Part C, commonly known as Medicare Advantage, is another way some people choose to receive their Medicare benefits. These are private health insurance plans that are Medicare-approved, specifically for people who are already enrolled in Medicare Part A or Part B.

Medicare Advantage plans provide all of your medical and hospital insurance coverage that you would receive with Medicare Part A and Part B (other than hospice care, which is still covered under Part A).

In addition, Medicare Advantage plans often include additional benefits, such as:

  • Hearing coverage
  • Prescription drug coverage
  • Routine dental services
  • Routine vision services
  • Out-of-pocket maximum amounts (causing your out-of-pocket Medicare spending to be limited or restricted to a certain amount per year)

It is important to understand that many Medicare Advantage plans restrict which doctors or hospitals you can visit. These plans have specific provider networks, which means you may have to see certain doctors, or go to certain hospitals, if you want to use your plan benefits. If you want to see a doctor who is outside of the network, you may be subject to paying more money out-of-pocket.

If you enroll in a Medicare Advantage plan, you must keep paying your Part B premium, as you are still considered to be a part of the Medicare program.


Medicare Part D

What is Medicare Part D?

Also known as the Medicare prescription drug benefit, Medicare Part D is a program created to help Medicare beneficiaries pay for prescription drugs through prescription drug insurance premiums.

Since Original Medicare (Part A and Part B) doesn’t cover most prescription medications, Medicare Part D was introduced. People who receive Original Medicare (Part A and Part B) won’t get coverage on most prescriptions. For prescription coverage, you will need to either enroll in a Medicare Advantage Prescription Drug plan or a stand-alone Medicare Part D Prescription Drug plan.

It’s a good idea to sign up for Medicare Part D as soon as you’re first eligible for it, due to the fact that you won’t automatically get Medicare Part D Prescription Drug coverage as a Medicare beneficiary. This coverage is considered optional, so you may be required to pay a late-enrollment penalty if you sign up for Part D coverage after you’re first eligible for it, or if you go 63 days or more in a row without a creditable prescription drug coverage. That means, on average, you must have coverage that’s at least as good as Medicare Part D Prescription Drug Plans.

So, unless you have, and continue to keep, what Medicare considers “creditable prescription drug coverage”, it’s best to sign up for Medicare Part D right when you’re first eligible for it.

Another thing to consider, is that Medicare Part D Prescription Drug Plans are often offered by private insurance companies who have contracts with Medicare. Your deductible, monthly premium, coinsurance, copayments, pharmacy network/service area and the list of prescription drugs covered by the plan vary depending on which plan you select.

When to enroll in Medicare Part D?

Similar to Medicare Advantage, the enrollment period for stand-alone Medicare Part D Prescription Drug Plan is limited to certain times of the year. This includes, but is not limited to, when you are first eligible for Medicare Part B.

That said, you may be able to qualify for a Special Election Period if you’re about to lose coverage because you’re moving out of your plan’s service area.


Medicare Supplement Insurance

What is Medicare Supplement Insurance?

Medicare also offers a Supplement Insurance policy, sometimes referred to as Medigap, which can help you pay some of the out-of-pocket costs that Original Medicare (Part A and Part B) won’t cover.

Some of these costs include, but are not limited to:

  • Deductibles
  • Copayments
  • Coinsurance

When it comes to Medicare Supplement Insurance, it is important to realize that these policies are sold by private companies. There are various Medicare Supplement plans, all of which cover different amounts of the Part A and Part B out-of-pocket costs. You will be expected to pay the private insurance company a monthly premium in addition to your Medicare Part B premium.

What are the differences between a Medicare Supplement policy and a Medicare Advantage plan? Medicare Advantage vs. Medicare Supplement

After enrolling in the Medicare program, beneficiaries need to decide how they want to receive their Original Medicare (Part A and Part B) benefits, and whether or not they need additional coverage.

That means, you will have to decide if a Medicare Advantage plan is right for you, or if you should stick with Original Medicare coverage and sign up for a Medicare Supplement plan for the added benefits.

Medicare Advantage – offers a way to get your Original Medicare Part A and Part B benefits.

Medigap Policy – only supplements your Original Medicare coverage, and may help pay out-of-pocket costs that your plan won’t cover.


Can I have both a Medicare Advantage plan & a Medicare Supplement plan?

In short – No.

Medicare Advantage plans do not work with Medicare Supplement plans. That means, you cannot use your Medigap plan to cover premiums, copayments or deductibles from your Part C Medicare Advantage plan.


How do I choose between Medicare Advantage & a Medicare Supplement plan?

As you are deciding between plans, compare the costs and benefits they offer in relation to your specific health care needs and conditions.

With Medicare Advantage plans, you are required to pay your Part B monthly premium, as well as your monthly premium to the private insurance company. With that in mind, Medicare Supplement plan benefits are standardized, and costs vary between different plans that offer the same benefits.

Take these key factors into consideration when comparing the costs and benefits of plans in your area:

  • Monthly premiums
  • Restrictions on doctors, pharmacies and hospitals
  • Deductibles
  • Maximum out-of-pocket amounts/costs
  • Anticipated costs of specific prescription drugs that you require regularly
  • Expected costs of hospital and health care services you use often

New Medicare Supplement policies don’t include prescription drug coverage. Due to that fact, many people also enroll in stand-alone Medicare Part D Prescription Drug Plans.


Medicare Cost Breakdown

What do I have to pay for a Medicare health plan?

Although Medicare provides great health-care coverage, it doesn’t cover everything. Generally, you will be responsible for paying a portion of your health-care expenses.

To give you an idea, here are a few of the out-of-pocket costs often associated with Medicare coverage:

  • Annual Deductible – The amount you are expected to pay out-of-pocket towards your health care or prescription medications before your Medicare insurance starts paying. The amount you’re expected to pay varies from plan to plan, and is subject to change every year. However, there are certain plans that don’t have deductibles.
  • Copayments – An out-of-pocket payment you may need to make for your share of any given health-care cost. These are most commonly found in Part D Prescription Drug Plans and Medicare Advantage Plans. For example, you may be required to pay $10 every time you see your doctor, and Medicare would cover the rest for you.
  • Premium – Your premium is the amount you must pay monthly to the Medicare program (typically for Medicare Part B) and/or a private insurance company in exchange for your health care benefits. This includes Medicare Supplement policies and/or prescription drug coverage. Your monthly premium is usually paid out-of-pocket. Although people who also qualify for Medicaid may be able to get help paying for their premium(s).
  • Maximum out-of-pocket limit – This represents a yearly limit on your out-of-pocket spending towards Medicare-covered services. Original Medicare (Part A and Part B) do not have an overall out-of-pocket limit. That said, all Medicare Advantage plans require this protection. Your health plan will pay 100% of the cost of covered health-care services for the rest of the year, once you reach the maximum limit.
  • Coinsurance – Coinsurance is the amount you may be required to pay as your share of the cost for health-care services, after you’ve met your plan’s deductibles. Medicare Part B uses a specialized coinsurance structure for many benefits. Unlike a copayment, coinsurance is typically a percentage of the approved cost of any given service, rather than a flat fee.

How to enroll in Medicare

You can enroll in Medicare Part A and/or Medicare Part B in the following 3 ways:

  • Enroll in Medicare online HERE
  • Enroll in Medicare by phone – call Social Security at 1-800-772-1213 Monday through Friday, Open 7AM to 7PM
  • Enroll in Medicare in-person by visiting your local Social Security office