Understanding Medicare Parts
Medicare is a federally funded health insurance program for individuals 65 years or older or those with certain disabilities. All U.S. citizens are eligible to receive Medicare coverage regardless of income or medical history. There are four different parts of Medicare as well as additional Medicare Supplement plans that provide health coverage. For those just transitioning into Medicare, navigating the different parts can be confusing. Understanding all Medicare parts is important when deciding which type of Medicare coverage is best for you.
Fortunately, navigating the different parts does not have to be difficult. Take a closer look at what each part covers so you can feel confident in choosing the right coverage for your needs.
Four Parts of Medicare
Part A
Hospital Insurance
Part B
Medical Insurance
Part C
Medicare Advantage Plans
Part D
Prescription Drug Plans
Medicare Part A
Medicare Part A is the part of Medicare that covers hospital-related services such as inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services. You can think of Part A as your hospital insurance.
Part A enrollment is automatic and premium free for most individuals once they turn 65 years of age provided the following requirements have been met:
- Have worked at least 10 years in the US or are married to someone who has.
- Eligible to receive or are already receiving social security benefits.
Part A is available for purchase for those who do not meet the employment eligibility requirement.
Medicare Part B
Part B of Medicare covers most medically necessary outpatient services and functions much like standard health insurance. Coverage for Part B includes services not covered under Part A such as:
- Doctor visits
- Outpatient services
- Labs
- X-rays
- Preventative services
- And medical supplies
For a more detailed list of what Medicare Part B covers, visit Medicare.gov.
Like Medicare Part A, Part B eligibility begins at age 65 however it is not free and requires a standard monthly premium.
The standard monthly premium for Part B in 2022 is $170.10.
Together, Part A and Part B make up what is called Original Medicare which provides the basics of healthcare coverage. Additionally, these are the only parts of Medicare available for enrollment through the Social Security Administration.
Medicare Initial Enrollment Period
You become eligible to enroll in Medicare Part A and Medicare Part B during your Initial Enrollment Period (IEP).
This is a seven-month window of time that begins three months before you turn 65 and ends three months after your birth month. For example, if you were born on July 4, your enrollment period would begin on April 1, the year you turn 65, and end on October 31.
If you do not enroll during your initial enrollment period and do not qualify for a special enrollment period such as continuing to work past 65, you may be subject to a costly late enrollment penalty. Learn more about enrollment periods in our blog, “Understanding the Different Medicare Enrollment Periods.”
Medicare Part C
Although Original Medicare does cover the basics when it comes to healthcare coverage it doesn’t cover everything and can sometimes leave costly gaps in coverage. This is why many Medicare-eligible individuals choose to enroll in supplemental Medicare insurance. A popular choice for supplemental insurance is Medicare Part C.
Medicare Part C, also known as Medicare Advantage, provides an alternative way for beneficiaries to receive their Original Medicare benefits. Part C plans are offered by private insurance companies that have received approval from the federal Medicare program and must adhere to rules and regulations set forth by Medicare.
Typically, Medicare Advantage plans bundle Medicare Parts A, B, and D together, offering you hospital insurance, medical insurance, and drug coverage all in one.
Because Medicare Advantage plans are offered through private insurance companies, costs and coverage can vary. Many Medicare Advantage plans are competitive, making it a more affordable option.
You can enroll in a Medicare Advantage plan during your Initial Enrollment Period or during the Annual Enrollment Period.
Medicare Part D
Medicare Part D (also known as PDPs or Prescription Drug Plans) are private stand-alone insurance plans that provide prescription drug coverage for Medicare beneficiaries. Although Part D plans are offered and managed through private companies, all plans must offer a standard level of coverage set by Medicare.
To enroll in a Part D plan you must be enrolled in Original Medicare (Part A and/or Part B). Once you enroll in either of those programs you are automatically eligible to join a drug plan. Part D benefits may also be included with enrollment in a Medicare Advantage plan.
Enrollment in Part D is not mandatory, however, if you do not enroll in prescription drug coverage when first eligible, and do not have creditable prescription drug coverage, you will be subject to a costly late enrollment penalty once you do decide to enroll.
Costs and coverage can vary between plans and carriers.
Original Medicare
-
Part A
Hospital Insurance
Covers things like inpatient hospital stays, home health care and some skilled nursing facility care.
-
Part B
Medical Insurance
Covers things like doctor visits, outpatient services, x-rays and lab tests, and preventive screenings.
-
Part C
Hospital Insurance
Private health insurance companies offer Medicare Advantage plans, also known as Medicare Part C. You’re provided the coverage of Original Medicare and it may also include a Prescription drug plan.
-
Part D
Prescription Drug Coverage
Medicare Part D is outpatient prescription drug coverage. To get drug coverage, you must join a Medicare-approved plan, such as a Medicare Advantage plan with drug coverage or a standalone Medicare prescription drug plan.
Medicare Supplements
Medicare Parts A, B, C, and D are the four main parts of Medicare. However, there are additional lettered plans known as Medicare Supplements that can help cover gaps in your health coverage.
Medicare Supplements, also known as Medigap plans, are optional supplemental insurance plans sold by private insurance companies that work in conjunction with Original Medicare (Parts A and B) to fill in some of the coverage gaps. These plans help pay for costs you’d normally be responsible for paying under Original Medicare such as copays, coinsurance, deductibles, and can even provide emergency coverage while traveling overseas. Medicare supplement plans are a popular choice for Medicare-eligible individuals who would like to better predict their healthcare expenses.
To be eligible for a Medicare Supplement plan, you must already be enrolled in Original Medicare. Once you are enrolled in Original Medicare, you can sign up for a Medicare Supplement plan during your one time Medigap Open Enrollment Period. This is a 6 month window of time beginning on your birth month, or the month you enroll in Medicare Part B. During this enrollment window, insurance companies cannot deny you based on your medical history. If you choose to enroll after your enrollment period closes you may be subject to medical underwriting and may be denied based on medical history.
How Do I Know What Parts of Medicare I Need?
Knowing all the parts of Medicare can help clear the confusion when it comes to deciding which coverage is best for you. Medicare is not a one size fits all approach and takes some due diligence on your part to decide which coverage options fit your needs.
In general, if Medicare will be your only healthcare coverage you should enroll in Original Medicare (Part A and Part B). These parts are required to enroll in additional supplemental coverage such as Medicare Advantage or Medicare Supplement plans. Additionally, most individuals choose to enroll in prescription drug coverage either through a stand-alone Part D plan or through a Medicare Advantage plan.
Get Free Personalized Service with a Licensed Agent
Choosing the right Medicare plan for your needs can be overwhelming. Fortunately, there is help. Many Medicare-eligible individuals aren’t aware of a free resource they have available to them – independent agents who are trained and well versed in Medicare. These agents are your health care guide and can help break down all parts of Medicare and coverage options available to you.
At AGA Medicare Options we know Medicare. Since 1997, our Independent Agents have been dedicated to serving and empowering beneficiaries by educating them on all Medicare plan options. As the largest insurance agency specializing in Medicare options on the west coast, we’ve helped hundreds and thousands of Medicare beneficiaries just like yourself find the most suitable plan for their needs.