Breaking Down the Different Medicare Parts

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Summary: Get to know the different components of Medicare and how they work together to provide comprehensive healthcare coverage. In this guide, learn the options available to help choose the right Medicare plan for you.

Knowing the ins and outs of Medicare can help you make informed choices when you’re helping a loved one make healthcare decisions or approaching retirement and will lose employer coverage.

Medicare has multiple parts, and it can be overwhelming to understand what each part entails. This comprehensive guide can help you understand Medicare, including:

• What is Medicare?
• Breaking down Medicare parts A, B, C and D
• How to know if you’re eligible for Medicare
• Medicare enrollment

What is Medicare?

Medicare is a government health insurance program that is meant to provide healthcare coverage mostly for people aged 65 and older, though it also helps cover certain younger people with disabilities and those with end-stage renal disease.

The program helps cover costs for medical needs like surgeries, consultations, and hospital stays.

What are the Medicare Parts?

Medicare is broken up into four parts A, B, C, and D. Review the table below to understand what each part covers.

Original Medicare: What is Medicare Part A and B?

Original Medicare is the program offered directly through the federal government, providing healthcare coverage to millions of Americans. It consists of two main parts: Medicare Part A and B.

What is Medicare Part A and B?

What is Medicare Part A?

Medicare Part A, also known as hospital insurance, helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and some home health care. Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years while working.

What is Medicare Part B?

Medicare Part B, or medical insurance, helps cover outpatient care, doctor visits, preventive services, and some home health care. Similar to Medicare Part A, Part B typically pays for 80% of these costs, so you only have to pay 20%. The government sets the monthly premium for Medicare Part B coverage every year, and it is usually withdrawn from your Social Security benefits.

Medicare Part C (Medicare Advantage)

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

Insurance companies announce new Medicare Advantage plans on October 1 of each year, just ahead of the Medicare Annual Enrollment Period, which lasts from October 15 through December 7.

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 benefits and dental or vision coverage.

Often, a Medicare Advantage plan may help you reduce some of the costs associated with Original Medicare, helping to complete your coverage and providing you with more benefits.

Medicare Part D

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

You get Medicare Part D through private insurance companies. New plans are announced on October 1 of each year, just ahead of the Medicare Annual Enrollment Period, which lasts from October 15 through December 7.

Even if you are not taking any medications, you’ll want to have prescription drug coverage, as you may be charged a penalty when you try to sign up later; the penalty can last for as long as you have Medicare prescription drug coverage.

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.

Medicare Supplement Insurance Plans (Medigap)

Medicare supplement insurance plans, also known as Medigap, help cover costs not fully covered by Original Medicare. Medicare supplement insurance plans are exclusively sold by private insurers.

Medicare supplement insurance plans are standardized by the federal government. In a few states, like Minnesota and Wisconsin, these plans are standardized in a different way. These standardized plans, labeled Plan A through Plan N, provide a consistent set of benefits regardless of the insurer.

In other words, if you choose Plan F from a particular insurance company, the policy will offer the same coverage as any other insurance company that sells it.

The government defines the plan benefits to ensure they are standardized for all companies, though the costs of the policies may be different with each provider.

Who is Eligible for Each Part of Medicare?

Eligibility for Original Medicare (Parts A and B) generally includes:

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:

• Enrollment in Medicare Part A and Part B
• Not have end-stage renal disease (ESRD)

To be eligible for Medicare Part D, you must meet the following criteria:

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

When Can You Enroll in Each Part of Medicare?

Medicare plans have various enrollment periods. Here’s a detailed look at when you can enroll in each part of Medicare:

Enrollment in Original Medicare (Part A and Part B)

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

1. Initial Enrollment Period: The Initial Enrollment Period is a seven-month window that allows you to sign up for Medicare Parts A and B when you first become eligible. It begins three months before the month you turn 65 and ends three months after the month you turn 65.
2. Special Enrollment Period: The Special Enrollment Period applies if you or your spouse are working and covered by a group health plan through an employer or union. While you are still a member of the group health plan, you can sign up for Medicare at any time, as well as during the eight-month window that starts the month after your employment or coverage ends.
3. Annual Enrollment Period: The Annual Enrollment Period runs from October 15 to December 7 each year. During this period, you may sign up for Medicare or prescription drug coverage, which begins January 1 of the following
4. General Enrollment Period: If you missed your initial enrollment period and do not qualify for a special enrollment, you can enroll during the general enrollment period, which runs from January 1 to March 31 each year. Late enrollment penalties may apply, increasing your premiums for late enrollment.

Enrollment in Medicare Part C (Medicare Advantage)

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

1. Initial Enrollment Period: This period is for those newly eligible for Medicare who want to enroll in a Medicare Advantage plan. The Initial Enrollment Period is a seven-month window that begins three months before the month you turn 65 and ends three months after the month you turn 65.
2. Annual Enrollment Period: This period allows you to switch between Original Medicare and Medicare Advantage or change Medicare Advantage plans from October 15 to December 7 each year. Coverage would begin on January 1.
3. 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 if you move to an area that your current plan’s service area does not cover or if you move to a nursing home.

Enrollment in Medicare Part D (Prescription Drug Coverage)

There are three periods when you can enroll in Medicare Part D.

1. Initial Enrollment Period: This is the seven-month window around your 65th birthday (three months before, the month of, and three months after).
2. Annual Enrollment Period: You can enroll in or change Part D plans starting October 15 to December 7 each year, which will be January 1 of the following year.
3. Special Enrollment Period: You may qualify for this under certain circumstances, such as losing other credible drug coverage, moving out of your plan’s service area, or entering a long-term care facility.

Enrollment in Medicare Supplement Insurance Plans

You can apply to join a Medicare supplement insurance plan at any time of year, but you’ll avoid medical underwriting requirements (an assessment of your current health) if you do so when you initially become eligible.

• During the six-month Medicare supplement open enrollment period, individuals can apply for Medicare supplement policies. Your Medicare supplement open enrollment period begins on the first day of the month after you turn 65. During this time, you typically can get the most affordable prices for your insurance.
• Once this time frame has passed, you are free to buy or change a Medicare supplement insurance plan whenever you choose, though the premiums can be higher and you may be subject to medical underwriting and denied coverage.*

Taking the Step Toward Your Healthcare Needs

As you can see, Medicare has lots of moving parts. But once you understand 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.

For a  personalized recommendation on what Medicare solution may be right for you, visit the Mutual of Omaha Medicare Advice Center. There, you can also find answers to commonly asked questions and more information on Medicare basics.

FAQs

Q1. What are the 4 Medicare parts?

The four Medicare parts are, Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage).

Q2. What is Medicare Part C used for?

Medicare Part C is used as an alternative to Original Medicare. It provides all Part A and Part B benefits and often includes additional benefits like coverage for vision, dental, and hearing services. Many Medicare Advantage plans also include prescription drug coverage (Part D). Medicare Advantage plans typically have network restrictions and higher out-of-pocket expenses. Note: You must first be enrolled in Original Medicare to join a Part C plan.

Q3. What are Medicare Parts F and G?

Medicare parts refer to Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage). Medicare Plans F and G, on the other hand, are Medicare supplement insurance plans and help cover the costs remaining from Original Medicare.

Q4. What’s the difference between Medicare Part A and Part B?

Medicare Part A primarily covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Medicare Part B helps cover outpatient care, doctor visits, preventive services, and some home health care.

Q5. Is Medicare Part A free at age 65?

Medicare Part A is generally free at age 65 if you or your spouse have paid Medicare taxes for at least 10 years. If you do not meet this requirement, you may have to pay a premium for Part A.

Q6. Is Medicare Part B mandatory?

No, Medicare Part B is not mandatory. However, if you do not sign up for Part B when you are first eligible and do not have other credible health insurance, you may have to pay a late enrollment penalty if you decide to enroll later. Remember that you must be enrolled in Part B in order to obtain a Medicare supplement or Medicare Advantage plan.

Q7. What is Medicare Part D used for?

Medicare Part D helps cover the cost of most prescription drugs. It can be added as a standalone plan to Original Medicare or Medicare supplement insurance plans or is typically included in most Medicare Advantage plans (Part C).

Q8. What is the monthly cost for Medicare Part C?

The monthly cost for Medicare Part C (Medicare Advantage) varies widely depending on the plan and the region. Some Medicare Advantage plans have a $0 premium, but you still need to pay the Part B premium. Medicare Advantage plans typically have higher associated costs, such as copayments, coinsurance, and deductibles, which vary by plan.

*Note: If you choose to cancel your current Medicare supplement policy and are denied coverage from a new plan, you may not be able to get your old plan back.

You must enroll in Medicare at age 65 if you receive Social Security benefits. If you do not enroll in at least Medicare Part A coverage, you won’t receive your Social Security benefits.

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