What Is Medicare?
Medicare is a senior-focused federal health insurance plan. Medicare came into effect in 1965 under the social security act, with the purpose of providing health insurance to U.S. citizens over the age of 65, regardless of income or medical history.
All U.S. citizens are eligible to receive Original Medicare at the age of 65. Original Medicare consists of Part A (inpatient hospital services) and Part B (outpatient medical services). Prescription drug coverage may be purchased separately under Part D Medicare, and special plans covering Original Medicare, Part D Medicare and more health services, also known as Medicare Part C (Medicare Advantage plans), can be purchased from private insurance companies.
Once you know you qualify for Medicare, you can evaluate your coverage options.
Turning 65 and Medicare Initial Enrollment
The first opportunity you have to enroll in Medicare is called “Medicare Initial Enrollment Period,” or IEP. This is a seven-month window of time. It begins three months before you turn 65, your birthday month, and then three months after.
The date your Medicare Part B coverage takes effect will depend on when you signed up during the IEP window.
The ssa.gov chart below illustrated effective dates in 2022:
|If you sign up during this month of your IEP:||Your Part B Medicare coverage starts:|
|One to three months before you reach age 65||The month you turn age 65|
|The month you reach age 65||One month after the month you turn age 65|
|One month after you reach age 65||Two months after the month of enrollment|
|Two or three months after you reach age 65||Three months after the month of enrollment|
Understanding Medicare Parts
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
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:
And medical supplies
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.
For a more detailed list of what Medicare Part B covers, visit Medicare.gov.
What’s Not Covered Under Medicare Parts A & B
While Original Medicare covers some necessary bases, it doesn’t cover all your costs. Services and expenses that are not covered under Original Medicare include:
- Most dental care/dentures
- Eye exams/prescription glasses
- Prescription drugs
- Hearing aids
- Long-term care
- Homeopathic care
- Foot care and orthopedic shoes
- Certain routine or physical exams
- Deductibles, coinsurance, or copayments for health services
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. They may also include additional coverage benefits that are not usually covered by Medicare.
Because Medicare Advantage plans are offered through private insurance companies, costs and coverage can vary. Many Medicare Advantage plans offer a competitive monthly premium, 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.
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.
Know all your options.
|Medicare Advantage||Medicare Supplement|
|Medical Insurance (Part B)||✔||✔|
|Part B Premiums||✔||✔|
|Monthly Premiums||$0 or low||$0 – $000|
|$0 Hospital Copays||✔||✘|
|Prescription Drug Coverage||✔||✘|
Avoid Extra Costs
Some Medicare-eligible individuals aren’t sure of what next step they should take and so they wait.
However, in the world of Medicare, this can come at a cost.
Medicare Part B Late Enrollment Penalty
The consequence of not enrolling in Medicare Part B when first eligible can be costly. If you do not qualify for a Special Enrollment Period and delay enrolling in Part B when you are first eligible, you’ll have to pay an extra 10% for each year you could have enrolled, as well as potentially higher premium rates depending on your income level. Here’s an example from medicare.gov:
If you waited 2 full years (24 months) to sign up for Part B and didn’t qualify for a Special Enrollment Period, you’ll have to pay a 20% late enrollment penalty (10% for each full 12-month period that you could have signed up), plus the standard Part B monthly premium ($164.90 in 2023).
$164.90 (2023 Part B standard premium)+ $32.98 (20% [of $164.90] late enrollment penalty)
So, instead of only paying $164.90 for your Part B premium, your monthly premium would be $197.88
Medicare Part D Late Enrollment Penalty
If you don’t have Medicare drug coverage (Part D) or other creditable prescription drug coverage upon your Initial Enrollment Period or any period thereafter for a window of 63 or more days, you may owe a late enrollment penalty. This will be permanently added to your premium. The amount of the penalty to be added to your standard premium is dependent upon how long there was not creditable prescription drug coverage in place. Here’s an example of how Medicare calculates the Part D penalty for someone who went without creditable prescription drug coverage for 4 years (48 months):
.48 (48% Penalty) x 33.37 (2022 Base Premium) = $16.00 / month (rounded to nearest tenth)
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.”
Special Enrollment Period (SEP)
Under certain special circumstances, Medicare-eligible individuals may qualify for a special enrollment period outside of their initial enrollment period. During a special enrollment, you can enroll in and make changes to your Medicare coverage without penalty as long as you have a qualifying life event. Common qualifying life events include:
- You move out of your plan’s service area
- You lose your current health coverage, including employer coverage
- You have the opportunity to get other coverage (employer or union)
- Your plan changes its contract with Medicare
- You were affected by a disaster or emergency
Annual Enrollment Period (AEP)
The Annual Enrollment Period” is the standard period of time in which Medicare beneficiaries can make changes to their healthcare coverage.. This enrollment period happens each year from October 15th – December 7th. During the annual enrollment period, you can:
- Switch your Medicare Advantage Plan
- Sign up for a Medicare Advantage or Medicare Supplement plan for the first time
- Pick up or drop a Medicare Prescription Drug Plan (Medicare Part D)
Changes made during the Medicare Annual Enrollment Period will take effect in January of the following year
Medicare Advantage Open Enrollment Period (OEP)
During the Medicare Advantage open enrollment period, beneficiaries enrolled in Medicare Advantage and not happy with their plan have a one-time opportunity to switch their plan during the Medicare Advantage Open Enrollment Period (OEP) which runs from January 1st – March 31st. During this enrollment period, you can:
Switch to another Medicare Advantage Plan (with or without drug coverage).
Disenroll in your Medicare Advantage Plan and return to Original Medicare.
Enroll in a prescription drug Medicare Part D plan if returning to Original Medicare.
This is a lot of information to take in, and we understand that. The acronyms alone are enough to make our heads spin!
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 advocates and can help break down all parts of Medicare and coverage options available to you.
If you have any questions or concerns about Medicare enrollment periods, please do not hesitate to contact us at
866-399-2905TTY 711 (M – F, 9AM – 5PM).
Selecting a Plan That is Right For You
To bridge the gap of what Original Medicare covers, there are 2 main options:
Benefits of an Advocate
Qualifying plans. A quick online search will give thousands of options and reviews on specific supplemental Medicare policies and carriers. The reason why is that everyone’s needs are different. What your neighbor might consider a terrible plan might be the exact right one for you.The challenge most beneficiaries experience is knowing where to start. There are so many options and lingo to learn. Even after that Initial Enrollment Period when you’ve become Yoda-level Medicare master, plans change year-to-year. Heck, an individual’s needs change, too. This is where finding your advocate comes into play.
- Guide you through how Medicare works and how you can make it work for you.
- Review your needs, such as checking to see which plans your doctors are covered under and which prescription drugs would be included.
- Provide thorough explanations of pros and cons of various Medicare plans.
- Be able to present options across multiple carrier plans, not just one or two.
- Make recommendations on a Medicare plan that will not only meet your needs, but also work with your budget.
- Include family. Your family probably has questions and wants to make sure you are well cared for. Some of them may not have any experience with how Medicare works. Readily available to answer questions throughout the year, not just during your IEP window.
- Never charge for their services.