Medicare Plans: What You Need to Know Now

Understanding the Basics of Medicare Plans

Medicare consists of four main parts, each covering different aspects of healthcare. These parts work together to provide comprehensive coverage, though not all are mandatory.

Part A (Hospital Insurance) covers inpatient hospital stays, care in skilled nursing facilities, 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 while working.

Part B (Medical Insurance) covers certain doctors' services, outpatient care, medical supplies, and preventive services. Most people pay a standard monthly premium for Part B.

Part C (Medicare Advantage) is an alternative to Original Medicare (Parts A and B) offered by private companies approved by Medicare. These plans include all benefits and services covered under Part A and Part B and usually include prescription drug coverage (Part D) as well.

Part D (Prescription Drug Coverage) adds prescription drug coverage to Original Medicare and some Medicare health plans. These plans are offered by insurance companies and other private companies approved by Medicare.

Comparing Original Medicare vs. Medicare Advantage

When choosing between Original Medicare and Medicare Advantage, several factors should influence your decision.

Original Medicare includes Part A and Part B coverage. With this option, you:

• Can see any doctor that accepts Medicare, without referrals
• Pay a deductible and coinsurance for services
• Need to purchase separate Part D coverage for prescription drugs
• May want to purchase a Medicare Supplement (Medigap) policy to help with out-of-pocket costs

Medicare Advantage (Part C) plans are offered by private companies. With these plans, you:

• Usually must use doctors in the plan's network
• May need referrals to see specialists
• Often have prescription drug coverage included
• May have additional benefits not covered by Original Medicare, such as vision, dental, and hearing services
• Have an annual out-of-pocket maximum for covered services

Your healthcare needs, budget, preferred providers, and geographic location should all factor into this important decision.

Medicare Supplement Insurance (Medigap) Explained

Medicare Supplement Insurance, also called Medigap, helps fill "gaps" in Original Medicare coverage. These policies are sold by private companies and can help pay for remaining healthcare costs such as copayments, coinsurance, and deductibles.

There are 10 standardized Medigap plans, labeled A through N (plans E, H, I, and J are no longer sold). Each plan offers a different set of benefits, and all plans with the same letter offer the same benefits regardless of which insurance company sells them. However, costs can vary between companies.

Important considerations about Medigap include:

• You must have Medicare Part A and Part B to buy a Medigap policy
• A Medigap policy only covers one person
• The best time to buy a Medigap policy is during your 6-month Medigap Open Enrollment Period, which begins the month you turn 65 and are enrolled in Medicare Part B
• Medigap policies generally don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing

If you have a Medicare Advantage Plan, it's illegal for anyone to sell you a Medigap policy unless you're switching back to Original Medicare.

Prescription Drug Coverage Through Medicare

Medicare Part D provides prescription drug coverage through private insurance companies that contract with Medicare. You can get this coverage in two ways:

Stand-alone Prescription Drug Plans (PDPs) - These plans add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service Plans, and Medicare Medical Savings Account Plans.

Medicare Advantage Plans with prescription drug coverage - Many Medicare Advantage Plans include prescription drug coverage.

All Medicare drug plans must provide at least a standard level of coverage set by Medicare, but specific formularies (lists of covered drugs) vary between plans. Each plan places drugs into different "tiers" with different costs.

Key aspects of Part D coverage include:

It's important to review your prescription drug needs annually during the Open Enrollment Period (October 15-December 7) as plan formularies, costs, and your medication needs may change.

Enrollment Periods and When to Sign Up

Understanding Medicare enrollment periods is essential to avoid potential penalties and gaps in coverage. There are several key enrollment periods:

Initial Enrollment Period (IEP): This is a 7-month period that begins 3 months before the month you turn 65, includes your birth month, and extends 3 months after. During this time, you can sign up for Medicare Parts A and B.

General Enrollment Period: If you miss your IEP, you can sign up for Part A and/or Part B during the General Enrollment Period from January 1 to March 31 each year, with coverage beginning July 1.

Special Enrollment Periods (SEPs): These allow you to sign up for Medicare outside normal enrollment periods due to certain life events, such as losing employer coverage or moving out of your plan's service area.

Medicare Advantage Open Enrollment Period: From January 1 to March 31 each year, if you're enrolled in a Medicare Advantage Plan, you can switch to a different Medicare Advantage Plan or switch back to Original Medicare.

Annual Election Period: From October 15 to December 7 each year, you can join, switch, or drop a Medicare Advantage Plan or a Medicare drug plan, with coverage beginning January 1 of the following year.

Missing enrollment deadlines may result in higher premiums and temporary gaps in coverage, so marking these dates on your calendar is highly recommended.