Understanding the Basics of Medicare: Your Expert Guide to Coverage

Everything you need to know about Medicare to help you Choose the best plan

What is Medicare?

Medicare is a federal government health insurance program mainly for folks aged 65 or older, although it also covers some younger people with disabilities who become eligible for Medicare.

After speaking with clients and Medicare beneficiaries for over two decades I know it can be overwhelming to digest all this information. The best thing I recommend is to learn small chunks at a time, write down all your questions, and find a trusted Medicare advisor to guide you.

Medicare may seem like a maze, but let’s navigate it together. It’s broken down into four basic parts: A and B as well as parts C, and D. Each part covers different kinds of health care costs, of healthcare and services covered.

What are the different parts of Medicare?

Here’s the lowdown on the four main Medicare parts:

Original Medicare Parts

Part A (Hospital Insurance)

Part A is your hospital insurance, and it’s generally free if you or your spouse paid Medicare taxes for a certain amount of time. In other words, there is no part A premium typically. It pays for inpatient hospital stays and skilled nursing facility care, but remember, it’s not entirely free – there are deductibles and co-pays.

Part B (Medical Insurance)

Medicare Part B is your medical insurance. It covers most health services, like doctor visits, outpatient care, and preventive health services only. There’s a monthly premium Part B beneficiaries also must pay. The 2024 Part B premium monthly is $164.90 however, it could be more if you are a high earner.

Supplementary Medicare Parts

Part C (Medicare Advantage Plan)

‘Part C’, also known as Medicare Advantage. These are all-in-one plans offered by insurance companies that typically bundle A, B, and D and may offer extra coverage. They come with their own set of costs, which can include premiums, deductibles, and co-pays.

Part D (Prescription Drug Plan)

‘Part D’ federal health insurance program covers your prescription drugs. These Medicare prescription drug coverage plans are offered by private insurers, and costs vary from plan to plan. Each part has its own costs and coverage details, so it’s important to understand what each one offers.

Medicare Coverage

Medicare provides a broad spectrum of coverage to make sure you can access the medical services you need. Here’s a breakdown:

What does Medicare cover?

Hospital Coverage: Under Part A, Medicare covers semi-private rooms, meals, general nursing, and drugs as part of your inpatient treatment, and other hospital services like lab tests, imaging, and operating room costs.

Medical Coverage: Medicare Part B helps cover services from doctors and other health care providers, outpatient care, home health care, durable medical equipment like wheelchairs, walkers, and hospital beds, and many preventive services to keep illnesses at bay or detect them at an early stage.

Comprehensive Coverage: Medicare Part C, or Medicare Advantage Plans, offer all the benefits included in Part A and B, often bundled together with Part D prescription drug coverage. They may also cover vision, hearing, dental, and other wellness programs.

Prescription Drug Coverage: Part D covers the cost of many prescribed medications. Original Medicare beneficiaries can add Part D by joining a Medicare Prescription Drug Plan.

What does Medicare not cover?

Despite all its benefits, Medicare doesn’t cover everything. There are some crucial areas of healthcare, often referred to as “benefit gaps”, or services covered that aren’t paid for by Medicare. Uncovered services include routine vision, hearing, dental care, and most importantly, long-term- care services, which include things like nursing homes or assisted living facilities. Also, prescription drugs aren’t covered unless you have a Part D plan or a Medicare Advantage plan that includes drug coverage.

Now, when Medicare doesn’t cover a service or item, you’ll have to pay for it yourself, unless you have other insurance or you’re in a Medicare health plan that covers these services. That’s where supplemental coverage comes into play.

The Value of Medicare Supplements

Medicare Supplement insurance is designed to help fill these gaps. Medigap, a private insurance policy, helps pay for some of the other healthcare services and costs that Original Medicare doesn’t cover, like co-payments, co-insurance, and yearly deductibles. Some Medigap policies also cover services like medical care when you travel outside the U.S.

Medicare Advantage Plans (Part C) are another way to get your Medicare coverage. They cover all Medicare services, and some offer extra coverage to cover specific services like vision, hearing, and dental coverage.

However, there’s a lot to consider when choosing your Medicare supplement plans. Every Medigap policy must follow federal and state laws designed to protect you, and it’s identified by letters, parts A and b, through N. Each policy that’s sold by different insurance companies under the same letter must offer the same basic benefits.

The key is to understand your healthcare needs, review your coverage options carefully, and make a choice that suits your health and budget. Remember, the best time to buy a Medigap policy is during your 6-month Medigap open enrollment period when you have a guaranteed right to buy any Medigap policy sold in your state.

While Medicare provides a broad spectrum of coverage, it doesn’t foot the bill for everything. You’ll usually have to pay out of pocket for services like long-term care, most dental care, eye exams related to prescribing glasses, dentures, cosmetic surgery, acupuncture, or any home health services or routine foot care.

What is a Medicare Supplement Plan?

A Medicare Supplement Plan, often known as a Medigap plan, is a type of insurance policy that helps cover the “gaps” Medicare leaves behind. That means it helps with some of the out-of-pocket costs not covered by Original Medicare, like copayments, deductibles, and coinsurance. Also, some Medigap plans might cover services that Original Medicare doesn’t cover, like medical care when you’re traveling outside the U.S.

But remember, Medigap policies typically don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty or skilled nursing facility. And one important tidbit: these plans are standardized. That means that a Plan F from one insurance company will have the same benefits as a Plan F from another company. However, the same monthly premiums can vary.

What is a Medicare Advantage Plan?

A Medicare Advantage Plan, also known as Part C, is a type of Medicare private health plan provided by private insurance companies that contract with Medicare. They provide all your Part A (Hospital Insurance) and Part B (Medical Insurance) benefits and often include Medicare prescription drug (Part D) coverage.

Some offer additional benefits such as coverage for vision, hearing and dental services, and wellness programs like gym memberships. These plans work like an HMO or PPO insurance plan and may have network restrictions. That means you might need to see doctors who are part of the plan’s network. They come with their own set of costs, including premiums, deductibles, and copayments or coinsurance.

The costs and specific benefits can vary greatly between plans, so it’s important to shop around and find the plan that best fits your needs and budget. One key point to remember is that you still have Medicare if you enroll in a Medicare Advantage Plan, this is just another way to get your Medicare coverage.

Understanding Medicare Part D Plans

Medicare Part D plans, often just referred to as “Part D,” provide coverage for prescription drugs on a stand-alone basis. Run by private insurance companies approved by Medicare, these plans help lower the cost of prescription medications and protect against future high prescription costs.

It’s important to note that Part D plans aren’t one-size-fits-all. Each stand-alone plan has its own list of covered drugs, known as a formulary, and places drugs into different “tiers” on their formularies. Drugs in each tier have a different cost, with drugs in lower tiers generally being cheaper than those in higher tiers.

While all Part D plans must cover certain types of drugs, the specific drugs covered in each tier can vary widely from plan to plan. Therefore, it’s crucial to review the formulary of any plan you’re considering to make sure your medications are being covered by Medicare.

Also remember, if you decide not to join a Medicare drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, you’ll likely pay a late enrollment penalty if you join later. So, it’s worth considering a Part D plan even if you don’t take a lot of prescription drugs right now.

Understanding Medicare Eligibility & Enrollment

You can enroll in Medicare during certain times of the year known as enrollment periods. The first time you are eligible for Medicare is called your Initial Enrollment Period (IEP). This initial enrollment period starts 3 months before the month you turn 65, includes the month you turn age 65, and ends 3 months after the month you turn age 65 again.

If you miss this period, don’t worry! You get another shot during the General Enrollment Period (GEP) which runs from January 1 to March 31 each year. There’s also a Special Enrollment Period (SEP) for those who missed the IEP due to certain life events, like moving or losing other healthcare coverage. Just remember it’s important to sign up when you’re first eligible to avoid late enrollment penalties.

Out Of Pocket Expenses With Medicare

While Medicare can be a big help, it’s important to note that it’s not entirely free. There are certain out-of-pocket costs that you’ll need to budget for. These can include premiums, deductibles, co-pays, and coinsurance. These costs vary depending on the type of service, the kind of Medicare plan you have, and whether your doctor or provider accepts the assignment.

In other words, while Medicare covers a large chunk of your healthcare expenses, it’s not a free ride. Speaking with a licensed insurance agent to understand these expenses better is always a good idea. They can guide you through the nuts and bolts of Medicare so you can make the best decision for your specific needs.

Talk to an Expert & Licensed Insurance Agent

Expert Guidance: Working with a licensed independent insurance broker specializing in Medicare plans offers the advantage of professional guidance. They have a thorough understanding of the complexities of Medicare and can explain the ins and outs in a straightforward, easy-to-understand manner. This can be particularly useful when comparing plans, understanding coverage and cost differences, and making decisions that best meet your specific healthcare needs.

Wide Range of Options: As an independent broker we are not tied to any specific insurance company, which means we can present a wide range of Medicare plans from various providers. This wider selection increases your chances of finding a plan that fits your specific health concerns, budget, and lifestyle. We have no bias toward which plan you choose, our only concern is finding you the right plan.

Personalized Service: Independent insurance brokers can provide personalized service tailored to your specific needs and circumstances. They take the time to understand your health requirements and financial situation and can help you navigate through the Medicare enrollment process, making it less overwhelming.

Ongoing Support: One of the significant benefits of working with an independent broker is the ongoing support they provide. They’re there for you even after you’ve purchased a plan. If there are any changes in Medicare policies or if your health needs change, they can help you adjust your coverage accordingly. They also assist with claims issues or any other problems you may face with your plan.

There’s a lot to soak in, right? That’s where a licensed insurance agent comes in. They’re like your personal navigator in the world of Medicare. An agent can help explain the nitty-gritty, assist with enrollment, and even help you understand how to apply for additional financial assistance and maximize your Medicare benefits. Remember, the goal is to get a plan that fits your health needs and financial situation. Don’t worry, you’ve got this. And remember, we’re here to help every step of the way.

Jason Gerstenberger

Jason has been a licensed Insurance broker since 2005. He began advising clients on Medicare Plans in the very first year of Medicare Part D coverage almost two decades ago.