How Medicare Works
Medicare, or Original Medicare, is a federal program offered to seniors when they reach 65, people with certain disabilities, and those with ESRD. Original Medicare includes Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). Supplemental Medicare options are also offered to “fill the gaps” in Medicare coverage. Supplemental Medicare options include Medigap, Medicare Advantage (Medicare Part C), and Medicare Prescription Drug Coverage (Medicare Part D) and are sold by insurance companies and other private companies approved by Medicare.
Am I Eligible For Medicare?
You are eligible for Medicare during the 7 month period surrounding your 65th birthday. This 7 month period is called an initial enrollment period and comprises the 3 months before you turn 65, the month you turn 65, and the 3 months after. Aside from folks turning 65 Medicare is also offered to certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
Outside of initial enrollment, there are two annual enrollment periods where you can change your plan. You can also disenroll in Part B at any time. Please learn more about the Medicare enrollment process before making any changes. Enrolling in a plan outside of initial enrollment could mean higher premiums down the road.
Am I Eligible for Medicare Advantage, Medigap, or Medicare Part D?
If you already have Parts A and B you qualify for a supplemental Medicare plan. Please note that the best time to enroll in a supplement plan is during your initial enrollment period. Initial enrollment for supplement plans is typically 60 days from the point you enroll in Part B.
To get Medicare Advantage, Medigap, or Medicare drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and coverage. Similar plans may be sold at different prices by different insurers, so it pays to shop around.
If you are enrolled in Medicare Part A and B (Original Medicare), you may want to consider a supplemental plan to meet your medical needs better.
Parts of Medicare
Medicare includes Parts A, B, C and D. Parts A and B are considered Original Medicare. When you sign up for Medicare, you are automatically enrolled in Parts A and B and must disenroll in Part B to avoid paying the part B premium if you don’t want it.
Medicare Advantage (Part C) is a supplemental plan offered private companies. It works with Original Medicare to provide greater benefits and cost coverage.
Part D is a drug program that helps to cover drug costs.
Original Medicare can be paired with Medigap policies (Part A through N) which are an alternative to Advantage Plans.
Original Medicare, Medigap, and Advantage plans can be paired with Part D (although most Advantage Plans offer Part D as part of the package). Medigap and Advantage plans cannot be paired together, and you cannot purchase a Medicare Advantage or Medigap policy without having both Part A and Part B.
Now that you have a basic Medicare overview it’s time to take a look at what each of the parts does on their own.
Medicare Part A (Hospital Insurance)
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B (Medical Insurance)
Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
Medicare Part C (Medicare Advantage Plans)
Part C essentially replaces Part A and Part B and typically includes Part D. Each Advantage Plan offers different cost and coverage options. Learn more about Medicare Advantage here or read the summary on Part C below.
Medicare Part D (prescription drug coverage)
Medicare offers Medicare Part D prescription drug coverage to everyone with Medicare. Medicare Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
What is Medicare Advantage?
A Medicare Advantage Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage. Remember you can’t pair Part D with an Advantage plan that includes drug coverage, and you can’t have Medigap and an Advantage Plan at the same time.
ACA, ObamaCare, Medicare regulations aim to fix some of the aspects of Medicare Advantage that weren’t working.
The following article from Huffington post, written by a writer who has had both Medicare and Medicare Advantage, discusses the changes to Medicare and Medicare Advantage under the Affordable Care Act.
What is Medigap?
Medigap, also called Medicare Supplement, is a supplemental insurance that requires Part A and Part B. It is an alternative to Medicare Advantage and is sold by private companies and is not part of Medicare. You can choose to also supplement your Original Medicare coverage with Part D as well as Medigap insurance, but cannot have an Advantage Plan and Medigap policy at the same time. Learn more about Medigap insurance here.
How Does the Affordable Care Act Affect Medicare?
ObamaCare (the Affordable Care Act) makes changes to Medicare and Medicare Advantage, but Medicare isn’t part of ObamaCare’s health insurance marketplace. If you like your Medicare plan, you can keep it.
Medicare recipients will have access to all of ObamaCare’s new benefits, rights, and protections and get some that are Medicare specific too. You can learn more about ObamaCare and Medicare here.
If you have Medicare Part A (Hospital Insurance) or Medicare Part C (Medicare Advantage), you’re considered to have “minimum essential coverage” and won’t owe the fee for not having health insurance in 2014.
Medicare Enrollment – How the Medicare Enrollment Process Works
Original Medicare has an initial enrollment period and then two annual enrollment periods where you can switch your plan. Medicare Advantage, Part D, and Medigap also have specific enrollment rules. If you want to learn about enrolling in Original Medicare or supplemental Medicare insurance, please look at our Medicare enrollment section. Remember only Part A and Part C will help you avoid the fee. Make sure to enroll in Medicare and any supplemental plan you want during your initial open enrollment period to ensure your coverage!
The History of Medicare
Now that you know what Medicare is, this video on the history of Medicare will enable you to learn more about where Medicare came from and why it’s so important. The second video talks about the history of Medicare and Medicaid in more detail.