The ABCs of Medicare
For many people approaching age 65, Medicare can be an intimidating, confusing topic. Even those who have received Medicare for years can still be unsure about many aspects of its plans. For help answering some common questions, we reached out to Kathryn Rueda, a plan guide for MVP Health Care, our partner in UVM HealthAdvantage.
1. What is Medicare and who is eligible?
Medicare is federal health insurance available through the Social Security Administration. It's available to individuals who are 65 and older, as well as younger people who are deemed disabled or who have been diagnosed with end-stage renal disease (ESRD).
2. Medicare has four different parts: A, B, C and D. Which ones are offered directly from the federal government, and which are offered from other insurance or companies?
The original parts of Medicare offered through the Social Security Administration are Medicare Part A and Part B.
- Part A covers hospitalization. Anyone who is admitted to a facility overnight or who needs home health or hospice services falls under Part A.
- Part B covers many day-to-day medical services. This includes doctor visits, office visits, lab work, outpatient hospital, emergency room visits, and medical equipment that fall under Part B.
Part C and Part D are separate plans, managed by Medicare-approved commercial insurance companies.
- Part C is a Medicare Advantage plan.
- Part D is the prescription drug plan that is available to members who are on Medicare A and B.
3. What are Medicare supplemental plans?
Medicare supplemental plans (also known as Medigap policies), are an option for people once they have enrolled Medicare Part A and Part B.
If you choose a Medicare supplemental plan, Medicare (Parts A and B) is your primary insurance, so it always pays first for covered expenses. Then, depending on which supplemental plan you choose, the 20 percent Medicare does not pay, as well as the Part A and/or Part B deductibles, may also be covered.
If you opt for a Medicare supplemental plan, you may also wish to purchase a separate Part D prescription drug plan to help pay for your prescription costs and avoid any potential penalties for not having a Part D plan in place.
4. What is a Medicare Advantage plan, Part C?
A Medicare Advantage plan, also known as Part C, works a little differently. It includes the benefits offered by Medicare Part A and Part B and, typically, the Part D prescription drug benefit, all in a single plan. With Medicare Advantage plans, Medicare doesn't pay any portion of the participant’s claims; instead, the commercial insurance company administering the Medicare Advantage plan does. So when a member goes to the hospital, the doctor's office or pharmacy, they simply show their Medicare Advantage insurance card. Those claims are then processed and paid by the associated insurance company.
5. Since Medicare Part A and Part B are managed by the federal government, are there out-of-pocket costs?
Generally, there is no cost for Medicare Part A if you have paid into Social Security for at least 10 years, or 40 quarters, during your work history. There is, however, a cost for Medicare Part B. In 2023, that cost starts at $164.90 per month, but could be higher depending on your adjusted household gross income.
Both Medicare Part A and Part B have deductibles. Some supplements will pay the Medicare Part A deductible, plus the daily copay that applies for hospital stays, as well as the 20 percent coinsurance that applies to Part B.
Currently, no Medicare supplements pay the Part B deductible, so that would be an out-of-pocket cost. (In the past, some supplements have covered the Part B deductible, and members would be eligible for one of these plans.)
6. Why would I consider Medicare Advantage or a supplemental plan for my Medicare Parts A and B?
If you choose only the traditional Medicare Part A and Part B, you are responsible for paying the deductibles for both parts, as well as the 20 percent coinsurance. There is no limit for these expenses, so if you become very sick throughout a year, you will pay 20 percent of all costs for medical expenses throughout the year.
A Medicare supplement or Medigap plan can help with some of the costs not covered by Medicare. These plans are appealing to those who prefer to pay a little more for their insurance premiums up front, knowing that they’re not going to receive as many bills for their medical expenses.
A Medicare supplement may also help someone who has complicated or ongoing medical expenses throughout the year. They may choose to pay a higher premium each month to help ensure they have the coverage they need to address their health needs.
A Medicare Advantage plan, or Part C, will typically have a lower monthly premium, even some as low as $0/month. But members may have to share in some of the medical expenses through deductibles, coinsurance and/or copayments. Medicare Advantage plans may also include some additional benefits, such as: dental, routine vision, transportation, over-the-counter benefits, and more, that are not included with traditional Medicare or a Medicare supplement.
7. When do I enroll in Medicare?
When you turn 65, the Social Security Administration gives you seven months to enroll in Medicare Parts A and B without penalty. The initial enrollment period begins exactly three months before your 65th birthday, includes the month in which you turn 65, as well as the three months following the month in which you turn 65. Failure to enroll in Medicare Parts A and B when you turn 65 could result in penalties, unless you are still working for an employer with 20 or more employees and are covered by that employer's group health plan.
8. How do I enroll in Medicare?
9. What if I’m still working? Must I enroll in Medicare Part A and Part B if I’m still employed at 65?
That depends on a few factors: whether you are self-employed or working for someone else, the size of your employer; and if you are covered by that employer’s health plan.
- If you are self-employed or your employer has fewer than 20 employees: You must enroll in Medicare Part A and Part B during the seven-month enrollment window.
- If your employer has 20 or more employees and you are covered by that employer’s health plan: You may postpone your Medicare enrollment without penalty or disruption to you claims.
10. Can I make changes to my coverage after I enroll in Medicare?
Yes. After enrolling in Medicare, you may change health plans during the annual enrollment period (October 15 through December 7). Any changes made during that annual enrollment go into effect January 1.
The Medicare Advantage open enrollment period is another opportunity to change health plans. If you are enrolled in a Medicare Advantage plan, you can make a one-time change to a different Medicare Advantage plan or switch to original Medicare from January 1 through March 31 each year, or during the first three months you're enrolled in Medicare.
Other special enrollment periods are also available. Some examples include: leaving employer group coverage, a move, and changes that cause you to lose your current coverage. Changes to other special situations may apply.
Visit Medicare.gov for more details about Medicare enrollment or coverage. In addition to general Medicare information, you can enter your zip code to display a list of the carriers in your area who offer supplements, individual Part D prescription plans, and Medicare Advantage plans. You can also review the annual costs for each.