When it comes to Medicare, simply understanding the basics can be a challenge. If you're enrolling for the first time, you probably have a variety of questions, including:
- When is initial enrollment?
- How much will premiums cost?
- Will I still be able to see my doctor?
- And all those parts: Which part covers what services, and why am I paying separately for them?
Even experienced Medicare recipients may have questions about their coverage. Some older Americans feel they're paying too much for plans and premiums. But did you know you have options for switching — and potentially lowering — your Medicare plan costs?
The Sum of Its Parts
In July 1965, President Lyndon B. Johnson signed the bill creating the original Medicare and Medicaid programs. At its conception, Medicare had two parts: Part A (hospital insurance) and Part B (medical insurance). These parts are called original Medicare.
Today, original Medicare still exists, with some major changes. In 2003, the Medicare Prescription Drug, Improvement, and Modernization Act made it possible for insurance companies to offer private health plans, known as Medicare Advantage plans (also called Part C). The act also added an optional prescription drug benefit known as Part D.
Medicare Parts at a Glance
Part A
Hospital stays, hospice, skilled nursing care following a qualifying hospitalization, home health care
Part B
Doctor services, outpatient services, medical equipment
Part C (Medicare Advantage)
Same services as Part A and Part B, and often prescription drug coverage, as well as other services
Part D
Prescription drug coverage
Part A: Hospital Insurance
Medicare Part A is provided through original Medicare or in a Medicare Advantage plan. It generally covers hospital-related expenses, including stays in a hospital or a skilled nursing facility following a qualifying hospitalization, hospice care and home health care.
Most people pay nothing for Part A coverage, because they've paid Medicare taxes for 10 years or more. However, if you've paid Medicare taxes for less than 10 years, you could pay up to $505 in monthly premiums for Part A.
2024 Medicare Part A Costs
Part B: Medical Insurance
Whether you receive Part B through original Medicare or a Medicare Advantage plan, two types of services will be covered: medically necessary services and preventive services. Doctor visits, lab tests, ambulance services, durable medical equipment, mental health treatment, and limited outpatient prescription drugs are covered by Part B.
2024 Medicare Part B Costs
*Premium may be higher depending on income
Part D: Prescription Drug Coverage
D stands for drugs — and Part D provides prescription drug coverage. While Part B provides for limited outpatient prescriptions, Part D plans include a more extensive list of formulary and generic drugs.
Medicare recipients can choose to add a stand-alone prescription drug plan. Premiums vary by plan coverage and income levels. If you enroll in a Medicare Advantage plan, your premium may include prescription drug coverage.
Important: A late enrollment penalty is added to your Part D premiums going forward if you go without Part D or other creditable prescription drug coverage for 63 days or more after your initial Part D enrollment period.
Medicare Supplement Insurance (Medigap)
Also known as Medigap, a Medicare Supplement insurance policy picks up where original Medicare leaves off. These policies are sold by private insurance companies to help cover copayments, coinsurance, and deductibles that aren't otherwise covered.
For Medicare recipients who divide their time between different regions, a Medicare Supplement insurance policy goes with you wherever you go. Some plans even travel with you outside of the United States.
Note:Medicare Supplement policies do not provide coverage for prescription drugs, long-term care, or vision or dental services. It's also illegal for someone to sell you a Medigap plan if you have Medicare Advantage.
Part C: Medicare Advantage
Medicare Advantage plans take Parts A and B and, in most cases, Part D and bundle them together as a comprehensive alternative to original Medicare. They are offered by private insurance companies and provide coverage for one monthly premium. Some Medicare Advantage plans also provide coverage for vision, hearing, and dental services.
While Medicare Advantage plans usually have a lower monthly premium than Medicare Supplement policies, a Medicare Advantage plan could result in higher out-of-pocket costs. However, Medicare Advantage plans also have the benefit of covering more services.
Medicare Advantage vs. Supplement: Comparison
| Feature | Supplement | Advantage |
|---|---|---|
| Monthly premium | Higher | Lower |
| Includes Part D and dental/vision | No | Usually |
| Copayments to providers | No | Yes |
| Restrictive network of doctors | No | Yes |
| Travel anywhere and use any doctor | Yes | No |
| Your plan can be canceled | No | Yes |
Three Major Factors to Consider
Cost
Medicare Supplement policies usually require a higher monthly premium but could result in lower out-of-pocket expenses than some Medicare Advantage plans.
Choice
With a Medicare Advantage plan, your choice of medical providers is limited to those within the HMO or PPO. Original Medicare and Medicare Supplement policies cover any medical provider who accepts Medicare.
Lifestyle
If you're a snowbird living in more than one state throughout the year or you travel extensively, you'll probably benefit from choosing original Medicare plus a Medicare Supplement policy.
Initial Enrollment
When you first become eligible for Medicare, you have seven months to complete initial enrollment. The period begins three months before the month you turn 65, runs through your birthday month, and ends three months after the month you turn 65.
Your 7-Month Enrollment Window
3 months before
your 65th birthday
The month of
your 65th birthday
3 months after
your 65th birthday
Important:If you miss the enrollment deadline when you're first eligible, you'll pay a late enrollment penalty — and you'll continue to pay the late enrollment penalty as long as you have Part B.
Key Dates to Remember
Initial Enrollment Period
7 months surrounding your 65th birthday
Annual Enrollment Period (AEP)
October 15 – December 7, annually
Medicare Advantage Open Enrollment (MA OEP)
January 1 – March 31, annually
Medicare Supplement Open Enrollment
Starts in the first month you're covered under Part B and age 65+, lasts 6 months
Should You Consider Changing Your Plan?
It might be time to look into other options if:
- Your health has changed in some way
- You need additional benefits
- You've had the same plan for a long time
- Your financial needs have changed
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Not Sure Where to Start?
Navigating Medicare can be confusing and overwhelming. We're here to help you understand how Medicare works and identify the right plan for you.