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Medicare Basics

Medicare FAQs

American citizens aged 65 or older are eligible for Medicare. You may also qualify if you meet at least one of the following conditions:

  • Collect disability benefits from either Social Security or the Railroad Retirement Board for 24 months
  • Have amyotrophic lateral sclerosis (ALS), commonly known as Lou Gehrig's disease
  • Have End-Stage Renal Disease (ESRD)

You are only automatically enrolled in Medicare if you collect retirement benefits from either Social Security or the Railroad Retirement Board for at least four months before you turn 65. If you do, you should receive your red, white, and blue Medicare card in the mail three months before your birthday.

If you do not already receive retirement benefits, you need to apply for Medicare through Social Security. Your Initial Enrollment Period (IEP) lasts for seven months, beginning three months before the month you turn 65 and ending three months after. So, if your birthday is April 19, your IEP begins on January 1 and ends July 31.

For more information about Medicare eligibility, please refer to When am I Eligible for Medicare.

In addition to working with a licensed Medicare broker, we recommend that everyone new to the program take some time to learn about the different parts of Medicare.

  • Medicare Part A: Often referred to as hospital insurance, Part A covers inpatient services received in a hospital, skilled nursing facility, nursing home, hospice care, and some home healthcare services. Most people receive premium-free Medicare Part A.
  • Medicare Part B: Also known as medical insurance, Part B covers outpatient services such as you receive in a doctor's office. It also covers some durable medical equipment and other supplies. Most people pay a monthly premium for Medicare Part B.
  • Original Medicare: Includes Parts A and B.
  • Medicare Part C: More commonly known as Medicare Advantage, Part C offers beneficiaries another way to receive their Medicare benefits. These plans more closely resemble the group health insurance many people received through an employer.
  • Medicare Part D: Also known as Medicare Prescription Drug Coverage. Your Part D plan helps pay for covered prescriptions. Most Part D plans have a formulary, or list of covered prescription medications.

Finally, there is Medicare Supplement Insurance, commonly known as Medigap. These plans help pay some of your out-of-pocket costs under Medicare and are offered by private insurers.

While Medicare governs what each plan covers, it does not dictate price. That is determined by the insurance provider.

Read through our Intro to Medicare page for more information.

You sign up for Medicare through Social Security. You have three options:

Unless you qualify for a Special Enrollment Period (SEP), you should sign up for Medicare as soon as you become eligible. This is known as your Initial Enrollment Period (IEP) and it begins three months before the month you turn 65 and continues for three months after your birth month (seven months total).

If you miss your IEP and do not qualify for an SEP, you may have to pay late enrollment penalties.

Learn more about Medicare enrollment periods.

Medicare can be extremely confusing. There are so many options that some people feel overwhelmed. A Medicare broker can help you understand your options to determine the best choice for you. But here are a few ideas to help you get started.

First, how often do you travel? If you live the RV life or spend summers in one place and winters in another, you probably don't want a Medicare Advantage (MA) plan. That’s because MA plans typically only cover you for care received within the plan's network and service area. Original Medicare, however, has no such restrictions. You can visit any doctor in the U.S. who accepts Medicare.

If you opt for Part C instead of Original Medicare, you need to carefully review the plan's coverage and network. Many MA plans offer additional benefits (all must cover at least what Original Medicare covers). But, they may have certain restrictions, such as a provider network. Check to see whether your doctors are on the plan's network.

When comparing Medicare Part D plans, make sure the formulary includes your prescriptions. Also look at the list of preferred pharmacies (if there is one). Many Part D plans implement cost incentives to encourage members to use preferred pharmacies.

Finally, look at the full cost of the plan, not just its monthly premium. Medicare has great coverage but numerous out-of-pocket costs. The monthly premium does not tell the whole story. When comparing plan options, also consider co-pays, co-insurance, deductibles, and any other out-of-pocket costs.

Go to our Selecting a Plan section for more information.

There are four main parts of Medicare.

  • Medicare Part A covers expenses for services received as an inpatient in a hospital, nursing home, or skilled nursing facility. It also covers some home healthcare and hospice care.
  • Medicare Part B covers medically necessary outpatient care, preventive services, ambulatory services, durable medical equipment and diabetes supplies, and some mental health services.
  • Original Medicare includes Parts A and B.
  • Medicare Part C is commonly known as Medicare Advantage. These plans are provided by private insurance companies and must offer the same coverage you'd received under Original Medicare. However, most Part C plans offer additional coverage, such as prescription drugs, vision care, and dental services.
  • Medicare Part D is Medicare's prescription drug coverage. These plans are also provided by private insurance companies that contract with Medicare.

Medicare Supplement Insurance, commonly known as Medigap, helps cover some of your out-of-pocket costs. Private insurers offer these plans as well.

Also known as the Medicare coverage gap. You enter the donut hole when you and your Part D plan spend a combined total of $3,820 (in 2019; the amount changes yearly). While in the coverage gap, you pay 25 percent of the cost of brand name prescription drugs and 37 percent for generic medications.

If your out-of-pocket spending hits a predetermined threshold ($5,100 in 2019), you enter catastrophic coverage. At this point, you have only a small co-insurance or co-payment for covered prescriptions for the rest of the year.

Review our Medicare Donut Hole section to learn more.

Medicare Annual Enrollment occurs every year from October 15 through December 7. This is when current Medicare enrollees can make changes to their coverage. You may sign up for a Medicare Advantage (MA) plan, leave your MA plan to return to Original Medicare, or sign up for a Part D plan.

The Initial Enrollment Period (IEP) occurs when you first become eligible for Medicare. It lasts for seven months, beginning three months before the month you turn 65 and ending three months after.

For example, if you turn 65 in April, your IEP begins January 1 and ends July 31.

You may qualify for a Special Enrollment Period (SEP) if you delay Medicare enrollment and meet certain guidelines.

SEPs let you make changes outside of the standard enrollment periods, assuming you qualify. Qualifying life events include:

  • Changes to where you live
  • Losing your current coverage
  • Having the chance to enroll in a new plan
  • Your current plan's Medicare contract changes
  • Becoming eligible for both Medicare and Medicaid
  • Qualifying for Extra Help

There are literally dozens of ways to qualify for an SEP. See Medicare.gov for the full list.

If you fail to enroll in Medicare Part A, B, or D when you become eligible AND you do not qualify for a Special Enrollment Period (SEP), you may have to pay a late enrollment penalty. This amount varies according to which part and how long you waited.

The Part A Late Enrollment Penalty

Most people do not have a monthly premium for Part A. However, if you do have a premium, the late enrollment penalty for Part A is 10 percent of the monthly premium for every full 12-month period you delayed enrollment AND did not qualify for an SEP.

A full 12 months must pass before you owe a late penalty. You pay this penalty for twice the number of years you could have enrolled in Part A but did not. So, 12 months equals 2 years of late penalties, 24 months equals 4 years, and so on.

The Part B Late Enrollment Penalty

The late enrollment penalty for Part B is 10 percent of the monthly premium for every full 12-month period you delayed enrollment AND did not qualify for an SEP. So, if you became eligible in January and enrolled in December, you would not have a penalty. However, if you became eligible in January and did not enroll until the following January AND you do not qualify for an SEP, you pay an extra 10 percent on top of your regular Part B premium.

If you go 24 months without enrolling, the penalty is 20 percent. It's 30 percent for 36 months, and so on. You pay this penalty for the rest of the time you have Medicare.

The Part D Late Enrollment Penalty

The late enrollment penalty for Part D is based on the national base beneficiary premium, 1 percent for every month you delay enrollment without qualifying for an SEP. So, it's 1 percent for 1 month, 2 percent for 2 months, and so on. You pay this penalty for the entire time you have Medicare Part D.

Read more about Late Enrollment Penalties.

Medicare is a federal entitlement program that provides healthcare coverage for American citizens aged 65 and older. In addition, citizens with certain medical issues or disabilities may also qualify. There is no income requirement for Medicare.

Medicaid is a state-level program that provides medical coverage to those who meet certain financial requirements. These vary by state but most are based on the national poverty level. In addition, most states restrict eligibility to those who meet specific resource limits.

Read more about Medicare vs. Medicaid

Medicare health plans are offered by private insurance companies that contract with Medicare to provide benefits. Plan options vary according to state and insurance provider. They may include:

  • Medicare Advantage Plans
  • Demonstrations or Pilot Programs (also known as research studies)
  • Programs of All-Inclusive Care for the Elderly (also known as PACE)
  • Medicare Medical Savings Account Plans
  • Medication Therapy Management Programs

You have two options for disenrolling from a Medicare Advantage plan. The first is during the Annual Enrollment Period, which allows you to make a variety of changes to your Medicare options. Annual Enrollment occurs every year from October 15 through December 7.

You may also disenroll during the Medicare Advantage Open Enrollment Period. From January 1 through March 31, you may enroll in a new plan or return to Original Medicare.

Learn more about Medicare Advantage Enrollment Periods.

In a word, yes. Medicare requires beneficiaries to have prescription drug coverage. If you do not have "creditable" coverage, i.e. equal to or better than Medicare's coverage, and delay enrolling in a Part D plan, you'll most likely have to pay a penalty for the entire time you have a Medicare Part D plan.

Review our Part D Late Enrollment section.

Yes, Medicare covers a variety of preventive care services, starting with the Welcome to Medicare exam and Annual Wellness checkup. Medicare also covers some immunizations, such as flu and pneumococcal shots, as well as a variety of screenings, including mammograms, prostate exams, and Pap tests.

Read more about Preventive Care and Medicare.

Also known as Part C, Medicare Advantage is an alternative to Original Medicare (Parts A and B). Plans must offer the same benefits as Original Medicare, but most cover additional services as well. Most provide prescription drug coverage and many include benefits like vision and dental. You still have to pay your Part B premium, even if the Medicare Advantage plan has a premium.

Learn more about Medicare Advantage.

Commonly referred to as Medigap, Medicare Supplement Insurance helps pay some of the costs not covered under Original Medicare (Parts A and B). Private insurance companies offer the plans and set their own prices, but plan benefits are the same from provider to provider.

Review our Understanding Medicare Supplement Plans section to learn more.