Try­ing to fig­ure out Medicare can be one of the most frus­trat­ing aspects of retire­ment.  Even the savvi­est of retirees strug­gle with fig­ur­ing out when to enroll and which parts to enroll in – there’s Part A, Part B, Part C, Part D, Medi­gap plans and so on. And, what in the world is a donut hole, anyway?

What is Medicare?

Medicare is the gov­ern­ment health care pro­gram for peo­ple 65 and over as well as some younger peo­ple with dis­abil­i­ties.  Medicare’s cov­er­age plays an impor­tant role in con­tain­ing med­ical costs as you age. Medicare is a dif­fer­ent pro­gram than Med­ic­aid, which offers health and oth­er ser­vices to eli­gi­ble low-income peo­ple of all ages.

Types of Medicare

  • Part A cov­ers inpa­tient hos­pi­tal stays, skilled nurs­ing facil­i­ty stays, some home health vis­its, and hos­pice care. Gen­er­al­ly, you don’t have to pay pre­mi­ums if you or your spouse paid Medicare tax­es for at least 10 years.
  • Part B cov­ers doc­tor vis­its and oth­er med­ical­ly nec­es­sary ser­vices and sup­plies. That includes pre­ven­tive ser­vices or health care to pre­vent ill­ness, as well as ambu­lance ser­vices, durable med­ical equip­ment and men­tal health cov­er­age. Part B comes with a month­ly price tag – the stan­dard pre­mi­um was $148.50 in 2021.
  • Part C or Medicare Advan­tage is a type of health plan offered by pri­vate insur­ance com­pa­nies that pro­vides the ben­e­fits of Part A and Part B and often Part D as well. These bun­dles plans may have addi­tion­al cov­er­age such as vision, hear­ing, den­tal care and may even include perks such as gym mem­ber­ships or trans­porta­tion to doctor’s appoint­ments. Medicare Advan­tage plans have an annu­al lim­it on out-of-pock­et costs.  Medicare Advan­tage plans are typ­i­cal­ly HMOs or PPOs.
  • Part D is the pre­scrip­tion drug ben­e­fit that cov­ers most out­pa­tient pre­scrip­tion drugs. It is a sep­a­rate plan pro­vid­ed by pri­vate Medicare approved com­pa­nies, and you must pay a month­ly pre­mi­um.  Unless you have cred­itable drug cov­er­age and will have a Spe­cial Enroll­ment Peri­od, you should enroll in Part D when you first get Medicare. If you delay enroll­ment, you may face gaps in cov­er­age and enroll­ment penal­ties.  Most plans with Medicare pre­scrip­tion drug cov­er­age (Part D) have a cov­er­age gap (called a “donut hole”).  That means that after you and your drug plan have spent a cer­tain  amount of mon­ey for cov­ered drugs, you have to pay all costs out-of-pock­et for your pre­scrip­tions up to a year­ly lim­it.  Once you have spent up to the year­ly lim­it, your cov­er­age gap ends and your drug plan helps pay for cov­ered drugs again.
  • Medi­gap or Medicare Sup­ple­ment Insur­ance is an addi­tion­al health insur­ance pol­i­cy you can buy from a pri­vate insur­er to help pay some of the costs not cov­ered by Medicare Part A and Part B, includ­ing deductibles, coin­sur­ance and health care if you trav­el out­side the U.S. Medi­gap poli­cies do not cov­er pre­scrip­tion drugs, den­tal, vision, hear­ing aids, pri­vate nurs­ing care or long-term care. There are 10 types of Medi­gap plans avail­able in most states.

When to Sign Up for Medicare

For most peo­ple, sign­ing up for Medicare occurs dur­ing a 7 month ini­tial enroll­ment period(IEP).   The IEP starts 3 months before you turn age 65 and con­tin­ues for 3 months after your birth­day. You may be eli­gi­ble soon­er if you have a dis­abil­i­ty, End-Stage Renal Dis­ease (ESRD), or ALS (also called Lou Gehrig’s disease).

Dur­ing the IEP, you can sign up for Medicare Part A.  Even if you are still work­ing after you turn 65, you should con­sid­er sign­ing up for Part A now.  If you’ve worked and paid Medicare tax­es, it comes at no cost to you and cov­ers hos­pi­tal services.

You can join, switch, or drop a Medicare Health Plan or a Medicare Advan­tage Plan (Part C) with or with­out drug cov­er­age dur­ing these times:

  • Ini­tial Enroll­ment Peri­od — When you first become eli­gi­ble for Medicare, you can join a plan.
  • Open Enroll­ment Peri­od — From Octo­ber 15 – Decem­ber 7 each year, you can join, switch, or drop a plan.
  • Medicare Advan­tage Open Enroll­ment Peri­od — From Jan­u­ary 1 – March 31 each year, if you’re enrolled in a Medicare Advan­tage Plan, you can switch to a dif­fer­ent Medicare Advan­tage Plan or switch to Orig­i­nal Medicare (and join a sep­a­rate Medicare drug plan) once dur­ing this time.

Let’s be hon­est, no one gets too excit­ed about enrolling in Medicare, but the more you know, the eas­i­er it is.  Being pre­pared for life’s unex­pect­ed twist and turns and keep­ing up with your health care is more impor­tant than ever.  By under­stand­ing the ABC’s of Medicare, you are empow­er­ing your­self for your future!

Oth­er Help­ful Resources Include:

Under­stand­ing Medicare’s Options: Parts A, B, C and D

What is Medicare?

An Overview of Medicare