Medicare was created to guarantee that seniors have access to affordable health care. To that end, the program has been wildly successful. But Medicare doesn’t cover everything.
Most people become eligible for Medicare when they turn 65. Those who are collecting some form of Social Security can enroll automatically. But when you enroll, there are decisions you will need to make about your coverage options. And those choices—especially the ones you make when you first become eligible—can go a long way to ensuring you continue to have the coverage you need down the road.
Let’s sort through some of the terminology surrounding Medicare.
Part A, Part B, Part C, Part D—it can be confusing sifting through the alphabet soup of Medicare’s different offerings. Here is a short guide:
- Part A is hospital coverage. Most people get Part A for free, but some have to pay a premium for this coverage.
- Part B is medical coverage. Part B, which is a voluntary program, does require a premium.
- Part C is more commonly called the Medicare Advantage program. More on that in a minute.
- Part D is a prescription drug program (PDP).
One of the most important things to remember is that Medicare covers 80% of eligible expenses. You have options to help you shoulder the cost of that other 20%.
One popular option for those seeking additional coverage is called the Medicare Advantage plan. Medicare Advantage, which is a policy you buy through a private insurer, works as an alternative to Original Medicare.
Medicare Advantage plans must cover the same benefits as Medicare Part A and Part B. In addition to that, Medicare Advantage plans usually offer additional benefits, and most include a prescription drug plan. You must be enrolled in Medicare Part A and Part B, and continue to pay your Part B premium, to be enrolled in a Medicare Advantage plan.
Medicare supplements (Medigap)
If you decide an Advantage plan is not right for you, there is still a way to help defray your out-of-pocket costs. Medicare supplement plans—also known as “Medigap” plans—can provide you with additional protection.
Medicare supplements help pay for the 20% that Medicare doesn’t cover. It is important to note that those enrolled in Medicare Advantage may not also remain enrolled in a Medigap plan.
In many states, Medicare supplement policies are standardized—only the premiums vary. But a few states, including Wisconsin, have slightly different rules.
To switch or not to switch
The good news is that if you choose a plan you don’t like, you can switch. The bad news is that switching isn’t always easy.
Medicare, of course, is what is referred to as a guaranteed-issue program. In plain English, that means nobody can be turned down for having a preexisting condition, no matter his or her health status. That also is true of Medicare Advantage and Medigap policies, upon your initial enrollment, unless you have End-Stage Renal Disease (ESRD), a scenario for which Medicare has special guidelines.
But if you decide to switch plans or delay signing up, you could be subject to medical underwriting. Depending on your health, that could result in higher premiums or even a denial of coverage.
That’s why it’s important to do a bit of homework before you turn 65 so you can make an informed choice. Luckily, the website Medicare.gov has invaluable resources to help you evaluate your options.
Medicare also has an open enrollment period, which runs from Oct. 15 to Dec. 7 each year. You can only change from Original Medicare to a Medicare Advantage plan, or vice versa, during this time. Medicare supplements do not have an annual open enrollment period and can be changed at any time, often dependent on answering the new insurer’s health questions.
Making the right choices
Medicare is a valuable health care resource for seniors. Being informed about your options allows you to make the choices that will afford you the best possible protection.