Medicare Basics

Original Medicare is comprised of Part A (Hospital Insurance) and Part B (Medical Insurance). These plans are made available directly through the Federal Government.

Part A

Part A helps to pay for hospital and skilled nursing facility, home healthcare, and hospice care. In most cases, if you had a Medicare deduction from your paycheck while you were working, you will not have a Medicare Part A premium. Medicare Part A coverage begins automatically upon your Medicare eligibility – age 65 or if you have been drawing Social Security due to a disability for 24 months.

Part B

Part B helps to pay for physician services, outpatient services, durable medical equipment, and other medical services. Generally speaking, you are eligible to apply for Part B three months prior to the month of your 65th birthday and three months following the month of your 65th birthday. For most people, the Part B monthly premium for 2013 is $104.90. There may be an additional premium for Part B depending on your annual income. You are required to have both Part A and Part B in order to purchase a Medicare Supplement or a Medicare Advantage plan.

Part C

Part C refers to Medicare Advantage plans. These plans incorporate your Part A, Part B, and usually Part D – Prescription Drug coverage – into one plan. Medicare pays a private insurance company to provide your healthcare coverage with a Part C Medicare Advantage plan. Part C must cover the same benefits as Original Medicare and may include a premium. Medicare Advantage plans often include extra benefits not offered by Original Medicare.

Part D

Part D refers to Medicare Prescription Drug coverage. People with Original Medicare and a Medicare Supplement must purchase a Medicare Part D Prescription plan separately. For people joining a Medicare Advantage plan, a Part D prescription plan is usually included with the Medicare Advantage coverage. You should note, if you choose not to sign up for Part D Prescription Drug coverage, a penalty will be assessed.

Classifications of

Medicare Insurance

The following represent the most common classifications of Medicare insurance.

Medicare Only

This terms refers to people who carry Original Medicare only (Medicare Part A and Part B), but no other form of Medicare health insurance. As Original Medicare covers approximately 80% of an individual’s expected healthcare expenses, these people choose to “self-insure” for the remaining 20%.

Medicare Supplement
(sometimes referred to as Medigap Insurance)

Still the most common classification of Medicare insurance nationally, this refers to individuals who have Original Medicare (Part A and Part B), and who also purchase a Medicare Supplement to help insure the approximate 20% of healthcare expenses that are not covered by Original Medicare. Medicare Supplements provide coverage that is secondary to Medicare; meaning Medicare pays first and the Medicare Supplement pays second (click here for more information on Medicare Supplements).

Medicare Advantage Plan

Also referred to as Medicare Part C, a Medicare Advantage plan incorporates your Part A, Part B, and usually Part D Prescription Drug coverage into one plan (click here for more information on Medicare Advantage plans).

Company-Sponsored Medicare Plan

This broad category refers to people who receive some form of Medicare insurance from a current or former employer (or their spouse’s employer). This category includes corporate Medicare plans, union member plans, military plans (TRICARE for Life), and Medicare plans offered to federal, state and municipal retirees. This type of insurance may be a plan that works secondary to Medicare or it may function as a Medicare Advantage plan. Oftentimes, employer-sponsored Medicare plans feature premiums that are considerably more expensive than comparable Medicare plans that are available to the general Medicare population. If you are considering cancelling an employer-sponsored Medicare plan and joining a regular Medicare Supplement or Medicare Advantage plan, be sure to carefully consider your options, as employers often will not allow retirees to return to the plan after cancelling coverage.

Medicare/Medicaid

These are individuals who qualify for both Original Medicare and Medicaid benefits simultaneously. Often referred to as being “dual-eligible”, Medicare/Medicaid beneficiaries meet state-specific income requirements for Medicaid eligibility, in addition to being qualified for Original Medicare. In basic terms, these individuals have Medicare as their primary insurance and Medicaid as secondary insurance.