Original Medicare consists of just two of the four parts. It consists of Parts A and B. Medicare Part C offers additional coverage for medical services and Part D offers prescription drug coverage.
Medicare Part A provides hospital coverage. It will help pay for “room and board” fees for any hospital stays. Part A will begin paying for expenses after the deductible for the benefit period has been met.
Most individuals receive premium-free Part A. As long as an individual has worked for ten years and paid Medicare taxes during that time, Part A will remain premium-free. However, if an individual has not met that requirement, Part A can have a substantial premium.
In addition to inpatient hospital stays, Medicare Part A may also cover limited, short-term home healthcare and skilled nursing care.
Individuals must meet their Part A deductible prior to coverage. After the deductible has been met, Part A will pay for 80% of the expenses. However, there are limits on how many days are covered.
Medicare Part B offers benefits for outpatient medical care. This includes visits to the doctor and many preventive services. It will pay 80% of covered services after the deductible has been met preventive services and outpatient care.
While some healthy beneficiaries may not use the Part A benefits often, Part B benefits are especially helpful since they include coverage for preventive services and outpatient care.
Part B includes coverage for annual physical exams, lab tests, mental healthcare services, and more. Some costs incurred while in a hospital may also be applied to Part B coverage.
Medicare Part C plans offer “all-in-one” Medicare coverage. They bundle the benefits from Parts A and B and sometimes include additional benefits for routine dental, vision, and hearing services, as well as prescription drug coverage. If an individual enrolls in a Part C plan, the benefits are all provided by the private insurance company instead of the federal Medicare program.
While Part C is one of the four parts of the Medicare program, it is not mandatory to enroll in a Part C plan. Part C gives Medicare beneficiaries the option for more coverage.
Medicare Advantage plans offer low premiums and a wide variety of covered services. However, it is important to understand how these plans work and what limitations they may have. Beneficiaries who do not enroll in a Medicare Advantage plan often choose a Medicare supplement plan instead.
Medicare Part D offers prescription drug coverage. Like Part C plans, Part D plans are offered by private insurance companies.
Many beneficiaries who are not currently taking prescription medications fail to enroll in a Part D plan when they become eligible. However, this can quickly become problematic if the individual has something unexpected happen and then requires prescription medications. Prescriptions are very costly without insurance.
Individuals will pay a monthly premium for their Part D plan. They will also need to pay any deductibles and coinsurance costs for each medication.
Medicare beneficiaries who delay enrollment in Part D without other creditable coverage will incur a late enrollment penalty. This penalty will be added to the individual’s monthly premium and never goes away – this penalty is for life! This is another reason why beneficiaries should enroll in a Part D plan as soon as they become eligible.
Many people will receive premium-free Part A and there are some premium-free Part C plans. Parts B and D will always have a premium, but there is financial help available to those who qualify. Individuals may receive financial assistance through the Medicare Savings Program or Extra Help.
Individuals can enroll in Parts A and B as soon as their Initial Enrollment Period begins – three months prior to their 65th birthday. If this period is missed, individuals can enroll during the General Enrollment Period, which is from January 1 through March 31 each year. In either scenario, enrollment can be accomplished online, by phone, or at a local Social Security office.
After applying for Parts A and B, individuals can enroll in a Part C plan. This can also be done during the Initial Enrollment Period and it is best to do so during that time. After that, enrollment is closed until the Annual Enrollment Period, which is from October 15 through December 7 each year. If an individual enrolls during that time, coverage will be effective on January 1. Part C enrollment is completed by going through the plan’s carrier.
Part D enrollment is the same as Part C. Individuals can enroll during the Initial Enrollment Period or the Annual Enrollment Period. Enrollment is done through the Part D insurance company.
Some individuals will qualify for a Special Enrollment Period. There are several qualifying events that would permit an individual to enroll during this time. If the individual has a qualifying event, they can enroll as soon as their Special Enrollment Period begins.
Enrolling in Medicare is not mandatory and each individual is free to choose which Medicare parts they want to utilize. Most beneficiaries do choose to sign up for all four parts so that they can reduce the out-of-pocket amount they spend on healthcare.
We’ve also mentioned that individuals are penalized for delaying enrollment in Parts B and D. Since we will likely all need major healthcare services at some point, most individuals enroll in Parts A, B, and D right away to avoid the penalties that will be applied down the road when they decide that health insurance is more essential.
Medicare Part C is where individuals have a bigger choice to make. Enrolling in Part C reduces out-of-pocket expenses, but it is not the only option to do so. Beneficiaries could also choose to enroll in a Medicare supplement plan. (Medicare supplements are also called Medigap plans.) Either option will save the beneficiary money when healthcare issues arise.
You don’t have to make all these decisions alone. Understanding the intricacies of Medicare takes time and it is helpful if you have an agent that can help you weigh the pros and cons of each part and walk you through the enrollment process.
When you are ready to begin your Medicare journey, we are here for you! Simply call our agency and schedule a free consultation. We’ll help you choose the coverage that is best for you.
