Transitioning from an employer-provided plan to Medicare, the federal health insurance program for those 65 and older and certain younger people with disabilities, can provide a tremendous sense of security — though it can also feel a little daunting. But demystifying this vital benefit doesn’t have to be an impossible task. In fact, it can be as easy as (re)learning your ABCs. Here’s a quick rundown on the basics of Medicare and its various parts if you’re about to become eligible.
The ABCs and Ds of Medicare
Unlike the private insurance you may be accustomed to, Medicare coverage is composed of four main parts, each labeled with a letter:
Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, hospice care and some limited home health care services. Most individuals’ premiums are covered by the Medicare taxes either they or their spouse have paid.
Part B (Medical Insurance): Covers medically necessary services, such as doctor visits, outpatient care, medical supplies and many preventive services. Part B requires a monthly premium, which is usually deducted from Social Security benefits.
Part C (Medicare Advantage): Offered by private Medicare-approved insurers, these plans combine Part A and Part B benefits and can include additional services like vision, dental and prescription drug coverage. They often have lower out-of-pocket costs but can come with network restrictions and requirements regarding your health care.
Part D (Prescription Drug Coverage): Covers prescription medications and is available as a stand-alone plan or as part of Medicare Advantage. The monthly premiums and drugs covered can vary by plan, so it's crucial to choose a plan that suits your needs.
Don’t Fall into the Gap (plus a few more letters to consider)
Just as your private insurance may have had limitations, restrictions or exclusions, it’s important to get the lay of the land regarding what is — and isn’t — covered by Medicare. Luckily, though, you have some flexibility when it comes to dealing with any coverage shortfalls. Medigap policies, also known as Medicare Supplement Insurance, are offered by private insurance companies and can help cover costs that Original Medicare does not, including copayments, coinsurance and deductibles (filling coverage “gaps”). There are 10 standardized Medigap plans available, each named with a letter (A, B, C, D, F, G, K, L, M and N) and offering different levels of coverage. Not all plans, however, are offered in every state, and they’re not compatible with Medicare Advantage. Carefully compare Medigap plans and choose the one that best aligns with your health care needs and budget.
Important Enrollment Periods
When you’re getting ready to change from private health insurance over to Medicare, there are specific periods for enrollment that you need to observe to avoid costly penalties and coverage gaps:
Initial Enrollment Period (IEP): A seven-month enrollment window begins three months before you turn 65, includes your birth month and ends three months afterward.
General Enrollment Period (GEP): If you miss your IEP, you can still sign up for Part A and/or Part B between January 1 and March 31, with coverage starting on July 1. However, you want to avoid this as you may face lifetime late-enrollment penalties.
Open Enrollment Period (OEP): Between October 15 and December 7 each year, you can make changes to your Medicare coverage, such as switching from Original Medicare to a Medicare Advantage plan.
Maximize Medicare Benefits by Choosing Wisely
Selecting the right Medicare coverage is essential to maximize benefits and minimize your out-of-pocket costs. Carefully evaluate your health care needs, budget and lifestyle as well as any program costs, covered services and restrictions when making your decision. How you handle your initial enrollment can have long-term consequences, so consider consulting a qualified Medicare consultant if you’re unsure what to do. They can help guide you through the important decisions you’ll face during the enrollment process and answer additional questions you may have as you make this important transition in your health care coverage.
Sources
https://www.medicare.gov/basics/get-started-with-medicare
https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/buying-a-medigap-policy
https://www.medicare.gov/health-drug-plans/medigap/basics
