Senior’s guide to Medicare

If you’re getting older and wondering about how you’ll be able to afford health care, you may be looking forward to Medicare as a health insurance option. More than 65 million people took advantage of Medicare coverage in 2023, either through Original Medicare or Medicare Advantage plans.

Medicare may not pay for everything, but it can go a long way toward helping older adults afford preventive care, treatments, procedures, and, in many cases, prescription drugs. Knowing the facts about what options are available can help you decide on an appropriate plan. 

What is Medicare?

Medicare, which started in 1965, is a health insurance program managed by the federal government and funded by Medicare payroll taxes, general federal revenue, and premiums paid by people with Medicare. You must opt-in or enroll to receive access to many, but not all, of the benefits. It has free and paid components for most people with Medicare. Medicare is widely accepted by healthcare providers across the U.S.

Who qualifies for Medicare?

Medicare is open to those 65 and older—with some exceptions. Younger people with disabilities and those with end-stage renal disease (ESRD) may also qualify. It is not limited to those within certain income brackets, although people with higher incomes usually pay higher premium costs. 

Difference between Medicaid and Medicare

Medicaid is a program that is generally managed on a state level, and it is designed to help those with lower incomes based on the Federal Poverty Level (FPL). Medicaid may cover services that are not paid for or only partially paid for by Medicare, such as vision, hearing, and dental services. However, it’s possible to lose coverage if a person starts earning past the FPL level threshold for Medicaid coverage. 

Medicare, on the other hand, does not tie income and resources to eligibility. Instead, eligibility for Medicare is primarily based on age or certain people with disabilities. It is possible to have both Medicare and Medicaid coverage at the same time.

What does Medicare cover?

Original Medicare consists of two parts: Part A and Part B. There’s also an option to enroll in a separate plan for Part D prescription drug coverage. With Original Medicare, you can use any provider or facility that accepts Medicare. There are no in-network rules to follow. With Original Medicare Part B, you’ll pay a coinsurance cost or a percentage of the cost of the health services. 

There is another option to bundle the three above parts into Part C (also known as Medicare Advantage). Medicare Advantage is another option for receiving your care. MA plans are offered by private health insurance companies and sometimes provide more options than Original Medicare. Patients typically pay a copay, or a fixed cost, with Medicare Advantage plans. 

Here is an explanation of the Medicare parts, what they offer, and how they may affect your overall healthcare coverage.

Medicare Part A

Medicare Part A is also called “hospital insurance” and is designed to help you with covered inpatient care costs for a hospital or skilled nursing facility. In some cases, it also covers hospice and home health care. The treatment must be necessary, prescribed by your physician, and offered by a facility or service provider that accepts Medicare. 

Costs for hospital coverage for 2024 vary depending on how much of the benefit you’ve used each benefit period. A benefit period starts the day you enter the hospital and only resets after you have been out of the hospital or rehab for a continuous 60 days. Typically, the coinsurance for days 1 to 60 is $0. The coinsurance amount for days 61 to 90 is $408 per day. You’ll owe a $816 coinsurance payment for each “lifetime reserve day” beyond 91 days. 

Medicare Part A is usually free if you or a spouse worked for at least 10 years and paid Medicare payroll taxes. If you don’t qualify for premium-free Part A coverage, you could pay a monthly premium of between $278 and $505. Not enrolling on time could subject you to a penalty of up to 10% of the monthly premium, though many people are enrolled into Part A automatically.

Medicare Part B

Medicare Part B pays for many of the medical services you would use in a typical year, including preventive services, medical supplies, outpatient care, and other doctors’ services. These medical services also include clinic visits to screen for and diagnose illnesses. Part B also covers outpatient mental health and ambulance services.

Medicare members don’t usually pay for preventive services, such as screenings, examinations, and vaccines. However, some preventive services may incur coinsurance or copay costs.

The standard Part B premium is $174.70 in 2024, although it can be higher depending on your income. Those who make more than a certain amount based on their tax return from two years ago may have to pay an extra amount on top of the premium. This extra charge is called an Income Related Monthly Adjustment Amount (IRMAA). Not signing up on time could also result in a monthly late enrollment penalty. 

Medicare Part C

An alternative to the Original Medicare plan is a Medicare Advantage plan, which is a private insurance plan that bundles Part A and Part B services. Medicare Advantage is also known as Medicare Part C or Medicare private health plan. 

The costs, rules, and restrictions for Medicare Advantage plans can vary, as well as services and coverage offered, but the average premium above the standard Part B premium across all plans is around $18.50 per month. Some people may prefer Medicare Advantage plans because of their flexibility and coverage for certain services, such as hearing exams, vision services, or dental services. With Medicare Advantage plans, you are more likely to pay a copay, or a fixed cost, instead of a coinsurance amount. Medicare Advantage plans typically require that you use the providers that are in-network, although with some plans, you may be able to use out-of-network providers for a higher cost. 

Medicare Part D

Most prescriptions aren’t typically covered by Medicare Part A or B, and that’s where Medicare Part D comes in. Not only does Part D help cover the costs of prescription drugs, but it may also help pay for vaccines. This optional, additional coverage plan must be added to Original Medicare, or you can get drug coverage with a Medicare Advantage plan.

Medicare drug coverage is available through private insurance companies, and the national base premium for Part D plans in 2024 is $34.70 a month. 

Are my prescription drugs covered under Medicare?

Your prescription drugs may be covered, depending on your chosen plan. 

Medicare Part B may help cover drugs that are given in an outpatient, such as drugs that are injected or infused. 

Medicare Part D provides coverage for many prescription drugs not covered by Medicare Part B, although you’ll have to pay a separate monthly premium to be enrolled in a Part D plan. 

Prescription coverage is generally included if you opt for a Medicare Advantage plan. 

Not all drugs are covered by Medicare, and they may be covered at a different rate, depending on your plan’s drug formulary. A formulary is a health plan’s list of covered drugs, which are organized on a tier system. Typically, the lower the tier, the lower the copay or coinsurance. Restrictions like step therapy, quantity limits, and prior authorization may apply.

Using a resource like SingleCare may help you save money for prescriptions that aren’t covered by Medicare. 

Medigap

Medicare helps pay for many healthcare services, but it doesn’t help cover everything. A Medicare Supplement Insurance (Medigap) policy can help when you need coverage for other healthcare costs. Costs that a Medigap policy may help cover include deductibles (the amount you pay at the beginning of the benefit period before coverage kicks in) and coinsurance amounts (typically, 20% of the costs of covered services).

It’s easy to see how costs can add up for expensive procedures and long hospital stays. Medigaps are only available to Original Medicare recipients. People with Medicare Advantage can’t buy this optional benefit. Some states will have a different name for their respective Medigap plans, but they often go by a letter part such as “Plan G.” 

Medicare enrollment options

There are quite a few rules to follow to ensure you get the best Medicare benefits at the lowest price. Since enrolling late can result in penalties and possibly missing out on some coverage options, knowing the important dates ahead of time can help you avoid making a costly mistake. 

Initial Enrollment Period

You have a limited window to sign up for Medicare Part A and Medicare Part B. The window starts three months before the month you turn 65. It ends three months after the month you turn 65. This is a total of seven months, including the month you turn 65, which gives you plenty of time to enroll. 

When does coverage start? If you sign up right away, within the first three months of the window, you can usually get coverage by your birthday month (or sooner if your birthday is the first day of the month.) Your coverage may be delayed if you wait until you turn 65 or later. 

General Enrollment Period

Did you miss out on signing up for Medicare Part B when you were first eligible, or perhaps you canceled coverage for some reason? This enrollment period is for you. The General Enrollment Period lasts from Jan. 1 to March 31 each year, with coverage starting the first of the month following your enrollment. 

You’ll have to pay a penalty for each year that you avoided paying for coverage, which could be up to 10% more per month than what you would have otherwise paid each month. Medicare Part A is also subject to this fee—but only if you were going to have to pay for Part A and you didn’t buy it when you were first eligible. Those who get Part A for free won’t have to pay any late enrollment penalties. 

You may qualify for a Special Enrollment Period (SEP), which is worth checking out to save money.

Special Enrollment Period

Life changes may cause you to lose existing coverage or need to get on Medicare quickly. If you qualify, you can sign up during a SEP. Examples of life events that may grant you SEP include moving to a new provider network address, losing your job, moving back to the U.S. after being overseas, or a recent release from prison. The time you have after an event varies, so don’t delay in finding out if you qualify. 

Medicare Advantage Open Enrollment Period

Medicare open enrollment gives those who want to change from a Medicare Advantage plan to an Original Medicare plan (or vice versa) a way to make the switch. It also allows for picking up a new or different Medicare Part D plan or adjusting your plan to reflect your current coverage status, network needs, or prescription changes. You can make these changes during the Fall Open Enrollment period, which is from Oct. 15 to Dec. 7 every year, with changes going into effect the following January 1. Additionally, you can enroll in a Medicare Advantage plan during the Medicare Advantage Open Enrollment Period, which is from Jan. 1 to March 31.

Medigap Open Enrollment Period

The best time to buy Medigap is as soon as you are eligible since that is when you’ll have access to the best prices. The Medigap Enrollment Period starts the first month you have Medicare Part B, but you must be 65 or older. If you wait to try to buy after the period ends, you may find you can’t get it due to preexisting conditions. Note: Some states allow for continuous open enrollment, while others do not.

How to choose the right plan

There are so many options these days, and it’s not just choosing between Medicare Advantage and Original Medicare. You’ll also need to pick a prescription plan provider if you want drug coverage and figure out if a Medigap may be right for you. To get it right the first time, follow these steps. 

Familiarize yourself with the options

Assessing your needs and then reading up on the plans is the best way to know what’s right for you. Know what coverage you need to keep getting quality health care, and make lists of prescriptions you use, services you require, and your favorite providers. This information will come in handy when choosing between plan options. 

Start your research early

Don’t wait until you turn 65 to learn about it. Ideally, you’ll want to have a plan in mind by the 3-month period before your birthday. This gets you coverage as soon as you are eligible, with no penalties. 

Watch out for scams

You can’t turn on broadcast television these days without seeing an ad for a Medicare plan or tool, and it makes sense to be suspicious of anything that requires you to pay. A Medicare coverage plan will be offered only by a reputable healthcare provider or the federal government as part of the Medicare Part A enrollment period. 

No one from Medicare will ever call you at home and ask for your Medicare number or banking information. Don’t ever share your Medicare number with anyone except your medical provider as needed for billing. If someone calls or visits and says they are from Medicare, don’t talk to them. Medicare representatives will always contact you via regular mail, and calling the official Medicare number at 1-800-MEDICARE can get you connected with someone who will help you determine if the letter you received is legitimate. 

More resources for Medicare

Your existing, private healthcare plan may have a Medicare option, so if you like the network you’ve been using, it’s worth asking about it. Medicare plans, especially private insurance options (like Medicare Advantage plans), give their members lots of extra resources, perks, and benefits that mirror what you’d see in a traditional health plan but are tailored to seniors. These benefits may include transportation assistance, hearing aid checks, and fall prevention tools. When your health needs change as you age, don’t hesitate to reach out to your Medicare provider to see what’s available. Plan details update every year, so there may be a resource you can use that wasn’t offered before. 

The official Medicare website, and their YouTube account, can be reliable sources of information for questions about enrollment, coverage, and law changes. 

SingleCare senior resources also offer a mix of daily living tips, best practices, and encouraging advice for those who want to live their later years in the healthiest possible way.

Sources

• Medicare enrollment numbers, Center for Medicare Advocacy (2023)
• Federal poverty level (FPL), Centers for Medicare & Medicaid Services
• Special enrollment periods, medicare.gov
• Medicare Advantage enrollment, Medicare Interactive
• Welcome to Medicare, medicare.gov
• YouTube channel for the Centers for Medicare & Medicaid Services, YouTube