The Guide to Medicare: Everything You Need to Know

Considering how many Americans receive Medicare benefits--58 million this year, according to the U.S. Centers for Medicare & Medicaid Services--you'd think it would be easy to understand who's eligible for them and what they cover.

Anyone who's enrolled in this decades-old, single-payer program, though, will tell you that's far from the case.

The main reason for this is enrolling in Medicare is a lot more complicated than enrolling in, say, employer-sponsored or marketplace-supported health insurance. (In this instance, "marketplace" refers to the federal and state marketplaces or "exchanges" created by the Affordable Care Act or Obamacare.)

Why? For starters, there are a number of components to consider when enrolling in Medicare--including medical, hospital, and prescription drug coverage. Also, there are a number of ways to obtain those types of coverage.

And then there are the eligibility periods, dates, and deadlines that make the situation even more confusing.

So how is anyone supposed to wrap his or her head around Medicare enrollment? By taking things one step at a time. By starting with the basics and then moving on to some of the more convoluted aspects of this program.

That's what you'll find here, at least. And hopefully by the time you finish reading through the "frequently asked questions" section at the end, you'll have a solid grasp of what Medicare is, who can get it, how they can get it, and much more.

Medicare Basics

Medicare. Original Medicare. Medicare Part A. Medicare Part B. Medicare Part D. Medicare Advantage. Medicare Supplement.

If you spend any time at all researching Medicare, you're sure to come across each of these terms.

Let's alleviate some confusion right off the bat. When someone talks or writes about "Original Medicare," they're referring to Medicare Part A and Part B. That could be what they're referring to when they talk or write about "Medicare," too, but they're more likely to be referring to all aspects of Medicare--Parts A, B, C, and D--in such instances.

As for Medicare Parts A, B, C, and D, here's a quick explanation of each coverage type:

Medicare Part A

A lot of people call Part A "hospital insurance." That makes sense, as the focus of this Medicare component is inpatient hospital care. In other words, when you're an inpatient at an acute care, critical access, or long-term care hospital, it pays for, or helps pay for, your:

• (semi-private) room
• meals
• drugs
• general nursing
• other hospital services and supplies

It also pays for these things when you're an inpatient at a rehabilitation facility.

Medicare Part A doesn't pay for the following, however:

• a private room
• the TV or phone in your room (if the hospital charges you for those items separately)
• personal care items
• private-care nursing

There's more to Part A than inpatient hospital coverage, though; it also covers certain aspects of care provided in skilled nursing facilities, nursing homes, and hospice settings. It covers some home health services, too.

Medicare Part B

People usually refer to Part B as "medical insurance." It covers preventive and "medically necessary" care. As for what that means in the real world: it covers most doctor visits, lab tests, x-rays, and durable medical equipment. (Some common examples of medical equipment: blood sugar monitors, canes, oxygen equipment, sleep apnea devices and accessories, and wheelchairs.)

Medicare Part B also covers:

• outpatient hospital care
• mental health care
• some home health and ambulance services
• clinical research

By the way, you can learn more about how Medicare and other health plans cover preventive care in the article, "Health Insurance and Preventive Care"

Medicare Part C

For whatever reason, Medicare Advantage plans also are known as Medicare Part C. No matter what you call it, though, this coverage option replaces Medicare Parts A and B. Private companies offer these plans that provide, at the very least, the same coverage as Parts A and B.

Why would someone choose a Medicare Advantage plan over Original Medicare? One reason is Medicare Advantage delivers Part A and B coverage via numerous types of plans, such as:

• Health Maintenance Organizations (HMOs)
• Preferred Provider Organizations (PPOs)
• Private Fee-for-Service (PFFS) plans
• Medical Savings Account (MSA) plans

Another reason is most Medicare Advantage plans include prescription drug coverage.

To learn more about Medicare Advantage policies in general, read this article.

Medicare Part D

Medicare Part D covers prescription drugs. (Hence, the "Part D.") You get this coverage in one of two ways. One is to join a Medicare Prescription Drug Plan (sometimes called a "PDP"). Another is to enroll in a Medicare Advantage plan that covers prescription drugs.

Don't expect Part D or Medicare Advantage plans to cover all drugs or medications. Some plans may cover the medications you take, while other plans won't. Given this, it's important to review a plan's list of covered drugs (also known as a "formulary") before you join it.

You can learn more about Medicare Part D plans in the article, "Medicare Part D: Prescription drug benefits to people over the age of 65."

Medicare Supplement Insurance

Private companies sell Medicare Supplement--also called MedSup or Medigap--plans, too. They pay some of the health-care costs that Original Medicare doesn't cover, like deductibles, copayments, and coinsurance.

They also often cover treatments and services Original Medicare doesn't cover. For instance, many MedSup or Medigap plans cover medical care you receive outside the U.S.

Check out our Medigap and MedSup FAQ for more information about these plans. Or read: "When Does it Make Sense to Get a Medicare Supplement Plan?"

Medicare Eligibility

Most people think of Medicare as being health insurance for people who are 65 or older. Although the vast majority of Original Medicare enrollees are older Americans, other groups enroll in it, too. A few examples are younger people with:

• Certain disabilities
• Amyotrophic Lateral Sclerosis (also called ALS or Lou Gehrig’s disease)
• End Stage Renal Disease (ESRD)

Medicare Enrollment

OK, here's where things become kind of confusing again.

Initial Enrollment Period

The first opportunity for older Americans to enroll in Original Medicare is the seven-month Initial Enrollment Period (IEP). The IEP begins three months before someone turns 65 and ends three months after their birthday month.

If you enroll during the first three months of the IEP, you'll have coverage the first month you're eligible for Medicare. (In most cases, that's the month you turn 65.) If you wait and enroll during any other month of the IEP, your coverage could be delayed.

Most people enroll in Original Medicare when they're first eligible. Some, however, delay enrolling in Part B. They usually do this because they still have similar coverage through a job, they have COBRA, TRICARE, or retiree coverage, or they have coverage through a still-working spouse.

Before you delay enrolling in Medicare Part B, know that if you don't enroll when you first become eligible, you might have to pay a penalty if you do so at a later date. Also, you'll pay this penalty for as long as you have Part B coverage.

Special Enrollment and General Enrollment Period

What happens if you don't enroll during your IEP? Depending on your situation, you may be able to sign up during a Special Enrollment Period (SEP). To do this, you must have missed your IEP because you were still covered by a group health plan through your own or your spouse's job. (Or through a family member's job, if you're disabled.)

Otherwise, you have to wait until the next General Enrollment Period (GEP) begins before you can enroll in Original Medicare. The GEP begins on Jan. 1 and ends on Mar. 31 every year. If you enroll during the GEP, your coverage won't start until July 1.

Automatic Enrollment

Some Americans don't have to worry about their IEP because they're automatically enrolled in Original Medicare when they turn 65. Which ones? Those who are receiving Social Security or Railroad Retirement Board (RRB) benefits at least four months before they're eligible for Medicare.

People who aren't automatically enrolled in Medicare have to apply through Social Security.

Medicare Enrollment for People with Disabilities

People of any age who receive or are entitled to monthly Social Security or RRB benefits because of a disability can enroll in Medicare Part A, too. The only catch here is they have to receive disability benefits for 24 months before they're considered eligible.

Disabled government employees who aren't granted Social Security or RRB benefits become eligible for Medicare Part A enrollment after being disabled for 29 months.

People who have ALS don't have to wait to enroll in Medicare Part A. They can do so the first month they're granted Social Security or RRB disability benefits.

Medicare Enrollment for People with ESRD

As for Americans with ESRD, they also gain access to Medicare Part A coverage (without paying a monthly premium, actually) under certain circumstances.

First, they must have a kidney transplant or receive regular dialysis treatments. Then, they have to apply for Medicare. After that, they must:

• Have worked the required amount of time under Social Security, the RRB, or as a government employee; or
• Receive or be eligible for Social Security or RRB benefits; or
• Be the spouse or dependent child of a person who has worked the required amount of time under Social Security, the RRB, or as a government employee.

Medicare Part D, Advantage, and Medigap Enrollment

You must enroll in Medicare Parts A and B before you can join a Medicare Prescription Drug Plan. The same is true if you want to join Medicare Advantage or Medigap plans.

In fact, you have to provide your Medicare number and the date your Original Medicare coverage started when you go to enroll in one of these plans.

Something to keep in mind about Medicare Part D enrollment: if you don't enroll in a drug plan during your IEP, you'll probably pay a penalty when you do go to enroll in one. Also, like the Part B late enrollment penalty, you'll pay this one for as long as you have Part D coverage.

Medicare Premiums and Out-of-Pocket Costs

Some people who enroll in Original Medicare have to pay a monthly premium for their coverage. Others don't.

In fact, according to medicare.gov., most Americans don't pay a monthly premium for Part A. Those who do pay up to $413 each month.

Everyone pays a premium for Part B coverage. The majority of enrollees pay the standard per-month premium of $134. If you receive Social Security benefits, however, you'll pay less. And you'll pay more if your "modified adjusted gross income" is above a certain amount.

As for out-of-pocket costs tied to Medicare Parts A and B, here are some pertinent details.

For Part A, you pay the following when you receive inpatient care at a hospital or skilled nursing facility (SNF):

• $1,316 deductible
• $329 coinsurance per day after your hospital or SNF stay lasts for more than 60 days (and until it reaches 90 days)
• $658 coinsurance per day after your hospital or SNF stay lasts for more than 90 days (these are called "lifetime reserve days")
• All costs beyond lifetime reserve days

You pay the costs above for each benefit period, by the way. One of these periods begins the day you're admitted as an inpatient. It ends when you haven't received any inpatient care for 60 days in a row.

For Part B, you pay a yearly deductible of $183. After you reach that amount, you pay 20 percent of the Medicare-approved amount for:

• Most doctor visits and services
• Outpatient therapy
• Durable medical equipment

What you pay for Medicare Part D varies by plan. The same is true of Medicare Advantage and MedSup or Medigap plans.

Frequently Asked Questions

Q: Who is eligible for Medicare? Or who can get Medicare?

A: Americans who are 65 or older are eligible to enroll in Original Medicare. Some younger people are eligible for it, too. This includes those with certain disabilities. It also includes people with Amyotrophic Lateral Sclerosis (ALS) or End Stage Renal Disease (ESRD).

Q: Do I have to enroll in Medicare if I'm eligible?

A: No, but most people do. And most enroll when they're first allowed to do so. If you don't enroll in Medicare Parts A, B, and D during your IEP, you may have to pay a penalty if you go to enroll in the future--sometimes for as long as you have coverage.

Q: Can I get both Original Medicare and Medicare Advantage?

A: No. One basically replaces the other. Private companies offer Medicare Advantage plans, which then provide you with all your Medicare Part A and B benefits.

If you ever want to switch from Original Medicare to a Medicare Advantage plan (or do the opposite), you can do so during the yearly Medicare Open Enrollment Period. The annual Medicare Advantage Disenrollment Period also lets you switch from Medicare Advantage back to Original Medicare.

Q: Can I get a Medigap policy if I already have a Medicare Advantage plan?

A: No. According to medicare.gov, it's illegal for an insurer to sell you a Medigap or MedSup policy if you have a Medicare Advantage plan. The only time this isn't illegal is if you're switching back to Original Medicare.

What if you have a Medigap policy and you decide to get a Medicare Advantage plan? Drop your Medigap coverage. You won't be able to use it to pay your Medicare Advantage deductibles, copays, or premiums.

Q: What does Medicare Advantage offer that Original Medicare doesn't?

A: The big difference between the two options is most Medicare Advantage plans include prescription drug coverage while Medicare Parts A and B do not.

Q: Why would I choose a Medicare Advantage plan over Original Medicare?

A: Some people like that Medicare Advantage plans cover prescription drugs and keep them from having to get that coverage elsewhere. Others like that Medicare Advantage can deliver Part A and B coverage through different types of health plans, such as HMOs, PPOs, and medical savings accounts.

Q: What do I do if I want to change Medicare plans?

A: Is depends on what you want to change. If you want to make any of the following changes, you have to make them during the Medicare Open Enrollment Period that takes place between Oct. 15 and Dec. 7 each year:

• Change from Original Medicare to a Medicare Advantage plan
• Change from a Medicare Advantage plan back to Original Medicare
• Switch from one Medicare Advantage plan to another
• Switch from one Medicare Prescription Drug Plan to another
• Join a Medicare drug plan
• Drop your Medicare drug coverage

Another period to keep in mind here is Medicare Advantage Disenrollment Period. During this period, which takes place between Jan. 1 and Feb. 14 each year, you can leave a Medicare Advantage plan and return to Original Medicare. You can't do the opposite or make any of the changes mentioned above during this period, however.

Also, if you switch to Original Medicare during the Medicare Advantage Disenrollment Period, you'll have until Feb. 14 to add drug coverage through a Medicare Part D plan.

Q: Does Medicare cover the cost of prescription medications?

A: Original Medicare, or Medicare Parts A and B, do not cover prescription drugs. To get that coverage, you need to enroll in or join a Medicare Part D plan, also called a Medicare Prescription Drug Plan.

Q: Does Medicare cover cosmetic surgery?

A: According to medicare.gov, Medicare only covers cosmetic surgery if it's "needed because of accidental injury or to improve the function of a malformed body part." Medicare also covers breast reconstruction if an enrollee has a mastectomy due to breast cancer.

Q: Does Medicare cover weight-loss surgery?

A: Medicare covers some types of weight-loss surgery. Two examples are the gastric bypass and lap band procedures.

For Medicare to pick up some or all of the costs tied to these expensive surgeries, though, you must:

• have a body mass index (BMI) of 35 or above
• have at least one medical condition that's related to obesity (type 2 diabetes is one example)
• have tried other medical treatments for obesity that weren't successful

Your surgery also must be performed at a facility that's certified by the American College of Surgeons or the American Society for Bariatric Surgery.

To learn more about how Medicare does and doesn't cover bariatric surgery, read our article, "Does My Health Insurance Cover Weight-Loss Treatments?"

Q: Does Medicare cover overseas doctor or hospital visits?

A: In general, no, Original Medicare won't cover health or medical care you receive while traveling outside the U.S.

It will cover some international doctor visits, hospital stays, ambulance calls, and even dialysis treatments, but only in a limited number of circumstances.

If you want to be protected in this way, consider buying Medicare Supplement insurance. Some of these policies pay for overseas health care.

For more information on this topic, check out: "Do Medicare, Medicare Advantage, or Medigap plans pay for medical treatments in foreign countries?"

Q: Does Medicare cover mental health care?

A: Yes, both Medicare Parts A and B cover various types of mental health care. Part A covers mental health care provided during inpatient hospital stays. Part B covers services received outside a hospital, like psychiatrist appointments and clinical social worker visits. Part B also covers partial hospitalizations related to mental health issues.

As for Medicare Part D, it covers some, but not all, prescription medications that treat mental illness. It does cover most anticonvulsant, antidepressant, and antipsychotic drugs, however.

To learn more about how Medicare does and doesn't cover mental health care, see this article, "What Kinds of Mental Health Care Do Medicare and Medigap Cover?"

Q: What kinds of preventative care does Medicare cover?

A: Medicare Part B covers a number of preventive and screening services. For example, it covers cardiovascular disease, diabetes, Hepatitis C, and HIV screenings. It also covers a variety of cancer screenings--such as for breast, cervical, colorectal, lung, and prostate cancers. And it covers flu, Hepatitis B, and pneumococcal shots, too.

Q: What are some of the treatments and services Medicare doesn't cover?

A: Original Medicare covers a lot, but it doesn't cover every health or medical treatment or service. Some of the things Medicare Part A and Part B doesn't cover:

• Most cosmetic surgeries
• Most dental care
• Eye exams
• Hearing aids and exams
• Long-term care

Q: Is Medicare considered qualifying health care coverage (QHC) or minimum essential coverage (MEC)?

A: Yes, Medicare Part A qualifies as QHC or MEC. Coverage provided by a Medicare Advantage plan also qualifies.

Q: How can I find out how much I'll have to pay for a specific service, treatment, or test after Medicare covers its portion of the costs?

A: The best advice here is to talk to your doctor or health care provider before you agree to any test or treatment.

Also, know that how much you pay depends on several variables, including:

• where your test or treatment is done
• the price your physician or provider charges for the test or treatment
• any other insurance you have

References:

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