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Part A covers Hospital Insurance

Part B covers Medical Insurance like doctors visits

Part C is Medicare Advantage Plans

Part D is Prescription Drug coverage

Medigap plans cover gaps in Part A & Part B

Medicare is a federal insurance program that provides health insurance for individuals 65+ years or individuals who are younger than 65 who may qualify due to certain disabilities. There are four different parts to Medicare-Part A, B, C, D.

Medicare Part A

Original Medicare (Part A and Part B) is provided by the Federal Government. Medicare Part A (Inpatient) provides coverage for your hospital services. Some examples of this coverage are:

Hospital care-room and board
SNF- Skilled nursing facility care (very limited and short-term)
Nursing home care (very limited and short-term)
Hospice (limited)
HHS- Home health services (very limited and short-term)

Without an optional Medicare Supplement (Medigap), you are responsible for a deductible, coinsurance, and co-payments.

The nice part about Medicare Part A is there is generally no monthly premium. As long as you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters), you won’t pay for this service. In most cases, you will be automatically enrolled in Part A when you turn 65, regardless if you’re retired or still working.

Medicare Part B

Medicare Part B (Outpatient) provides coverage for services that are medically necessary to treat diseases and conditions as well as preventative services. Some examples of these services are:

Labs
Surgery
Doctor office visits
Clinical research
Ambulance services
Durable medical equipment
Mental health
Getting a second opinion before surgery
Limited outpatient prescription drugs
Wheelchairs and walkers
A variety of preventative services and screenings

Ideally, you should enroll in Medicare Part B when you turn 65. However, more and more people choose to continue working past the age of 65, which means you won’t need Part B until you lose your Employer’s health insurance or creditable coverage.

The first time you can enroll in Part B is called the “Initial Enrollment Period.” This is a 7-month window that begins 3 months before you turn 65, the month of your 65th birthday, and 3 months after.

If you don’t enroll in Part B during the 7-month window, you’ll have to pay a late enrollment penalty. The exception to this rule is if you’re still on some kind of creditable health coverage, such as your Employer’s group health insurance.

The standard Part B premium for 2021 is $148.50/mo which typically comes out of your Social Security check. Most people pay the standard Part B premium, unless your income is above a certain amount. An Income Related Monthly Adjustment Amount (IRMAA) is an extra charge added to your standard Part B Premium if it is determined that IRMAA applies to you.

Medicare Part C

Medicare Part C is commonly known as Medicare Advantage (MA) and is optional. These are all-in-one plans that bundle coverage from Original Medicare- Part A Hospital, Part B Medical and often Part D Prescription Drug benefits, all in one plan. One plan, one card. Medicare Part C is not a part of Original Medicare, so you don’t enroll it in at the social security office, but you will still have to pay your Part B premium. These plans are offered by private insurance companies, approved by Medicare, and provide health insurance coverage after you turn 65. They closely resemble a traditional HMO or PPO type plan and may include prescription drug coverage. While there are many benefits to an MA plan, they do have costs that are similar to traditional health plans.

Medicare Advantage Pros:

The plan covers everything traditional Medicare covers-hospital insurance (Part A) and medical insurance (Part B) as well as emergency and urgent care
Many plans may offer dental, vision, hearing, wellness programs and other benefits
Most plans also include prescription drug coverage
The convenience of having a single plan for everything – one card
Your eligibility isn’t affected by health or financial status
Monthly premiums are low

Medicare Advantage Cons:

Plan benefits can change from year to year
Plan premiums can change from year to year
You’re restricted to certain doctors in your network (unless it’s an emergency)
You’re subject to high deductibles and co-pay responsibilities
Difficult to switch back to Medigap/Medicare Supplements later on due to medical underwriting

Medicare Part D

Medicare Part D is prescription drug coverage offered by private insurance companies. Part D is available to everyone that has Medicare. There are plans that can be sold as part of a MAPD-Medicare Advantage Prescription Drug plan, or as a separate stand-alone plan, but cannot be sold in conjunction with each other.

Medicare Part D is optional, but if you decide not to get it, there are late enrollment penalties involved if you wait to enroll.

PDP’s-Prescription drug plans cover most prescriptions, but each drug plan has its own list of covered drugs called a “plan formulary.” The plan formulary decides what drugs are covered. In addition, most drug plans place drugs into “tiers,” and each tier has a different cost. The tiers range typically from tier 1 to tier 6. The lowest tier is the least expensive while the highest tier is the most expensive. A formulary exception can be requested if a drug is not covered or is covered at a higher tier.

To choose a drug plan, go to Medicare.gov, and click “Find health & drug plans”.

*Medicare Supplement (Medigap)

Medicare Supplements a.k.a Medigap plans are not Medicare Advantage plans and these two plans can not be bundled together. Medigap plans are designed to fill coverage gaps in Original Medicare-Part A and Part B.
A Medigap plan can help pay for health care costs such as copayments, deductibles and coinsurance. For example, Medicare Part B pays 80% of covered costs after you pay your annual deductible, but you're still responsible for an uncapped 20%. A Medigap plan would fill that gap by paying the remaining 20% due.
Medigap plans are private plans, available from insurance companies or through brokers. This means you pay a monthly premium in addition to your Part B monthly premium.
Medigap plans are recognized as labeled Plans "A, B, C, D, F, G, K, L, M, and N," each with a different standardized coverage set.

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Late Enrollment Penalties

What are the Part B and Part D late enrollment penalties?

If you don’t sign up for Part B when first eligible, your monthly Part B premium may go up 10% for each 12 month period that you could’ve had Part B, but didn’t sign up.

Part D has a late enrollment penalty, 1% of the national base beneficiary premium ($33.06)in 2021, multiplied by the number of uncovered months you were eligible, but did not enroll in Medicare drug coverage. The penalty is permanently added to your Medicare Part D premium.

These are lifetime penalties.

Source: cms.gov