Last month, we discussed Medicare enrollment periods. The Medicare program is quite complex, and a litany of terms, such as Medicare, Original (or Traditional) Medicare, and Medicare Advantage, can be confusing when it is time to enroll. We’ll go through the basics here, but we recommend speaking with a financial planner or an insurance agent specializing in Medicare to help you make an informed decision.
Original Medicare
Original Medicare is made up of Part A and Part B.
- Part A (Hospital Insurance): Part A covers hospital stays, hospice care, and some skilled nursing care if you require rehabilitation in a nursing home or other facility. Most people don’t have to pay a premium for Part A (because they’ve already paid into the system via Medicare tax deductions on their wages), but deductibles are still required.
- Part B (Medicare Insurance): Part B covers doctor visits, lab tests, diagnostic screenings, medical equipment, ambulance transportation, and other outpatient services. Part B monthly premiums depend on your income, and deductibles and co-pays apply.
Medicare Advantage Plans
- Part C: An alternative to original Medicare, Medicare Advantage is a private health insurance option that combines various parts of Medicare into one plan. These plans are required to cover everything that original Medicare (Parts A and B) covers, and some plans pay for services that original Medicare does not, including dental and vision care. Most Medicare Advantage plans also provide prescription drug coverage. However, not all plans contain the same extra benefits, so coverage must be carefully reviewed.
Prescription Drug Coverage
- Part D: Because original Medicare does not cover prescription drugs, individuals needing prescription drug coverage can obtain this through a Part D plan. Like Medicare Advantage, Part D plans are purchased through a private insurer. Each plan generally has premiums and other out-of-pocket costs, either flat copays or a percentage of the prescription costs. It may have an annual deductible. At medicare.gov, you can review whether the plan you’re considering has the medicines you take on its covered list. However, those lists change yearly, so it’s important to recheck your plan every year at open enrollment time.
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