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Medicare 101

Medicare 101

Medicare 101

Medicare is a government program (started in 1965) that helps cover certain healthcare costs. It doesn’t cover all healthcare needs. For example, it generally doesn’t pay for long-term care, or routine dental care. And it doesn’t always pay the entire cost of everything. Medicare beneficiaries may be responsible for deductibles, co-pays, and coinsurance for many many services and items.

Medicare Has Four Parts

Medicare Part A is hospital insurance that helps cover the cost of inpatient care in hospitals, rehabilitation care in skilled nursing facilities and hospice, as well as home health care after hospitalization. If you or your spouse paid Medicare taxes while working, you probably contributed enough that you don’t have to pay a monthly premium (fee) for Part A. However, if you don’t qualify for premium-free Part A coverage, you may be able to get Part A insurance by paying a premium.

Medicare Part B is medical insurance that helps cover doctors’ and other healthcare professionals’ services, outpatient care, durable medical equipment, and some home healthcare. It also helps cover some preventive services that can help you stay healthy and keep certain illnesses from getting worse. You pay a monthly premium for Part B. Together, parts A and B are known as “traditional Medicare.”

Medicare Part C also known as Medicare Advantage, includes health plans provided by Medicare-approved private insurance companies that offer the benefits and services covered under both Parts A and B. Most Medicare Advantage Plans also offer Medicare prescription drug coverage. And some plans provide additional benefits at an extra cost.

Medicare Part D is prescription drug insurance offered by Medicare-approved private insurance companies. It helps cover the cost of medications.

Medigap Supplemental health insurance policies known as Medigap are sold by private insurance companies, and are not part of Medicare. They do, however, help cover certain healthcare costs that Medicare doesn’t. Usually, you have to have Part A and B coverage in order to buy a Medigap policy.

When Can You Sign Up?

Initial Enrollment Period

You can sign up when you’re first eligible for Part A and/or Part B (for which you pay monthly premiums) during your Initial Enrollment Period. For example, if you’re eligible when you turn 65, you can sign up during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.

3 months
before

the month you turn
65

2 months
before

the month you turn
65

1 month
before

the month you turn
65

Sign up early to avoid a delay in coverage. To get Part A and/or Part B the month you turn 65, you must sign up during the first 3 months before the month you turn 65.

The month
you turn 65

1 month
after

the month you turn
65

2 months
after

the month you turn
65

3 months
after

the month you turn
65

If you wait until the last 4 months of your Initial Enrollment Period to sign up for Part A and/or Part B, your coverage will be delayed. See chart below.

If you enroll in Part A and/or Part B the month you turn 65 or during the last 3 months of your Initial Enrollment Period, your start date will be delayed:

If you enroll in this month of your IEP: Your coverage starts:
The month you turn 65 1 month after enrollment
1 month after you turn 65 2 months after enrollment
2 months after you turn 65 3 months after enrollment
3 months after you turn 65 3 months after enrollment

For example: You turn 65 in April and you wait to apply for Medicare Part B until May, your Medicare Part B will not start until July 1st. You will NOT have Medicare coverage for June.

If you wait until June to apply your Medicare Part B will start in September

If you wait until July to apply your Medicare Part B will start in October.

NOTE: If your birthday falls on the 1st of the month then everything goes retroactive back to the following month.

For example: You turn 65 April 1st, and you apply in February your Part B will start March 1st NOT April 1st.

Weigh the Pros and Cons of Part B Coverage and When to Get It

When signing up for traditional Medicare most people can choose to get Part A coverage only and skip Part B (and the monthly premium that goes along with it). Keep in mind, if you don’t enroll in Part B when first eligible you may have to pay a late enrollment penalty when you finally do join (unless you qualify for a Special Enrollment Period SEP). And, if you don’t qualify for a  SEP you can only enroll during the General Enrollment Period from January 1 though March 31 with coverage beginning July 1. The most common SEP is leaving employer group coverage. If you have health coverage through you or your spouse’s employer, you may be able to defer enrolling in Part B without paying a late enrollment penalty. See the Age 65+ and Employer Plans tab for more details.

If You'll Need to Pay a Premium for Part A, Sign Up and Save

If you’re not eligible for premium-free Part A (because you didn’t pay enough in Medicare taxes while working) you should sign up for Part A without delay. If you don’t enroll as soon as you’re eligible you’ll have to pay a higher premium later.