Essential Medicare knowledge for Medicare first-timers

Let’s start with some basic definitions.

Medicare is a social insurance program administered by the U.S. Federal Government. Mostly offered to those 65 years of age and older, Medicare has over 55 million beneficiaries around the country. The parts of Medicare are organized with letters of the alphabet.

When you first turn 65 or otherwise become eligible for Medicare, you will generally enroll in Original Medicare. Most people are automatically enrolled into both Part A and Part B.

Original Medicare covers a wide variety of treatments and services at the doctor and hospital. The key thing to remember is that Medicare Part A and Part B cover 80% of these services.

A* Medicare Part A is hospital insurance
B* Medicare Part B is doctor’s office insurance
C Medicare Part C plans are Medicare Advantage plans
D Medicare Part D is prescription drug insurance

*
Medicare Part A and Part B are known as Original Medicare.

Comparing Employer Insurance with Medicare

Our advisors face this situation every day and have found that the following factors are most important when comparing an employer plan and Medicare insurance. Keep in mind that oftentimes employer insurance will become much more expensive when you turn 65. Be sure to consult your Human Resources department for accurate information.

NOTE: It is likely that (unless you receive an employer subsidy) Medicare and a Medicare Supplement plan will be more affordable and a higher level of coverage than your employer’s plan.

Pay attention to these factors when comparing employer insurance and Medicare:

  1. Basic plan information such as premium, deductible, copay, coinsurance, etc. about both your employer-sponsored plan and the options surrounding Medicare
  2. Additional coverage such as dental, vision, or hearing
  3. If you have dependents, how their coverage will change if you leave the employer option, and how they could be covered by insurance through the Government Health Insurance Exchange
Read more about Retirement & Medicare:

Medicare Supplement Insurance

Medicare Supplement insurance, also known as Medigap, helps you pay the remaining 20% of costs that Original Medicare does not cover. With a Medigap plan, you have Original Medicare AND your Medicare Supplement plan. Medigap plans are organized with letters of the alphabet, just like the basic pieces of Medicare.

As you can see in this chart, each plan letter covers different portions of the gaps in Original Medicare. For example, Plan G does not cover the Medicare Part B deductible, but Plan F does. The most important thing to know about Medicare Supplement plans are that they are standardized by the federal government. No matter which insurance company sells a Plan G, the benefits are exactly the same.

The only difference from one company to the next is the monthly premium. This is the same for every plan letter no matter where you are in the country. Plan G with Company #1 is the same coverage as Plan G with Company #2.

Choosing a Medigap plan is a two-step process.

  1. Pick the plan letter that fits your health care needs
  2. Find the lowest-priced option for that plan letter

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Coverage For Prescription Drugs

Medicare Part D is prescription drug coverage. No matter if you take one prescription, no prescriptions, or twenty, there is a Part D plan designed for you. To enroll in Medicare Part D, you must choose a Part D plan that works best for your needs. This is done by directly signing up at the Official Medicare website: https://www.medicare.gov/.

Medicare Part D is a Medicare program designed to finance the costs of prescription drugs and prescription drug premiums. It was introduced in 2003, as part of the Medicare Modernization Act and was officially available to the public in 2006.

Medicare Part D encompasses a variety of drug plans—each of which covers its own set of drugs. The list of drugs that a plan covers is called a formulary. The cost of drug plans varies based on which types of drugs you need and whether you participate in your plan’s network of pharmacy. There is also no standard monthly premium for Part D, as it depends on the drug plan, which sets premiums every year.

Read more about Part D Drug Plans:

Medicare Advantage Programs

Medicare Part C, also known as Medicare Advantage, is another coverage option you can select. These plans are offered by private insurance companies and are approved by Medicare to take over your Part A and Part B basic benefits.

What’s the difference between Medicare Advantage and Medigap plans?

Networks

Medicare Advantage plans all have a network (HMO, PPO), Medigap plans do not

Federal Standardization

Medigap plans are standardized by the government. Medicare Advantage plans are approved by Medicare, but are created by the insurance carrier.

Guaranteed Renewability

Medicare Advantage plans may change their network and coverage from year to year. Medigap plans do not (because they are federally standardized).