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Medicare, the American government-funded insurance for people who are 65 or over, can seem to have a startling array of moving pieces. It began with Parts A and B for hospital and medical care expenses – aka the “Original” Medicare rolled out in 1965 – and added in other mix-and-match services and drug prescription options along the way.

It’s a lot to decide. But if you – and your doctor if you wish – view your plan through the lens of the costs, availability, and your needs, the best option or combo should come into focus.

Deductibles, copays, and other aspects of your insurance will vary widely according to your plan, whether you have additional coverage, and other factors. 

Original Medicare

Also called “Traditional Medicare,” as well as Fee-for-Service (FFS) Medicare, this is still most people’s go-to option. You’ll also be enrolled in Part A – which covers hospital care expenses – by default if you receive Social Security benefits and don’t choose another plan.

With Original Medicare, the government directly pays for your health care services as you get them. Instead of having a narrow choice of providers, this plan lets you access any of the many hospitals and providers' offices (which are covered by Part B) that participate in Medicare.

Part A - Hospital Insurance

Part A covers:

  • Your care when you’re in the hospital, aka inpatient care
  • Home health care
  • Skilled nursing care
  • Hospice, or end-of-life, care

What you’ll pay

Most people qualify for free Medicare Part A when they turn 65. If you or your spouse have paid payroll taxes for at least 10 years, and qualify for Social Security, Part A coverage is free. If you don’t qualify for free Part A, however, your premium can go up to $499 per month (as of 2022). The amount you pay depends on the number of years you paid through your work.

How to sign up

If you’re already receiving Social Security, or Railroad Retirement if you’re connected with the railroad industry, you’ll be automatically enrolled in Medicare the month you turn 65. If you receive disability benefits, you’ll be auto-enrolled in the 25th month of those benefits.

If neither scenario applies and you need to enroll yourself, it’s best to do it in the open enrollment period that starts 3 months before you turn 65, so you’ll be covered as of your birthday. This period will last through your birth month and then three months after – a total of 7 months.

  • Call the Social Security Administration at 800-772-1213 to enroll in Medicare or to ask questions about whether you’re eligible. You can also go to their web site at www.socialsecurity.gov.
  • The Medicare.gov web site also has a handy tool to help you determine if you’re eligible for Medicare and get a premium estimate.

Part B - Medical Insurance

This is like the other side of the Original Medicare coin. It covers outpatient medical services such as:

  • Doctors visits
  • Blood transfusions
  • Chemotherapy
  • Diagnostic tests and X-rays
  • Kidney dialysis
  • Vaccinations

Part B doesn’t cover most outpatient prescription drugs, or dental or vision care.

What you’ll pay

Though you could say Part B is basic medical care, it’s not free. The premium isn’t quite as high as out-of-pocket premiums for Part A, though. You’ll likely pay around $170 a month in 2022. It differs according to your income bracket. If you are low-income, you may qualify for help to pay for your Part B premium, as well as your co-insurance and deductibles. You can find out if you qualify for one of the Medicare Savings Plans on the Medicare website.

How to sign up

If you’re alerted about receiving Part A because of Social Security or Railroad Retirement benefits, you’ll get the option to sign up for Part B then.

If you’re enrolling on your own, follow the same process as Part A and indicate you wish to have Part B as well.

If you wait and sign up for Part B later, you might have to pay a higher premium. One exception to the late penalty for enrolling in Part B is if you are still working and have insurance through your employer or a spouse’s employer.

What about prescription drug coverage?

You can add prescription drug coverage under Part D (see below) to your Original Medicare. All prescription plans are managed by private insurance companies. As with a late enrollment in Part B, your premium may go up if you decide to sign up for Part D later.

Medicare Advantage

Rolled out in 1997, Medicare Advantage plans are offered through a private company approved by Medicare. You still need to enroll in Parts A and B, making it like a bundle.

Some main features, and differences, of Medicare Advantage include: 

  • You’ll need to see providers within your plan’s network most of the time.
  • Your out-of-pocket expenses might be less than with Original Medicare.
  • You might get benefits Original Medicare doesn’t offer, like dental, hearing, and vision.

What you’ll pay

Cost varies by plan for each type and your personal needs and financial situation. In general, though, the factors that will decide the out-of-pocket expenses include:

  • What kind of health services you need
  • Whether you have Medicaid or other assistance from your state
  • Whether you pay a monthly premium for your plan
  • Whether your plan covers any of your Part B premium. Some plans offer a reduced premium for Part B.
  • Copayments and deductibles your plan requires.

How to sign up

A handy tool to help you sort through the many options and find out what’s available in your area is at Medicare.gov/plan-compare. You also can call 800-MEDICARE. From there, you can get contact info and further instructions for each plan.

Part D - Prescription Drug Plans

Most Medicare Advantage plans – almost 90% – include Part D coverage. As mentioned above, if you have Original Medicare, you only can get Part D if you have Parts A and B.

What you’ll pay

Since only private companies offer Part D coverage, the cost will vary. Your premium might range from under $6 a month to over $207 based on 2022 numbers.

Check out Medicare.gov/plan-compare to see Plan D costs. Your State Health Insurance Assistance Program (SHIP) can help you look at plans and costs, too.

You might be eligible for a plan called Extra Help to assist with paying for Part D if you qualify for a low-income subsidy program.

How to sign up

If you opt for Original Medicare, you’ll get a chance to enroll in Part D when you sign up.

If you choose Medicare Advantage and your plan doesn’t cover prescription drugs, you’ll have the chance to sign up for a Part D plan on its own.

Medigap

Medigap policies are a type of supplemental health insurance you’ll buy from a private company. It helps fill in gaps from Original Medicare plans. You’ll need Parts A and B to get it. Medigap comes with a separate premium.

While they both offer extras on top of Parts A and B, Medigap and Medicare Advantage are quite different. For example, Medigap doesn’t cover vision and dental coverage, but doesn’t limit your choice of provider to those in a network like Medicare Advantage does.

What you’ll pay

Lots of personal factors figure into the cost of Medigap, including:

  • Where you live
  • Your age
  • Your health and marital status

How to sign up

If you think Plans A-D seem like a lot to process, Medigap offers 14 choices – plans A-N. You’ll need to choose carefully because you might not be able to switch later.

A few ways to tap into Medigap:

  • Search by ZIP code on the Medicare site.
  • Call your state health insurance assistant program, SHIP.
  • Call your state insurance department.

Open Enrollment and Switching Plans

The open enrollment period is the time frame in which you can sign up for a plan without penalty. The dates are Oct. 15 to Dec. 7 each year.

During the Medicare open enrollment period, you can:

  • Switch to Medicare Advantage, or switch between Medicare Advantage plans. You'll be disenrolled automatically from your old plan when your new coverage starts.
  • Switch to Original Medicare. Contact your current plan, or call 800-MEDICARE.
  • Switch from one Medicare Part D prescription drug plan to another.
  • Enroll in a Medicare Part D plan if you didn’t enroll yet.

If You Have Other Insurance

If you have both Medicare and other insurance from another source like Medicaid, a group health plan, or a retiree plan, each plan is called a “payer.” Certain benefits guidelines determine which is the primary payer, aka who pays your bills first. It’s key to remember the second plan may not cover the entire balance of the bill.

© 2022 WebMD, LLC. All rights reserved.

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SOURCES:

Medicareresources.org: “Original Medicare, “Medicare Part A - Hospital Insurance,” "When is the Best Time to Enroll in Medicare?" “Medicare Part D – Prescription Drug Coverage,” “Introduction to Low-Income Programs,” “Medicare Part D – Prescription Drug Coverage,” “Medicare Open Enrollment 2022 Guide.”

Medicare.gov: “Medicare Costs at a Glance,” “What Part A covers,” “Part B Late Enrollment Penalty,” “Part D Late Enrollment Penalty,” “How to Get Prescription Drug Coverage,” “Your Medicare Coverage Choices,” “Costs for Medical Advantage Plans,” “Understanding Medicare Advantage Plans,” “Medigap and Medicare Advantage Plans,” “What's Medicare Supplement Insurance (Medigap)?” “4 Steps to Buy a Medigap Policy,” “Join, Switch, or Drop a Medicare Advantage Plan,” “How Medicare Works with Other Insurance.”

Medicare Interactive: “The Parts of Medicare (A, B, C, D),” “Medigap Costs.”

U.S. Railroad Retirement Board: “Myths and Facts about Railroad Retirement.”

Centers for Medicare & Medicaid Services: “Medigap (Medicare Supplement Health Insurance).”