If you’re over 65, you may already be on Medicare. If not, it’s important to know just how the federal health insurance plan works.
Eligibility begins at 65, and you can apply a few months prior to your birthday. However, while it can help you save money on healthcare, it’s not really the same as other insurance plans. If you’re used to being on a marketplace plan or you get insurance through work, get ready for a change.
Breaking Down the Parts
First of all, Medicare has four parts that it’s broken down into: A, B, C, and D. Each of these parts gives you different types of coverage.
It’s important to note that, generally, Medicare won’t cover all of your health care expenses. This is why many people choose to obtain extended or additional coverage.
Medicare Parts A and B
Coverage starts with the basic Medicare parts A and B. Part A is free for the majority of people who enroll and is sometimes considered hospital insurance. Part B will cost a monthly premium, but it covers additional medical services as well as some preventative care.
The two parts together are often called “Original Medicare.” Typically, these will cover about half of your medical costs. Like any healthcare plan, you’ll still have deductibles, copays, coinsurance expenses, and prescription costs that you’ll have to pay.
Of course, that’s where parts C and D can help.
Medicare Parts C and D
With these parts, you have the option to purchase additional coverage. Part C is actually private insurance, commonly referred to as a Medicare Advantage Plan. Part D covers prescription drugs, which is why you’ll often find it coupled with part C.
Medicare Part C basically includes A, B, and often part D all in a single plan that offers additional coverage. Different plans may also include dental, hearing, and even vision insurance.
If you do not wish to obtain extra coverage, part D can still be added to Original Medicare by itself.
At the time of your enrollment is when you’ll decide whether you want the basic coverage or an Advantage Plan. Obviously, budget, lifestyle, and existing care providers will factor in quite a bit here.
Part A usually does not have a monthly premium. Part B, however, will usually cost around $122 a month. (However, if your individual adjusted gross income is over $85,000, it will cost more.) Part D is also means-tested, so again, your income will affect the cost.
Part C premiums vary widely from one plan to the next. You’ll simply have to shop around for a plan that suits you and fits your budget.
If you choose not to enroll in an Advantage Plan, it’s possible you may still want to get supplemental coverage. These are often referred to as “Medigap policies,” and the costs also vary depending on the plan.