Medicare is a federal health plan for people aged 65 years and over. The program has four parts that help cover hospital care, outpatient services, some additional services, and prescription drugs.
Some younger people with specific health conditions are also eligible for the program.
This article discusses the different parts of Medicare and what each one covers. It also looks at the enrollment periods, enrollment methods, and associated costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Former president Lyndon B. Johnson first signed original Medicare (Part A and Part B) into law in 1965.
Medicare Part A covers hospital, skilled nursing facility, and hospice care. Medicare Part B covers outpatient diagnosis, treatment for medical conditions, and some preventive services, such as flu shots and cancer screening.
Private health insurance companies offer Medicare Part C, or Medicare Advantage, plans. These plans combine the benefits of original Medicare under one policy and offer some additional benefits, such as vision, dental, and hearing care. Some Medicare Advantage plans may also include Part D drug coverage.
Medicare Part D covers prescription drugs, and private health insurance companies offer these plans. Each plan has a formulary, which is a list of covered medications. The list must include at least two commonly prescribed drugs to ensure that different medical conditions have sufficient coverage.
Enrollment in Medicare may be automatic, or a person may have to apply during one of several enrollment periods.
The list below outlines these periods in more detail:
- Automatic enrollment: If a person receives benefits from Social Security or the Railroad Retirement Board, they will automatically enroll in Medicare. People younger than 65 years old may also be eligible if they have certain physical conditions.
- Initial enrollment period (IEP): This is a 7-month period that starts 3 months before a person turns 65 years of age, includes their birthday month, and extends for 3 months afterward. A person can enroll in original Medicare, a Medicare Advantage plan, or a Part D policy during this time.
- General enrollment period (GEP): The GEP occurs each year from January 1 to March 31. A person is eligible for the GEP if they chose not to enroll during their IEP, though there may be a late enrollment penalty for Part B premiums. A person can also switch their Medicare Advantage plan or return to original Medicare during this time.
- Open enrollment period (OEP): The OEP runs from October 15 to December 7 every year. It is also known as the annual enrollment period. A person can switch Medicare Advantage plans, go from original Medicare to an Advantage plan, or enroll in or drop a Part D plan during this period.
- Medicare Advantage OEP: This enrollment period runs from January 1 to March 31 each year. People already enrolled in Medicare Advantage can switch plans or go back to original Medicare during this time, and they may also enroll in Part D for prescription drug coverage.
- Special enrollment periods (SEPs): SEPs are available when certain events occur, such as moving location, the loss of current health coverage, having a coverage opportunity through an employer, or when a plan changes its contract with Medicare. This online tool can help a person find out if they qualify for a SEP.
There are various ways to apply for Medicare. The following sections will look at these methods in more detail.
Original Medicare
To enroll in original Medicare (parts A and B), a person can do any of the following:
- A person can enroll for original Medicare online via the government website. They can also check the progress of their application and replace their Medicare card using this website.
- A person may call the Social Security office at 800-772-1213 (TTY 800-325-0778) Monday through Friday.
- Before deciding to make an in-person visit to their local Social Security office, a person should call to check the current regulations and when the office may be open.
After applying for original Medicare, a person will receive a welcome packet in the mail. This will also contain their Medicare card.
Medicare Advantage and Part D
To enroll in Medicare Advantage or in a Part D plan, a person can apply online or by mail.
This online tool can help a person find a plan in their area and provides contact information and enrollment options.
Each part of Medicare has different costs, depending on various factors. The following sections will look at costs in more detail.
Original Medicare
Most people do not pay a Medicare Part A premium. However, if a person does not meet certain conditions — such as the amount of working tax paid — they may have to pay a premium, which can range from $259 to $471.
The basic Medicare Part B premium of $148.50 may increase, depending on a person’s income.
Medicare Advantage
The Medicare Advantage premium depends on the individual plan details and can range from zero premium costs upward.
People can use this online tool to check individual plan details and costs.
Medicare Part D
The premiums for Part D depend on a person’s income as they reported it to the Internal Revenue Service, with extra costs added to the plan’s premium if their income is high.
Specifically, the additional cost starts when a person’s income is above $88,000 if filed as an individual or above $176,000 if filed jointly with a spouse.
Medicare is a federal health plan that includes original Medicare (Part A and Part B), Medicare Part C (or Medicare Advantage), and Medicare Part D (for prescription drug coverage).
Most people are first eligible to enroll in original Medicare during their IEP, which occurs around the 7 months when they turn 65 years of age. Other enrollment periods are available, though some may carry late enrollment penalties.
Out-of-pocket costs for Medicare may include premiums, deductibles, copays, and coinsurance.