What's the difference between Medicare Plan C and Medicare Plan D?

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All Medicare Part C plans must cover every benefit of original Medicare (parts A and B). Some policies offer more coverage, such as for vision, dental, and hearing care.

Most Medicare Advantage plans work as a private insurance plan, and the options include:

• Health Maintenance Organization plans
• Preferred Provider Organization plans
• Private Fee-for-Service (PFFS) plans

Medicare usually sets the fee for both the provider and the individual enrollee. For a PFFS plan, the insurance company sets these fees.

Insurance companies must follow the Medicare rules, though each plan can have different rules for out-of-pocket costs and access to services. Insurance companies can also change the rules of Medicare Part C plans each year.

Medicare Part D is an outpatient prescription drug plan that Medicare-approved private insurance companies offer. People can choose to enroll in a standalone Medicare Part D plan or bundle it with Medicare Part C.

If a person enrolls in a standalone Part D plan, they pay a monthly premium based on the expected cost to the insurance company. The individual pays approximately 25% of the cost of prescriptions, and Medicare Part D pays the remaining 75%.

If a person reaches the “catastrophic coverage” amount, they pay 5% of the cost of prescriptions. This feature of the plan helps individuals with high out-of-pocket prescription expenses. In 2021, the out-of-pocket amount is $6,550.

Medicare Part C and Part D offer different benefits to people eligible for Medicare. It is important that people consider the benefits they may need to cover their medical expenses.

Coverage

In general, Medicare Part A and Part B (original Medicare) provide coverage as shown in the table below.

Medicare Part C is an alternative to original Medicare. It must offer the same basic benefits as original Medicare, but some plans also offer additional benefits, such as vision and dental care.

Medicare Part D, on the other hand, is a plan that people can enroll in to receive prescription drug coverage. A person can get a Medicare Part D plan in combination with original Medicare or bundled into their Medicare Part C plan.

Costs

The cost of Medicare Part C plans varies depending on several factors, including the plan’s benefits and the person’s location, age, and sex. The premium for Medicare Part C is paid to the private insurance company, which then pays the premium for Medicare Part B to Medicare.

Medicare Advantage plans have a yearly out-of-pocket spending limit. If a person reaches the limit in a calendar year, the plan pays all medical expenses for the rest of the year. The insurance company determines the cap on out-of-pocket expenses.

Medicare Part D costs include a premium, a deductible, copayments, and any late enrollment penalties. The company can charge a penalty when a person is without Medicare Part D for 63 continuous days or longer after the initial enrollment period (IEP) ends. This rule applies to the standalone Medicare Part D plan or the prescription drug coverage that Medicare Part C includes.

The penalty depends on how long a person went without prescription coverage. When a person joins a prescription plan, the insurance company calculates the penalty and adds it to the premium. Generally, this penalty forms part of the premium for as long as the person has a Medicare prescription plan.

Eligibility and enrollment

In general, a person must meet two requirements to be eligible for Medicare Part C: They must be enrolled in original Medicare, and they must live in an area where an insurance company offers Medicare Part C.

During a person’s IEP, they are eligible for Medicare Part C. This 7-month window extends 3 months on either side of the month during which a person turns 65 years old.

People can switch to Medicare Part C after enrolling in Medicare Part A and Part B. They can do this during the annual open enrollment period (OEP), which runs from October 15 to December 7 every year.

Medicare Part C has a different OEP, which runs from January 1 to March 31 each year. During this time, a person with Medicare Part C can change policies. They can also leave the Medicare Part C plan and go back to Medicare Part A and Part B. However, they cannot:

• enroll in Medicare Part C from Medicare Part A and B outside of the OEP
• join Medicare Part D if they are enrolled in Medicare Part C
• switch one Medicare Part D plan for another

However, these changes are possible during the annual OEP that runs from October 15 to December 7. Medicare Part D is available for everyone during their IEP for original Medicare.

Private insurance companies sell Medicare Part C and Part D. A person can find a company that sells a policy in their area by setting up a free account on the Medicare Plan Finder. Once they have logged in, the tool will show the Part C and Part D policies available in their ZIP code.

Not all plans work the same way. It is important that people take the time to compare the available plans in their area and understand the costs and rules.

A person needs to fill out an application form for Medicare Part C or Part D. They also need to give the insurance company their Medicare number and the date on which coverage began for Part A, Part B, or both. This information is on their Medicare card.

Medicare Part C combines the benefits of Medicare Part A and Part B under one plan. These plans can also offer additional benefits. Medicare Part D is a prescription drug plan that some Medicare Part C plans include.

Private insurance companies offer Medicare Part C and Part D, but they must follow Medicare rules. The insurance company charges a premium for Part C and Part D, which a person pays directly to the company. They then pay the premium for Medicare Part B to Medicare.