Paul Sanchez
Medicare is a health insurance program for individuals aged 65 and above. It is also available to younger people with disabilities or those with End-Stage Renal Disease (ESRD). Medicare insurance is divided into parts A, B, C, and D. Part A (Hospital Insurance) and Part B (Medical Insurance) are often referred to as Original or Basic Medicare. Individuals with Parts A and B can purchase a Medicare supplement policy, also known as Medigap, to cover any gaps in their Medicare coverage. Medigap policies are standardized, with each offering the same benefits regardless of the insurance company. Medicare Part D covers prescription drugs, and individuals who do not sign up for it when they first get Medicare may have to pay a late enrollment penalty.
| Characteristics | Values |
|---|---|
| Medicare Part A | Hospital Insurance |
| Medicare Part B | Medical Insurance |
| Medicare Part C | Medicare Advantage |
| Medicare Part D | Drug coverage |
| Medicare Supplement Insurance | Medigap |
| Medigap Policy | Plan G or Plan K |
| Medicare Advantage Plan | Out-of-pocket spending ceilings |
| Medicare Advantage Plan | No separate drug plan |
| Medicare Advantage Plan | Zero premium |
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What You'll Learn
Medicare Part A and Part B
Part B is medical insurance. Everyone has to pay a premium for Part B coverage. If you or your spouse are still working, you may be able to wait to sign up for Part B without paying a late enrollment penalty. Once you stop working (or lose your health insurance), you have an 8-month Special Enrollment Period (SEP) to sign up for Part B or to add Part B to existing Part A coverage.
After signing up for Part A and Part B, you can choose how you get your coverage. There are two main ways to get your Medicare coverage: Original Medicare and Medicare Advantage. With Original Medicare, you can use any doctor or hospital that accepts Medicare anywhere in the US, but you pay for services as you get them. Medicare pays part of the cost, and you pay your share. With Medicare Advantage, you join a Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage. In many cases, you can only use doctors who are in the plan's network.
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Medicare Advantage Plan
Medicare Advantage, also known as Part C, is a health plan offered by Medicare-approved private companies that must follow rules set by Medicare. It is one of the two main ways to get your Medicare coverage, the other being Original Medicare.
To be eligible for a Medicare Advantage Plan, you must have Part A (Hospital Insurance) and be enrolled in Part B (Medical Insurance). You may pay a late enrollment penalty if you don't sign up for Part A and Part B when you first become eligible. Once you have signed up for both parts, you can choose to join a Medicare Advantage Plan.
It is important to note that Medicare Advantage Plans have specific enrollment rules, and joining one may cause you to lose your existing employer or union coverage. Additionally, a Medicare Advantage Plan can disenroll you for various reasons, such as moving outside the plan's service area or losing Medicare eligibility. Therefore, it is recommended to carefully review the plan details and consider seeking personalized health insurance counseling before enrolling.
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Medigap policies
It is recommended to purchase a Medigap policy when you first enroll in Medicare and then stick with it. During the six-month period when you first get Part B, you have "guaranteed access" to Medigap, meaning you cannot be rejected due to pre-existing health conditions. If you switch Medigap plans later, you could be turned down due to your health. As long as you pay your premium, your Medigap policy is guaranteed renewable and will continue year after year.
To be eligible for a Medigap policy, you generally need to have both Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). You will have to pay the monthly Medicare Part B premium in addition to a premium to the Medigap insurance company. If you do not buy a Medigap policy within six months of getting Part A and Part B, you may face difficulties purchasing a policy or may have to pay more.
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Drug coverage
There are two main ways to get Medicare drug coverage. Firstly, you can join a Medicare Advantage Plan (Part C) or other Medicare health plan with drug coverage. You get your Part A, Part B, and Medicare drug coverage (Part D) through a single plan. To join a Medicare Advantage Plan, you must already have Part A and Part B. Usually, you will get your drug coverage through that plan.
The second way to get drug coverage is to join a separate Medicare drug plan. However, if you are in a Health Maintenance Organization, HMO Point-of-Service Plan, or Preferred Provider Organization, and you join a separate drug plan, you will be disenrolled from your Medicare Advantage Plan and returned to Original Medicare.
The cost of your Medicare drug coverage will depend on the plan you choose. You may have to pay more depending on your income. You could pay a premium, a monthly amount for coverage, whether you get covered drugs or not. You may also have to pay a deductible, an amount you pay for covered drugs and items each year before your plan starts to pay. Some plans have no deductible, and no Medicare drug plan may have a deductible of more than $590 in 2025. You may also have to pay a copayment, a fixed amount you pay for a drug at the pharmacy, and coinsurance, a percentage of the cost of the drug.
You can use your Medicare drug coverage at your local retail pharmacy. Some plans offer a discount or only cover your drugs when you get them filled at a pharmacy in their network. You can contact your plan to see if you can get a 2- or 3-month supply of drugs you take regularly, which may be more cost-effective. If you don't have your new drug plan card, your pharmacist may still be able to get your drug plan information from your Medicare Number or the last four digits of your Social Security Number. If they can't, your doctor may be able to give you a sample of your prescription drug until your coverage is confirmed.
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Medicare Part D
To enroll in Part D, beneficiaries must also be enrolled in either Part A (Hospital Insurance) or Part B (Medical Insurance). They can participate in Part D through a stand-alone prescription drug plan or through a Medicare Advantage plan that includes prescription drug benefits.
Part D plans usually pay most of the cost for prescriptions, but enrollees cover a portion of their own expenses through cost-sharing. The amount of cost-sharing an enrollee pays depends on the retail cost of the drug, the rules of their plan, and their eligibility for additional Federal income-based subsidies. The number of offered plans varies geographically, but enrollees typically have dozens of options to choose from.
It is important to note that there is a potential late enrollment penalty for Part D. If you do not join a Medicare drug plan when you first get Medicare and go 63 days or more without creditable drug coverage, you may have to pay a penalty for as long as you have Part D coverage.
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Frequently asked questions
Medicare Part A is Hospital Insurance. Most people get Part A for free, but some have to pay a premium for this coverage.
Medicare Part B is Medical Insurance. You must have both Part A and Part B to join a Medicare Advantage Plan.
Medicare Part D is a plan for drug coverage. You may pay a Part D late enrollment penalty if you don’t join a Medicare drug plan when you first get Medicare.
