Medicare is the government program that pays some of your health and medical costs after you have reached retirement age. (You will still have a health insurance premium, though, even with Medicare.) Medicare is a very flexible program, offering you lots of choices — but this flexibility is also what can make Medicare so confusing.
First off, you have probably heard of Medicare “parts” — as in Medicare Part A, Part B, Part C, and Part D. Below is a summary of each “part” — notice that we actually discuss Parts A, B, and D before we discuss Part C. (You will soon see there is a reason for that.)
- Medicare Part A is hospital insurance. It covers hospital stays as well as care in a skilled nursing facility (nursing home), hospice care, and some home health care.
- Medicare Part B is medical insurance, meaning the bulk of your health care costs when you’re not hospitalized, such as doctors’ visits & preventive services, outpatient care, medical supplies, etc.
- Medicare Part D is for prescription drug coverage.
- Medicare Part C is also known as a Medicare Advantage Plan, and it is where much of the confusion resides. Medicare Part C is not really a “part” but could instead be thought of as an alternative to standard Medicare in that you are buying a health plan from a private insurance company, and included within that Medicare Advantage Plan are your Part A (hospital care), Part B (medical care), and (usually) Part D prescription drug benefits. (Medicare pays the insurance company a fixed amount each month toward your care, so you are still in Medicare even if you choose an Advantage Plan.) An important thing to understand is that Medicare Part C/Advantage Plans are generally HMOs or PPOs that restrict your coverage to “approved” health care providers (or make you pay more for providers out of their approved network).
So, your first choice is what type of Medicare you are signing up for:
- Do you want “Original Medicare”, run by the government, that includes Part A & Part B, and allows you to choose any doctor that accepts Medicare (and will require you to buy separate Part D prescription drug coverage), or…
- Do you want a Medicare Advantage Plan, run by a private insurance company, that includes Medicare Part A, B, and usually Part D drug coverage, and puts you in an HMO or PPO that restricts you somewhat to a network of approved providers?
HOW DO I CHOOSE?
Two factors generally come into play when choosing your Medicare coverage:
- How important it is to you to be able to choose your health care providers
Some people are adamant that they should have full choice to go to any provider they want, and so they bristle at being in a Medicare Advantage Plan that restricts care to providers in a network. But having complete freedom of choice may cost more. Other people are OK with being part of an HMO or PPO if it means they will pay less. In addition, a Medicare Advantage Plan may be closer to the health insurance coverage they had before retirement, so they may feel more comfortable with it. (Especially due to the fact that Medicare Advantage Plans usually roll all coverage into one package, while Original Medicare may be slightly more complicated when it comes to getting all of your coverages established and paid for.)
You need to be signed up to get Medicare. That can happen in one of two ways:
- You may get signed up for Original Medicare automatically if you are already getting Social Security (or benefits from the Railroad Retirement Board), or if you are disabled, or have ALS (Amyotrophic Lateral Sclerosis, known as Lou Gehrig’s Disease). In this case, you will start receiving Medicare Part A & Part B benefits on the first day of the month in which you turn 65.
- You may need to sign up online or go to a local office to sign up. You should do this 3 months before your 65th birthday to be sure your Medicare benefits start on time. (Note that you can apply for Medicare without applying for Social Security retirement benefits, or you can apply for both at the same time.)
- If you would like to apply for Medicare online, go here.
- If you are not comfortable applying online, you can make an appointment to visit a local Social Security Office (go here to find a local office) or apply by phone: 1-800-772-1213 (TTY 1-800-325-0778).
Once you’ve applied for Medicare Part A & Part B, you still have a number of decisions to make (Isn’t this fun?):
- If you’ve chosen Original Medicare, you might also want:
- Medicare Part D prescription drug coverage
- Medigap supplemental insurance to pay for things Medicare does not cover, such as certain deductibles and co-pays
- If you want to go with a Medicare Advantage Plan (Medicare Part C) instead of Original Medicare, you need to choose a plan and get enrolled.
OK, so who do I choose for coverage?
Well, sure, wouldn’t it be nice if we could tell you that? Unfortunately for you (or fortunately if you value having lots of choices) there are many, many companies who want your Medicare business, and you’ll need to compare their plans and decide for yourself. As a first step, use this Medicare Plan Finder to see insurance providers in your area.