Medicare Basics

**Important Financial Consideration: Navigating Medicare with Expert Guidance.** Utilizing the services of an **INDEPENDENT insurance agent** who specializes in Medicare can be invaluable in helping you avoid costly errors.

**Understanding Medicare**

Medicare* is a health insurance program designed for individuals aged 65 and older, as well as those under 65 who qualify due to a disability.

Medicare consists of two main components: Original Medicare and two additional parts.

The two components of Original Medicare are as follows:

1. **Part A (Hospital Insurance)**: This segment of Original Medicare typically incurs no monthly premium for individuals or their spouses who have accumulated 40 quarters of work in the United States. Part A primarily covers inpatient hospital stays but also includes benefits for blood transfusions, limited nursing facility care, rehabilitative services, and hospice care. A deductible applies to hospital admissions (the deductible was $1,216 in 2014), along with daily copayments for hospital stays extending beyond 60 days.

2. **Part B (Medical Insurance)**: Part B does require a monthly premium, averaging around $100 for most enrollees, though higher-income individuals may pay more. This coverage encompasses outpatient services that are provided without an overnight hospital stay, covering routine check-ups, outpatient surgeries, diagnostic testing, and emergency visits. An annual deductible of $147 was in effect for 2014. Once this deductible is met, Medicare Part B generally covers 80% of the approved service amounts, though beneficiaries may be liable for additional charges, which can be up to 15% above the recognized amounts.

If this is your first encounter with Medicare Parts A & B, you are entitled to an Open Enrollment Period that spans from six months prior to your Medicare Part B effective date to six months following it. During this period, you have the opportunity to purchase a Medicare Supplement plan without the requirement of answering health-related questions. This Open Enrollment Period guarantees that you cannot be denied Medicare Supplemental coverage, which encourages most individuals seeking this coverage to enroll at least a month before their Medicare Part B effective date, ensuring continuity of coverage from the onset.

Medicare comprises two additional components:

1. **Part D (Prescription Drugs)**: Since Original Medicare Parts A & B do not cover prescription drugs, enrolling in Part D offers optional drug coverage. These plans are administered by private insurance companies that have received approval from the Centers for Medicare & Medicaid Services (CMS). Participation is not mandatory; however, if you fail to maintain creditable coverage and wish to enroll in a Part D plan later, penalties may apply. Apart from specific exceptions (known as special election periods), changes to these plans can only occur once annually during the designated enrollment period.

2. **Part C (Medicare Advantage)**: Medicare Advantage serves as an alternative to Original Medicare Parts A & B, but enrollment in Parts A & B is a prerequisite to participate. Under Medicare Advantage, private companies are responsible for administering health benefits instead of Original Medicare. These plans, also subject to CMS approval, have benefits that are specific to individual counties. Often, prescription drug coverage is included in these plans, which may eliminate the need for a separate Part D plan. Notably, not all healthcare providers accept Medicare Advantage plans. While some plans may feature low or “zero premium” costs, it is essential to understand that these plans do not classify as Medicare Supplemental coverage. Participants may incur separate co-pays, deductibles, or coinsurance for provided services. Similar to Part D, changes to Medicare Advantage plans are restricted to once per year during the annual enrollment period unless a special election period applies. Additionally, since 2014, individuals with end-stage renal disease may face limitations in enrolling in new plans.

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Please note that Open Enrollment for Medicare Advantage commences three months prior to your Medicare Part B effective date and concludes three months following the month in which your Medicare Part B becomes effective.

Additionally, please be aware that if you choose to discontinue your Medicare supplement coverage in favor of enrolling in a Medicare Advantage Plan, you may face specific health criteria that could prevent you from qualifying for a new Medicare Supplement policy should you decide to return.

If you hold only Original Medicare Parts A and B, it may be beneficial to consider acquiring a Medicare Supplemental policy to cover the deductibles and coinsurance amounts not included in Original Medicare. Furthermore, if you require prescription drug coverage, you will need to enroll in a separate Part D prescription drug program (see details below).

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*Please be aware that Future Benefits and its agents are not affiliated with or endorsed by Medicare or CMS. This information serves as a general overview and may not reflect the most accurate details due to evolving Medicare laws and regulations. For comprehensive and current information, please visit Medicare.gov.

See our Professional Disclaimer.