The ABCs of Medicare

Did you know?

Original Medicare, Parts A and B, covers approximately
80% of health care costs after age 65.
Medicare Advantage (Part C) and Medicare Supplemental
Insurance (Medigap) can cover the remaining health care
costs.
Medigap policies require a Part D Prescription Drug plan to
cover prescription costs.

What is Medicare?

Medicare is federal health insurance for people over 65 (or individuals with particular circumstances). You’ve earned Medicare, but it can be complicated to get started. We’ll help you understand what it is and how to determine your coverage.

Original Medicare — Parts A and B

Original Medicare includes Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). Most people don’t pay a month premium for Part A, though everyone pays a monthly premium for Part B.

Part A

Coverage: inpatient hospitalization, skilled  nursing, rehabilitation services, and long-term hospital services
Out-of-pocket costs: Some deductibles and copays
Premium: Usually premium-free with approximately 10 years of work credits

Part A is usually premium free but doesn't cover all hospital costs.

Part B

Coverage: certain doctors' services, outpatient care, durable medical supplies, and preventive services
Out-of-pocket costs: Annual deductible and coinsurance
Premium: Monthly premium, usually deducted from Social Security benefits
Monetary penalty for late enrollment may apply

Part B has a plan premium, which is adjusted based on income.

Note: It is important to sign up for Part B when you first become Medicare-eligible. You’ll have to pay a late
enrollment penalty if you don't. To learn more about Part B's late enrollment penalty, visit medicare.gov.

Private Insurance companies provide coverage where Original Medicare does not. There are two types of plans offered:

Medicare Advantage (Part C), which often comes with prescription drug coverage.
Medicare Supplement (Medigap), which requires the purchase of a standalone Medicare Part D plan for prescription  drug coverage.

Medicare Advantage Plans, Also Known as Part C

Combines Original Medicare (Part A and B) and prescription  drug coverage into one plan (MAPD)
Plans have health care provider networks
Usually have lower premiums and higher out-of-pocket costs compared to Medigap

You can lower your plan premiums by using plan networks.

Medicare Supplement Insurance (Medigap) Policies

Works alongside Original Medicare Parts A and B
Allows you to visit any doctor who accepts Medicare  and new patients
Add a separate Part D Prescription Drug plan to cover  drug costs

Medigap has higher monthly plan premiums on average than Medicare Advantage but may lower  out-of-pocket costs.

Part D Prescription Drug Plans

Offers pharmacy networks
Changes to drugs covered under plans can occur
Avoids likely penalty for not having drug coverage

These plans add drug coverage to Original Medicare and Medigap.

Short-Term Medical Coverage

Short-term medical insurance may be a good option if you’re turning 65 within a year. These medical plans can be as much as 80% less expensive than standard health care plans. They’re designed to cover you for up to 364 days but could be renewable for up to three years. They work well for people in transition — such as those within a year of becoming Medicare-eligible.