Medicare Insurance Planning

Medicare is a federal program designed to provide health insurance benefits to US residents who have reached the age of 65, as well as to other individuals who meet certain eligibility criteria, such as permanent disability or certain chronic diseases.

This page focuses on benefits and program enrollment for individuals who have reached age 65.

Original Medicare, started in the 1960’s, consists of Part A and Part B.

Part A generally covers costs of inpatient hospital care and skilled nursing care for a limited period of time anywhere in the United States.

Part B covers 80% of costs for health care service providers (e.g., physicians), outpatient care, durable medical equipment. The beneficiary (e.g., you and I) receiving services is responsible for paying the remaining 20% of costs. Under Part B, a beneficiary may use the services of any provider in the US who accepts Medicare patients. Part B participants typically buy a Medicare Supplement, or Medigap, policy from a private insurance company to cover the 20% co-insurance costs.

Part C, also known as Medicare Advantage, is a relatively new part of Medicare. Under Part C, a person enrolled in Part B signs up with a private insurance company that is then obligated to provide services to the participant. A

A Part C (Medicare Advantage) plan must provide the same services covered under Part B, although many of the plans provide additional benefits. Depending on the geographical area and the policy details, a Part C plan generally has a lower monthly premium than a Medigap plan (or zero premium). A Part C plan, however, generally has a high deductible compared to Medigap plans. Also, a plan participant is generally limited to service providers within a local network. Some private insurance carriers also provide one or more so-called Special Needs Plans (SNPs) designed for individuals having special medical needs (e.g., special care for diabetes or kidney disease).

Part D is a relatively new prescription drug plan that covers some of the costs of prescription drugs.

Late enrollment. Part A and Part D have initial enrollment periods (e.g., around the date of becoming age 65). If an individual does not timely enroll when initially eligible, then Medicare imposes late-enrollment penalties upon later enrollment (unless certain exceptions apply).

Enrollment Periods. After an Initial Enrollment Period (IEP), a beneficiary has the right to switch plans and insurance carriers every year during the Annual Election Period (AEP), October 15 to December 7. (An insurance carrier is not obligated to accept every applicant.) A Part C enrollee also has the right to switch to another Part C plan or switch back to Part B during the Medicare Advantage Open Enrollment Period (MA OEP) every year, January 1 to March 31. There are also a number of Special Election Periods (SEPs), during which a beneficiary may enroll in, switch, or drop a Part C plan. A SEP is triggered by a qualifying life event, such as a geographic move or a change in medical conditions.