If you’ve just celebrated your 65th birthday or it’s coming up in the next year, your mailbox is probably full of postcards, flyers and letters about your eligibility for Medicare.
It’s important to understand the ins and outs of Medicare before you sign up to avoid unexpected costs. Even if you’ve been on Medicare for years, you may want to reevaluate your options annually to confirm that your plan is still the best choice for you.
In this guide, we outline everything you need to know about Medicare.
[READ: Medicare Mistakes to Avoid.]
What Is Medicare?
Simply, Medicare is a federal health insurance program for those age 65 and older. Medicare also covers those under the age 65 with disabilities, as well as people with end-stage renal disease or amyotrophic lateral sclerosis (also known as Lou Gehrig’s disease).
Medicare Eligibility and Enrollment
Regardless of your retirement age, you become eligible for Medicare when you turn 65.
Medicare initial enrollment
You can sign up for Medicare three months before your 65th birthday, during your birth month or throughout the three months after. This period is known as the initial enrollment period. You may face a long-term penalty if you don’t sign up during these seven months, even if you’re still working.
Individuals receiving benefits four months before their 65th birthday from Social Security or the Railroad Retirement Board will be automatically enrolled in Medicare.
Medicare open enrollment
For those who aren’t enrolling for the first time, the fall open enrollment period, also known as the annual election period, runs from October 15 through December 7. During this period, you can review or adjust your Medicare plans, or you can switch from a Medicare plan to a Medicare Advantage plan or vice versa. Coverage begins January 1 of the next year, according to Medicare.gov.
Another open enrollment period, known as the Medicare Advantage open enrollment period, runs from January 1 through March 31. This period is for those already enrolled in a Medicare Advantage plan who want to switch to another Medicare Advantage plan or go back to original Medicare.
Medicare general enrollment
The general enrollment period for Medicare, which lasts from January 1 through March 31, is for those who need to enroll in Medicare but missed the initial enrollment window and don’t qualify for special enrollment (more on that below). Your insurance coverage begins the month after you enroll, and you can face penalties for not enrolling during this period.
Medicare special enrollment
If you need to enroll or adjust your coverage outside of the regular enrollment windows, you may qualify for a special enrollment period. Some example situations include:
— You lost Medicare coverage after January 1.
— You couldn’t enroll because of a natural disaster or an emergency happening after January 1.
— You’re volunteering and serving in another country.
— You were recently incarcerated and couldn’t sign up during your incarceration.
Depending on your situation, you may have up to six months to enroll in Medicare. If you don’t sign up within that window, you’ll have to wait for the general enrollment period and possibly pay a late enrollment penalty.
[READ: What Medicare Does Not Cover.]
Medicare Plans and Coverage
There is a virtual alphabet soup of Medicare plans. Here are the parts that you ought to know about:
— Part A covers hospital care, skilled nursing, hospice and some home health care.
— Part B covers doctor visits, preventive care, outpatient care and hospitals and some home health care as well.
— Part D covers prescription drugs.
[Read: 5 Steps for Picking a Medicare Plan.]
Medicare Advantage vs. Medicare
In addition to Medicare Parts A, B and D, there’s an additional letter in the Medicare alphabet soup: Medicare Part C, also known as Medicare Advantage.
What is Medicare Advantage?
Medicare Advantage comprises health plans offered by private companies that contract with Medicare to provide you with all your Part A and Part B benefits. Many plans also offer Part D drug coverage. Premiums range by region and plan.
What does Medicare Advantage cover?
Medicare Advantage provides the same coverage as original Medicare (Part A and Part B), as well as some dental, vision and hearing coverage. Some Medicare Advantage plans may also include wellness coverage, such as gym memberships, and some over-the-counter drug coverage not provided in Part D. Plans can vary, though, so you’ll need to read the fine print to make sure your needs are covered.
What does Medicare Advantage not cover?
Plans vary, but generally, Medicare Advantage does not cover medical care needed outside of the U.S. You may also need approval from your plan to get coverage for some services, such as those the plan deems not medically necessary. Make sure to check before making appointments.
Who should get Medicare Advantage vs. Medicare?
Choosing original Medicare or a Medicare Advantage plan is a big decision, says Meredith Ramsey, an independent insurance agent in New Orleans.
“Medicare Advantage plans can have low or no monthly premiums, but they usually require members to get their care only from network doctors and hospitals,” she points out, adding, “Both options may have deductibles, copays and coinsurance, where you pay a percentage of the bill.”
In 2024, Medicare Advantage plans have a maximum out-of-pocket limit of $8,850 for in-network services, according to the National Council on Aging. On the other hand, original Medicare has no cap on the amount you may spend on medical costs in a given year.
But with Medicare Advantage, you’ll have access to fewer doctors and hospitals. For those who absolutely can’t afford to purchase a Medigap supplement to help cover the costs of original Medicare (more on that below) and who don’t mind adhering to a limited network of providers, a Medicare Advantage plan will likely be the best option.
How to sign up for Medicare Advantage
You can sign up for a Medicare Advantage plan in several ways:
— Through Medicare.gov
— By calling 1-800-MEDICARE
— By paper application to Medicare
— Through a specific private insurer’s website
— With the help of an insurance agent
Medicare Supplement (Medigap) Plans
If you’re opting for original Medicare but may need additional financial assistance to pay for out-of-pocket coverage, then you might consider a Medicare supplement plan.
What is a Medicare supplement plan?
A Medicare supplement plan, also known as Medigap, is for people who need a plan in addition to original Medicare to cover all the services and medications they require or may need in the coming year.
Depending on where you live and when you’re eligible for Medicare, there are multiple types of Medigap policies, such as Medicare Part F and Part G, offered by private insurers or via groups such as AARP. Costs vary considerably.
“You can go through your life with just parts A and B, but the out-of-pocket costs will get you,” notes Diane J. Omdahl, founder of 65 Incorporated, a Wisconsin-based company that helps people choose Medicare coverage.
With a Medigap policy, however, many of those costs are covered.
What does Medigap cover?
Medigap helps cover original Medicare-related costs, including:
— Deductibles
— Copayments
— Coinsurance
Unlike Medicare Advantage plans, Medigap may also cover emergency medical costs when you’re abroad.
What does Medigap not cover?
Medigap does not cover:
— Vision care and glasses
— Dental care
— Private nursing
— Long-term care, such as a nursing home
Who should get a Medigap plan?
You should get a Medigap plan if you need help paying for out-of-pocket costs associated with Medicare. A Medigap plan can also provide greater flexibility. Compared to Medicare Advantage, for instance, original Medicare combined with a Medicare supplement plan offers greater access to specialists and doesn’t require the insurance company to approve specific treatments.
How to sign up for Medigap
Before signing up for Medigap, make sure to do your research. Medigap plans can vary by state, and you’ll want to know how much coverage you’ll need and what your copay might be. Resources to help you include:
— Trusted sites such as Medicare.gov and CMS.gov
— Licensed brokers or agents who sell plans from private insurance companies
— Counselors with the State Health Insurance Assistance Program
— Medicare supplement websites, where you can search for plans by ZIP code
Once you’ve settled on a plan, you can fill out an application. Following approval, you should review the policy to make sure it’s still the right fit.
Note that you can enroll in a Medigap plan during the six-month window once you’ve turned 65 and you’ve enrolled in Medicare Part B. You can also sign up for Medigap after this period, but prices could be higher or your application could be denied.
[READ: How to Pay for a Nursing Home With No Money.]
Medicare Savings Programs for Low-Income Seniors
Americans with very low income (an individual monthly income of about $1,200) may be eligible for extra help with Medicare premiums and health care costs. The four primary Medicare Savings Programs are:
— Qualified Medicare Beneficiary Program, which helps to pay for premiums, deductibles, coinsurance, co-payments and prescription drugs. The monthly income limit for an individual in 2024 is $1,275, and the resource limit (for stocks, bonds or money in a checking, savings or retirement account) is $9,430.
— Specified Low-Income Medicare Beneficiary Program, which helps to pay for Medicare Part B premiums and prescription drugs. The monthly income limit for an individual in 2024 is $1,526, and the resource limit is $9,430.
— Qualifying Individual Program, which helps to pay for Medicare Part B premiums. The monthly income limit for an individual in 2024 is $1,715, and the resource limit is $9,430.
— Qualified Disabled Working Individual Program, which helps to pay Medicare Part A premiums for those with disabilities who are working and lost their premium-free Part A coverage because they chose to return to work. The monthly income limit for an individual in 2024 is $5,105, and the resource limit is $4,000.
Medicare Resources
The Medicare system is complex, and most people should seek help when choosing a plan. U.S. News’ Best Medicare Advantage Plans and Best Medicare Part D Plans can help you navigate the options and get the proper medical coverage. You can also get help via phone or in person from SHIP. Those agencies often maintain office hours at senior centers or other locations.
Omdahl stresses that seeking reliable information is essential because the onslaught of mailings and TV commercials can be overwhelming. Since January 1, 2023, the Centers for Medicare & Medicaid Services must approve Medicare Advantage plan commercials prior to airing — relieving some of the misinformation that causes confusion among beneficiaries. When in doubt, seek an expert for help.
More from U.S. News
What to Do When Medicare Stops Paying for Skilled Nursing Care
Assisted Living Communities: Types of Rooms
What Is Medicare: Coverage, Cost and Enrollment originally appeared on usnews.com
Update 05/28/24: This story was published at an earlier date and has been updated with new information.
