Medicare is the federal health insurance program for people 65 and older, but it’s not a single plan. It’s a collection of parts, each covering different services. Understanding these parts is crucial to avoiding penalties and getting the right care.
Original Medicare
Original Medicare is run by the federal government and includes two parts:
- Part A (Hospital Insurance): Covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Most people don't pay a premium for Part A if they paid Medicare taxes while working.
- Part B (Medical Insurance): Covers certain doctors' services, outpatient care, medical supplies, and preventive services. Everyone pays a monthly premium for Part B.
Crucial Note: Original Medicare doesn't cover everything. It typically covers 80% of approved costs, leaving you with the remaining 20%—with no annual limit on out-of-pocket costs. It also doesn't cover prescription drugs, dental, or vision.
The Private Options
To fill the gaps in Original Medicare, you have two main paths:
- Part C (Medicare Advantage): These are "all-in-one" plans offered by private companies. They bundle Part A, Part B, and usually Part D (drugs). Most also offer extra benefits like vision, hearing, dental, and gym memberships. They often have lower premiums but restrict you to a specific network of doctors.
- Part D (Prescription Drugs): Standalone plans that help cover the cost of prescription medications. If you stick with Original Medicare, you must buy a Part D plan separately to avoid a late enrollment penalty.
- Medicare Supplement (Medigap): These policies help pay your share of costs under Original Medicare—like that 20% coinsurance and deductibles. They give you the flexibility to see any doctor who accepts Medicare, but they have higher monthly premiums than Advantage plans.
Choosing between "Original Medicare + Medigap + Part D" versus "Medicare Advantage" is the biggest decision you'll make. Explore your Medicare options now.