Demystifying Medicare: A Guide to the ABC’s (and D)

November 23, 2021

Joe Namath flashes his gleaming smile from T.V. sets across the country, urging seniors to call the Medicare Coverage Helpline to learn about their benefits. “It’s FREE!” Jimmie “JJ” Walker (of “Dy-no-MITE!” fame) is doing the same thing. Even “Captain Kirk” William Shatner is on the Medicare commercials bandwagon.

While some question the legitimacy of the helplines touted by old familiar faces, it’s no wonder the concept exists. Medicare is complicated!

To help shed some light on the basics of Medicare and its various enrollment periods, Kendal Corporation’s Vice President of Health Services, Lisa Holloway, shared helpful insights in a recent “Let’s Talk Medicare” video presentation for the Barclay Friends community.

Let’s unpack her key points:

What is Medicare and Who is Eligible?

Medicare is Title 18 of the Social Security Act, enacted in 1965. As a federal social safety program, it is   the largest health insurance provider in the U.S. Those eligible for Medicare are U.S. citizens or permanent residents aged 65 or older who have worked for at least 10 years and are eligible for Social Security or Railroad Retirement benefits. Those entitled to disability benefits as well as those with end-stage renal disease or ALS (Lou Gehrig’s disease) are eligible for Medicare before the age of 65.

The ABC’s (and D) of Medicare

Part A

Medicare Part A is hospital insurance, including inpatient hospital care, skilled nursing services (with several conditions), hospice care, some home health care, and blood transfusions.

Part B

Medicare Part Bis medical insurance, covering doctor visits, outpatient surgeries and physical/speech therapies, ambulance services, emergency and urgent care, some screenings and immunizations, lab services, and medical supplies and equipment.

Medicare Parts A and B are known as Original Medicare.

Part C

Also referred to as Medicare Advantage, Medicare Part C is provided by private insurance companies to which Medicare pays a fixed amount per month. Part C includes all the benefits of Original Medicare (Parts A and B) as well as Part D (prescription drugs) and other services such as hearing, vision and dental. It does not cover assisted living or personal care.

Part D

Like Part C, Medicare Part D is sold by private Medicare-approved insurance providers. Easily remembered for the “D” in drugs, it helps cover the cost of outpatient prescription medications. Part D follows a drug formulary (a list of approved generic and brand name prescription drugs), and premiums vary based on the plan. Note: If you do not enroll in Part D when you’re first eligible (read about Medicare enrollment periods below), you may have to pay more at a later time.

Is Medicare Free?

Not completely. Like private insurance plans, Medicarestill incurs premiums, co-pays and deductibles. Let’s break these down by the different parts of Medicare:

Costs associated with Part A (hospital insurance)

There is no monthly premium if you have worked and paid Social Security taxes for at least 10 years. If you have worked less than this, the premium may be up to $437 per month. Co-insurance and deductibles may apply.

A deductible is the amount you pay for a service out-of-pocket before the plan begins to share costs with you.

Co-insurance is the percentage you pay of the cost for a service or item.

Part B costs (medical insurance)

Monthly premiums are based on income. The standard Part B premium amount is $148.50 ($170.10 in 2022) or higher, depending on your income. The annual deductible is $203; beneficiary’s co-insurance responsibility is 20%.  

Not covered in Parts A and B:

• Prescription drugs
• Routine hearing/vision exams
• Gym memberships/fitness classes
• Wellness programs
• Most care while traveling abroad

There is no limit for out-of-pocket medical expenses under Medicare Parts A and B. This means that the more services you use, the more expenses mount up.

Is Original Medicare Coverage Enough?

Not so much. Because of the premium/deductible/co-insurance costs associated with Original Medicare, as well as the above items and services not covered, beneficiaries by and large need additional coverage. That’s where Medicare Part C (Advantage Plan) and supplemental insurance (MediGap) come in.

Why Part C/Medicare Advantage?

Where Original Medicare falls short, Part C includes hearing, vision and dental services (plus everything included in Parts A and B). Most Medicare-approved Advantage plans cover prescription drugs (Part D) and, depending on the plan, other options such as gym memberships and transportation services. Unlike Original Medicare, Advantage plans have an annual out-of-pocket cost limit, subject to changes across time and plans.

Why supplemental insurance?

As the name MediGap implies, supplemental insurance from private companies covers the gaps that Parts A and B do not. What’s more:

Supplemental plans are standardized, meaning that all insurance companies offer the same coverage, facilitating plan comparison and preventing benefit structure changes after a plan has already been purchased.

Supplemental plans allow the broadest access to medical providers, including all that accept Medicare.

Policy holders can live or travel anywhere in the U.S.

About Those Enrollment Periods

Perhaps the greatest confusion surrounding Medicare is rooted in the various enrollment periods and conditions. Let’s break it down, starting with the one for first-time Medicare beneficiaries. Click here for comprehensive information about Medicare and enrollment.

Initial Coverage Election Period – ICEP

This period is six months long, beginning three months before your 65^th birthday through three months after you turn 65. Note: if you are already collecting Social Security benefits by the time you turn 65, you will automatically be enrolled in Medicare Parts A and B.

Annual Enrollment Period – AEP

Those who are eligible for Medicarecan enroll, make changes, or switch plans during this period, dating from October 15-December 7. This is when you might switch from Original Medicare to an Advantage plan or add/subtract prescription drug coverage to or from an existing Advantage plan.

Special Election Period – SEP

• This is for those who need to join, switch or drop a plan due to one or more of the following circumstances:
• Relocation out of the plan’s area
• Relocation back to the U.S. after residence abroad
• Having both Medicare and Medicaid
• Residence in a skilled nursing facility
• Loss of employer coverage

Supplement Open Enrollment Period

If you choose to purchase supplemental insurance, your six-month enrollment period begins the first day of the month you turn 65. You must have already signed up for Medicare Part B.

General Enrollment Period

You may sign up for Medicare Part A and/or B between January 31-March 31 each year if a) you didn’t sign up when you were first eligible; or b) you are not eligible for the Special Enrollment Period noted above.

Medicare Advantage Open Enrollment Period

From January 1-March 31 of each year,people enrolled in a Medicare Advantage plan can make a one-time election to a) move to another Advantage plan with or without prescription drug coverage; or b) move to Original Medicare.

Indeed, navigating Medicare is challenging. Ideally, the time to research and get familiar with the best plan for you is before you’re eligible for coverage. But wherever you are on the Medicare journey, multiple resources are available to guide you, including members of our own Barclay Friends family. Feel free to contact Laurey Andreas at landreas@bf.kendal.org or 610.918.3429 with any questions or for further information.