Medicare Explained: A Simple Guide for Informed Medicare Decisions
Medicare was created to provide affordable healthcare coverage to older Americans. As a group, seniors were underserved by the existing health insurance market, which centered around employer-linked plans. The program has seen great success, and an overwhelming majority (94%) of Americans over the age of 65 choose to enroll in Medicare.
Unfortunately, enrolling in Medicare isn’t always easy. If you or a loved one has ever gone through the process of signing up for Medicare, you may have witnessed first-hand just how overwhelming it can feel to sort through all the different parts and plans available. But Medicare doesn’t have to be complicated. In fact, it’s often incorrect and unclear information that makes Medicare guides fail.
That’s why we started Chapter. Chapter makes Medicare simple with unbiased Medicare advice to help older Americans understand, choose, and use their Medicare insurance.
Not sure where to start? The guide below has plenty of information to help you learn the basics of Medicare. We’re also here to help, no matter where you’re at on your Medicare journey. Give us a call at (855) 900-2427 or schedule a free consultation to discuss your Medicare options.
What is Original Medicare?
Original Medicare (also sometimes called traditional Medicare) includes Part A and Part B, which were introduced when Medicare was established. Original Medicare is funded by the federal government, and is available to every American over the age of 65—in addition to some Americans with disabilities and chronic conditions. Original Medicare provides the same coverage for every beneficiary and is the most widely accepted insurance in the US. This makes Original Medicare the most universal insurance program available to older Americans.
What you need to know:
Around 93% of doctors across the country accept Original Medicare.
There can be a penalty for signing up outside of your Initial Enrollment Period, unless you qualify for a Special Enrollment Period.
Original Medicare will cover about 80% of your healthcare costs, and you can sign up for additional coverage to manage the leftover 20% (as well as any prescriptions).
If you are on Social Security, then you should be automatically enrolled in Original Medicare when you become eligible.
What is Medicare Part A?
Medicare Part A is your hospital insurance. It covers inpatient care, which is care from a doctor or nurse after being admitted for at least one night. In some cases, Part A will also cover home health services.
What you need to know:
Part A is free to most Americans who have worked and paid Medicare taxes for 10 years (and their spouses).
There can be a penalty for signing up outside of your Initial Enrollment Period, unless you qualify for a Special Enrollment Period.
What is Medicare Part B?
Medicare Part B covers outpatient care—for anything that doesn’t require you to stay overnight. It can include medically necessary healthcare as well as preventative care.
Some covered equipment and services include:
Doctor and specialist visits
Outpatient services and surgery
Ambulance services
Durable medical equipment
What you need to know:
As of 2024, Part B has a standard cost of $170.10/mo, but high earners may pay more due to IRMAA surcharges.
There can be a penalty for signing up outside of your Initial Enrollment Period, unless you qualify for a Special Enrollment Period.
Additional Medicare Coverage
Original Medicare only covers about 80% of medical costs, leaving about 20% leftover for beneficiaries to cover on their own (out of pocket). Now, you can imagine that if you have any underlying medical conditions, 20% of your medical expenses could cause significant financial hardship, especially considering many older Americans are living on fixed incomes. This is why additional Medicare options were added—to help limit Medicare beneficiaries’ out of pocket costs.
What is Medicare Part C (AKA Medicare Advantage)?
Medicare Advantage, also known as Medicare Part C, is a bundled option for your Medicare coverage. It often covers dental, By law, Medicare Advantage plans must cover at least the same services as Part A and Part B. They generally provide additional benefits, which can include:
Part D benefits
Dental, vision, and hearing benefits and coverage
What you need to know:
While many Medicare Advantage plans have a $0 premium, that doesn’t make them free. You still have to pay the same premiums that you’d pay for Original Medicare.
Generally speaking, Medicare Advantage plans have many more limitations than Original Medicare when it comes to the doctors you can see.
Medicare Advantage plans aren't standardized across the board and can vary significantly. This means it's critical to do your research and ensure you're getting the coverage you need when comparing these plans.
What is Medicare Part D?
Medicare Part D covers prescription drugs, which are not covered by Original Medicare. You first become eligible for Medicare Part D during your Initial Enrollment Period, and you should consider signing up as soon as you’re eligible to avoid late penalties.
What you need to know:
Every Part D plan is different, so you should be sure to check that your prescriptions are covered before enrolling.
You can have a standalone Part D plan or bundle Part D within a Medicare Advantage plan.
Medicare Part D is optional, but if you don’t sign up when you first become eligible, you may have to pay a penalty every month for the duration of your coverage.
What is Medigap (AKA Medicare Supplement Plans)?
Medicare Supplement (Medigap) plans sit on top of Original Medicare and help to cover the remaining 20% of costs not covered by Original Medicare. There are 10 Medicare Supplement plans, and each one is required to provide the same coverage, regardless of the insurance carrier. If you live in Massachusetts, Minnesota, or Wisconsin, your Medicare Supplement plans may offer different options from policies sold in the rest of the country.
What you need to know:
Medicare Supplement plans are accepted by all doctors who accept Original Medicare, which is about 93% of all doctors in the US.
During your Medigap Open Enrollment Period, you are guaranteed issue, which means you cannot be denied acceptance into any Medicare Supplement plan, regardless of your medical history.
Outside of your Medigap Open Enrollment Period, you can change or sign up for Medigap any time, but will have to pass medical underwriting and may not be accepted into the plan you want.
When to Enroll in Medicare
Perhaps one of the most common (and costly) mistakes that Medicare-eligible Americans make is missing or skipping enrollment periods. Unfortunately, missing enrollment can sometimes result in penalties for the duration of your Medicare coverage, so it’s important to make note of these different periods.
Initial Enrollment Period
If you’re starting Medicare by way of turning 65, you will have a 7-month period to notify Social Security that you intend to enroll in Medicare. The window begins three months before the month in which you turn 65, includes your birth month, and continues for three months after your birth month. For example, if your birthday falls on September 9 then your window begins June 1 and ends December 31. If your birthday falls on the first of the month, it shifts the 7-month window up by a full month. For example, if you were born on September 1, then your window would begin on May 1 and end on November 30.
What you need to know:
You are eligible sign up for Original Medicare (Part A & Part B) during your Initial Enrollment Period, which is a 7-month period surrounding your 65th birth month.
If you are on Social Security, then you should be automatically enrolled in Original Medicare when you become eligible.
Annual Open Enrollment Period
The Medicare Annual Enrollment Period lasts from October 15-December 7. During the Annual Enrollment Period, you can do the following:
Choose or switch your Medicare Advantage plan
Choose or switch your standalone Part D plan
Switch between Original Medicare and Medicare Advantage
Enroll in Original Medicare if you missed your Initial Enrollment Period or Special Enrollment Period (late enrollment may result in a penalty)
If you add or switch coverage during the Annual Enrollment Period, your new coverage will come into effect on January 1.
General Enrollment Period
If you miss your Initial Enrollment Period and you don’t qualify for a Special Enrollment Period, then you’ll have to wait for the General Enrollment Period to sign up for Medicare for the first time. The General Enrollment Period lasts from January 1 to March 31 every year. Once you sign up, your coverage will begin July 1 of that same year.
Medicare Advantage Open Enrollment Period
The Medicare Advantage Open Enrollment Period lasts from January 1-March 31 every year. If you find your Medicare Advantage plan isn’t working for you, then you may use this period to choose a different Medicare Advantage plan or switch to Original Medicare. If you switch to Original Medicare, you may also use this time to enroll in a standalone Part D plan. If you switch coverage during the Open Enrollment Period, then your new coverage will come into effect on the first day of the following month.
Special Enrollment Periods
Special Enrollment Periods (SEP) allow you to start or make changes to your Medicare coverage outside of the standard periods, due to exceptions based on life events. The most common life events that make you eligible for an SEP are:
You leave your job and lose employer coverage
You move and your plan is no longer available
You’re eligible for both Medicare and Medicaid
There is a five-star plan available to you
Get help enrolling in Medicare
Not sure where to start? We’re here to help! Give us a call at (855) 900-2427 or schedule a free consultation to discuss when to enroll in Medicare, which coverage is best for you, and how to get the most value from your Medicare insurance.