Welcome
- Medicare Basics
Whether you’re new to Medicare or just looking for a refresher, you've come to the right place. For the next few minutes, we'll explore:
- BulletWhat is Medicare
- BulletWhat Medicare offers (and doesn't offer)
- BulletWhat you should know before making a Medicare decision
As the title indicates, we’re covering the basics here, but we also provide links to reliable sources if you need more detail.
Click the arrow to the right to get started
- WHAT IS MEDICARE?
Medicare is a federal health insurance program created for individuals age 65 and older, as well as individuals with certain medical conditions or disabilities.
Medicare is made up of parts. Each part provides a different type of health care coverage. Let's take a closer look at each of these parts, starting with Original Medicare: Part A and Part B.
- Original Medicare
The federal government provides Part A and Part B to help cover general health care services received from a qualified health care provider (such as a doctor or a specialist).
Note: You must be enrolled in Original Medicare before you can sign up for add-on coverage or Medicare Advantage.
Part A is hospital insurance. It helps cover:
- BulletInpatient hospital care
- BulletSkilled nursing facility
- BulletHospice care
- BulletHome health care
Check out Medicare.gov for a deeper dive into Part A coverage
Part B is medical insurance. It helps cover:
- BulletDoctor visits
- BulletAmbulance services
- BulletDurable medical equipment
Check out Medicare.gov for a deeper dive into Part B coverage
What does it cost me?
Part A and Part B have monthly
The monthly fee you pay to be in a health insurance plan. A fixed amount you pay out of your own pocket for covered services before your Medicare coverage begins to pay your medical bills. The percentage you pay for a service you receive. Generally, you pay 20% of a covered service’s cost and Medicare pays 80%. Coinsurance usually comes into effect after you’ve met your plan’s deductible limit. Medicare.gov has more on premium-free Part A eligibility and what your Part B premium could be. You can also learn more about the Part B late enrollment penalty
What's not covered?
While Original Medicare provides coverage for hospital and medical services, it doesn't cover everything.
In general, Original Medicare pays for only 80% of covered health care costs. It's up to you to pay the remaining 20%.
Plus, Original Medicare doesn't cover prescription drugs or other benefits such as vision, dental, or hearing services.
- Additional Coverage
Many choose to buy additional insurance to help cover the 20%. Some choose a Medigap plan and/or a Part D prescription drug plan, while others choose a Medicare Advantage plan.
Let's take a closer look at additional coverage by starting with Medigap and Part D.
- Add-on plans
Medigap (also known as Medicare Supplement) and Part D prescription drug plans (PDP) work alongside Original Medicare. These plans are made available through private health insurance companies, although they are regulated by the government.
In other words, you keep Original Medicare and add either (or both) of these for more comprehensive health care coverage.
Medigap plans help pay your share of health care costs, such as
Your share of the cost of a doctor's visit or prescription drug. Copays don't count toward your deductible. The percentage you pay for a service you receive. Generally, you pay 20% of a covered service’s cost and Medicare pays 80%. Coinsurance usually comes into effect after you’ve met your plan’s deductible limit. A fixed amount you pay out of your own pocket for covered services before your Medicare coverage begins to pay your medical bills. The monthly fee you pay to be in a health insurance plan. Check out Medicare.gov for a deeper dive into Medigap plans
Part D prescription drug plans (PDPs) are stand-alone plans that help pay for medications you buy from a pharmacy or through a mail-order pharmacy service.
PDPs have their own monthly
The monthly fee you pay to be in a health insurance plan. A fixed amount you pay out of your own pocket for covered services before your Medicare coverage begins to pay your medical bills. Your share of the cost of a doctor's visit or prescription drug. Copays don't count toward your deductible. The percentage you pay for a service you receive. Generally, you pay 20% of a covered service’s cost and Medicare pays 80%. Coinsurance usually comes into effect after you’ve met your plan’s deductible limit. For more about how to sign up for Part D, what it covers, what it costs, and how it works with other insurance, visit Medicare.gov
While Part D is technically "optional" add-on coverage, if you sign up late for a PDP, you'll face a permanent late enrollment penalty tacked on to your premium.
If you decide to go the path of Original Medicare plus add-on coverage, sign up for Part D as soon as you become eligible.
“I’m not taking any prescriptions so I don’t need Part D.” Why you should think twice before skipping Part D
Part D plans may feature these pharmacy types as part of their network: Retail chain or big box store pharmacies, mail order, specialty pharmacies, and long term care pharmacies. These plans may also feature preferred pharmacies, where you pay a lower copayment for prescriptions—a real cost savings compared to paying for prescriptions elsewhere.
What does it cost me?
Health insurance companies set the prices for these types of coverage. Costs can be determined by things such as age, whether you use tobacco, and your location (ZIP Code).
Visit Medicare.gov for more about Medigap costs
Visit Medicare.gov for more about Part D costs
Original Medicare and supplemental plans aren't the only option available to you. There's one more we'll cover and that's Part C, also known as Medicare Advantage.
- Medicare Advantage
Health insurance companies provide Medicare Advantage plans that are regulated by the government. These plans are sometimes referred to as an "all-in-one" option. They combine Original Medicare services with benefits such as vision, dental, hearing, or prescription drug coverage.
These plans don't replace Part A and Part B. You still need to enroll in Original Medicare before you enroll in a Medicare Advantage plan.
Medicare Advantage comes in two flavors: Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs).
Both HMOs and PPOs- Provide Part A and Part B benefits (hospital and medical insurance)
- Typically offer prescription drug coverage
- Have in-network provider and pharmacy networks
- Require you to have Original Medicare and live in service area
- Feature out-of-pocket maximums, unlike Original Medicare
You must keep paying your Part B monthly premium; a Medicare Advantage plan’s monthly premium doesn’t replace the Part B premium.
And here's how HMOs and PPOs differ in general:
HMOs- No out -of-network provider or pharmacy coverage (except in medical emergencies)
- Feature lower monthly premiums, copayments, and deductibles
- Can sometimes require you to select a primary care physician (PCP)
- Referrals required for in-network specialists
PPOs- Cover out -of-network providers also but at a higher cost
- Feature higher monthly premiums, copayments, and deductibles
- Flexibility in seeing any in-network provider
- No referrals for specialists required
Other HMO/PPO considerations
Before picking either an HMO or PPO Medicare Advantage plan, make sure the plan covers your area, the doctors you prefer to see, and the services you need. Find out the rules involved with emergency medical situations. Know your costs! What are the monthly
The monthly fee you pay to be in a health insurance plan. Your share of the cost of a doctor's visit or prescription drug. Copays don't count toward your deductible. A fixed amount you pay out of your own pocket for covered services before your Medicare coverage begins to pay your medical bills. The total amount you have to pay out of your own pocket each year before Medicare coverage pays 100% of your covered services. Original Medicare (Part A & Part B) doesn’t have an out-of-pocket maximum, but some Medigap plans and most Medicare Advantage plans do. What does it cost me?
Medicare Advantage costs and coverage can differ from plan to plan. Most plans have a monthly
The monthly fee you pay to be in a health insurance plan. A fixed amount you pay out of your own pocket for covered services before your Medicare coverage begins to pay your medical bills. Your share of the cost of a doctor's visit or prescription drug. Copays don't count toward your deductible. The total amount you have to pay out of your own pocket each year before Medicare coverage pays 100% of your covered services. Original Medicare (Part A & Part B) doesn’t have an out-of-pocket maximum, but some Medigap plans and most Medicare Advantage plans do. With a Medicare Advantage plan, you still have to pay your monthly Part B premium.
Medicare.gov has more details on Medicare Advantage plan types
- Choosing additional coverage
While Medigap/Part D and Medicare Advantage help pay the health care costs Original Medicare doesn't cover, they differ quite a bit.
We'll explain some of these differences to help you understand which Medicare coverage might be your best match.
Choosing add-on plans means:
Add-On Plans (Medigap/Part D)- Separate monthly premiums for Medigap and Part D
- Limited out-of-pocket costs for hospital and medical care
- No network restrictions seeing a doctor or going to the hospital
- Extra benefits (dental, vision, hearing, etc.) purchased separately
These may be good for those who:
- BulletAre comfortable paying higher monthly premiums in order to limit out-of-pocket spending on health care
- BulletWant the freedom to access doctors/hospitals throughout the US
- BulletCan afford to buy extra benefits separately
Picking a Medicare Advantage plan means:
Medicare Advantage- Premiums as low as $0
- A maximum out-of-pocket limit for hospital and medical care
- Network restrictions for seeing doctors or going to the hospital
- Prescription drug coverage and extra benefits are often included
These may be good for those who:
- BulletWant a lower monthly premium and are comfortable paying copays and deductibles for health care services
- BulletAre comfortable seeking care within a defined provider network
- BulletWant prescription drug coverage and extra benefits (dental, vision, hearing, etc.) included
- Enrollment
Let’s move on to another important topic: how (and when) you should sign up for Medicare.
Most people become eligible to sign up for Medicare 3 months before and 3 months after their 65th birthday. As you near 65, you should ask yourself "Do I need Medicare coverage right now?"
Some individuals may still have health insurance through an employer and want to continue that coverage. Others may be coming off their health insurance and need to switch to Medicare.
If you plan to make Medicare your primary source of health insurance, you should enroll in Part A and Part B as soon as you become eligible and start considering the additional options we've covered.
We recommend you contact Social Security to enroll in Part A and Part B and determine how you'll pay for it (usually the premiums are deducted from your Social Security check, although direct bill is another option).
Learn more by visiting the Social Security website
Now that you've explored the basics, what would you like to do next?
Enroll in a plan
Talk to a Medicare AdvisorLearn more about Medicare
Visit the Fidelity Learning CenterGo to the Medicare website
Visit Medicare.gov
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