The ABCD’s of Medicare

By Barbara Braa, MBA, CTFA

Do you know the ABCDs of Medicare? The basic components are: Part A = Hospital coverage; Part B = Medical Insurance (for non-hospital health care coverage); Part C = Advantage Plans; and Part D = Drug coverage. There are two main paths to get Medicare, “Original Medicare” or “Medicare Advantage.” You need to be enrolled in Medicare Parts A & B for either path.

Original Medicare’s Parts A & B generally cover 80% of the costs incurred. To fill the 20% gap, you purchase a Medicare Supplement Plan (“Medigap”) and a Part D prescription plan. Most of your care will be covered if you use providers who accept Medicare. If you use non- Medicare accepting providers, you will be responsible for any charge beyond what Medicare approves. You will pay for Part B, for the Supplemental, and for Part D. You may pay a small deductible and you will have drug co-pays.

Advantage Plans (Part C) are offered by insurance companies with a contractual agreement with Medicare to provide most of your Part A & B coverage. Medicare pays the insurer per enrollee. Advantage plans cover specific service areas and you have to live in that area and use service providers who accept the plan. Advantage plans may offer no or low-cost monthly premiums and often include Part D prescription coverage and may offer other incentives, but there are co-pays and annual out-of-pocket limits which can be substantial.

Medicare is complicated.

Both paths to coverage have pros and cons. The above only shows basic differences between Original Medicare and Medicare Advantage Plans. One item to note is, if you decide to switch to Original Medicare after your 12-month trial period in an Advantage plan, you may lose your guaranteed coverage for a Medicare Supplement plan, which means you may need to undergo medical screening to determine your eligibility.

Don’t wait until the last minute to educate yourself or to enroll!

The 2023 Annual Open Enrollment for Medicare runs from October 15th to December 7th. To determine the most suitable plan for your needs, please visit www.medicare.gov. This will enable you to have an informed discussion about your options with a reliable insurance agent or broker, helping you make the best choice for your situation.