The ABC’s (and D) of Medicare
THE A & B:
Original Medicare has two parts – Hospital (Part A) & Medical (Part B)
Part A covers services such as hospital bed & board, skilled nursing & hospice.
- Generally, you pay no premium for Part A.
- No penalties to delay your enrollment, but no reason to not enroll as soon as you’re eligible.
Part B covers services like doctor’s visits, outpatient surgery, and diagnostic services.
- You do have a monthly premium for Part B (and it is income adjusted for high-income earners). The Part B premium can change each year and is generally withheld from your Social Security or RRB benefits.
- Penalties do apply if you don’t enroll in Part B when you’re eligible – see the “When to enroll” section for more information.
THE C:
Medicare Advantage plans are called Part C
Part C combines the benefits of Original Medicare A & B into one plan. When you join a Medicare Advantage plan, the insurance company now pays the claims (which is why these plans are also called Medicare Replacement plans – we replace Medicare as the claims payer).
Medicare Advantage plans usually have a network of doctors that you will use to maximize your benefits and help you control your costs.
Medicare Advantage plans also usually cover things that Original Medicare doesn’t cover – like routine vision and hearing exams, transportation for rides to your doctors, over the counter benefits – even gym memberships. You can also choose a plan that includes coverage for outpatient prescription drugs – which brings us to:
THE D:
Outpatient prescription drug coverage is called Part D
Part D plans can either be included with your Medicare Advantage plan or as a stand alone plan to go with Original Medicare.
Part D plans provide coverage for your prescription drugs and are offered by insurance companies. Medicare sets the structure of the Part D plans, so the difference between Part D plans are what drugs are covered and how much you’ll pay for them.
Help with drug costs:
Social Security does have a program to assist Medicare beneficiaries that are lower-income called Extra Help or Low-Income Subsidy. Depending on your income (and somewhat on your assets), you may qualify for this program. People that qualify for Extra Help will see lower monthly premiums & generally their copays are at the Catastrophic coverage levels.
If you qualify for Medicaid, your drug costs will be even lower.
All Part D plans have four stages:
| Deductible Stage | The amount you pay before you begin to pay copays in the Initial Coverage Limit |
| Initial Coverage Stage | Your covered drugs are sorted into 5 different tier levels, and your cost will depend on which tier level your drugs are in. Most people stay in this level throughout the plan year, but depending on your total drug costs (what you pay plus what the insurance company pays) you could move to the next level. |
| Coverage Gap Stage (or the donut hole) | When you reach the initial coverage limit (for 2023, this is $4,660 in total drug costs), you fall into the gap and usually pay 25% of the cost for your drugs. You stay in this stage until your total drug out of pocket costs for the year reaches $7,400 (for plan year 2023) , then you move to the final stage. |
| Catastrophic Stage | When you reach this stage, you pay the greater of 5% of the cost of your drugs or $4.15 for generic drugs or $10.35 for all other drugs. People that reach the catastrophic level stay there until the end of the year. |
When do I enroll in Medicare?
Generally you’re eligible to enroll in Medicare when you turn 65 (in fact, if you are collecting Social security benefits, you are automatically enrolled in Medicare A & B). Some people are eligible at a younger age due to a disability. If you are determined to be disabled, you will be automatically enrolled in Medicare A & B.
For simplicity, let’s look at the timelines for someone turning 65. You can start the enrollment process up to 3 months before your 65th birth month. If you are not collecting your Social Security retirement benefits, you can enroll online at www.ssa.gov or in person at your local Social Security Office.
If you are not covered under an employer plan, you will need to enroll in BOTH Medicare A & B to avoid penalties.
If you are still working and are covered under an employer plan (or you are the dependent of an ACTIVE employee), you can delay your Part B enrollment – when you retire, you can enroll in Part B with no penalties. NOTE: You should always check with Social Security to make sure you can delay your enrollment!
Do I need to enroll in Medicare if I am Native American and receive my health care through tribal affiliation?
Yes! If you do not enroll in Medicare when you are eligible to do so, even though you receive your health care from Indian Health Services, you will still be penalized.
Do I need to enroll in Medicare if I am a Veteran and receive my health care through the VA?
Yes! You must still enroll in Medicare to avoid penalties later.
Medicare can be complicated – if you still have questions, call our Medicare team at (918) 594-5275. We are available Monday through Friday from 8:00am to 6:00pm.
