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Over the next three years, more people in the US will turn age 65 than any other time in the history of the country. This marks a major milestone in most people’s lives as they are faced with an extremely important healthcare decision.

As people approach their 65th birthday, most are confronted with the same issues:

1. They must decide and act on Medicare by a certain date.
2. They are inundated with information.
3. They have no idea what to do.
4. They don’t know who to talk to.

There are plenty of Medicare products on the market; however, what most people are looking for is an understanding of how Medicare works and how it applies to them. Let’s take a look.

Overview

Medicare is broken down into four parts: A, B, C, and D, with parts A and B commonly referred to as “Original Medicare”. (The primary reason many people favor Original Medicare is due to the open access of care. There are no networks, so this coverage is accepted anywhere in the country by any provider or facility that accepts Medicare. If you move, your coverage goes with you.)

Medicare Part A

This covers a portion of the costs for hospitalization and skilled nursing care. It includes deductibles and co-insurance costs to the insured. Most people receive Part A at no cost if they have been employed at least 40 quarters during their lifetime. You must make application with Social Security to receive Part A.

Medicare Part B

This is the medical insurance portion of Medicare, which covers physician services and other ancillary healthcare benefits. It also carries a $226 annual deductible, and a 20% co-insurance with no cap. Part B has a monthly cost of $164.90, with higher premiums for higher income earners. You must also apply for Part B through Social Security.

Medicare Part C

Also known as “Medicare Advantage”, this is another way to get Part A and Part B coverage. These plans are offered and managed by private insurance companies. These “bundled” plans include Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) and usually Part D (Drug Coverage). There is no cost for many of these plans, although the Medicare Part B premium must still be paid. They often offer coverage for benefits not covered by Original Medicare such as vision, dental, hearing and health club memberships.

While these plans offer a zero upfront cost along with additional benefits, care is limited to the providers within the carrier’s network. They operate much like group or individual coverages for those under 65, with HMO and PPO options. Generally, an HMO offers a lower out of pocket cost along with a smaller network, while a PPO offers a larger network with a higher out of pocket costs. If you move out of the coverage area or the carrier discontinues the plan, new coverage will need to be obtained.

Medicare Part D

This is a prescription plan that helps pay for the cost of prescription drugs. Medicare.gov provides a very useful tool to determine the most cost-efficient plan, based on your current medications. This is separate coverage from Medicare and while not required, there are substantial penalties for signing up after the initial enrollment period.

Important Notes

• If you are receiving Social Security Benefits prior to age 65, your Medicare Part A and B will be issued automatically, a couple of months before your birth month.
• In addition to Original Medicare, most people purchase a Medicare Supplement or Medigap plan. These plans pay for most of the costs not covered by Part A and Part B. To further confuse things, these plans are also identified by letter: A, B, G, K, L, and N. The most comprehensive and popular one is Plan G, which pays for all costs not covered by Part A and B except for the annual Part B deductible.

As you approach age 65, find an advisor who can give you a clear picture of how Medicare works for your individual situation. An understanding of these basics should precede any discussion relating to products and will make your decision-making process much easier. Visit the Medicare Solutions page to connect with a specialist.

If you’re on the cusp of turning 65, you may be feeling overwhelmed with the Medicare system right now. Plans, parts, options, supplements, enrollment periods, deadlines, regulations – it’s a lot to take in.

To help make sense of it all we’ve compiled a list of basic Medicare terms and names that you’ll need to know before making your selections.

1. Medicare Part A (hospital coverage)

This will help recipients cover inpatient hospital care, skilled nursing facility care, hospice care, and home health care.

2. Medicare Part B (doctors and outpatient services)

This helps cover medical services from doctors and other health care providers, outpatient care, additional home health care, and medical equipment such as wheelchairs, walkers, hospital beds, etc. It will also help cover many preventive services (screenings, vaccines, and routine exams).

3. Medicare Part C (Medicare Advantage)

Medicare Advantage Plans are offered by private companies and provide all of the Part A and B benefits, with the exception of certain aspects of clinical trials (which are covered by Original Medicare). Medicare Advantage Plans include:

• Health Maintenance Organizations
• Preferred Provider Organizations
• Private Fee-for-Service Plans
• Special Needs Plans
• Medicare Medical Savings Account Plans

4. Medicare Part D (prescription drugs)

These plans are sold by private insurance companies that follow rules set by Medicare, and they help enrollees cover the cost of prescription drugs and many recommended vaccines.

5. Original Medicare

Original Medicare includes Medicare Parts A and B and can be used to visit any doctor or hospital that accepts Medicare. It does not include Part D and will not cover any out-of-pocket costs associated with Medicare (such as the 20% coinsurance).

6. Medicare health plan

Medicare health plans are offered by private companies that contract with Medicare to provide Part A and B benefits. They include Medicare Advantage Plans, Medicare Cost Plans, Demonstration/Pilot Programs, and Programs of All-Inclusive Care for the Elderly (PACE). PACE plans can be offered by public or private companies and provide Part D and other benefits in addition to Part A and Part B benefits.

7. Benefit period

This is how Original Medicare tracks your use of hospital and skilled nursing facility services. A benefit period begins when you’re admitted to a hospital or skilled nursing facility as an inpatient, and ends when you haven’t received any care for 60 consecutive days. If you are admitted to a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period will begin. There’s no limit to the number of benefit periods you can experience but you will still be expected to pay the inpatient hospital deductible for each benefit period.

8. Medicare-approved amount

Referring to Original Medicare, this is the amount a doctor or supplier agrees to be paid for services and may be less than their non-Medicare rate. Of this agreed-upon amount, Medicare will pay part of it and you will be expected to pay the difference out-of-pocket.

9. Medicaid

Medicaid is a joint federal and state program that helps enrollees who have limited income pay for medical costs.

10. Medigap

Also referred to as Medicare Supplement Insurance, Medigap is sold by private insurance companies to help Medicare enrollees fill the “gaps” in their Medicare coverage.

Whether you’re turning 65, already have coverage, or helping a family member with their decision, getting the right Medicare advice is critical.

As a benefit of your membership, you — as well as your spouse and parents — have access to a team of Medicare Specialists. These experts can answer your questions, review all your options, and help you navigate the process so that you can make the best decision based on your specific circumstances.

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Visit our Medicare Solutions page to connect with a Medicare Specialist.