Parts of Medicare

Medicare benefits come in four categories - A, B, C, and D. Here's a breakdown of each part and its function, what it costs, and what it covers.

Medicare Part A - Hospital and other facility care (Original Medicare)
Medicare Part B - Doctors, outpatient hospital, medical equipment, therapy (Original Medicare)
Medicare Part C - Medicare Advantage, which is Original Medicare plus additional coverage - provided by health insurance companies
Medicare Part D - Medicare Part D prescription drug coverage provided by health insurance companies

Medicare Part D

Medicare Part D provides prescription drug coverage through various private insurance companies. Like Part B, most people pay premiums each month to be covered for Part D coverage. Premiums for Part D vary by company and state.

There are different Part D plans - also called prescription drug plans or PDPs - for different needs. You can get Medicare prescription drug coverage in one of two ways:

Stand-alone plan - Separate prescription drug coverage you buy in addition to Original Medicare or a Medicare supplement.
Part of a Medicare Advantage plan - Prescription drug coverage you get when you enroll in a Medicare Advantage plan instead of Original Medicare or a supplement.

If you're eligible for Medicare, you don't have to get prescription drug benefits. But if you don't sign up for a prescription drug plan when you are 65, you will pay a penalty for signing up at a later time.

Prescription drug plans may include:

Basic coverage meeting the federal government's minimum requirements
Broad coverage with fixed copayments to help you manage your costs with no deductible to pay
Extensive coverage with generic prescription drugs covered while in the coverage gap, no deductible, and fixed copayments to help save you money; protection up to a catastrophic limit

Each private plan provides coverage for a specific list of medications, called a formulary. Choose your plan carefully to make sure it covers drugs you use regularly.

Medicare supplemental insurance

Original Medicare doesn't cover everything. So seniors with Original Medicare can purchase Supplemental Medicare insurance policies from a private insurance company or organization. These plans are also knows as Medigap policies. They cover all or part of Medicare's deductibles and coinsurance, or additional care that Original Medicare doesn't cover.

To avoid confusion, federal law defines 12 standardized Medigap plans, but not all states allow all 12. In addition, not all companies offer 12 plans.

When to get Medicare supplemental insurance

There are no specific enrollment dates for Medicare Supplement plans. The best time to buy a plan is during your Medigap Open Enrollment Period, which lasts six months. It starts on the first day of the month in which you and your spouse are both age 65 or older and enrolled in Medicare Part B. Once your Medigap Open Enrollment Period starts, it cannot be changed. During this period you cannot be denied coverage, nor made to wait before coverage begins.

Seniors with Medicare Advantage Medicare Advantage don't need to buy Supplemental Medicare insurance.

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