Aging Options

Defining Medicare: Part 2: Coverage Options

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In the second part of this two-part series from Soundpath Health, we identify the coverage options available for those who are eligible for Medicare.

1. Original Medicare: Original Medicare is Medicare Parts A and B and includes coverage for Inpatient Hospital Insurance (Part A) and Outpatient/Physician Insurance (Part B). Eligible individuals are automatically enrolled in Part A, but must enroll in Part B at their social security office. There is a premium associated with part B and a penalty assessed if the individual does not enroll during their initial enrollment period.

2. Medicare Part D: Medicare Part D is prescription drug coverage. Part D is voluntary and is designed to supplement Parts A and B. This covers all drugs mandated by Medicare. There is a penalty assessed if the individual does not enroll in Part D during their initial enrollment period.

3. Medigap Plans – Medicare Supplemental Health Insurance: Medigap is Medicare supplemental health insurance sold by private insurance companies that helps pay some of the health care costs that Original Medicare doesn’t cover. Beneficiaries must have Medicare Parts A and B to purchase a Medigap policy. If a beneficiary is enrolled in the Original Medicare Plan and has a Medigap policy, then Medicare and Medigap will each pay its share of the health care costs. Medigap will not work with Medicare Advantage Plans. Beneficiaries pay a monthly premium for Medigap and must continue to pay their Part B premium.

4. Medicare Advantage Plans: Medicare Advantage (MA) Plans, also known as Medicare Part C, offer coverage that is more similar to the commercial and employer health insurance that most Americans are used to. In addition to Part A and Part B Medicare coverage, MA Plans often offer extra benefits such as vision, hearing, dental and/or health and wellness programs. Many MA Plans also cover prescription drug coverage.

5. Prescription Drug Plans: Medicare Prescription Drug Plans provide prescription drug coverage to beneficiaries who elect to enroll in a prescription drug plan. Anyone who has Part A and Part B and lives in a plan’s service area is eligible to join the plan. People with Medicare who do not have prescription drug coverage through other means may purchase prescription drug coverage by joining a (stand alone) Part D Prescription Drug Plan or joining a Medicare Advantage plan with prescription drug coverage. There is a penalty assessed if the individual does not enroll in Part D during their initial enrollment period.

Have questions? Submit a comment below. Look to future articles  on Medicare’s interaction with other health insurance, types of Medicare Advantage Plans and how Medicare Advantage Plans work.

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