Understanding the Basics of Medicare

If you are turning age 65 soon, are eligible for Medicare and are not covered by an employer plan, you’ve got some homework to do. Understanding basic Medicare coverage and the terminology of Parts A, B, C, D and Medigap is the best place to start. Everything new comes with potential challenges, but by laying the foundation with solid information, you will have what it takes to select the right Medicare coverage to protect your health and your wallet.

Sidestep These Potential Medicare Mistakes With Knowledge

  1. Many new Medicare enrollees are surprised to find out that vision care, dental care, glasses and hearing aids may not be covered by Medicare. (Medicare Part C may cover some of these services.)
  2. Also, many folks mistakenly think long-term care expenses are covered by Medicare. Long term care services are not covered by Medicare.
  3. If you miss deadlines for signing up, there may be ongoing penalties. And if you miss the sign-up deadline for Medigap, your coverage may not be guaranteed.

Knowing the details of what’s not covered by Medicare, can be almost as important as knowing what is covered. It’s not impossible to figure Medicare out. There are terms to understand, mistakes to watch out for, actions to take and deadlines to meet. (For related reading, see: How Does Medicare Work After Retirement?)

The Parts of Medicare

Part A is Medicare hospitalization coverage. For many retirees, Medicare hospital and skilled nursing care coverage does not require an annual premium. This part of Medicare covers inpatient hospital costs. Medicare does not cover 100% of all expenses. That’s why Medigap insurance is so important. 

Part B pays for doctors' bills. You will pay a monthly/quarterly premium for this coverage. Please note, not all doctor’s bills are covered. There are annual deductibles and assignments. Medigap insurance can also help with these expenses.

Part C is Medicare Advantage which is HMO-like coverage that covers Part A, Part B and sometimes Part D. It may also cover routine vision and dental care. (For related reading, see: How to Choose the Best Medicare Advantage Plan.)

Part D is the Medicare drug plan. Approved Medicare Part D prescription drug plans are only going to pay a portion of the costs for your prescription drugs. Your choices of prescription drug plans and costs can vary by state and zip code. Beware of the donut hole, aka the coverage gap!

The Medicare.gov website is a great place to search for prescription drug plans available in your area and ‘cost out’ your annual prescription drug costs. (Tip: You can enter your zip code to begin and save your plan ID and date so you don’t have to re-type your prescription list every time.)

Medigap Insurance

Medigap insurance policies are standardized across the United States and are designed to help pay for expenses Medicare does not cover.

The Medicare.gov website has a page with insurance companies that provide Medigap policies in your area. After entering your prescription drug information, the site allows you to compare the key features of available Medigap policies side-by-side.

Medicare Resources

There is a lot to know about Medicare. Start learning early about what’s covered and not covered by Medicare. Take the time to understand Parts A, B, C, D and Medigap insurance. If you don’t think you can afford to pay for coverage, explore assistance options.

Consult these websites, videos and booklets for more information.

(For more from this author, see: 5 Key Things to Do Right Away During a Divorce.)