The ABCs of Medicare: A Plain-Language Guide for Getting Started

If you are getting close to Medicare age, you may be hearing a lot of new terms: Part A, Part B, Part C, Part D, Original Medicare, Medicare Advantage, Medigap and prescription drug coverage. It can feel like a lot at first.

The good news is that Medicare becomes easier to understand once you break it into basic pieces. This guide explains what Medicare is, what the different parts generally mean and what questions to think about as you begin learning your options.

What Is Medicare?

Medicare is a federal health insurance program. Many people first become eligible around retirement age, although some people may qualify earlier because of certain disabilities or medical conditions.

Medicare is not one single plan. Instead, it is made up of different parts that help cover different types of care. Some parts are run by the federal government. Other coverage options are offered by private insurance companies that follow Medicare rules.

The main goal of Medicare is to help pay for covered health care services. However, Medicare does not cover everything. Depending on the coverage path you choose, you may still have premiums, copays, coinsurance, deductibles or services that are not covered.

Medicare Part A: Hospital Insurance

Part A is often thought of as hospital insurance. It generally helps cover inpatient hospital care, skilled nursing facility care, hospice care and some home health care.

Part A does not mean every hospital-related cost is fully covered. It is still important to understand what services are covered, what rules apply and what out-of-pocket costs you may be responsible for.

Medicare Part B: Medical Insurance

Part B helps cover many outpatient and medical services. This can include doctor visits, preventive services, outpatient care, certain medical equipment and some home health services.

Part B is an important part of Medicare because it helps with many of the routine medical services people use outside of a hospital stay. Most people who want full Original Medicare coverage have both Part A and Part B.

Medicare Part C: Medicare Advantage

Part C is also called Medicare Advantage. Medicare Advantage plans are offered by private insurance companies approved by Medicare.

These plans provide another way to receive Medicare benefits. Instead of getting coverage directly through Original Medicare, you receive most Medicare-covered services through the Medicare Advantage plan. Many Medicare Advantage plans also include prescription drug coverage, and some may offer extra benefits that Original Medicare does not usually cover.

Medicare Advantage plans can vary by service area, provider network, drug coverage, costs and plan rules. A plan that works well for one person may not be the right fit for another person.

Medicare Part D: Prescription Drug Coverage

Part D helps cover prescription drugs. Part D coverage is offered through private insurance companies approved by Medicare.

Some people get Part D as a stand-alone prescription drug plan that works alongside Original Medicare. Others get drug coverage through a Medicare Advantage plan that includes prescription benefits.

Because prescription needs vary, it is important to review whether a plan covers your medications, which pharmacies are in the plan network and what cost-sharing may apply.

Original Medicare and Medicare Advantage

Most people receive Medicare coverage in one of two main ways: Original Medicare or Medicare Advantage.

Original Medicare includes Part A and Part B. With Original Medicare, you can generally see any doctor or hospital that accepts Medicare. Many people who choose Original Medicare also consider adding a Part D prescription drug plan and may look at Medicare Supplement Insurance, also called Medigap.

Medicare Advantage is an alternative way to receive Medicare benefits through a private Medicare-approved plan. These plans must cover Medicare-required services, but they can have their own provider networks, referral rules, prior authorization requirements, costs and additional benefits.

Neither path is automatically better for everyone. The right fit depends on your health needs, prescriptions, doctors, budget, travel habits and comfort with plan rules.

Where Medigap Fits In

Medigap is Medicare Supplement Insurance. It is private insurance designed to help pay some of the out-of-pocket costs that remain with Original Medicare.

Medigap is not the same as Medicare Advantage. It works with Original Medicare, not as a replacement for it. People generally use Medigap to help make certain medical costs more predictable.

Medigap policies do not usually include prescription drug coverage, so people who choose Original Medicare and want drug coverage often look at a separate Part D plan.

What Medicare May Not Cover

A common misconception is that Medicare covers every health-related expense. It does not.

Some Medicare Advantage plans may offer extra benefits in certain areas, but availability, rules and costs vary by plan.

This is one reason it is important to look beyond the name of a plan and understand what is actually covered.

What If You Are Still Working?

If you are still working as you approach Medicare eligibility, or if you have coverage through a spouse’s employer, your situation may be different from someone who is fully retired.

Employer coverage, retiree coverage, union coverage, COBRA and other insurance can affect how Medicare works for you. Before enrolling or delaying enrollment, it is important to ask how your current coverage coordinates with Medicare.

You may want to speak with your employer benefits department, plan administrator or a licensed insurance professional who can explain how the pieces may work together.

Questions to Ask Before Choosing Medicare Coverage

As you begin learning about Medicare, consider these questions:

• Do my doctors and preferred hospitals accept the coverage I am considering?
• Are my prescriptions covered?
• Do I travel often or spend part of the year in another state?
• Am I comfortable using a provider network?
• Do I want the flexibility to see any provider that accepts Medicare?
• What monthly costs and out-of-pocket costs could I be responsible for?
• Do I have employer, retiree or other coverage that may affect my Medicare choices?
• Would I prefer a plan with more built-in benefits or a structure that gives me broader provider access?

These questions do not point everyone to the same answer. They simply help you compare options based on your own situation.

Glossary of Common Medicare Terms

Coinsurance: A share of the cost you may pay for a covered service.

Copay: A set amount you may pay for a covered service or prescription.

Deductible: An amount you may need to pay before certain coverage begins to pay.

Medicare Advantage: A Medicare-approved plan from a private company that provides another way to receive Medicare benefits.

Medigap: Medicare Supplement Insurance that can help pay some costs left over by Original Medicare.

Original Medicare: Medicare coverage through the federal government. It includes Part A and Part B.

Part A: The part of Medicare that generally helps cover inpatient hospital care and certain related services.

Part B: The part of Medicare that generally helps cover doctor visits, outpatient care, preventive services and other medical services.

Part C: Another name for Medicare Advantage.

Part D: Prescription drug coverage offered by private insurance companies approved by Medicare.

Premium: An amount you may pay to have coverage.

Provider network: A group of doctors, hospitals, pharmacies or other providers that work with a specific plan.

The Bottom Line

Medicare is an important part of health coverage for many people, but it is not always simple at first glance. The easiest way to start is by understanding the main parts: Part A helps with hospital-related care, Part B helps with medical and outpatient care, Part C is Medicare Advantage and Part D helps with prescription drugs.

From there, the key question is not which option is best in general. The better question is which option fits your health needs, prescriptions, providers, budget and lifestyle.

Before making a decision, take time to review your choices carefully. You can also use official Medicare resources or speak with a licensed insurance professional for educational guidance based on your situation.

This article is for educational purposes only and does not provide personalized insurance, legal or financial advice.

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Sources:

https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/parts-of-medicare

https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/how-does-medicare-work

https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/your-coverage-options/compare-original-medicare-medicare-advantage

https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/working-past-65

https://www.medicare.gov/health-drug-plans/medigap/basics‍