How does Medicare work?

What is Medicare?

Medicare is a government health insurance program that covers health care services in the United States for people age 65 and older (as well as some younger people who qualify through Social Security). Because Medicare benefits don’t pay for everything, it’s important to understand your options and decide which coverage best suits your individual health needs.

How does Medicare work?

Medicare is made up of four different parts— A, B, C, and D.

Part A: Hospital Insurance

Medicare Part A covers:

  • Hospital inpatient care
  • Skilled Nursing Facility Care
  • home health care
  • hospice care

Most Americans are automatically enrolled in Medicare Part A, although it may not cover all of your health care costs on its own. Parts B, C, and D are voluntary programs that provide additional coverage.

Part B: Medical Insurance *

Medicare Part B covers:

  • Outpatient medical services
  • Coverage of medical services and routine medical visits
  • Preventive care and services (such as flu shots and mammograms)
  • Laboratory, x-rays, and medical supplies.

Part C: Medicare Advantage Plans

Medicare Advantage plans cover:

  • These plans are an “all-in-one” alternative to Original Medicare.
  • These “combination plans” include everything covered by Original Medicare (Part A and Part B) and usually Part D (Medicare drug coverage).
  • Additional benefits or services, such as dental, vision, and hearing services (depending on the private health plan you choose).

You cannot use and cannot be sold a Medigap policy if you are in a Medicare Advantage plan.

Part D: Prescription Drug Coverage *

  • Original Medicare doesn’t cover most prescription drugs, so Part D covers the cost of prescription drugs.
  • Medicare Prescription Drug coverage is optional and is offered to everyone with Medicare.
  • To get Medicare Prescription Drug Coverage, you must join a Medicare-approved plan that offers drug coverage.
  • In most cases, this means you can add drug coverage to Original Medicare OR select a Medicare Advantage plan that offers drug coverage.

* If you don’t sign up for Part B or Part D when you’re first eligible for Medicare, you may have to pay a penalty later.

Medigap: Medicare Supplement

Medigap is Medicare supplement insurance that helps fill “the gaps” in Original Medicare and is sold by private companies. Original Medicare pays a large part, but not all, of the cost of covered medical services and supplies. A Medicare supplement insurance (Medigap) policy can help pay for some of your remaining health care costs, such as:

  • Copays
  • Coinsurance
  • Deductibles

There are several Medigap (Medicare Supplement Insurance) plans, each with different benefits and premiums, so you can choose the plan that best meets your specific needs. Please note that Medigap plans do not offer prescription drug coverage.

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