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How Does Medicare Work?

Happy group of Medicare eligible senior friends.

Chances are, you’re familiar with the Medicare Program – whether you have a loved one enrolled, are enrolled yourself, or help contribute to the Medicare tax. Medicare is a major government-run program designed to offer health insurance to seniors and those living with disabilities. 

While we may have heard the name, there are plenty of nuances and pieces of the program that may get confusing once you start really learning about Medicare. No need to worry – we’ll cover some Medicare basics, as well as contact information to get in touch with an expert with any questions you have or to enroll. 

What Is Medicare?

Medicare is a federal health insurance program designed to offer healthcare benefits to individuals over 65 or those under 65 living with a disability. The Medicare Program offers basic coverage to qualified individuals and helps to pay for services such as doctor visits and hospital stays.

How Is Medicare Funded?

The Centers for Medicare & Medicaid Services (CMS) is a federal agency that is responsible for running the Medicare program. CMS is responsible for managing the payment of Medicare, which is paid for through the Medicare Trust Funds – two trust fund accounts held by the U.S. Treasury.

The Hospital Insurance Trust Fund is funded primarily through payroll taxes paid by employees, employers, and people who are self-employed as well as premiums paid for by beneficiaries. This trust fund pays for Medicare Part A benefits (hospital insurance) as well as the Medicare Program administrative costs. 

The Supplementary Medical Insurance Trust Fund is funded through funds approved by Congress as well as Medicare Part B premiums. This trust fund pays for Medicare Part B and D benefits as well as the   Medicare Program administrative costs.

The Parts of Medicare

Medicare health insurance is broken out into different sections, called “Parts.” Each of the parts of Medicare help to cover costs for specific services.

Medicare Part A

Medicare Part A is also referred to as “Hospital Insurance” and is part of what is referred to as Original Medicare. Part A covers:

  • Inpatient care in a hospital
  • Skilled nursing facility care
  • Nursing home care (inpatient care in a skilled nursing facility that’s not custodial or long-term care)
  • Hospice care
  • Home health care

Medicare Part B

Medicare Part B is also referred to as “Medical Insurance” and is part of Original Medicare. Part B offers you affordable access to two types of services:

  • Medically necessary services
  • Preventive services

Medicare Part C

Medicare Part C is also referred to as “Medicare Advantage.” Part C is essentially an alternative to original Medicare. Through Medicare Advantage, you obtain benefits through private health insurance providers. These plans typically bundle the benefits of Medicare Parts A, B, and usually D, plus a few other added benefits as well.

Medicare Part D

If you take any type of prescription drugs, Medicare Part D will help pay for the cost of your medicine. Part D covers prescription drug coverage through private health insurance companies with contracts with the government to offer this service.

Medicare Supplements

Medicare Supplement plans, also called Medigap, helps fill in the “gaps” that Original Medicare doesn’t cover. To purchase a Medicare supplemental policy, you must first enroll in Medicare Part A and Part B. These plans are sold by private insurance companies and may help cover additional costs such as copayments and deductibles.

Original Medicare vs. Medicare Advantage

You have the choice of how to enroll in your Medicare health insurance coverage. There are two main ways for you to receive Medicare benefits: Original Medicare and Medicare Advantage. 

  • Original Medicare includes both Part A (hospital insurance) and Part B (medical insurance). If you’re looking to include prescription drug coverage, you can also enroll in Part D. 
  • Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare that bundles Part A, B, and usually D and is purchased through a private insurance carrier. Most plans also offer additional benefits, such as dental and vision coverage. 

Each individual’s situation is unique, so it’s entirely up to you and your needs when it comes to choosing how to receive your Medicare coverage. But keep in mind, your choice affects how much you pay for coverage, the quantity and quality of the services you receive, and the doctors that are available within your network.

When Does Medicare Start?

The requirements for Medicare eligibility depend on your age.

If you’re over 65, you are fully eligible for Medicare if you’re a U.S. citizen or legal permanent resident.

If you’re under 65, you are eligible for Medicare if you meet one of the following criteria:

  • You have been receiving Social Security Disability or Railroad Retirement Board (RRB) benefits for 24 months prior to your desired date of enrollment.  
  • You have been diagnosed with Amyotrophic Lateral Sclerosis (ALS). 
  • You have been diagnosed with End Stage Renal Disease (ESRD) and have undergone dialysis or a kidney transplant.  
  • You have been diagnosed with a neurocognitive disorder, such as dementia or Alzheimer’s Disease.  

Important Medicare Enrollment Dates to Remember

Once you know that you’re qualified, there are a few time periods throughout the year in which you’re able to enroll in your Medicare plan.

  • Initial Enrollment Period (IEP) – Begins 3 months before your 65th birthday and ends 3 months after your 65th birthday.
  • General Enrollment Period (GEP) – Annually from January 1st – March 31st.
  • Annual Enrollment Period (AEP) – Annually from October 15th – December 7th.
  • Medicare Supplement Enrollment Period – Begins the month you turn 65 and lasts a period of 6 months.
  • Medicare Advantage Enrollment Period – Annually from January 1st – March 31st.
  • Special Enrollment Period (SEP) – Only applies to qualifying circumstances and typically lasts 60 days.

If you’re already enrolled in Medicare and looking to make changes to your plan, you can do so during the following times.

  • Initial Enrollment Period (IEP) – Begins 3 months before your 65th birthday and ends 3 months after your 65th birthday.
  • Annual Enrollment Period (AEP) – Annually from October 15th – December 7th.
  • Medicare Advantage Enrollment Period – Annually from January 1st – March 31st.
  • Special Enrollment Period (SEP) – You may qualify for a Special Enrollment Period (SEP) if you lose or need to alter your Medicare plan due to certain life events and circumstances, such as changes in your employment status or residence. If you lose coverage, the typical period of eligibility lasts 60 days.

How Do I Enroll in Medicare?

Enrolling for Original Medicare, Parts A and B, depends on the person – some individuals receive the benefits automatically while others have to manually enroll.

  • If you are getting benefits from Social Security or the Railroad Retirement Board (RRB) at least 4 months before you turn 65, you will be automatically enrolled in Medicare Parts A and B.
  • If you won’t be getting benefits from Social Security or the RRB at least 4 months before you turn 65, you’ll need to sign up with Social Security to enroll in Medicare Parts A and B.
  • If you are under 65 and have a disability, you will be automatically enrolled in Medicare Parts A and B after you receive disability benefits from Social Security for 24 months or you receive certain disability benefits from the RRB for 24 months.
  • If you have ALS (Amyotrophic Lateral Sclerosis, also called Lou Gehrig’s disease), you automatically are enrolled in Parts A and B the month your disability benefits begin.
  • If you have End-Stage Renal Disease (ESRD), enrolling in Medicare is your choice and you have to manually enroll through Soci8al Security if you wish to receive Parts A and B.

When it comes to enrolling in Medicare Advantage, you can either go through a specific insurance carrier or talk to a broker. While carriers offer you the plans that are available within their specific company, health insurance brokers, like the team at Find The Plan, have access to a variety of carrier options and will help you compare available plans to find the best option for you and your needs. 

Discuss Your Medicare Solutions With the Team at Find The Plan

No matter where you are in your Medicare journey, the team at Find The Plan is prepared to walk you through the process with confidence. Through our years of expertise, we’ve become well-versed in the Medicare industry and will explain the details of the plan you choose and answer any questions you may have. 

We can help you find and enroll in either a Medicare Advantage or Medicare Supplement plan that works for your healthcare needs and budget. Because we’re a health insurance brokerage, we have access to any marketplace plan and will recommend the best match for you.

To start, we recommend you use our PlanMatch tool. This tool helps us learn a little bit more about you and how you use your healthcare coverage, which can help us find a better plan that suits your needs. After you complete the quiz (which takes less than 5 minutes!) you can either reach out to our team directly or schedule a time that’s convenient for you.