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Updated: March 22, 2021 Senior Planning Guide

Medicare 101

By Rachel Coppola

Roughly 11,000 Americans age into Medicare each day – a rate rising amid the current economic volatility – and many have questions about what the government program and private supplemental plans cover.

Photo | Courtesy of Coverage
Rachel Coppola

“The process of shopping for a Medicare plan can be overwhelming for seniors, especially those who have never shopped for a health plan before,” said Lynne Newson, vice president of Medicare strategy at the health plan Blue Cross Blue Shield of Massachusetts. “Whether you’ve had Medicare coverage for many years, are shopping for the first time this fall or are helping friends or family members enroll in the program, understanding some Medicare basics can make the process easier.”

According to the Centers for Medicare & Medicaid Services, the Medicare population will increase to more than 80 million beneficiaries in 2030, up from 54 million in 2015.

The Medicare annual enrollment period, when seniors can shop for certain types of plans for a Jan. 1 effective date, runs from Oct. 15 through Dec. 7.

What is it, and what does it cover?

Medicare is a public healthcare program, funded by the government, workers and employers, and available to people at age 65 or who have qualifying disabilities. But contrary to popular belief, the program was not intended to cover all services at no cost. Rather, it provides a core set of basic medical benefits to cover inpatient (e.g., hospital) and about 80% of outpatient (e.g., doctor’s office) care. Medicare members face out-of-pocket expenses, such as deductibles – the amount you pay for covered healthcare services before your insurance plan kicks in. Medicare members may have to pay coinsurance, or a percentage of costs, for services – for instance, with 20% coinsurance, you may owe $200 for a $1,000 bill. For more robust coverage, purchase Medicare Supplement, Medicare Advantage and Part D.

When you initially become eligible for Medicare, you can pick any plan; after that, there are certain times during the year when you can make changes. Generally, beneficiaries can purchase Medicare Supplement plans at any time, while Medicare Advantage and Part D plans can be purchased during the annual enrollment period.

How do the ABCDs work together?

In general, Medicare beneficiaries can:

• Get Parts A and B and choose a supplemental plan that fills in the gaps in coverage (Medigap), as well as adding a Part D prescription drug plan.

• Or choose a Part C (Medicare Advantage) plan, which provides Part A, B and D benefits, among others.

When are you eligible for Medicare?

During your working years, you pay a portion of your income (and your employers make a similar contribution) to help finance Part A. Generally, people are eligible for Part A when they turn 65.

Most people must enroll in Part B at age 65 unless they or their spouse decide to continue working. When they enroll in Part B, an amount is deducted from their monthly Social Security check.

Medigap vs. Medicare Advantage plan?

Generally, Medigap plans are a better fit for people who want predictable out-of-pocket monthly expenses and a wide range of choices for medical care. These plans are also popular with snow bird retirees who spend the winters in warm-weather locations because they allow you to get care from any doctor who participates with Medicare nationwide.

Medicare Advantage plans tend to be a better and less expensive option for people who value healthcare coordination by a primary care physician and stay within a network of care providers.

How do you shop for a plan?

Anyone who retires at age 65 or later and gets coverage from their employer should check with their workplace about their options. Those without employer-sponsored coverage should first decide between the two Medicare options (Medigap or Medicare Advantage). Here are two resources to help:

• The Centers for Medicare and Medicaid Services, 1-800-MEDICARE (1-800-633-4227), available 24/7. TTY users call 1-877-486-2048.

• Serving the Health Information Needs of Everyone, 1-800-243-4636.

To learn more about your specific Medicare benefits, visit www.ssa.gov/benefits/Medicare/.

Rachel Coppola is a writer for Coverage, a news service of Blue Cross Blue Shield of Massachusetts.

What are the ABCDs of Medicare?

Medicare Part A: Covers basic inpatient hospital services. For most people, there is no premium but there is a deductible ($1,484 per benefit period in 2021) and some coinsurance for extended inpatient hospital and skilled nursing facility stays.

Medicare Part B: Covers doctor visits. There is a monthly premium that is usually deducted from your monthly Social Security check, a deductible ($203 in 2021) and, typically, coinsurance of 20% for most services. No coinsurance or deductible is charged for an annual wellness visit or for preventive services such as a mammogram or prostate cancer screening.

Medicare Supplement or “Medigap” plans: Help cover the out-of-pocket deductibles and co-insurance associated with Medicare Part A and Part B. Medigap provides supplemental coverage for people who do not have employer- or union-sponsored retiree health coverage or Medicaid, because their incomes and assets are too high to qualify. A quarter of beneficiaries in traditional Medicare had a private, supplemental Medigap policy in 2015, paying for it via monthly premiums, which help keep health costs predictable. Medicare Supplement plans are available through private health plans, such as Blue Cross Blue Shield of Massachusetts.

Part C or Medicare Advantage plans: Are offered through private plans like Blue Cross and cover all of the benefits of Part A and B and then some. These plans provide greater care coordination and additional benefits like dental, vision and hearing coverage. They can also include Part D prescription drug coverage. Enrollment in Medicare Advantage plans has grown over time, with more than 24 million beneficiaries enrolled in Medicare Advantage in 2020, more than a third of all Medicare beneficiaries.

Part D plans: Help pay for drug costs and are offered through private plans like Blue Cross. Plans vary in their costs and covered drugs. Enrollees pay monthly premiums and some of the cost for prescriptions. In 2020, more than 46 million people on Medicare were enrolled in a prescription drug plan.

Source: Coverage, a news service of Blue Cross Blue Shield of Massachusetts

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