ABCD: An Overview
Are you confused by the Medicare process with PLANS and PARTS and LETTERS seemingly flying about everywhere like out-of-control bats? With all those plans, parts, and letters, you would think that the government is behind it. Oh yah, they are!
So, if you’re a member of the “Confused Club,” well, don’t feel bad. In dealing with hundreds of clients, including many doctors and university professors, the Confused Club includes 98% of everyone. Not to worry. Let’s try and get you a membership in the “I Get It Now” club.
Here are the basics of how Medicare generally works: Three months before you turn 65, you become eligible to apply for your Medicare card. You get this through the Center for Medicare Services (CMS), which is part of the Social Security Administration. Your Medicare coverage then starts on the first day of the month of your 65th birthday. For instance, if your birthday is August 28, then your Medicare coverage will begin August 1. Unless that is, your birthday happens to be on August 1, in which case your Medicare coverage will begin July 1. How crazy is that?
Your Medicare includes TWO parts: Part A, which is hospital coverage, and Part B, which is doctor costs, lab costs, medical equipment - just about everything else that’s medical. It’s important to note that Medicare does not cover Part D which is prescription drug coverage. Therefore you get this part separately by signing up for a Medicare Advantage plan, which almost always includes prescription drug coverage. Or, by signing up for a Prescription Drug Plan (PDP) if you stay with Original Medicare. More on that in the section on Two Types of Medicare.
For most people, Part A is free of cost and Part B costs $148.50 a month (in 2021) unless you have a high income (about $170,000 as a duel filer) in which case you will pay more called IRMAA.
Medicare covers 80% of your Medical costs. That said, most people would figure that 80% coverage is not nearly good enough, especially considering that the other 20% that comes out-of-your-pocket has no limits on it and your 20% share could add up to the size of a small state’s entire budget, such as that of Rhode Island. Do not despair though. This is where you will have two very different choices: A Medigap Insurance Supplement (usually Plan G) or a Medicare Advantage Plan, also known as Part C. You need to choose one or the other.
Choice One: Medicare Advantage
Or, Choice Two: Original Medicare with Medicare itself paying 80% and a Medigap supplement, such as Plan G, picking up the rest.
You never choose both.
Either way, you have to pay CMS (Medicare) the $148.50 for Part B and be issued your Medicare card before you can sign up for either a Medicare Advantage Plan (which includes prescription drug coverage) or a Medigap Supplement (which does not). So, if you go this second route of Original Medicare you’ll also need to sign up separately for a Prescription Drug Plan (PDP).