As we get older, we face more health concerns. This is nothing new. But for those without health insurance, it can pose an enormous challenge mentally, physically and financially. Thankfully, there’s Medicare, the federal government’s health insurance program, which dates back to 1965. That’s the year that President Lyndon Johnson signed the Medicare and Medicaid Act, which is also known as the Social Security Amendments of 1965, into law.

Medicare, which is managed by the federal government’s Centers for Medicaid and Medicare Services, plays an important role for millions of people every year by providing coverage for health services such as primary care and specialist visits, surgery and hospital stays, screenings and diagnostic tests, prescription drug care coverage, mental health services and more. In fact, in 2021, more than 63 million people enrolled in Medicare.

For the millions of adults who sign up for Medicare every year, however, the process can be confusing, and even daunting. That’s why we’ve put together a guide to help first-timers as well as long-timers understand Medicare, and how to make the most of it.

What is Medicare?

Medicare, the federal government’s health insurance program, is available to people who are 65 and older, as well as younger people with certain disabilities and conditions, and all people with end-stage renal disease. Medicare policies are for individuals—not couples or families—so it’s important to choose the one that’s best for your own health today, while also looking ahead to the future.

(Note: the content below is aimed at older adults; others can find information on signing up on Medicare’s website.)

When can I sign up for Medicare?

There are a few different times you can sign up for Medicare, and they depend on your circumstances.

• During your “Initial Enrollment Period.” If you’ve never signed up for Medicare before, your “Initial Enrollment Period” begins three months before you turn 65, and ends three months after the month you turned 65. If you miss that period, you may have to wait to sign up, you also may need to pay a penalty.
• During the “Open Enrollment Period.” From October 15 to December 7 you can choose, change or drop a plan for the upcoming calendar year. Coverage begins January 1.
• During the “Medicare Advantage Open Enrollment Period.” Those who are enrolled in a Medicare Advantage Plan (more on that in the next section) can change that plan or switch to Original Medicare between January 1 and March 31. Keep in mind you can only switch once during that period.

What are the different Medicare offerings?

Understanding the different plans is a little like decoding Medicare alphabet soup. Briefly, there are “Original Medicare” plans that cover hospital visits (Part A) and healthcare provider visits (Part B); there are Medicare Advantage Plans (Part C) offered through private insurers as alternatives to Medicare (and usually include A, B and D), along with prescription coverage plans (Part D) and MediGap, which is supplemental insurance. Here’s a look at what each covers:

Medicare Part A

It’s accepted by any providers in the US who take Medicare, and covers:

• In-patient hospital care
• Care at skilled nursing facilities
• Hospice care
• Home health care

Cost: Most people do not have to pay a monthly premium for Part A, because they paid Medicare taxes while working. Patients will need to pay a deductible along with co-payments for certain care.  

Medicare Part B

It’s accepted by any providers in the US who take Medicare, and covers:

• Visits to doctors and other health care providers
• Preventive services, such as vaccines, screenings and annual visits
• Outpatient care
• Home health care
• Certain medical equipment

Cost: Monthly premium; plus patient usually pays 20 percent of the Medicare-approved amount (coinsurance) after meeting their deductible. Higher-income earners will pay higher premiums.

Medicare Advantage Part C

These plans are offered by private companies that Medicare approves, like Blue Cross Blue Shield of Alabama’s Blue Advantage plans. Plans can be HMOs or PPOs, and will include hospital services (Part A) as well as healthcare visits (Part B), and sometimes prescription drug coverage (Part D). They may also offer coverage for other types of care, such as vision, hearing and dental. These policies abide by rules set by Medicare, and sometimes cost less out-of-pocket. One caveat: the patient may need to see health care providers who are in-network, and may need a referral in order to see a specialist.

Cost: Monthly premium; plus there may be copay/coinsurance costs, depending on the plan. 

Medicare Part D

This refers to the different prescription drug plans available. Part D plans are offered by private companies that follow the rules set by Medicare (like BlueRx), and can help you save on prescription medications, as well as certain vaccinations. Each plan will have its own “formulary,” which is the list of medications it covers. If you know you need to be on particular medications, check those lists before choosing a specific plan to find one that offers the best coverage for your needs. You must have Part A or B to purchase Part D.

There are some financial rules to be aware of in these plans. When you and your plan spend $4,660 on prescriptions, you reach a coverage gap, also referred to as “The Donut Hole.” At that point, you’ll be responsible for 25 percent of what your medications cost until you reach the level for “catastrophic coverage,” which is $7,400. Then, you’ll pay a small coinsurance or copay amount for covered drugs until the end of the calendar year.

Cost: Monthly premiums, along with deductibles, coinsurance and copays will vary by plan. Higher-income earners will pay higher premiums. 

Medicare Supplemental Insurance (Medigap)

While Medicare plans cover many healthcare costs, they don’t cover everything. That’s why some people opt to also get supplemental insurance, known as Medigap, which is the name for plans sold by private insurance companies. Medigap plans, like Blue Cross Blue Shield of Alabama’s CPlus, can help pay for costs such as copays, coinsurance and deductibles. (Medigap is not for people who have Medicare Advantage plans). There are a number of Medigap plans to choose from, and prices and benefits vary, so be sure and do your research to find one that fits your needs.

Cost: Varies by plan.

How do I choose the best plan for me?

Now that you’ve read the basics, it’s time for the tough work: choosing which plan is right for you. You’ll want to go with a plan that best covers what you need now—including the doctors and specialists you see, as well as the medications you take—while also considering what you might need in the future. Be sure to consider out-of-pocket costs as well as the quality of coverage.

It’s no small task! If you need another opinion, consider talking with your health provider team. They know your health history best and deal likely with Medicare daily, so they may be able to address some of your questions and concerns. And remember, nothing is permanent! As your health care needs change, you can always choose different coverage during the next Open Enrollment period.