Medicare 101

Below is basic breakdown of Medicare and its different parts. For the most comprehensive and up to date information always consult the government’s official website directly at:

Medicare is a national social insurance program, administered by Centers for Medicare & Medicaid Services (CMS) since 1965. It guarantees access to health insurance for Americans ages 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD). Medicare is divided into 4 Parts: A, B, C, D

Part A - Hospital

Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

Part B - Doctor

Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services.

**When you have enrolled in both Part A AND Part B together, you have Original Medicare.**

Part C - Medicare Advantage Plans

A Medicare Advantage Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you're enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and aren't paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage. You must be enrolled in Original Medicare (Part A & B) to order to join a Medicare Advantage plan.

Part D - Prescriptions Drug Plans

Prescription Drug Plans or PDP’s add prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, Medicare Medical Savings Account Plans, and Medicare Supplement Insurance Plans (Medigap). These plans are offered by private insurance companies and approved by Medicare. Medicare Advantage Plans may also include prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.

Medicare Supplement Insurance Plans (Medigap)

Medicare Supplement Insurance Plans or Medigap plans are sold by private companies and help pay some of the health care costs that Original Medicare (Part A & B) doesn't cover, like copayments, coinsurance, and deductibles. Some Medigap policies also offer coverage for services that Original Medicare doesn't cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share. A Medigap policy is not the same as Medicare Advantage Plan. Medigap plans supplement Original Medicare copayments, coinsurance, and deductibles, whereas Medicare Advantage Plans establish benefits outside of Original Medicare.

Late Enrollment Penalty - Part B and Part D

Part B – Late Enrollment Penalty If you don't sign up for Part B when you're first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it. Usually, you don't pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B later during a Special Enrollment Period. A common Special Enrollment Period is receiving your current insurance benefits from a qualified work plan.

Part D – Prescription Drug Plan Late Enrollment Penalty The late enrollment penalty is an amount added to your Medicare Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there's a period of 63 or more days in a row when you don't have Part D or other creditable prescription drug coverage. The cost of the late enrollment penalty depends on how long you went without creditable prescription drug coverage. The late enrollment penalty is calculated by multiplying 1% of the "national base beneficiary premium" times the number of full, uncovered months you were eligible but didn't join a Medicare Prescription Drug Plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. The national base beneficiary premium may increase each year, so the penalty amount may also increase each year.

Medicare Enrollment Periods

For Medicare Advantage Initial Enrollment Period 7 Months 7-month period that starts 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.

Annual Enrollment Period (AEP) or Open Enrollment October 15th – December 7th During this time of year you can:

Change from Original Medicare to a Medicare Advantage Plan.
Change from a Medicare Advantage Plan back to Original Medicare.
Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
Switch from a Medicare Advantage Plan that doesn't offer drug coverage to a Medicare Advantage Plan that offers drug coverage.
Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn't offer drug coverage.
Join a Medicare Prescription Drug Plan.
Drop your Medicare prescription drug coverage completely.


Medicare Advantage Disenrollment Period January 1st – February 14th

If you’re in a Medicare Advantage Plan, you leave your plan switch back to Original Medicare. If you switch back Original Medicare during this period you will have until February 14 to join a Prescription Drug Plan to add drug Coverage. You cannot switch from one Medicare Advantage Plan to another during this time.

Special Election Periods (SEP): This is only a partial list of Special Election Periods that allow Medicare beneficiaries to avoid Late Enrollment Penalties and/or make changes to their Medicare plan selections year round. For a complete list of SEP’s please consult or your licensed insurance agent:

Dual Eligible – Full & Partial Medicaid with Medicare.
LIS – Non Medicaid Low Income Subsidy or Extra Help. Involuntary Loss of Credible Coverage.
Loss of Employer Group Coverage.
Change in Residence.