Medicare Basics

Medicare Basics

Medicare is a federal health insurance program in the United States designed primarily for individuals aged 65 and older, although it also provides coverage for certain younger people with disabilities and those with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant). Established in 1965 under the Social Security Act, Medicare helps cover many essential medical services, including hospital care, doctor visits, preventive services, and prescription drugs. The program is divided into four parts: Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services; Part B helps cover outpatient care such as doctor visits, lab tests, and preventive services; Part C, also known as Medicare Advantage, is an alternative way to receive Medicare benefits through private insurance plans approved by Medicare that often include additional services like vision, dental, or hearing coverage; and Part D provides prescription drug coverage through private plans. While Medicare helps reduce healthcare costs, it does not cover all expenses, and many beneficiaries choose to enroll in supplemental insurance plans to help pay for deductibles, copayments, and other out-of-pocket costs.

Table of Contents:

Part A Covered Services:

Inpatient hospital stays
Skilled nursing facility care
Hospice care.
Limited home health care.

Part A Cost:
Usually premium-free if you or your spouse worked and paid Medicare taxes for at least 10 years.

Part A Deductibles (2025):
$1,676 per benefit period.

Part B Covered Services:

Doctor visits.
Preventive services (e.g., flu shots, screenings).
Outpatient care.
Durable medical equipment (e.g., walkers, oxygen).

Part B Cost:
Standard premium is $185/month (2025), higher for higher incomes.

Part B Deductible and Co-Insurance:
$257/year (2025) deductible. After that, you typically pay 20% coinsurance for most services (no maximum limit).

Late Enrollment Penalty:
Late enrollment penalties may apply if you go without medical coverage when first eligible.

Part C Covered Services:

All Part A hospital covered services.
All Part B medical covered services.
Most plans include Prescription Drug coverage.
It may also include added benefits such as:

Dental, vision, and hearing.
Gym memberships.
Transportation to medical appointments.
Over-the-counter (OTC) items.

Offered by:
Medicare Advantage (Part C) is a private alternative to Original Medicare that bundles Part A, Part B, and often Part D into one convenient plan.

Part C Cost:
Varies by plan and location. Some plans have $0 premiums.

Part D Covered Services:
Part D helps cover the cost of prescription drugs, which Original Medicare does not.
Plans vary covered drugs (formulary), and pharmacy networks.

Offered by:
Part D or Stand-alone Prescription Drug Plans (PDPs) are offered by private insurance companies.

Part D Cost:
Varies by plan. Higher-income individuals may pay a surcharge.

Part D Deductible (2025):
Up to $590. After that, cost-sharing applies.

Late Enrollment Penalty:
Late enrollment penalties may apply if you go without credible drug coverage when first eligible.

Understanding Original Medicare

Original Medicare is the traditional fee-for-service health insurance program offered directly by the federal government. It includes two main parts:

Part A (Hospital Insurance): This covers inpatient care in hospitals, skilled nursing facility care, hospice care, and some home health services. Most people do not pay a premium for Part A if they or their spouse paid Medicare taxes while working.
Part B (Medical Insurance): This covers outpatient care such as doctor visits, preventive services, durable medical equipment, lab tests, X-rays, and some home health care. Most people pay a monthly premium for Part B.

With Original Medicare, beneficiaries can go to any doctor, hospital, or provider that accepts Medicare nationwide—without needing referrals. However, Original Medicare does not cover everything, such as most prescription drugs, routine dental, vision, or hearing services. It also has deductibles, coinsurance, and copayments, which is why many people choose to add a Medicare Supplement Insurance (Medigap) policy to help pay out-of-pocket costs, and a Part D plan for prescription drug coverage. Original Medicare is different from Medicare Advantage (Part C), which is offered through private insurance companies and may include additional benefits.

Understanding Medicare Supplement (Medigap)

Medicare Supplement Insurance, commonly known as Medigap, is a type of private insurance that helps pay for “gaps” in coverage left by Original Medicare (Parts A and B). These gaps include deductibles, copayments, and coinsurance—expenses that can quickly add up and place a financial burden on beneficiaries.

Medigap Covered Services:
Depending on the plan, Medigap may cover:

Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used up)
Part B coinsurance or copayment
Blood (first 3 pints)
Part A hospice care coinsurance or copayment
Skilled nursing facility care coinsurance
Part A and Part B deductibles (varies by plan)
Foreign travel emergency coverage (up to plan limits)

Note: Medigap does not cover:

Prescription drugs (you need a Part D plan for that)
Routine dental, vision, or hearing
Long-term care
Private-duty nursing

Remember, these premiums are in addition to your Part B premium, which is $185/month in 2025 (standard amount).

Understanding Medicare Enrollment Periods

What is it:
Your Initial Enrollment Period (IEP) is your first chance to sign up for Medicare when you become eligible — usually when you turn 65 (or after 24 months of disability benefits).

When You Can Enroll:
Your IEP is a 7-month window that includes:

3 months before your 65th birthday month.
Your birthday month.
3 months after your birthday month.

During this period, you can enroll in:

Medicare Part A (Hospital Insurance).
Medicare Part B (Medical Insurance).
Medicare Advantage (Part C).
Prescription Drug Plan (Part D).

Who qualifies:
You may use this SEP if you delayed enrolling in Medicare Part A and/or Part B because you (or your spouse) were covered under an employer or union group health plan.
When that coverage ends, you get a Special Enrollment Period to sign up without penalty.

When You Can Enroll:
The SEP lasts for 8 months starting the month after your employer or union coverage ends, or the month after your employment ends — whichever happens first.

You can choose to enroll in:

Medicare Part A (Hospital Insurance).
Medicare Part B (Medical Insurance).
And, if desired, a Medicare Advantage (Part C) or Prescription Drug Plan (Part D) once your Parts A & B are active.

What it is:
If you missed your IEP and don’t qualify for a SEP, you can sign up for Medicare Part A and/or Part B each year Jan 1 – Mar 31. Your coverage begins the 1st of the month after you enroll.

What you can do during GEP:

Enroll in Part A and/or Part B (late penalties may apply if you lacked creditable coverage).
Medicare.
After A/B are active, you may join Medicare Advantage (Part C) plan, or Prescription Drug Plan (Part D).

When does it occur?
Oct 15 – Dec 7 every year. Changes take effect Jan 1 if the plan gets your request by Dec 7.
Centers for Medicare & Medicaid Services.

What you can do:

Switch: Medicare Advantage (MA/MAPD) ⇄ another MA/MAPD.
Move: Original Medicare → Medicare Advantage (or back to Original Medicare).
Change drug plans: Join/switch/drop a Part D (PDP) or MAPD.

Your last application submitted by Dec 7 is the one that takes effect Jan 1.

When does it occur?
Jan 1 – Mar 31 each year. Only for people who are already enrolled in a Medicare Advantage plan as of Jan 1 (there’s also a special MA OEP for newly eligible folks—see below).

What you can do (one change only)?

Switch to another Medicare Advantage plan (with or without drug coverage), or
Drop Medicare Advantage and return to Original Medicare (and you may join a stand-alone Part D plan).

Coverage starts the 1st day of the month after the plan gets your request.

What you can’t do in MA OEP?

You cannot switch from Original Medicare to a Medicare Advantage plan.
You generally cannot enroll in or switch stand-alone Part D plans unless you’re leaving MA and going back to Original Medicare.

Understanding the 4 Parts of Medicare

Understanding Original Medicare

Understanding Medicare Supplement (Medigap)

Understanding Medicare Enrollment Periods

Need Help or Quote?

Vision Insurance Group, LLC.

Clients

Services