Understanding Medicare: Basics You Need to Know

Understanding Medicare

Medicare consists of several parts and, contrary to popular belief, doesn’t pay for everything. These facts make it seem complicated, but once you know how the program’s facets function, it becomes easier to understand. This post provides an introduction to understanding Medicare.

What is Medicare?

Medicare is national health care coverage in the United States, primarily for individuals ages 65 and over. When you become eligible for Medicare, you have an Initial Enrollment Period, beginning three months prior to your 65th birthday and ending three months after. 

Part A

Should you choose to delay enrollment in Part A and lack creditable coverage (meaning at least as good as Medicare), you’ll need to pay a late enrollment penalty. This penalty is 10% of your monthly premium for twice the number of years you were eligible but didn’t enroll. 

Part B

Those with lower incomes and limited resources may be eligible for a Medicare Savings Program, covering the Part B premium. Delaying coverage from Part B while lacking creditable coverage also results in a late enrollment penalty. This penalty is 10% of the monthly premium for each year you weren’t enrolled.

Part C (Advantage)

Before enrolling in an Advantage plan, make sure to do your research and investigate the star rating. This rating system shows how satisfied others in your area have been with these plans. Advantage plans commonly take the form of Preferred Provider Organizations (PPOs) which means they involve doctor networks.

Part D (Prescription Drug Plans)

If you aren’t taking any prescription medications when it’s time to sign up for Medicare, it’s wise to pair your coverage with a Part D plan. The average Part D monthly premium in 2021 is $33.06 per month. So, it’s likely that the money you save on prescription medication you’ll need in the future will be worth the premiums.

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