Alphabet Soup: Making Sense of Medicare

When enrolling in Medicare, knowing your ABCs – and D – is important. Thankfully, Phelps Health’s EnrollU Department is here to help. Johanna Lawrence, a certified application counselor with EnrollU, unpacks Medicare and its different parts by answering commonly asked questions about the federal health insurance program.

What is Medicare?

Medicare is a federal health insurance for people ages 65 and older, individuals with long-term disabilities or those with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). You also qualify for Medicare if you are disabled for 24 months or longer (on Social Security disability).

When talking about Medicare, we often hear about Medicare Parts A, B, C, D and all of these supplement plans. Can you make sense of these?

Part A is your hospital coverage, which covers inpatient hospital care, care in a skilled nursing facility, hospice care and some home health care.

Part B is your medical care and covers doctor's visits, outpatient care, lab work and preventive services. Parts A and B are what we consider to be Original Medicare.

Part C gets a little more complicated. Part C is a Medicare Advantage Plan and is not an official part of Medicare. These are plans offered by private insurance companies. Essentially, you forgo your Original Medicare to have your Medicare handled and managed by a private insurance company.

These companies include Anthem, WellCare, UnitedHealthcare and Humana. So, instead of having the federal government manage your Medicare, your plan is managed by a private company. Bottom line: You can choose between Original Medicare or Medicare Advantage.

Part D adds prescription drug coverage to Original Medicare (Parts A and B). Part D is the easiest one to remember; think “D” for drugs.

Medicare Supplement Plans: Original Medicare (Parts A and B) will generally cover about 80% of your healthcare costs, leaving you with 20% to pay out-of-pocket. Medicare Supplement Plans (A-N) are designed to cover that remaining cost. The most popular plan is G, which covers all but your Part B deductible.

What is the difference between Medicare and Medicaid?

Medicare is federal health insurance. You qualify based on your age (65 and older) or any kind of disabilities that you may have. Medicare, as mentioned before, has a cost-sharing aspect, for example, 80/20. Patients are responsible for a portion of their healthcare. Medicaid, on the other hand, provides health coverage to eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Whereas Medicare is federal, Medicaid is administered by the states, according to federal requirements, and typically, there’s no cost sharing for the consumer.

How do I sign up for Medicare and how soon will my coverage begin?

For Parts A and B, you sign up through the Social Security Administration. You can visit your local Social Security office or apply online at https://www.ssa.gov/benefits/medicare/. For a Part D prescription drug plan or Medicare Supplement Plan, you would sign up directly through the private insurance company. And that's where we come in. While EnrollU doesn’t work directly with the Social Security Administration, we can help guide you through selecting Medigap, a Medicare Supplement Plan or Part D and get you in touch with the right people.

When you're initially enrolling, you have a 7-month window to enroll. It's 3 months before your birthday month, the month of your birthday, and then 3 months after. Your coverage start date depends on when, during that period, you sign up. If you sign up during the 3 months prior, your coverage is going to start on the first of your birthday month. If you sign up after that, it will be the first of the month of the following month. For example, let’s say you sign up during your birthday month, which is November. Your coverage would begin December 1. If you sign up in December, your coverage would begin January 1 and so on, until your window expires.

Do I have to enroll in Medicare when I turn 65?

As long as you have other creditable coverage (coverage through an employer or a spouse’s employer), you do not have to sign up. And technically you don't have to sign up at all, but if you choose to not sign up without creditable coverage, you would be subject to penalties when you decide to sign up in the future. Part A is generally free as long as you've worked 40 quarters in the United States. If you're still working, we encourage you to sign up for the Part A benefit, as it doesn't cost you anything. You will at least have this free coverage while you decide whether or not you want to get Part B or more.

Also, the penalties can be pretty substantial. The penalty for Part B, for example, is 10% for every year that you had the opportunity to get coverage but declined. So, either signing up for Medicare or having some other type of credible coverage in place is important.

Say I turn 65, but I continue working and keep my employer-offered health insurance. In these instances, would that penalty not apply?

Correct; you would not have a penalty in that case.

When is Medicare open enrollment?

Medicare open enrollment is October 15 through December 7. During this time, you also can change your Medicare Advantage or Part D plans, switch from Medicare Advantage back to Original Medicare, or vice versa. At EnrollU, we encourage you to look over your current coverage during this time, especially your Part D Plans, because prescription needs can change every year. Reviewing the available plans and seeing if there’s something better for you next year during Medicare open enrollment is important.

What are the major Medicare benefit changes for 2023?

In 2023, we are seeing three major changes. First, you will see a decrease in the Part B premium and deductibles. For example, the 2022 premium for Part B is $170.10, and for 2023, it’s going down – for the first year in a while – to $164.90. The Part B deductible is also going down, from $233 to $226. On the flip side, we're going to see marginal increases in the Part A deductibles and coinsurance. The most exciting change is that insulin charges will be capped. Beginning January 1, 2023, plans can’t charge you more than $35 for a 1-month supply of each Medicare Part D-covered insulin and can’t charge you a deductible for insulin. This change is incredibly important for diabetic patients, because insulin can be so expensive.

What is a special enrollment period (SEP) and who qualifies for these?

A special enrollment period is any time outside of open enrollment or general enrollment where you can make changes to your Medicare coverage. SEPs would include moving, losing your current coverage, having the chance to get other coverage and other special situations. Rules about when you can make changes and the type of changes you can make are different for each SEP.