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Medicare 101
Understanding the basics of Medicare
AAA is here to guide your Medicare journey
Like any journey, navigating the road to Medicare begins with research and planning to decide what's right for you. We're here to help with information on:
Coverage Options, Including Medicare Advantage Plans
You can also schedule a complimentary Medicare review or call (877) 477-7120 and speak with a AAA Licensed Insurance Agent to find out more.
Medicare is the federal health insurance program for people who are:
- 65 or older
- Younger than 65 with a qualifying disability
- Any age with a diagnosis of end-stage renal disease (ESRD)
What are the parts of Medicare?
There are four different parts of Medicare that cover specific services. When you enroll in Medicare, you’ll be signing up for Parts A (hospital insurance) and B (medical insurance). You’ll also likely need to add Part D prescription drug coverage—either by purchasing a stand-alone plan or by selecting a Medicare Advantage plan (Part C) that includes prescription drug coverage.
It's important to know that, while Medicare Part D drug coverage is optional, if you decide not to get it when you’re first eligible and don’t have other creditable prescription drug coverage or get Extra Help, you’ll likely pay a late enrollment penalty if you join a Part D plan later.
The four parts of Medicare
Medicare Parts A and B are what’s known as “Original Medicare”. When you become eligible to enroll in Medicare, this is what you’re signing up for. (See "Enrolling in Medicare" for details on when and how to sign up.)
While Original Medicare helps pay for your hospital care and doctor visits, it doesn't cover everything. If you rely solely on Original Medicare, you’ll have an annual deductible to meet, and you’ll be responsible to pay 20% coinsurance on all covered medical services.
This leads to gaps in coverage and higher out-of-pocket costs if you rely solely on Original Medicare.
What Original Medicare doesn't cover
Covering the gaps
To cover the gaps and lower out-of-pocket costs, most Medicare beneficiaries add private insurance coverage, such as a Medicare Advantage plan (Part C) or Medicare Supplement (Medigap) plan, and Medicare Part D prescription drug coverage .
Our AAA Licensed Insurance Agents will talk with you to understand your personal situation and help you sort through your options. We’ll give you unbiased advice about the coverage options that are best for you.
Medicare premiums vary, depending on how long you (or your spouse) worked, when you first enroll, and your current income.
Most people do NOT pay a monthly premium for Part A. If you or your spouse have made payroll contributions to Social Security for at least 10 years, you won’t pay a Part A premium. If not, you’ll pay a monthly Part A premium—and that premium will be higher if you enroll late.
Everyone pays a monthly premium for Part B. The premium varies depending on your income and when you enroll in Part B. Most people pay the set standard premium. Talk to our AAA Licensed Insurance Agents to estimate what your Part B premiums will be.
Enrolling in Medicare
Your Initial Enrollment Period (IEP)
As you approach your 65th birthday, you'll have a 7-month Initial Enrollment Period (IEP) that begins three months before your 65th birthday and ends three months after.
It’s important to understand how your personal situation may impact enrollment deadlines. If you’ll be working past age 65 and/or you have employer- or plan-sponsored coverage when you first become eligible, you may not need to enroll in Medicare until you retire or that coverage ends.
Our Licensed AAA Insurance Agents can help you determine the best enrollment timeline for you to ensure you avoid costly, lifetime late-enrollment penalties.
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When to enroll
The sooner you enroll in Medicare, the sooner your coverage will start. If you enroll before your birthday month, your coverage will start the month you turn 65. If you wait until your birthday month or later, your coverage won’t begin until after the month you turn 65—in some cases 2-3 months after you enroll. See the chart below for details.
| If you enroll: | Your coverage will start: |
|---|---|
| Before the month you turn 65 | The month you turn 65 |
| The month you turn 65 | The month after your birthday month |
| 1 month after you turn 65 | 2 months after you enroll |
| 2 or 3 months after you turn 65 | 3 months after you enroll |
| IEP Initial Enrollment Period |
AEP Annual Enrollment Period |
MAOEP Medicare Advantage Open Enrollment Period |
SEP Special Enrollment Period |
|
|---|---|---|---|---|
| Medicare Enrollment Periods |
Your first eligibility for Medicare. 7-month period starting 3 months before your birth month and continuing for
3 months after your birth month.
|
Yearly enrollment begins October 15 and ends December 7. You can add, change or drop Medicare Advantage (MA) or
Part D coverage.
|
Yearly from January 1 through March 31. If you have an existing MA plan, you can switch plans.
|
For those with Special Needs Plan (SNP), Extra Help/Low-Income Subsidy (LIS), or State Pharmaceutical Assistance Program. You may also qualify if you’ve had certain life events, moved in or out of a service area, or if your household income falls below a certain amount. |
How to enroll
Your Initial Enrollment Period begins the second leg of your Medicare journey. Once you’ve enrolled, you can move on to choosing the coverage that's right for you.
If you’re already collecting Social Security benefits, you don’t need to do a thing. You’ll be automatically enrolled and will receive your Medicare card by mail. If not, you can easily sign up online or by phone.
And, as always, your trusted friends at AAA are here to guide you if you need help.
Remember, if you don’t enroll in Medicare Parts A and B during your Initial Enrollment Period, you’ll have to wait to sign up. This could cause a gap in your coverage, and you may have to pay a lifetime late enrollment penalty. That penalty increases the longer you wait.
Coverage options
Deciding how you want to get your coverage
Once you’ve enrolled in Medicare, it’s time to decide how you want to get your coverage. Because of the gaps in coverage and the high out-of-pocket costs, our AAA Licensed Insurance Agents always advise against relying on Original Medicare alone.
Most Medicare beneficiaries choose a Medicare Advantage plan or Medicare Supplement Insurance (often called Medigap) to deliver their benefits.
Original Medicare + Medigap
Original Medicare provides:
- Part A Hospital Insurance
- Part B Medical Insurance
You must add:
- Part D prescription drug coverage. Offered by private carriers, Part D helps pay for your prescription drugs.
You may want to add:
- Medicare Supplement Insurance also known as Medigap. Offered by private insurance companies, Medigap helps pay some of the out-of-pocket costs that come with Original Medicare. Can help pay healthcare costs, such as copays, coinsurance, and deductibles.
Medicare Advantage Plan
Medicare Advantage Plan (Part C) provides:
- Combined Medicare Parts A and B in one plan
- Part D prescription drug coverage (included with most plans, otherwise must be purchased separately)
- Additional benefits not provided by Original Medicare, including vision, dental and hearing aid coverage (varies by plan)
Medicare Advantage plans vs. Medigap
Medicare Advantage plans (Part C) - These plans are an affordable, all-in-one healthcare option offered by private, Medicare-approved health insurance companies. Medicare Advantage plans combine your Medicare Parts A and B benefits in one plan and typically include Part D prescription drug coverage along with extra benefits Medicare doesn’t cover, such as vision, dental, and hearing benefits. Plan options and benefits will vary by the insurance provider and the area you live in.
If you choose a Medicare Advantage plan, you’ll still need to pay your Medicare Part B premium, and the Medicare Advantage plan may have an additional monthly plan premium—though some insurance providers offer $0 monthly premium plans. You’ll pay a copay for medical and hospital services you receive. But there’s no medical deductible to meet, and copays are usually much lower than the 20% coinsurance you’d pay with Original Medicare. Medicare Advantage plans are typically a more affordable choice than Medigap insurance plans.
Medicare Supplement Insurance (Medigap) - Like Medicare Advantage plans, Medicare Supplement Insurance is offered by private, Medicare-approved health insurance companies, and you must continue to pay your Medicare Part B premiums. Medigap plans are standardized and available in all 50 states; however, all plans may not be available in your area. Unlike Medicare Advantage plans, Medicare Supplement Insurance plans are designed to simply fill in the coverage gaps in Original Medicare, and Medigap plans do not include Part D prescription drug coverage, so an additional Part D plan needs to be purchased.
Pros
- Provides your Medicare Parts A and B in a single, easy-to-use plan.
- Most plans include your Part D prescription drug coverage.
- Extras like routine vision, dental, hearing coverage, and benefits for eyewear, hearing aids, and fitness programs are often included.
- Monthly plan premiums are typically lower than Medigap plans. Your yearly out-of-pocket costs are capped.
- Your yearly out-of-pocket costs are capped.
Cons
- Some plans may require you to choose your doctors and hospitals from a network.
Pros
- Supplements your Original Medicare benefits to fill in the coverage gaps and help with out-of-pocket expenses, such as deductibles, copays, and coinsurance.
- There are no network limitations, so you have nationwide coverage and can see any doctor or hospital that accepts Medicare.
Cons
- Monthly premiums can be pricey.
- Some plans have deductibles.
- A copayment may apply to specific services.
- Prescription drug coverage is not included with any Medigap plan, so you need to purchase a separate Part D plan.
- Extra benefits are not included.
Our AAA Licensed Insurance Agents are here to help you
Our AAA Licensed Insurance Agents will talk with you to understand your personal situation and help you sort through your options. We'll give you unbiased advice about the coverage options that are best for you. If you have questions, please call us at (877) 477-7120.
By calling, you agree that a AAA Licensed Insurance Agent may contact you. AAA Insurance is provided through AAA Members Insurance Agency of Western & Central New York, Inc, which offers products through AAA-affiliated companies and non-affiliated companies. Not affiliated with any government agency including Medicare. We do not offer every plan available in your area. Currently we represent 10 organizations which offer 80+ products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.