Medicare Basics:

Medicare is administered by Centers of Medicare and Medicaid Services. It has four different parts.

Part A:

Also called Hospital Insurance covers inpatient hospital care, skilled nursing facility, hospice and home health care. Part A is free, if you, your spouse, or your former spouse, have paid Medicare taxes for more than 40 quarters. You are rerquired to pay premiums if you have worked less than 40 quarters.

Part B:

Also called Medical Insurance covers doctors’ services, hospital outpatient care, home health care and preventative services. For 2014, the Part B premium is $104.90 per month. Beneficiaries with income greater than $85,000 and married couples with income greater than $170,000 will pay a higher monthly premium.

If you sign up late for Medicare Part B, you will have to pay a significant penalty every month, along with your Part B premium.You may not have to pay the penalty if you had health insurance through your job or your spouse's job when you were first eligible to sign up for Medicare Part B.

Although Original Medicare (Part A and Part B) pays for some preventive services and covers most medically necessary services, but it does not cover all medical services. Also it does not pay 100% of covered services. There are deductibles, co-pays ans co-insurance.

Some of the services not covered by Original Medicare are hearing aids, eyeglasses, dental care, acupuncture, chiropractic care, long-term care at home or in a nursing home and health care outside the United States.

With only Original Medicare you could have sizable out-of-pocket health care expenses and they will increase as you age.

Part C:

Also known as Medicare Advantage plans. You must have both Part A and Part B to enroll in a Medicare Advantage plan. These plans can be purchased from Medicare approved private insurance companies. By law, these plans cover everything that Medicare Part A and Part B cover. Medicare Advantage plans pay instead of Medicare, not in addition to Medicare. The deductibles, co-pays, and co-insurance are lower than Original Medicare. There is an annual out of pocket maximum after which you have 100% coverage; there is no out of pocket maximum with Original Medicare. Coverage includes emergency and urgent care. Some plans may even include routine vision, routine dental and/or wellness programs.
Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans.

Part D:

Prescription Drug Coverage was enacted as part of the Medicare Modernization Act of 2003 and went into effect on January 1, 2006. This coverage can be purchased only from Medicare approved private insurance companies.

You are eligible for prescription drug coverage under a Part D plan if you are entitled to benefits under Medicare Part A and/or enrolled in Part B. Beneficiaries can obtain the Part D drug benefit through two types of Medicare approved private plans: they can join a stand-alone Prescription Drug Plan for drug coverage only or they can join a Medicare Advantage plan that covers both medical services and prescription drugs.

If you don’t sign up when eligible for Medicare Part D, you will have to pay a significant penalty every month, along with your Part D premium. You will pay this penalty as long as you have Medicare Part D. You may not have to pay the penalty if you are low income or if you had other drug coverage through your job, your spouse's job, retiree coverage, or the Veterans Administration.