The Basics of Medicare | Adviser Investments

The ABCs of Medicare

All of the talk of inflation this week came with one bright side for retirees: Social Security benefits, tied to inflation, will increase 5.9% next year—the biggest bump in 39 years. Where might that extra income be spent? Health care is one option.

We recently wrote about Medicare’s Annual Election Period, the two-month window beginning today (Oct. 15) when recipients can fine-tune their Medicare coverage. Since the program’s creation in the 1960s, Medicare has been expanded and amended several times, leaving participants facing a confusing hodgepodge of rules and terminology. This week, we’ll sort through the alphabet soup of Medicare coverage and spell out what you’ll need to know to get started.

Regardless of which coverage options you choose, you need to sign up on time. Your “initial enrollment window” starts roughly three months before your 65th birthday and extends for about three months after—failing to act during that period can lead to higher premiums. There is one exception: You can delay Medicare enrollment if you’re still working at age 65 and receive health care through your employer. In this case, we recommend enrolling a month before you retire to avoid gaps in coverage.

Let’s break down Medicare’s benefits by the letter:

  1. Medicare Parts A and B. Medicare Part A covers hospital care and Medicare Part B covers doctor visits. Everyone who signs up for Medicare receives these two basic types of coverage, sometimes referred to as “Original Medicare.” And we do mean basic: Many common health care expenses are not fully covered by Parts A and B. If you require frequent hospital stays or doctor visits, the deductibles can be confusing and expensive. As a result, many people choose to supplement or replace Parts A and B with additional insurance.
  2. Medicare Part C. More commonly known as Medicare Advantage, Medicare Part C consists of the private insurance plans that can be used as alternatives to Medicare Parts A and B. Most Medicare Advantage plans offer more comprehensive coverage than the originals and may include things like glasses and contact lenses, as well as dental care and prescriptions. Premiums for Medicare Advantage are generally more costly than for Parts A and B, and benefits and availability vary by geographic area.
  3. Medicare Part D. Medicare Part D is supplemental insurance that covers prescription costs.
  4. Medigap (Plans A through N). Like Medicare Advantage, Medigap plans help bridge the gaps in Medicare Parts A and B. Medigap plans are delineated by letters—ranging from Plan A to Plan N, with Plan G being the most comprehensive. In general, Medigap plans offer less coverage and are less expensive than Medicare Advantage plans. However, Medigap plans don’t include prescription coverage; if you opt for one, you’ll also need to get a separate Part D prescription plan.

How do you know which plans to choose? Check out to see the Medicare Advantage plans available in your area. If you don’t find the coverage you want, explore a Medigap and Part D prescription plan.

For more guidance, please listen to our Medicare Made Simple podcast or check out our handy Medicare reference guide. And remember, you can always contact your wealth management team for advice specific to your situation. Your team’s financial planning professional would be happy to discuss these issues with you—after all, we are The Planner You Can Talk To.

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