Medicare 101 Guide: How Does Medicare Work? | Oscar | hioscar Blog | Oscar
Medicare 101: A handy starter guide
Learn how Original Medicare and Medicare Advantage work, and how to pick a plan that’s right for you.
Medicare AdvantageMedicare
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If you're in the process of deciding how you will get your Medicare benefits, or you’re just doing some health insurance research for a loved one who may be eligible for Medicare, you’ve no doubt noticed that there are a lot of coverage options. At Oscar, we like to keep things simple and easy, so we’ve compiled this primer that breaks down the basics of Medicare.
What is Medicare?
Medicare is a federal health insurance program for: people who are 65 and older, certain people under 65 who have disabilities, and people with end-stage renal disease. Medicare is broken into four parts: A,B,C, and D.
What is Medicare part A?
Part A covers hospital stays and other inpatient care. You can get Part A benefits directly from the government or by enrolling into a Medicare Advantage plan.
What is Medicare part B?
Part B helps cover doctor visits, outpatient surgery, labs, and medical equipment. You can get Part B benefits directly from the government or by enrolling in a Medicare Advantage plan.
What is Medicare part C?
Part C (also known as Medicare Advantage), is privatized Medicare, which means it’s offered by health insurance companies like Oscar. Medicare Advantage plans combine everything you get in Part A and Part B, usually with added benefits, like prescription coverage, dental, vision, and wellness perks.
Part D covers prescription drugs and is only offered by private insurance companies, either through Medicare Advantage plans that include prescription drug coverage, or Prescription Drug Plans that offer Part D coverage on its own.
How Medicare works can get pretty confusing, so we made this handy chart breaking down the four parts of Medicare:
Your Premium (opens in new tab): is the amount you pay for your health insurance coverage each month. Original Medicare and Medicare Advantage plans generally have different monthly premiums. In Original Medicare, you will pay a monthly Part B premium of $135.50 (in 2019). You may also have to pay a Part A premium if you did not pay enough Medicare taxes while you were working.
Many Medicare Advantage plans offer $0 or low premiums. These amounts will vary by plan and by geographic location, so be sure to check the specific plans available in your area.
Coinsurance (opens in new tab): is the percentage you pay for a covered health service—it varies based on the total cost of the services you receive.
Original Medicare usually requires a 20% coinsurance, so beneficiaries are responsible for paying 20% of the total bill. This can vary based on the amount of the final bill, which can make planning ahead a challenge.
Medicare Advantage plans usually have set dollar amounts for most services and procedures, which allows their members to plan ahead.
Most Medicare Advantage plans have a MOOP. Once you’ve reached this amount for the year, your insurance company pays for 100% of covered services.
Original Medicare plans do not have a MOOP, so there’s no limit to how much you’ll have to spend in a calendar year.
Coverage
Original Medicare plans only include hospital and medical insurance, so if you need prescription drug coverage, you’ll need to purchase a separate Part D plan.
Medicare Advantage plans usually combine all Part A and Part B services with Part D prescription drug coverage.
Which doctors and hospitals can you use? If you have Original Medicare, you can go to any doctor that accepts Medicare. Most Medicare Advantage plans require you to see a doctor or facility in their network. When in doubt, ask your doctor what Medicare Advantage plans they accept.
Medicare supplemental insurance benefits
Some Medicare Advantage plans include dental, vision, and hearing, as well as perks like gym memberships and home delivery for prescriptions.
You can compare the differences between Original Medicare and Medicare Advantage in more detail here:
Original Medicare vs Medicare Advantage Chart
Medicare Eligibility and Medicare Advantage Enrollment
Most people 65 and older who get Social Security benefits are automatically enrolled in Part A and receive a welcome letter (opens in new tab) from the government. The welcome letter tells them how to get Part B and prescription drug coverage.
To enroll in a Medicare Advantage plan, a person must have Part A and Part B and live in the Medicare Advantage plan’s service area. Individuals can first enroll into a plan during the seven month period that begins three months before and ends three months after their 65th birthday. Medicare beneficiaries can also make changes to their plan during the Annual Election Period (AEP), which happens every year from October 15th to December 7th. If you make a change, the new plan usually becomes effective on January 1st of the upcoming year.
