Medicare Part A helps cover Medicare eligible inpatient care in hospitals, inpatient care in a skilled nursing facility, home health care services and hospice care services. In most cases, it makes sense to enroll in Medicare Part A once eligible unless you're covered by a High Deductible Health Plan arranged with a Health Savings Account (see HSA section below).

You can get premium-free Part A at 65 if:

You already get retirement benefits from Social Security or the Railroad Retirement Board.

You're eligible to get Social Security or Railroad benefits but haven't filed for them yet.

You or your spouse had Medicare-covered government employment.

If you're under 65, you can get premium-free Part A if:

You got Social Security or Railroad Retirement Board disability benefits for 24 months.

You have End-Stage Renal Disease (ESRD) and meet certain requirements.

If you don't qualify for premium-free Part A, you can buy Part A.

If you buy Part A, you'll pay up to $505 each month. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $506. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $278.

You can enroll in Medicare Part A during your Initial Enrollment Period when you first become eligible. You can also enroll during the Medicare A&B Open Enrollment January 1st - March 31st. You can enroll in Medicare Part A at any time once eligible, if you qualify for premium-free Part A.

Your Part A Inpatient hospital costs in Original Medicare

$1,632 deductible for each benefit period ( 60 days ).

Days 1–60: $0 copay for each benefit period.

Days 61–90: $408 copay per day of each benefit period.

Days 91 and beyond: $816 copay per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime).

Beyond lifetime reserve days : you pay all costs.

Your Skilled Nursing Facility (SNF) costs in Original Medicare

Days 1–20: $0 for each benefit period .

Days 21–100: $204 copay per day of each benefit period.

Days 101 and beyond: you pay all costs.

Your Hospice costs in Original Medicare

The Medicare Hospice Benefit is an inclusive benefit, in which all services that are related to the terminal illness are covered up to 100 percent by Medicare Part A.

NOTE: Medicare Part A does not have an Annual Maximum Out of Pocket Spending Limit. If Medicare Part A is your only coverage for inpatient claims, there is no cap on your out of pocket exposure.

Medicare Part B helps cover Medicare eligible physician services, outpatient care, home health services, durable medical equipment, and other medical services. Part B also covers some preventative services. The standard base premium for Part B in 2024 is $174.70 per month. However it is "means tested" based on your modified adjusted gross income – you may have to pay more than $164.90/mo. (see Means Testing - IRMAA section).

If you are eligible for Medicare due to age (65 or older) and are covered by group health insurance based on active employment with an employer with 21 or more employees, you can defer Medicare Part B without late enrollment penalties later (Penalties explained in a separate section below). Your group remains primary to Medicare, Part B would pay after your group plan has paid. In most cases, if you are still working for an employer with 21 or more employees it does not make sense to enroll in Medicare Part B if you intend to remain on your group plan.

If you are eligible for Medicare due to age and there are 20 or fewer employees covered by your group plan, Medicare Part A&B will become primary to your group plan. If you do not enroll in Medicare A&B you will begin to accumulate late enrollment penalties (see Penalty section below). Your group plan will also pay secondary towards claims as if you had enrolled in Medicare... even if you did not enroll.

If you are under the age of 65 and eligible for Medicare due to disability the rules and requirements differ. If eligible for Medicare under 65 and covered by an employer sponsored group plan, the employer must employ 100 or more employees 50% of the year or more. If there are 100 or more employees, the group plan will remain primary. The beneficiary can defer Part B without late enrollment penalties later. However, if there are fewer than 100 employees 50% of the year, Medicare Part A&B will become your primary insurance and the group plan will become secondary. Many smaller employers will group together to obtain better group insurance rates. If your employer has a joined a group or association, only 1 of these employers must meet the 100+ (or 21+ if eligible due to age) employee requirement.

You can enroll in Medicare Part B during your Initial Enrollment Period, Open Enrollment or using a Special Enrollment Period (if you qualify).

Initial Enrollment Period
You are eligible for Medicare due to age the 1st of your 65th birth month unless you are born on the first of the month. For those born on the first, they are eligible on the first of the month prior to their 65th birth month.

Open Enrollment
January 1st - March 31st of each year. Enrolling in Part B during the Open Enrollment, Part B will begin the 1st of month following your enrollment. This enrollment period would only be used if you missed your Initial Enrollment Period and did not qualify for a Special Enrollment Period.

Special Enrollment Period
If you or a spouse is currently working, and you are covered by a group plan based on that active employment, you can sign up anytime you have the group coverage or within 8 months after the employment or coverage ends (whichever happens first). If you have COBRA or Severence health insurance, you must sign up during the 8 month period that begins the month after employment ends. COBRA will pay secondary to Medicare, if you are eligible for Medicare. COBRA will coordinate benefits as secondary, even if you do not enroll in Medicare.

If you are obtaining your health coverage through an employer plan at or after age 65, you should still review all the applicable Medicare rules to avoid potential penalties. You should also check with the employer Benefits or Human Resources Department as it pertains to the employer plan for those eligible for Medicare. Please do not assume the group coverage is better than Medicare - review all options.

Part B covers 2 types of services

Medically necessary services: Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.

Preventive services: Health care to prevent illness (like the flu) or detect it at an early stage, when treatment is most likely to work best. You pay nothing for most preventive services if you get the services from a health care provider who accepts Medicare Assignment.

Your Part B Outpatient / Durable Medicare Equipment costs in Original Medicare:

The Annual Deductible is $240 in 2024. You pay the first $240 for Part B covered services.

You pay 20% of the Medicare approved amount for most doctor services (including most doctor services while in the hospital), outpatient therapy (may be some limits) and durable medical equipment.

You pay $0 for Medicare approved clinical laboratory services.

You pay $0 for home health care

You pay 20% - 40% for most outpatient mental health care.

You pay coinsurance and co-pay amounts that vary for hospital outpatient services.

NOTE: There is no annual maximum out of pocket spending limit under Medicare Part B. Part B will cover the first 80% for eligible Part B claims leaving the beneficiary to pay 20%. Example: $100k surgery = Part B pays ~ $80k and you pay $20k.

Medicare Supplement plans also called Medigap, are sold by private insurance companies and pay for some or most of the costs ("gaps") left over by Medicare Part A or Part B. You must have both Medicare Part A and Part B to purchase this coverage. All plans are "standardized". This means all Plan A’s must adhere to the standard benefits to be offered in all Plan A policies (in other words, all Plan A’s cover the same things). This is also true for all the other Plans. Therefore, assuming the same Plan, some differences between insurance companies are the premiums, pricing methods and service.

Supplement Plans are standardized differently in Massachusetts, Minnesota and Wisconsin. These 3 states inacted Medicare reform at the state level before Medicare supplement plans were standardized in 2010 at the Federal level. If you live in one of these states, you should review your state’s material on Supplement Plans.

Some Supplement Plans have a Select option. This means you must use specific hospitals and, in some cases, specific doctors to get full coverage. Standard option Supplement Plans do not require you to use specific hospitals and/or doctors…you can use any that accept Medicare.

You can not add a Supplement Plan to an Advantage Plan. If you have a Supplement Plan (and do not terminate it) and purchase an Advantage Plan, the Supplement will not pay the deductibles, co-pays or coinsurance from the Advantage Plan.

How Medigap Plans are Priced

Medicare Supplement (Medigap) Plans can be priced or "rated" in the following three ways:

Community rated - You pay the same premium as everyone else who has the policy in a specific area, regardless of your age. Once you buy the policy, the premiums may go up because of inflation and other factors, but not based on your age. We believe Community rating to be the superior method. Community rating is required on all Medigap plans in Arkansas, Connecticut, Maine, Massachusetts, Minnesota, New York, Vermont and Washington.

Issue-age rated - The premium is based on your age when you buy (are "issued") the policy. Once you buy the policy, premiums may go up because of inflation and other factors, but not based on your age.

Attained-age rated - The premium is based on your current age (the age you have "attained"). Once you buy the policy, the premiums may go up as you get older and may go up because of inflation and other factors.

Medigap Comparison Chart for 47 of 50 states (excludes Wisconsin, Minnesota, and Massachusetts) - opens in new window.

Medigap Comparison Chart for Wisconsin - opens in new window.

Medigap Comparison Chart for Minnesota - opens in new window.

Medigap Comparison Chart for Massachusetts - opens in new window.


When Can I Enroll in Medigap?

First you must be enrolled in both Medicare Part A and Part B to apply for a Medigap plan. There is no true open enrollment for Medigap as you can apply at any time however, the first 6 months in which you are enrolled in Medicare Part B, your application must be accepted and you must be issued the preferred rate. If you apply for a Medigap plan after being enrolled in Part B longer than 6 months, you will face medical underwriting in most circumstances.

Beyond the first 6 months you are enrolled in Part B, there are other guaranteed issue rights for various situations. Only four states (CT, MA, ME, NY) require either continuous or annual guaranteed issue protections for Medigap for all beneficiaries in traditional Medicare ages 65 and older, regardless of medical history.

An insurance company can't refuse to sell you a Medigap policy under the following situations:

Situation	If born before 1-2-55 or if your Medicare Part A started before 1-1-2020, you have the right to buy	If born on or after 1-2-55 or if your Medicare Part A started on or after 1-1-2020, you have the right to buy	When to apply
You are in a Medicare Advantage plan, and your plan is leaving Medicare or stops giving care in your area, or you move out of the plan's service area.	Medigap Plan A, B, C, F, K or L (You must also return to Original Medicare)	Medigap Plan A, B, D, G, K or L (You must also return to Original Medicare)	As early as 60 calendar days before the date your coverage will end, but no later than 63 calendar days after coverage ends. Medigap cannot begin until the Advantage plan ends.
You have Original Medicare and an employer sponsored group plan (includes retiree coverage or COBRA) or union coverage that pays after Medicare and that plan is ending. Some states offer additional rights in this situation.	Medigap Plan A, B, C, F, K or L	Medigap Plan A, B, D, G, K or L	No later than 63 days after the latestest of these 3 dates Date coverage ends Date on notice telling you coverage is ending (if you get one) Date on a claim denial, if this is the only way you discovered coverage has ended.
You have Original Medicare and a Medicare SELECT policy. You most of the Select policy's service area. You can keep your Medigap policy, or you may want to switch.	Medigap Plan A, B, C, F, K or L	Medigap Plan A, B, D, G, K or L	As early as 60 days before coverage ends but no later than 63 days after coverage ends.
Trial Right. You joined an Advantage plan or All-inclusive Care for Elderly (PACE) when you first eligible for Medicare at age 65, and within the first year of joining, you decide you want to switch to Original Medicare.	Any Medigap plan sold in your state by any insurance company.	Any Medigap plan sold in your state by any insurance company (except Plan C or Plan F).	As early as 60 days before coverage will end but no later than 63 days after coverage ends.
Trial Right. You dropped a Medigap policy to join an Advantage plan (or switch to a Select Medigap policy) for the first time, you have been in the plan less than a year and you want to switch back.	The same policy you had before if the company still sells it. If your former policy is no longer available, you can buy Plan A, B, C, F, K or L.	The same policy you had before if the company still sells it. If your former policy is no longer available, you can buy Plan A, B, D, G, K or L.	As early as 60 days before coverage will end but no later than 63 days after coverage ends.
Your Medigap company goes bankrupt and you lose coverage through no fault of your own.	Medigap Plan A, B, C, F, K or L	Medigap Plan A, B, D, G, K or L	No later than 63 days from when coverage ends.
You leave an Advantage plan or drop a Medigap policy because the company hasn't followed the rules, or it misled you.	Medigap Plan A, B, C, F, K or L	Medigap Plan A, B, D, G, K or L	No later than 63 days from when coverage ends.

NOTE: Current Medicare rules state if you have an Advantage plan for the first time in your life, you have one year to change your mind and switch to a Medicare Supplement plan. If you make the switch to a Supplement plan within the "one-year trial right", the Supplement plan is “guaranteed” - the issuing insurance company cannot turn you down nor can they impose any pre-existing condition exclusions.

However, if you attempt to switch to a Supplement plan after the one-year period, the issuing insurance company has the right to ask questions about your health and underwrite your application. This could result in limitations which could include the exclusion of pre-existing conditions or outright denial of coverage. Therefore, if you have an Advantage plan and you are beyond the one-year window (referred to as your “trial right”), you should assume you may be limited only to Advantage plans for the rest of your life, as going back to a Medicare Supplement plan could be impossible or the conditions may be unacceptable to you.

Advantage plans are offered by private insurance companies. To purchase you must be enrolled in Part A and Part B, live within the service area of the plan. You pay the $164.90 per month (or more) for Part B and the premium for the Advantage Plan (and the Part A premium if not free). Advantage Plan premiums can vary dramatically based on residency, coverage and company.

Types of Advantage Plans include Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Private Fee-For-Service (PFFS), Medical Savings Account (MSA) and Special Needs Plans (SNP).

Health Maintenance Organization (HMO)

Generally you must use doctors and hospitals in the plan’s network (except for emergency care, out of area urgent care or out of area dialysis). If you go outside the network, you may have to pay the full costs. In some plans (HMO-POS) you can go out of network for a higher cost.

Prescription drug coverage may be included or excluded in the plan.

In most cases you need to choose a primary care doctor. If your doctor leaves the plan, you can select a new one.

In most cases you need to get a referral to see a specialist.

Preferred Provider Organization (PPO)

There is a network of doctors and hospitals, but you can go outside of network for a higher cost.

Prescription drug coverage may be included or excluded in the plan.

You do not need to choose a primary care doctor or get a referral for a specialist.

There are two types of PPOs – regional and local. Regional PPOs serve one of the 26 regions set by Medicare. Local PPOs serve the counties the plan chooses to include.

Private Fee-For-Service (PFFS)

You can go to any Medicare approved doctor or hospital that accepts the plan and agrees to treat you (not all will). If the plan has a network, you may pay more for an out of network provider.

Prescription drug coverage may be included or excluded in the plan.

You do not need to choose a primary care doctor or get a referral for a specialist.

Make sure you check with your doctors, hospital and other providers that they will accept the plan (they may decide not to treat you even if you have seen them before). In an emergency doctors and hospital must agree to treat you.

Medical Savings Account (MSA)

You can use any doctor or hospital that accepts Medicare. Some plans have preferred doctors and hospitals at a lower cost.

Prescription drug coverage is not included. For prescription drug coverage you can purchase a stand alone Medicare Drug Plan (Part D).

You do not need to choose a primary care doctor or get a referral for a specialist.

MSAs have two parts – a high deductible health plan and a bank account.

Medicare puts money into the bank account every year. This amount is less than the deductible.

Any Medicare covered Part A and Part B service counts towards the deductible.

The first costs come from the bank account with the rest coming from out of your pocket, up to the maximum out of pocket set by the plan.

After you reach the maximum out of pocket in the plan, your Medicare covered services are paid in full.

Any money left in the bank account carries over to the next year and is added to the deposit for the year.

Special Needs Plans (SNP) are available to those also eligible for Medicaid (state sponsored income based) and certain conditions such as End-Stage Renal Disease. SNP are not available to the general public otherwise.

Advantage plans must cover at least all services Part A and Part B cover but may have different out of pocket costs. You will be responsible for some of the costs of Medicare covered services through deductibles, co-pays or coinsurance. Doctors and hospitals need to be in the network or accept the plan to avoid a lower (or no) reimbursement.

Prescription drug coverage may be included in the Advantage Plan (same standard coverage as a stand alone Part D Plan). If the Advantage Plan does not include prescription drug coverage, you should also purchase a stand alone Drug Plan (Part D).

Some Advantage Plans offer extra coverage such as preventive care, vision, hearing, dental and/or health and wellness programs.

Medicare Part D Prescription Drug Plans (PDP) are available through private insurance companies. Medicare prescription coverage can be purchased as a stand-alone Part D plan or part of an Advantage plan (Part C). There are 20+ PDP available in each state. Plans will vary by:

Monthly Premium - Premiums vary by state between $5-$150

Annual Deductible - Most plans have an annual deductible. Plans without deductibles have higher monthly premiums.

Pharmacy Network - You will obtain the lowest cost at preferred in-network pharmacies. You will pay more at standard in-network pharmacies and pay the full cost at out of network pharmacies.

Drug Formulary - The list of medications covered by the plan, drug tier designation, restrictions and discount applied to each medication will vary from one plan to another.

Standard Medicare Prescription Coverage Details 2024

Annual Deductible: $545 Maximum in 2024. Many plans (but not all) provide copays for generics without needing to first satisfy the deductible.

Initial Coverage Level: The Initial Coverage Level begins after you have met your annual deductible. Plans without an annual deductible begin in the Initial Coverage Level.

You pay co-pays or coinsurance and the plan pays its share of covered medications until the combined total reaches $5,030 (includes annual deductible, but not monthly premiums). Once the full cost of your medications reaches $5,030 you will enter the Coverage Gap (Doughnut Hole).

Coverage Gap: You will pay 25% and the plan will pay 75% until the end of the year or until you reach the Catastrophic Coverage Level. While paying 25% for name brand and generic medications, you will be given credit for 95% on name brand medications until you have spent $7,400. Example: A medication which retails for $100 would cost you $25, but $95 would be added towards reaching $7,400.

Catastrophic Coverage Level: Starting in 2024, there is no Catastrophic Coverage Level. Once you leave the Coverage Gap aka Donut Hole phase, you are done paying copays and coinsurance for that year. You must continue to pay your premium.

You can enroll in Medicare Part D coverage when you first turn 65 or within 60 days of losing creditable prescription drug coverage. You can also change your Part D plan each year between October 15th and December 7th. If your current plan is available the following year, you do not need to re-enroll in the same plan.

The premiums for Part B and Part D are means tested. This means the premium will increase if your modified adjusted gross income is over certain levels. Your modified adjusted gross income is your adjusted gross income plus tax exempt interest income. Your modified adjusted gross income from two years ago is used. If it has decreased since then, you may ask that a more recent year be used to determine your premium (certain criteria must be met).

The Social Security Administration receives your modified adjusted gross income from the Internal Revenue Service each year to determine your monthly premium add on amount. You do not have to do anything.

The following shows the monthly premium add on amounts for 2023 based on your modified adjusted gross income (it does not include a late enrollment penalty, if applicable).

Medicare will reassess IRMAA Means Testing each year, looking back two years. You can appeal this tax if your income has changed due to:

Marriage

Divorce

Death of Your Spouse

Work Stoppage or Reduction

Loss of Income Producing Property

Loss of Pension Income.

To appeal you must file form SSA-44.pdf with Social Security Administration.

Part A Hospital Insurance – The cost will increase 10% if you do not enroll within the first 12 months of being eligible. You pay this penalty for twice the time you could have had Part A, but did not sign up for it. You avoid this penalty if you qualify for the special enrollment period or if your Part A is free.

Part B Medical Insurance – The cost will increase 10% for each full 12-month period you should have been enrolled in Part B but did not sign up for it, unless you qualify for the special enrollment period. You will pay this penalty as long as you have Part B.

Part D Drug Coverage – The cost will increase 1% for every full month you did not have creditable drug coverage after you were first eligible to join a Medicare Drug Plan. This percentage is multiplied by the prior year's Part D national base beneficiary premium. You must pay this penalty as long as you have Part D. This penalty also applies to Part C (Medicare Advantage Plans) if drug coverage is included.

President Joe Biden signed the Inflation Reduction Act of 2022 on August 16, 2022. This legislation has many components but we will focus only on its impact on Medicare. We will not address the components involving non-Medicare healthcare, taxes, green energy or the deficit. This legislation brings changes to drugs covered by Part D and Part B of Medicare. Some of these changes begin January 1, 2023 while others do not begin until 2025 or later.

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2023

Insulin - Beginning in 2021, many Medicare Part D plans and Medicare Advantage plans provided certain types of insulin capped at a price of $30-$40 in accordance with Executive Order 13937 signed by President Trump. In 2023, ALL Part D and Advantage plans must offer this benefit. This capped price of $35 is during the deductible phase (not subject to deductible), during the Initial Coverage Level Phase, and the Coverage Gap (aka Donut Hole). During the final phase, Catastrophic, beneficiaries will pay $35 or less.

The price cap of $35 under some plans may not apply to non-insulin injectable diabetic drugs such as: Amylin, Adlyxin, Bydureon, Byetta, Ozempic, Tanzeum, Trulicity, or Victoza.

Vaccines - Beginning in 2023, all Medicare Part D plans and Advantage plans will be required to cover all ACIP-recommended adult vaccines with no cost sharing, even if the beneficiary is in the deductible phase of the benefit. For those 65 and older, ACIP-recommended adult vaccines are listed below. Vaccines in underlined italics recommended for those with additional risk factor(s) or another indication.

Influenza inactivated (IIV4) - Flu

Pneumococcal (PCV15, PCV20, PPSV23) - Pneumonia

Zoster recombinant (RZV) - Shingles

Haemophilus Influenzae Type B (Hib)

Hepatitis A (HepA)

Hepatitis B (HepB)

Miningococcal A,C,W,Y (MenACWY)

Miningococcal B (MenB)

Tetanus, diphtheria, pertussis (Tdap or Td)

Varicella (VAR)

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2024

Eliminating Catastrophic Coverage Level - Beginning in 2024, the fourth and final phase of Medicare prescription drug coverage will be eliminated. In 2022, once you have entered the Catastrophic phase, generic medications cost $3.60 or 5%, whichever costs more. Brand name medications cost $8.95 or 5%, whichever costs more. In 2024, once you have entered the catastrophic phase the beneficiary will pay nothing.

Expansion of Low Income Subsidy (LIS) - Beneficiaries with low income and limited resources are eligible for extra help paying their prescriptions. Those considered " deemed eligibles " do not need to apply and automatically qualify. Deemed eligibles are:

Full-benefit dual eligibles (FBDEs), those eligible for both Medicare AND Medicaid.

Supplemental Security Income (SSI) recipients, including SSI recipients who do not qualify for Medicaid.

Medicare beneficiaries who are participants in the Medicare Saving Programs (MSP), which are QMB, SLMB and QI.

For those who must apply, they must meet certain criteria, of which one is income. The criteria as of 2023:

2023	INCOME	RESOURCES
Single	Less than $21,870	Less than $16,600
Married	Less than $29,580	Less than $33,240

So what changes? Currently, you either qualify for full or partial help. Beginning in 2024 it will be all or nothing. To learn more about what counts as income and/or resources, click here: https://www.ssa.gov

Part D premium increase limit - Beginning in 2024 and until end of calendar year 2029, Part D plan premium increases will be limited to 6%. This limit was created so premium increases would not offset other savings included in the Inflation Reduction Act of 2022. Limits beyond 2029 have not been established but could be included in future legislation.

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2025

$2,000 Out of pocket max - Beginning in 2025, the maximum amount beneficiaries enrolled in a Medicare Part D prescription drug plan (PDP) or Medicare Advantage plan which includes prescription drug coverage (MAPD), pay in a calendar year for prescription copayments and coinsurance will be capped at $2,000. This does not include premiums, only copayments and coinsurance. If your prescription coverage includes a deductible, amounts paid towards the deductible will count towards the maximum of $2,000.

The cap of $2,000 per year could increase over time if what Medicare spends on prescription drugs per enrollee increases.

Smoothed Cost Sharing - Beginning in 2025 it is required that Part D plans offer enrollees the option called smoothed cost-sharing. This means you can opt to have your out-of-pocket costs spread out over the year, helping those who enter the donut hole. This is designed to protect people from being hit with such a big drug bill at one time that it may discourage them from filling their prescriptions. Rather than paying reasonable copays in the Initial Coverage Level then later paying 25% the negotiated cost during the Donut Hole, they would pay level costs all year until reaching the $2,000 out of pocket maximum.

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