How does Medicare coverage work?

Medicare has four parts: hospital insurance, known as Part A; medical insurance, known as Part B, which provides payments for doctors and related services; and prescription drug coverage, known as Part D. Medicare Part C gives you the choice of receiving the benefits of Medicare A, B, and D through a private health plan, like an HMO or PPO. This coverage is called Medicare Advantage and is described on page 16 of this booklet.

Most people don’t pay a premium for Part A, since they already paid for it through payroll taxes while they were working. There is a monthly premium for Medicare Part B ($93.50 per month in 2007, but people with incomes over $80,000 pay more).

Usually, you will pay a premium if you decide to enroll in Medicare’s prescription drug plan. If you don’t enroll as soon as you are eligible, your premium will be higher if you decide to enroll at a later time. Also, once you are past your first eligibility, you will have to wait for the annual enrollment period (generally November 15-December 31 of each year) in order to enroll in Medicare’s prescription drug coverage.