By Rhea Maze

Confused about Medicare? You’re not alone. The federal system of health insurance for those 65 years of age and older (and some younger people with disabilities) is hardly simple and straightforward.

Let’s clear up three big misconceptions right away. First, Medicare is not free health insurance coverage. While some assistance is available based on a person’s income, most people will have to pay deductibles, copays, and even monthly premiums depending on what plan(s) they choose. Second, not all types of care are covered, including basics like dental, vision, or hearing. Third, Medicare generally does not cover long-term care except in certain circumstances.

During the COVID-19 pandemic, most Medicare recipients DO have coverage for doctor-ordered testing, hospital stays related to the virus, telehealth, and a vaccine if one becomes available. (If you have Parts A and B, read on for descriptions.)

Alan Heileman has heard all of the myths and understands the confusion. “People are intimidated by Medicare and see it as a vast jigsaw puzzle with too many pieces,” says Heileman, coordinator of community programs with UCHealth’s Aspen Club. “And while it is true that there are many options, Medicare really comes down to a few basic parts.”

We asked him to break down how Medicare works:

AH: The basic parts of Medicare are hospital insurance, medical insurance, prescription drug insurance, and insurance to fill in the gaps. The first thing someone approaching 65 will need to decide is whether to go on Original Medicare or Medicare Advantage. You are not automatically enrolled in Medicare unless you have been receiving Social Security for at least four months or getting benefits from the Railroad Retirement Board for four months or longer by your 65th birthday. Your first chance to enroll is during the Initial Enrollment Period which is the three months before you turn 65, the month you turn 65, and the three months after your birthday. (Read on for other enrollment options.)

What are some differences between Original Medicare and a Medicare Advantage Plan?

AH: Medicare does not cover hearing exams or hearing aids, vision, or dental care, but some Medicare Advantage plans do. If on Original Medicare, you will most likely need to purchase a drug plan and can also supplement your coverage with a Medigap plan to pay for some of the deductibles and copays that aren’t covered. Those on Medicare Advantage will most likely have a drug plan included, are required to use in-network providers, and cannot have an additional Medigap plan.

What’s the deal with all those letters (A, B, C, and D)?

AH: That is the basis of Medicare and where it all starts.

Part A is hospital insurance provided by the government. Most Americans do not pay for this and it covers hospital stays and rehab, and has deductibles and copays.

Part B is medical insurance provided by the government. It covers doctors, physical therapy, medical equipment, etc., as well as outpatient mental health services. This includes coverage for COVID-related testing and treatment. It has deductibles, copays, and a premium. If you make over a certain limit, you’ll pay an income-related monthly adjustment in addition to your plan premium.

Part D is a prescription drug plan sold by private insurers. Premiums may change annually and are based on your income. If you make over a certain limit, you’ll pay an income-related monthly adjustment in addition to your plan premium.

Be sure you learn about Medicare before you first become eligible when turning 65—there may be significant penalties if you don’t sign up by the deadlines that apply to you. If you are still working and getting employer coverage at age 65, your deadlines will depend on your specific situation.

Part C is Medicare Advantage sold by private insurers. You must have Parts A and B first. Most Medicare Advantage plans are a combination of parts A, B, and D, and typically provide other types of benefits like dental, vision, and hearing. Deductibles, copays, monthly premiums, and out-of-pocket maximums vary by plan and even by state. Premiums may change annually.

Finally, Medigap, or Medicare Supplement Insurance plans, are listed by the same letters, which can be confusing, but they are not related to the main parts of Medicare. These private health insurance plans help you cover certain out-of-pocket Medicare costs such as deductibles, copayments, and coinsurance.

Once you’ve considered your options, there are several chances to enroll. If you don't sign up for Part A and/or Part B during the Initial Enrollment Period (the 7-month period before, during, and after you turn 65), you can sign up during the General Enrollment Period between Jan. 1 and March 31 each year, for coverage beginning July 1.

Want to switch to a Medicare Advantage plan, return to Original Medicare or add/change a prescription drug plan? Medicare’s Annual Election Period of Oct. 15 – Dec. 7 is the time to enroll, dis-enroll, or choose a new plan that will then take effect on Jan. 1.

Any other insider tips?

AH: Several programs offer assistance for those living on lower incomes who qualify. And be sure to check your drug plan every year during the Annual Election Period! Even if your prescriptions haven’t changed, coverage formulas do change and odds are you will save money shopping for the best plan.