Making sense of Medicare

Here are the essential Medicare terms to know:

Premium: A fee for coverage, usually paid monthly.

Deductible: An amount of the expenses you need to cover before Medicare kicks in.

Co-pay/Co-insurance: The portion of the cost that you’ll have to cover for each service or drug.

Part A: This insurance helps pay bills for in-patient care at hospitals and skilled nursing facilities, as well as hospice and some home health care services. Most people don’t have to pay a monthly premium for this coverage since they paid Medicare taxes while working. There is, however, a deductible for hospital stays.

Part B: This insurance helps cover the costs of doctors’ services, lab tests, x-rays, mental health care and other medically necessary services. You can delay enrolling in this coverage if you or your spouse have employee-sponsored health care, depending on the size of the employer. Make sure to sign up as soon as that employment ends, though, or you may be subject to penalties and have a waiting period before coverage kicks in.

Part C: This isn’t additional coverage. Instead, it’s an alternative way to get your Medicare benefits. Also known as Medicare Advantage, these are Medicare-approved plans from private insurers that cover the services included in Parts A and B (which is referred to as “Original” Medicare) as well as prescription drug benefits and sometimes hearing, vision and dental.

Part D: This helps pay for the prescription drugs that you take at home. These are stand-alone plans through private insurers for people who are getting their Medicare benefits the traditional way — with Parts A and B. You will likely need to pay a monthly premium, an annual deductible, and co-pays.

Medigap: These are supplemental insurance plans for people using Original Medicare that may cover deductibles, copays and other costs. Medigap plans are standardized and labeled by letters, but they are offered by a variety of private insurers. Your employer or union may already offer you similar coverage, so check before you buy.

Coverage Gap: Sometimes called the “donut hole,” it’s what you may have to pay for drugs after you and your drug plan have spent a certain amount of money.

In-network: Doctors, hospitals, pharmacies and other healthcare providers that provide members of a certain insurance plan with services and supplies at a pre-determined price.