When I first began working as a Daily Money Manager, I had a senior client that was contacted by an insurance provider during open enrollment. They told her they could switch her to a different insurance plan that would give her even more benefits, and had no premium at all. Too good to be true?
I didn’t have much experience with Medicare, but I knew it was not likely that any insurance company would be offering insurance coverage for free, so there must be more to the story.
I started educating myself on how Medicare works. If I’m being honest, it seemed very complex at first. With the enormous amount of marketing materials out there from insurance companies (sometimes disguised as “neutral” advisors), I found it difficult to find straightforward information. It required a great deal of focus and discernment to cut through the hype and get to the facts.
If you’ve ever felt the same way, you’re not alone.
As a Daily Money Manager, I work closely with older adults and their families to help them navigate the financial side of life. Medicare is a big part of that. So today, I want to break down the basics—the things I wish someone had explained to me when I was just getting started. Whether you’re helping a loved one or preparing for your own future, this guide is for you.
Understanding Basic Medicare Terms
Let’s start with the structure of the Medicare program and related terms. Medicare isn’t just one plan—it’s a collection of parts, each covering different types of care:
- Medicare Part A: This is hospital insurance. It covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes while working.
- Medicare Part B: Think of this as your general medical insurance. It covers doctor visits, outpatient care, preventive services (like flu shots), and even ambulance services. In 2025, the standard monthly premium is $185, though higher-income individuals may pay more. For covered items, Part B will cover 80% of the cost for those things.
- Medicare Part C (Medicare Advantage): These are plans offered by private insurance companies that bundle Part A and B—and often Part D—into one plan. They may also include extras like dental, vision, and hearing coverage. Costs and coverage vary widely, so it’s important to compare plans carefully.
- Medicare Part D: This is your prescription drug coverage. Like Part C, it’s offered through private insurers, and plans vary on the coverage and premiums.
- Original Medicare: This is a general term sometimes used to refer to Part A + Part B.
- Medicare Supplement (aka Medigap Plan): This is not technically part of the Medicare, but it’s an important part of the picture for many people. It is offered by private insurance companies and operates as an add-on policy that provides coverage options for the 20% of costs not covered by Medicare Part B.
- Medigap Plan Types (eg. Plan G, Plan F, Plan N): Although the Medicare program doesn’t offer supplement policies, it does set standards on various levels of coverage which must be adhered to by any company offering these plans. This makes it easier to compare rates from different companies.
How Medicare “Parts” Work Together
To make it more complex, some of these concepts work together and others not allowed to be applied together.
Let’s dive into a couple examples of common ways a person may be covered.
Original Medicare
Many people are covered the “traditional” way under original Medicare. For those people, the components of their coverage would typically include:
- Part A (Hospital): covers hospital, hospice, and skilled nursing expenses. Most people get this when they turn 65.
- Part B (Medical): covers 80% of covered medical expenses. This is not required but there can be potential penalties if coverage is not maintained.
- Medicare Supplement: add-on to help cover the remaining 20% of medical expenses (typically has premiums, deductibles, and copays). This is not required but most people under Original Medicare have this type of insurance.
- Part D (Prescription): covers prescription drug costs. Typically has premiums, deductibles, and/or copays. This is also not required but there are potential penalties if coverage is not maintained.
Notice anything missing here? A person with coverage under Original Medicare will not have Part C (Medicare Advantage). A person may only have one or the other.
Medicare Advantage Plans
Since most people on Original Medicare will require a Medicare Supplement policy, and those premiums go up drastically as people age, at some point many people choose to take an alternate path and sign up for a Medicare Advantage Plan.
The most important thing to understand about this decision is that a Medicare Advantage Plan is not just a replacement for a Medicare Supplement, which is an ADD-ON to Parts A and B. It replaces ALL of the components I listed in the first example (Part A, Part B, Medicare Supplement, and Part D). So often for people covered under these plans, that is the only coverage they need.
In general, the benefits of a Medicare Advantage Plan are typically that they tend to have lower overall premiums, they often include additional benefits such as dental, vision, and sometimes even prescription coverage. For some people, the drawbacks of a Medicare Advantage plan are that it requires approval of certain care, and just because something was covered under Original Medicare does not necessarily mean it will be approved under a Medicare Advantage plan.
Medicare Funding and Costs
One of the biggest misconceptions I had early on was that Medicare was “free.” It’s not. While many people qualify for premium-free Part A, the other parts come with monthly premiums, deductibles, and copays.
Here’s a quick snapshot of typical costs:
- Part A: Typically funded by the Center for Medicare & Medicaid Services, which means there is no premium for most people.
- Part B: While the program is funded by the Center for Medicare & Medicaid Services, a standard premium is also charged to covered individuals, which many people elect to have deducted out of their Social Security check automatically. In 2025, the premium for Part B is $185/month.
- Medicare Supplement: While companies must adhere to the standard coverages set by Medicare for the type of plan they are offering, costs such as premiums, deductibles, and copays are not standardized. These vary widely based on a person’s age, health, the type of plan they are choosing, and the provider they are choosing. Costs for Medicare Supplements are paid directly to the company providing the coverage.
- Part C: The Center for Medicare & Medicaid Services provides funding to companies offering these types of plans, since these plans eliminate Medicare Part A and Part B coverage for those individuals. Depending on the plan, the company providing the coverage may or may not require the covered individual to pay an additional premium. This is why some Advantage plans are advertised as $0 premium plans.
- Part D: Companies who offer these plans receive some funding from tax dollars, but also heavily rely on premiums paid by the covered individuals. Premiums, deductibles, out of pocket caps, and copays vary depending on the plan. Coverage for various medications also varies by plan, so it is important to understand the specific person’s medical situation before choosing a plan.
Timing Matters: Know When to Enroll
Medicare enrollment isn’t automatic for everyone. If you’re already receiving Social Security benefits when you turn 65, you’ll be enrolled in Parts A and B automatically. But if not, you’ll need to sign up yourself.
Here’s the key window: You have a seven-month Initial Enrollment Period (IEP) that starts three months before your 65th birthday and ends three months after. Miss it, and you could face late enrollment penalties that stick with you for life.
There’s also an Annual Enrollment Period from October 15 to December 7 each year. This is when you can switch plans, add coverage, or make other changes. I always remind clients to mark their calendars—this window is easy to miss, and the consequences can be costly.
Medicare Doesn’t Cover Everything—So Plan for Gaps
Another surprise for many people (myself included) is that Original Medicare doesn’t cover 100% of your healthcare needs. For example, it doesn’t cover:
- Long-term care (like assisted living)
- Most dental, vision, and hearing services
- Routine foot care
- Overseas medical care
That’s where Medigap (supplemental insurance) or Medicare Advantage plans can help. These options can fill in the gaps—but again, they come with their own costs and rules. I always encourage clients to review their health needs and budget before choosing a plan.
How to Enroll in Medicare
If you’re not automatically enrolled, you’ll need to sign up through the Social Security Administration. You can do this online, by phone, or in person. It’s not as scary as it sounds, but it does require some prep work—like gathering your work history and current insurance info.
And if you’re feeling overwhelmed? That’s where professionals come in!
As a Daily Money Manager, I work hand in hand with independent, licensed Medicare brokers to help my clients evaluate the best option for them. The Medicare broker helps us understand the options and coverage the client may qualify for based on their specific situation, along with the related costs. I help my clients evaluate the affordability and tradeoffs of those options.
I’ve seen firsthand how confusing this process can be—and how empowering it is when someone finally feels in control of their healthcare decisions.
Final Thoughts: You Don’t Have to Navigate Medicare Alone
You don’t have to navigate Medicare alone. There are plenty of resources out there that can help… the key is to start with the basics, lean on those who have experience, and take it one step at a time!
If you’re supporting a loved one, or preparing for your own Medicare journey, I hope this post gives you a solid foundation to get started. And if you ever need a guide along the way, Advocate Money Management is here to help. Contact us for a free consultation!
Let’s make Medicare a little less mysterious—together.
Check Out These Related Resources
- Set Up For Success: Getting Started Taking Over Your Parents’ Finances
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- Navigating the Maze: Estate Planning vs. Medicaid Planning
- Managing Elderly Parents’ Finances: Stress Relief for the Sandwich Generation
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