Original Medicare: The Complete Guide to Maryland

Original Medicare is the federal health insurance program designed primarily for Americans aged 65 and older, as well as certain younger individuals with specific disabilities. If you are approaching eligibility in Maryland, understanding Original Medicare is the single most important step in securing your healthcare future. It serves as the foundation upon which all other Medicare decisions—such as whether to buy a Medigap policy or choose a Medicare Advantage plan—are built.

Original Medicare consists of two distinct halves: Part A (Hospital Insurance) and Part B (Medical Insurance). Administered directly by the Centers for Medicare & Medicaid Services (CMS), Original Medicare is characterized by its ultimate freedom of choice. You are issued a red, white, and blue Medicare card, and you can present that card to any doctor, hospital, or specialist in the United States who accepts Medicare. There are no HMOs, no PPOs, no regional networks, and no requirements to get a referral before seeing a specialist.

However, this freedom comes with significant financial exposure. Original Medicare was designed in the 1960s and functions very differently from modern commercial health insurance. It does not cover prescription drugs, routine dental work, or vision care. Most critically, it does not include an annual out-of-pocket maximum. If you face a catastrophic illness, Original Medicare will continue to pay its share, but you will be legally responsible for your share of the bills indefinitely.

To navigate your transition into the Medicare system effectively, you must understand exactly how Part A and Part B work, how they share costs with you, when you are required to enroll to avoid lifelong penalties, and how Maryland’s unique healthcare landscape affects your coverage.

Medicare Part A: Hospital Insurance Unpacked

Medicare Part A is designed to cover major inpatient medical events. It acts as your catastrophic safety net for facility-based care.

What Part A Covers

Part A covers inpatient care provided in hospitals, skilled nursing facilities, hospice care, and some home health care services.

• Inpatient Hospital Care: This includes a semi-private room, meals, general nursing, and drugs supplied as part of your inpatient treatment.
• Skilled Nursing Facility (SNF) Care: Part A covers SNF care, but only if it follows a qualifying inpatient hospital stay of at least three consecutive days, and only if you require skilled nursing or therapy services.
• Hospice Care: For individuals with a terminal illness and a life expectancy of six months or less, Part A covers virtually all aspects of hospice care, including pain relief medications and grief counseling for families.
• Home Health Care: If you are homebound and require part-time or intermittent skilled nursing care, physical therapy, or occupational therapy, Part A can cover these services provided by a Medicare-certified home health agency.

What Part A Costs

For the vast majority of Maryland residents, Medicare Part A is premium-free.

The Premium: If you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters) over the course of your working lifetime, you do not pay a monthly premium for Part A. If you do not have the required work history, you can still purchase Part A, but you will pay a substantial monthly premium based on how many quarters you actually worked.

The Deductible and Benefit Periods: The most counterintuitive aspect of Medicare Part A is how it calculates deductibles. Unlike modern health insurance that uses an annual calendar-year deductible, Part A uses “Benefit Periods.”

A benefit period begins the day you are admitted to a hospital or skilled nursing facility as an inpatient. It ends only when you have been out of the hospital or SNF for 60 consecutive days. When you are admitted, you must pay the standard Part A deductible before Medicare covers the rest of the first 60 days of that stay.

Because the deductible is tied to the benefit period, not the calendar year, you could theoretically pay the Part A deductible multiple times in a single year if you are hospitalized, discharged for more than 60 days, and then hospitalized again.

Coinsurance: If an inpatient stay extends beyond 60 days, Original Medicare stops paying 100% of the cost. For days 61 through 90, you must pay a significant daily coinsurance amount. If your stay extends beyond 90 days, you begin tapping into your 60 “lifetime reserve days,” which come with an even higher daily coinsurance cost. Once lifetime reserve days are exhausted, Part A pays nothing for the remainder of the stay.

Medicare Part B: Medical Insurance Unpacked

While Part A covers the hospital, Medicare Part B covers the medical care you receive both outside the hospital and from doctors while you are admitted.

What Part B Covers

Part B is the workhorse of Original Medicare. It covers two main categories of care: medically necessary services and preventive services.

• Outpatient Care and Doctor Visits: Part B covers visits to primary care physicians, specialists, outpatient surgeries, and urgent care clinics.
• Preventive Services: Medicare heavily incentivizes prevention. Part B covers a Welcome to Medicare preventive visit, annual wellness visits, flu shots, pneumococcal shots, and various cancer screenings (like mammograms and colonoscopies) typically at zero cost to you, provided the doctor accepts Medicare assignment.
• Durable Medical Equipment (DME): This includes blood sugar monitors, test strips, CPAP machines, wheelchairs, walkers, and oxygen equipment prescribed by your doctor.
• Mental Health Care: Part B covers outpatient mental health services, including counseling and psychotherapy.
• Ambulance Services: Part B covers emergency ambulance transportation to the nearest appropriate medical facility.
• Provider Fees While Inpatient: Even when you are admitted to the hospital (covered by Part A), the doctors and surgeons treating you bill their services to Part B.

What Part B Costs

Unlike Part A, Medicare Part B always carries a monthly cost, and its cost-sharing structure leaves you exposed to unlimited financial liability.

The Premium: Every Medicare beneficiary pays a monthly premium for Part B. The federal government sets a standard base premium annually. This premium is typically deducted directly from your Social Security check if you are receiving benefits; if you are not yet drawing Social Security, you will be billed directly by CMS.

The IRMAA Surcharge: If you have a higher income, you will pay more than the standard Part B premium. This is called the Income-Related Monthly Adjustment Amount (IRMAA). Medicare looks at your Modified Adjusted Gross Income (MAGI) reported on your IRS tax return from two years prior. If your income exceeds certain tiers, a surcharge is added to your monthly Part B bill. If you experience a life-changing event (such as retirement, divorce, or the death of a spouse) that significantly reduces your income, you can file an appeal (Form SSA-44) to have your IRMAA recalculated based on your current income rather than the two-year lookback.

The Annual Deductible: Part B features a standard, calendar-year deductible. You must pay this relatively small deductible entirely out-of-pocket each year before Part B begins to cover its share of your medical services.

The 20% Coinsurance: After you meet your annual deductible, Medicare typically pays 80% of the Medicare-approved amount for most covered services. You are responsible for the remaining 20%. Because Original Medicare does not feature an out-of-pocket maximum, there is no limit to how much that 20% can cost you if you develop a severe chronic illness, require frequent specialist visits, or need costly outpatient treatments like chemotherapy or radiation.

Understanding Medicare Assignment

When navigating Part B costs, you must understand the concept of “Assignment.” This dictates how much a doctor is allowed to bill you.

1. Participating Providers: These doctors accept Medicare assignment, meaning they agree to accept the Medicare-approved amount as payment in full. You pay your deductible and your flat 20% coinsurance, and the doctor cannot bill you for the rest.
2. Non-Participating Providers: These doctors accept Medicare but do not accept assignment. They can charge you up to 15% more than the Medicare-approved amount. This extra cost is called a “Limiting Charge,” or an excess charge, and you are entirely responsible for paying it out-of-pocket.
3. Opt-Out Providers: These doctors have formally opted out of the Medicare program entirely. Medicare will not pay anything for services rendered by these providers, and you must sign a private contract agreeing to pay their full cash rates out of your own pocket.

What Original Medicare Explicitly Excludes

A common misconception among new beneficiaries is that Medicare acts as blanket coverage for everything a senior might need. In reality, Original Medicare strictly limits its scope to acute medical care. It leaves several massive gaps in coverage that you must plan for.

1. Prescription Drugs

Original Medicare does not cover self-administered retail prescription drugs. If you go to a pharmacy in Maryland to pick up a medication for blood pressure, cholesterol, or any other daily need, Original Medicare pays absolutely nothing. To get prescription drug coverage, you must proactively purchase a standalone Medicare Part D plan or enroll in a Medicare Advantage plan that includes a Part D component.

2. Routine Dental, Vision, and Hearing Care

Original Medicare excludes routine care for teeth, eyes, and ears.

• Dental: It will not cover cleanings, fillings, extractions, or dentures. (Medicare only covers dental care if it is an integral part of a covered medical procedure, such as jaw reconstruction following an accident.)
• Vision: It will not cover routine eye exams for prescribing glasses, nor will it cover eyeglasses or contact lenses. (It will, however, cover medical vision care, such as cataract surgery or glaucoma screenings.)
• Hearing: It will not cover routine hearing exams or hearing aids.

3. Long-Term Custodial Care

Original Medicare pays for skilled nursing care to help you recover from an acute medical event. It does not pay for custodial care—the non-medical assistance needed for activities of daily living, such as bathing, dressing, eating, or using the bathroom. If you need to move into an assisted living facility or require a home health aide solely for custodial help, Original Medicare will not foot the bill.

4. Foreign Travel

With rare, limited exceptions (such as emergency care near the border of Canada or Mexico), Original Medicare does not cover healthcare services received outside the United States.

The Enrollment Timelines and Penalties

Original Medicare is unforgiving when it comes to enrollment deadlines. Failing to understand the specific windows during which you are allowed to enroll can result in gaps in coverage and permanent financial penalties.

The Initial Enrollment Period (IEP)

Your Initial Enrollment Period is a 7-month window that revolves around your 65th birthday. It begins three full months before the month you turn 65, includes the month of your birthday, and ends three months after your birth month. (If your birthday falls on the first day of the month, your entire IEP is shifted back by one full month.)

If you enroll during the three months before your birthday month, your Original Medicare coverage takes effect on the first day of your birthday month. If you enroll during or after your birthday month, your coverage will be delayed, taking effect the first day of the month following your enrollment.

The General Enrollment Period (GEP)

If you miss your IEP and do not qualify for a special exception, you are not allowed to enroll in Medicare at just any time. You must wait for the General Enrollment Period, which runs from January 1 through March 31 every year. If you enroll during the GEP, your coverage will begin on the first day of the following month. However, relying on the GEP usually means you will be subjected to late enrollment penalties.

Special Enrollment Periods (SEP) for the Working Elderly

The most common reason people legally delay Medicare enrollment without facing penalties is because they, or their spouse, continue to work past age 65 and maintain employer-sponsored health insurance.

If you have health insurance through a current employer (and the employer has 20 or more employees), that coverage is considered “creditable.” You can safely decline Part B when you turn 65 and remain on your employer’s plan.

When you eventually retire or lose that employer coverage, you are granted an 8-month Special Enrollment Period to sign up for Part B without a penalty. (Note: The SEP specifically requires coverage through current active employment. COBRA or retiree health coverage does not count, and you cannot use it to delay Part B without incurring penalties).

The Mechanics of Late Enrollment Penalties

If you are required to enroll in Part B and fail to do so, Medicare imposes a severe penalty. Your Part B premium will increase by 10% for every full 12-month period that you were eligible for Part B but did not enroll. This is not a one-time fee; it is a permanent increase added to your monthly premium for the rest of your life. A similar, but differently calculated, permanent penalty applies if you fail to maintain creditable prescription drug coverage (Part D).

The HSA Trap

If you are working past 65 and contributing to a Health Savings Account (HSA) through a High-Deductible Health Plan, you must exercise extreme caution. According to IRS rules, you cannot contribute to an HSA if you are enrolled in any part of Medicare.

Because Medicare Part A can apply retroactively for up to six months once you finally apply (provided you are past your 65th birthday), you must stop all HSA contributions at least six months before you intend to apply for Medicare or Social Security to avoid harsh tax penalties.

How Maryland’s Unique Healthcare Landscape Impacts Medicare

While Original Medicare is a federal program that operates consistently nationwide, the state you live in dictates the local healthcare environment you navigate. Maryland is entirely unique in the United States regarding hospital billing.

Maryland operates under an All-Payer Model, regulated by the Health Services Cost Review Commission (HSCRC). Unlike other states where hospitals negotiate vastly different rates with different insurance companies, every hospital in Maryland charges the exact same rate for a given service, regardless of whether the bill is being paid by Medicare, commercial insurance, or the patient themselves.

For Original Medicare beneficiaries in Maryland, this creates a highly standardized and predictable hospital billing environment. It stabilizes the baseline costs that Part A deductibles and coinsurance are applied against, offering a layer of consistency that seniors in other states do not experience.

Furthermore, Maryland offers robust support through its State Health Insurance Assistance Program (SHIP). This program provides free, objective, unbiased counseling to help Maryland residents understand their Medicare options, decipher their Medicare Summary Notices (MSNs), and navigate the appeals process if a claim is denied.

Bridging the Gaps: Medigap and Part D

Because Original Medicare leaves you exposed to a 20% coinsurance without an out-of-pocket maximum, relying solely on Part A and Part B is financially dangerous. Most Maryland residents use supplementary coverage to protect their assets. The traditional approach is to purchase a Medicare Supplement (Medigap) policy and a standalone Part D plan.

How Medigap Works with Original Medicare

Medigap policies are sold by private insurance companies but are strictly standardized by the federal government and regulated by the Maryland Insurance Administration. Plans are identified by letters (e.g., Plan G, Plan N).

A Medigap policy does not replace Original Medicare; it sits behind it as a secondary payer. When you go to the doctor, you hand them two cards: your red, white, and blue Medicare card, and your Medigap card.

1. The provider bills Original Medicare (the primary payer).
2. Medicare pays its approved 80% share.
3. Medicare automatically forwards the remaining claim to your Medigap carrier.
4. The Medigap carrier pays the remaining 20% (and depending on the plan, your deductibles and excess charges).

Because Medigap is purely a secondary payer, it adopts Original Medicare’s network. If a doctor in the United States accepts Original Medicare, they are legally required to accept your Medigap plan, regardless of which private carrier issued the policy. This provides the ultimate freedom of network choice.

However, Medigap policies do not include prescription drugs. To complete this traditional setup, you must purchase a standalone Part D prescription drug plan from a private insurer.

Original Medicare vs. Medicare Advantage in Maryland

The major alternative to the traditional Original Medicare + Medigap route is Medicare Advantage (Part C). Understanding the structural difference between these two paths is the most important decision you will make regarding your healthcare in retirement.

Medicare Advantage plans are offered by private, Medicare-approved organizations. In Maryland, companies such as Aetna Medicare, Alterwood Advantage, CareFirst BlueCross BlueShield Medicare Advantage, HealthSpring, Humana, Johns Hopkins Advantage MD, Kaiser Permanente, and UnitedHealthcare offer these plans.

When you enroll in a Medicare Advantage plan, you do not lose your Medicare status, but you do change how you receive your benefits. The federal government pays the private insurance carrier a fixed monthly amount to take on your medical risk. The private carrier then becomes your primary health insurer, entirely replacing the delivery of Original Medicare Part A and Part B.

For Maryland residents who qualify for both Medicare and Maryland Medicaid (Dual Eligibles), private carriers offer highly specialized plans to manage this complex interface. For example, Alterwood Advantage offers Special Needs Plans (SNPs) like the Alterwood Advantage Dual Secure (HMO D-SNP) and Dual Value (HMO D-SNP), which coordinate Medicare and Medicaid benefits to reduce out-of-pocket friction for low-income beneficiaries.

The choice between remaining on Original Medicare (with a Medigap policy) versus moving to a Medicare Advantage plan comes down to a tradeoff between network freedom and premium costs. Original Medicare with a supplement provides maximum provider freedom and highly predictable healthcare costs, but it requires paying multiple monthly premiums. Medicare Advantage offers the convenience of packaged benefits and low upfront premiums, but requires you to navigate localized provider networks and pay copays as you utilize the medical system.

Navigating the Transition from Employer or ACA Coverage

Transitioning into Original Medicare from other forms of insurance requires precise timing to avoid overlapping costs or tax penalties.

From Employer Group Coverage

If you are retiring and leaving an employer group plan, your HR department will provide you with a form confirming you had creditable coverage. You will submit this form to the Social Security Administration alongside your Part B application during your Special Enrollment Period. This proves you were continuously covered and waives the late enrollment penalty. It is critical that your Medicare Part B effective date aligns exactly with the first day of the month after your employer coverage ends to prevent a lapse in coverage.

From Affordable Care Act (Obamacare) Coverage

If you currently purchase your own health insurance through the Maryland Health Connection (the state’s ACA marketplace), your transition requires a manual intervention.

Once you become eligible for Premium-Free Medicare Part A, you are legally no longer eligible to receive Advance Premium Tax Credits (APTC) to subsidize an ACA marketplace plan. It is entirely your responsibility to log into the Maryland Health Connection and cancel your marketplace plan, or at least remove the APTC, effective the day your Original Medicare coverage begins. If you fail to do this and maintain subsidized dual coverage, the IRS will force you to repay those tax credits when you file your taxes the following year.

Making Your Medicare Decision

Understanding Original Medicare’s structure—its coverage of hospital and medical care, its significant financial gaps, and its strict enrollment windows—is the prerequisite to building a secure healthcare strategy in retirement.

Your next steps depend on your specific timeline. If you are within three months of your 65th birthday and are not continuing to work with large-group employer coverage, you must initiate your enrollment into Original Medicare through the Social Security Administration. Once your Part A and Part B dates are established, you must immediately decide how you will fill the financial gaps the federal government leaves behind: by purchasing a Medigap policy and a Part D plan, or by assigning your benefits to a private Medicare Advantage plan.

Frequently Asked Questions