2.1 What Medicare Is: Program Structure & How Parts A–D Fit Together

AHIP Medicare Certification Exam

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1 Introduction

1.1 About the AHIP Medicare Certification Exam 1.2 How to Use This Study Guide

2 Chapter 2: Medicare Program Fundamentals

2.1 What Medicare Is: Program Structure & How Parts A–D Fit Together 2.2 Medicare Part A — Hospital Insurance 2.3 Medicare Part B — Medical Insurance 2.4 Medicare Eligibility Rules (Age 65, Disability, ESRD, ALS)

3 Chapter 3: Medicare Enrollment Periods

3.1 Initial Enrollment Period (IEP) 3.2 Annual Enrollment Period (AEP): October 15 – December 7 3.3 Medicare Advantage Open Enrollment Period (MA OEP): January 1 – March 31 3.4 Special Enrollment Periods (SEPs) & Qualifying Life Events 3.5 Late Enrollment Penalties (Part A, Part B, Part D)

4 Chapter 4: Medigap & Coordination of Coverage

4.1 Medigap (Medicare Supplement) Basics & Guaranteed Issue Rights 4.2 Dual Eligibility & Medicare Savings Programs 4.3 How Original Medicare, MA, Part D & Medigap Interact

5 Chapter 5: Medicare Advantage Plan Types

5.1 Medicare Advantage (Part C) Overview: How MA Differs from Original Medicare 5.2 HMO & HMO-POS Plans 5.3 PPO Plans 5.4 PFFS Plans (Private Fee-for-Service) 5.5 MSA Plans (Medicare Medical Savings Accounts) 5.6 Cost Plans & Employer Group Waiver Plans (EGWPs)

6 Chapter 6: Special Needs Plans & MA Plan Design

6.1 Special Needs Plans (SNPs) Overview 6.2 D-SNP — Dual-Eligible Special Needs Plans 6.3 C-SNP & I-SNP — Chronic Condition & Institutional Special Needs Plans 6.4 MA Benefits, MOOP & Supplemental Benefits 6.5 MA Star Ratings & Plan Quality

7 Chapter 7: Part D Structure & the 2026 Redesign

7.1 Part D Overview & Eligibility 7.2 Formularies & Drug Tiers 7.3 The 2026 Part D Benefit Redesign ($2,100 OOP Cap, $615 Max Deductible, Catastrophic Phase) 7.4 Medicare Prescription Payment Plan (Drug-Cost Smoothing)

8 Chapter 8: Part D Costs, Assistance & Appeals

8.1 Low-Income Subsidy (LIS) / Extra Help 8.2 Part D Late Enrollment Penalty & Creditable Coverage 8.3 Coverage Determinations, Exceptions & Appeals

9 Chapter 9: CMS Marketing Rules & Scope of Appointment

9.1 CMS Medicare Communications & Marketing Guidelines (MCMG) Overview 9.2 Scope of Appointment (SOA): the 48-Hour Rule & Exceptions 9.3 Permitted vs. Prohibited Marketing & Sales Activities 9.4 Marketing Events vs. Educational Events

10 Chapter 10: Enrollment & Disclosure Requirements

10.1 The Pre-Enrollment Checklist (PEC) 10.2 Enrollment Procedures & Application Requirements 10.3 Call Recording & Third-Party Marketing Organization (TPMO) Disclaimers 10.4 Agent & Broker Compensation Rules

11 Chapter 11: Marketing Conduct & Oversight

11.1 Cross-Selling Restrictions & Nominal Gift Value Rules 11.2 Marketing to Vulnerable Populations & Non-Discrimination in Sales 11.3 Website, Social Media & Advertising Compliance 11.4 Complaint Tracking Module (CTM) & Agent Oversight

12 Chapter 12: Understanding Fraud, Waste & Abuse

12.1 Defining Fraud, Waste & Abuse (and the Difference Between Them) 12.2 The False Claims Act 12.3 The Anti-Kickback Statute

13 Chapter 13: Compliance Laws & Screening

13.1 The Stark Law (Physician Self-Referral) 13.2 HIPAA Privacy & Security Basics 13.3 The OIG Exclusion List & Sanctioned-Provider Screening

14 Chapter 14: Reporting, Compliance Programs & Consequences

14.1 Detecting & Reporting FWA 14.2 Compliance Program Requirements (Seven Core Elements) & Non-Discrimination Training 14.3 Consequences & Corrective Action Plans

2.1 What Medicare Is: Program Structure & How Parts A–D Fit Together

Key Takeaways Explain This Topic AI

Medicare is a federal health insurance program run by CMS (Centers for Medicare & Medicaid Services), created under the Social Security Act of 1965.

“Original Medicare” means Part A + Part B only — fee-for-service, no networks, administered directly by the federal government.

Part C (Medicare Advantage) is a private-plan delivery vehicle, not a separate benefit category — it must cover everything Parts A and B cover.

Part D is optional drug coverage delivered two ways: a stand-alone PDP alongside Original Medicare, or bundled into an MA-PD plan.

Medigap is not a numbered “Part” of Medicare — it only works alongside Original Medicare and can never be paired with Medicare Advantage.

Last updated: July 2026

Why This Section Matters

Module 1 (Medicare Basics) is 20% of the AHIP final, but its real weight is much higher than 20% — every question in Modules 2 through 5 assumes you already know which "Part" a benefit, cost, or rule belongs to. If you cannot instantly sort a scenario into Part A, B, C, or D, you will burn time flipping through your open-book notes on questions that should take ten seconds. Get this section fully internalized before moving forward.

What Medicare Is

Medicare is the federal health insurance program for people age 65 and older, and for certain younger people with disabilities or specific diagnoses. It was created in 1965 as Title XVIII of the Social Security Act and is administered by the Centers for Medicare & Medicaid Services (CMS) , an agency within the U.S. Department of Health and Human Services (HHS). Unlike Medicaid, Medicare is not means-tested — eligibility is based on age, disability status, or specific medical diagnoses, not income.

Medicare has four parts, and the exam expects you to know both what each part covers and, just as importantly, who actually delivers it — the government directly, or a private insurance company under contract with CMS.

The Two Delivery Models

Every Medicare benefit reaches a beneficiary through one of two structural paths:

Original Medicare — Parts A and B together. CMS pays providers directly on a fee-for-service basis. There are no provider networks (any provider who accepts Medicare can be seen), no referrals required, and no annual cap on out-of-pocket spending unless the beneficiary layers on a Medigap policy.

Medicare Advantage (Part C) — A private insurance company contracts with CMS to deliver all Part A and Part B benefits (plus usually Part D) through its own plan design, often with networks, prior authorization, and referral requirements — but always with an annual out-of-pocket maximum (MOOP), which Original Medicare alone does not have.

This is the single most tested structural fact on the exam: Part C is not a fourth kind of coverage sitting next to A, B, and D — it is an alternative way of receiving A and B (and usually D). A beneficiary is never enrolled in "Part A, B, and C" simultaneously in the way they might have "Part A and Part B"; once someone elects an MA plan, that plan becomes their vehicle for the Part A/B benefit, replacing (not supplementing) Original Medicare for as long as they're enrolled.

The Four Parts at a Glance

Part Common Name What It Covers Who Delivers It

Part A Hospital Insurance Inpatient hospital, skilled nursing facility (SNF), hospice, limited home health CMS directly (or an MA plan)

Part B Medical Insurance Physician visits, outpatient care, durable medical equipment (DME), preventive services CMS directly (or an MA plan)

Part C Medicare Advantage A private-plan bundle of A + B (usually + D), often with extra benefits Private insurers under CMS contract

Part D Prescription Drug Coverage Outpatient prescription drugs Private insurers, as a stand-alone PDP or bundled MA-PD

A simple memory hook many agents use: A dmission (hospital), B oth-in-and-out-of-the-hospital doctor bills, C hoice (the private alternative), D rugs.

Where Medigap Fits — and Where It Doesn't

Medigap (Medicare Supplement insurance) is regulated separately from the four Medicare parts and is sold by private insurers to fill Original Medicare's cost-sharing gaps — the Part A deductible, Part B coinsurance, and similar out-of-pocket amounts. The single fact the exam tests most on this topic: Medigap only works alongside Original Medicare. A beneficiary enrolled in a Medicare Advantage plan cannot also carry (or newly purchase) a Medigap policy to supplement that MA plan — the two products are not compatible, and it is illegal for an agent to sell a Medigap policy to someone the agent knows is enrolled in MA (with narrow exceptions such as a Medigap policy that predates MA-only trial-right situations covered later in Chapter 4).

A Working Scenario

A client tells you, "I have Medicare Part A and Part B, and I just enrolled in a Humana Medicare Advantage plan." What should you know instantly?

The client is no longer using Original Medicare's fee-for-service structure for daily care — the Humana MA plan is now the delivery vehicle for their A and B benefits.

The client's red-white-and-blue Original Medicare card still exists and still proves entitlement, but claims for routine care run through Humana's plan, not through CMS directly.

If the client also has a Medigap policy from before they joined the MA plan, that Medigap policy provides no benefit while they're in the MA plan (some states allow “suspend” rights for certain circumstances, but the policy does not pay MA cost-sharing).

Common Traps

Treating “Part C” as if it adds a distinct new benefit category, rather than recognizing it as a delivery alternative for A/B.

Assuming Part D is automatically included with every MA plan — some MA plans (notably MSA and some PFFS plans) do not include drug coverage, and the beneficiary may need a stand-alone PDP or go without.

Forgetting that hospice care always remains billed under Original Medicare Part A , even for a beneficiary enrolled in an MA plan — this is the one Part A/B benefit MA plans do not have to deliver directly (covered in more depth in Chapter 6).