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13.1 Medicare Parts A, B, C, and D

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California Life & Health Insurance State

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1 Standalone Coverage Map

Standalone Coverage Map: National Content vs. California Rules

2 Introduction: California Life & Health Insurance Exam Overview

California Life & Health Exam Overview

3 National Portion: Insurance & Risk Fundamentals

Risk, Peril, Hazard, and the Law of Large Numbers Insurable Interest, Indemnity, and Insurance Principles Insurance Contract Law and Elements Producers, Agents, Brokers, and Authority Types of Insurers and Distribution Systems

4 National Portion: Life Insurance Basics

2.1 Purpose and Need for Life Insurance 2.2 Term Life Insurance 2.3 Whole Life Insurance 2.4 Adjustable, Limited-Pay, and Endowment

5 National Portion: Interest-Sensitive & Variable Life

3.1 Universal Life Insurance 3.2 Variable and Variable Universal Life 3.3 Indexed Universal Life 3.4 Specialized Policies (Joint, Survivorship, Juvenile)

6 National Portion: Life Policy Provisions & Options

4.1 Standard Policy Provisions and Beneficiaries 4.2 Nonforfeiture Options and Cash Value 4.3 Dividend Options and Settlement Options 4.4 Policy Loans, Withdrawals, and Assignments

7 National Portion: Life Riders & Underwriting

5.1 Living Benefit and Disability Riders 5.2 Death Benefit and Insured Riders 5.3 Life Insurance Underwriting and Risk Classification 5.4 Field Underwriting, Applications, and Replacement

8 National Portion: Annuities - Structure & Types

6.1 Annuity Principles and Parties 6.2 Fixed and Immediate Annuities 6.3 Deferred and Indexed Annuities 6.4 Variable Annuities

9 National Portion: Annuities - Payout, Uses & Suitability

7.1 Annuity Payout Options and Annuitization 7.2 Uses of Annuities and Suitability 7.3 Annuity Regulation and Disclosure

10 National Portion: Life & Annuity Taxation, Group, and Retirement

8.1 Taxation of Life Insurance and MEC Rules 8.2 Taxation of Annuities 8.3 Group Life Insurance 8.4 Qualified Plans, IRAs, and Retirement (TEFRA/SEP/401k)

11 National Portion: Health Insurance Basics

9.1 Health Insurance Concepts and Defining the Insured 9.2 Medical Expense Insurance (Basic and Major Medical) 9.3 Managed Care: HMO, PPO, POS, and HSA/HDHP 9.4 Cost Containment and Provider Arrangements

12 National Portion: Disability Income Insurance

10.1 Disability Income Policies and Definitions of Disability 10.2 Benefit Periods, Elimination Periods, and Riders 10.3 Business Disability (Key Person, Buy-Sell, BOE) 10.4 Disability Underwriting and Taxation

13 National Portion: Health Policy Provisions & Clauses

11.1 Required and Optional Uniform Provisions 11.2 Renewability and Continuation Provisions 11.3 Exclusions, Riders, and Pre-Existing Conditions 11.4 Claims, Coordination of Benefits, and Subrogation

14 National Portion: Group Health & Employer Plans

12.1 Group Health Fundamentals and Eligibility 12.2 Group Underwriting and Contribution/Participation 12.3 COBRA, HIPAA, and Continuation 12.4 Section 125 / Cafeteria Plans and Self-Funding

15 National Portion: Senior & Government Health Programs

13.1 Medicare Parts A, B, C, and D 13.2 Medicare Supplement (Medigap) Policies 13.3 Medicaid and Long-Term Care Partnership 13.4 Social Security Disability and Benefits

16 National Portion: Long-Term Care & Supplemental Health

14.1 Long-Term Care Insurance 14.2 Dental, Vision, and Limited Benefit Plans 14.3 Specified Disease, Critical Illness, and Hospital Indemnity 14.4 Accidental Death & Dismemberment and Supplemental

17 National Portion: Affordable Care Act & Individual Market

15.1 ACA Essential Health Benefits and Metal Levels 15.2 Guaranteed Issue, Rating Rules, and Marketplaces 15.3 Premium Tax Credits and Cost-Sharing Reductions

18 National Portion: Underwriting, Producers & Claims

16.1 Health Underwriting and Risk Selection 16.2 Application, Producer Responsibilities, and Fair Credit Reporting 16.3 Claims Handling and Fraud Prevention

19 National Portion: Insurance Regulation & Licensing

17.1 State Regulation, Licensing, and McCarran-Ferguson 17.2 Marketing, Advertising, and Replacement Regulation 17.3 Company Operations, Solvency, and Guaranty Associations

20 National Portion: Ethics & Unfair Trade Practices

18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Fiduciary Duty, and Suitability 18.3 Privacy (HIPAA/GLBA), Fraud, and Consumer Protection

21 Chapter 1: California Insurance Regulation & Licensing

1.1 California Department of Insurance (CDI) 1.2 California Producer Licensing Requirements 1.3 License Maintenance and Continuing Education

22 Chapter 2: California Life Insurance Laws

2.1 California Life Insurance Policy Requirements 2.2 California Annuity Regulations 2.3 California Replacement Rules

23 Chapter 3: California Health Insurance Laws

3.1 California Health Insurance Policy Requirements 3.2 California Medicare Supplement (Medigap) Regulations 3.3 California Disability and Long-Term Care Insurance

24 Chapter 4: California Insurance Ethics & Prohibited Practices

4.1 Unfair Trade Practices 4.2 Producer Conduct and Fiduciary Duties 4.3 California Life and Health Insurance Guarantee Association

25 Chapter 5: California Annuity Regulations & Senior Protections

5.1 California Annuity Best Interest Standard 5.2 California Senior Consumer Protections 5.3 California Variable Annuity and Indexed Annuity Regulations

26 Chapter 6: California Group Insurance & Special Topics

6.1 California Group Life and Health Insurance Requirements 6.2 California COBRA and Cal-COBRA Continuation 6.3 California State Insurance Programs

13.1 Medicare Parts A, B, C, and D

Key Takeaways Explain This Topic AI

Part A (hospital) is usually premium-free with 40 quarters; it uses benefit periods, not calendar years, and covers skilled care, never custodial care.

Part B (medical) charges a monthly premium plus 20% coinsurance with no out-of-pocket maximum; IRMAA surcharges apply to high earners.

Part C (Medicare Advantage) bundles A and B through private plans, requires an out-of-pocket maximum, and cannot be paired with Medigap.

Part D drug coverage carries a lifetime penalty after 63+ days without creditable coverage and added an out-of-pocket cap in 2025 ($2,100 in 2026).

Memorize enrollment windows: IEP (7 months around 65), GEP (Jan 1-Mar 31, coverage July 1), AEP (Oct 15-Dec 7); COBRA does not allow penalty-free Part B delay.

Last updated: November 2026

Medicare: The Federal Senior Health Program

Medicare is the federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). It covers people age 65 and older, certain individuals under 65 receiving Social Security Disability Insurance (SSDI) for 24 months, and people with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Most people earn premium-free Part A by accumulating 40 quarters (10 years) of Medicare-taxed work. Exam questions test which part covers which service, the cost-sharing numbers, and the enrollment timing rules.

Eligibility trap: ALS recipients get Medicare the first month SSDI begins (no 24-month wait). ESRD coverage generally starts the 4th month of dialysis. Standard SSDI recipients wait 24 months.

The Four Parts at a Glance

Part Common name Covers Premium

A Hospital Insurance Inpatient hospital, skilled nursing facility (SNF), hospice, limited home health Usually $0 with 40 quarters

B Medical Insurance Physician visits, outpatient care, preventive services, durable medical equipment Monthly premium + deductible

  • C Medicare Advantage Private-plan alternative bundling A + B (usually + D) Part B premium + plan premium
  • D Prescription Drugs Outpatient prescription medications Monthly premium
  • Part A: Hospital Insurance Mechanics

Part A uses a benefit period , not a calendar year. A benefit period begins on admission and ends after 60 consecutive days without inpatient or skilled care. A new benefit period means a new deductible. For 2026, the inpatient deductible is $1,736 per benefit period. Days 1-60 have no coinsurance; days 61-90 carry a daily coinsurance; days 91+ draw on 60 lifetime reserve days that never renew once exhausted.

SNF care: days 1-20 are fully covered, days 21-100 carry coinsurance, beyond 100 days the patient pays all costs.

SNF coverage requires a qualifying 3-day inpatient hospital stay first.

Part A covers skilled care, never custodial (help with bathing, dressing, eating only).

Part B: Medical Insurance Mechanics

Everyone pays the Part B premium ($202.90/month standard in 2026). After a small annual deductible, Medicare pays 80% of the approved amount and the beneficiary pays the 20% coinsurance with no out-of-pocket maximum. Higher-income beneficiaries pay an IRMAA surcharge based on income from two years prior. Most preventive services (annual wellness visit, flu shots, many screenings) are covered at 100%.

Worked numeric: Part A coinsurance

A patient is hospitalized for 75 days in one benefit period (2026 rates). The patient pays the deductible once (~$1,736), then $0 for days 1-60. Days 61-75 = 15 days of coinsurance at $434/day = 15 x $434 = $6,510 . Total patient cost ≈ $1,736 + $6,510 = $8,246 . Days 91+ would have triggered lifetime reserve days at a higher daily rate.

Medicare Assignment and the Limiting Charge

  • Provider status What they accept Patient exposure
  • Accepts assignment Medicare-approved amount as full payment 20% of approved amount
  • Non-participating Up to 15% above approved (limiting charge) 20% + up to 15% excess
  • Opt-out Private contract, no Medicare payment 100% of billed charge
  • Part C: Medicare Advantage

Medicare Advantage (MA) plans are sold by private insurers approved by CMS. The member must have both Part A and Part B and keep paying the Part B premium. MA plans must cover everything Original Medicare covers, must include an annual out-of-pocket maximum (Original Medicare has none), and often bundle Part D plus extras like dental, vision, and hearing. Common designs: HMO (network + referrals), PPO (out-of-network at higher cost), PFFS, and Special Needs Plans (SNP) for dual-eligible/chronic/institutional populations. You cannot use a Medigap policy with an MA plan.

Part D: Prescription Drug Coverage

Part D is voluntary prescription drug coverage from private plans. Beneficiaries who go 63 or more consecutive days without creditable drug coverage owe a lifetime late-enrollment penalty (roughly 1% of the national base premium per month uncovered). Since 2025, Part D has included an annual out-of-pocket cap on covered drugs ($2,000 in 2025, $2,100 in 2026 ), eliminating the old coverage-gap ("donut hole") catastrophic exposure.

Enrollment Periods (high-frequency exam item)

  • Period Dates Purpose
  • Initial Enrollment Period (IEP) 7 months: 3 before, month of, 3 after 65th birthday First enrollment in A/B
  • General Enrollment Period (GEP) Jan 1 - Mar 31 Enroll if IEP missed; coverage starts July 1
  • Annual Enrollment Period (AEP) Oct 15 - Dec 7 Change MA / Part D; effective Jan 1
  • Special Enrollment Period (SEP) Varies (8 mo. after employer coverage ends) Qualifying life events

Exam trap: COBRA and retiree coverage are NOT creditable employer coverage for delaying Part B. Only active-employment group coverage allows penalty-free delay.

The Four Parts and Their Cost Structure

Medicare covers those 65 and older , those receiving Social Security disability for 24 months , and those with ESRD or ALS . It has four parts the exam expects you to separate cleanly:

Part Covers Funding/premium Cost-share highlight

A - Hospital Inpatient hospital, SNF, hospice, some home health Usually premium-free (payroll taxes) Per-benefit-period deductible; SNF copays after day 20

B - Medical Doctor visits, outpatient, DME, preventive Monthly premium, income-adjusted Annual deductible + 20% coinsurance

  • C - Advantage Bundled A+B (often D) via private plans Private plan premium Plan network and copays
  • D - Drugs Prescription drugs via private plans Monthly premium Tiered copays
  • Enrollment Windows

The Initial Enrollment Period is the 7-month window around the 65th birthday month. The General Enrollment Period runs Jan 1-Mar 31 for those who missed it, often with a late-enrollment penalty that permanently raises Part B and Part D premiums. A Special Enrollment Period waives penalties for those who kept creditable employer coverage past 65. Part A's hospital deductible resets each new benefit period , which begins on admission and ends after 60 consecutive days out of a facility - so a person can owe the deductible more than once a year.