Medicare is a government-run health insurance program that provides coverage to Americans over the age of 65. It also covers people with disabilities and those with End-Stage Renal Disease (ESRD). Medicare has four parts: Part A, which covers hospital stays; Part B, which covers doctor visits and other outpatient services; Part C, which allows beneficiaries to receive their benefits through private health plans; and Part D, which helps cover the cost of prescription drugs.
Medicare Broken Down
When you become eligible for Medicare, you have choices to make. First, you must decide whether you’ll enroll in Part A and B or Part A only and defer Part B. Most people choose Part A because it is premium-free. If you’re enrolled in a health savings account (HSA), you won’t be able to continue contributing to it if you enroll in Part A. Once your A and B choices are made, you can keep Original Medicare. Then you can add a supplement and Part D plan or opt for a Medicare Advantage Plan.
Here is What Each part Covers
- Medicare Part A is considered the hospital insurance portion of Original Medicare. Part A coverage includes health care costs associated with hospital stays and limited stays at a nursing home, hospice care, and some costs for home health care.
- You don’t have to pay a monthly premium for Medicare Part A hospital insurance if you or your spouse paid qualifying taxes during employment. If you don’t qualify for premium-free Part A, you can pay for it. The premium amount you have to pay varies based on how long you or your spouse worked and paid Medicare taxes. For instance, if you paid taxes for less than 30 quarters, you’ll pay $499 per month based on 2022 premiums. But if you worked and paid taxes between 30 and 39 quarters, you’ll only pay a $274 monthly premium.
- Medicare Part B is considered the medical insurance portion of Original Medicare. Similar to health insurance, Part B coverage is for everyday health care expenses such as trips to the doctor’s office for a checkup or a sick visit, any outpatient care you might receive, certain medical supplies, and preventive care like an annual wellness visit.
- Medicare Part B medical insurance requires monthly premiums from nearly everyone. The standard amount for 2022 is $170.10. Furthermost, If your gross income on your tax return is high enough, you’ll be required to pay both the standard monthly premium and an Income Related Monthly Adjustment Amount (IRMAA). You’re also responsible for 20% of the costs of your health services after your annual deductible ($233 in 2022) is met.
Medicare Part C
- Medicare Part C, commonly referred to as Medicare Advantage, is offered by health insurance companies approved by Medicare. If you choose a MA as an alternative to Original Medicare, it becomes your primary coverage. Think of Medicare Advantage Plans as “Medicare bundles” because these plans cover everything that Part A and Part B do. Most Advantage Plans include Part D Medicare prescription drug coverage. Some Advantage Plans offer additional coverage for dental and vision and even fitness memberships. For example, Advantage Plans cover in-patient hospital stays, stays in a skilled nursing facility, and home health care like Original Medicare Part A. Part C also covers outpatient care such as Medicare Part B does, including doctor visits, lab tests. X-rays, outpatient surgery, and emergency services.
- Original Medicare Part A and Part B only cover 80% of the costs of services received. Meanwhile, Advantage Plans cover everything Part A and Part B cover but charge a small copayment and coinsurance for services. Most Medicare Advantage plans also have maximum out-of-pocket costs per year. Many come with a $0 monthly premium, which can make these plans more affordable. The costs of Advantage plans vary since private companies offer them, but you can expect to pay both a monthly premium and a monthly Part B premium, unless the plan is a $0 premium plan. Plan costs can vary depending on whether other benefits like Part D, dental, vision, and hearing are included.
Medicare Part D
- Part D refers to prescription drug coverage, so it’ll help cover the costs of medications prescribed for your health condition. Individual Medicare drug coverage plans use a formulary developed by a pharmacy and therapeutics committee composed of pharmacists and physicians to regulate which medications they’ll cover. The United States Centers for Medicare and Medicaid Services (CMS) must approve the formulary. Part D plans are required to offer two medications in all categories necessary to treat your health condition. In most cases, if a name-brand medication isn’t covered, a generic will be.
- Part D does have costs associated with it. The costs vary based on which type of plan you choose. In general, you can expect to pay a monthly premium ― this can be deducted directly from your Social Security if you choose ― and a yearly deductible. The deductible can’t be more than $480 in 2022. You’ll pay a copayment or coinsurance percentage for each drug after your deductible is met. If you have low income and resources, you may be able to get help with Part D costs through Extra Help.
Medigap
- Medigap insurance is commonly known as Medicare Supplemental Insurance. As the name implies, it’s used as a supplemental health insurance program to cover health care costs that Original Medicare does not. You can only purchase Medigap insurance if you’re enrolled in Original Medicare. It cannot be used with a Advantage Plan. Medigap insurance is offered through private insurance companies approved by Medicare.
- You pay a monthly premium for Medigap as well as your regular monthly Part B premium. Your Medigap premium is paid directly to the health insurance company you got your Medigap policy through while the Part B premium is paid to the Social Security Administration.
- Medigap insurance can help cover your deductible costs, copayments, and coinsurance under Original Medicare. For people newly eligible for Medicare on or after January 1, 2020, Medigap insurance can no longer cover the Part B deductible. If you were eligible for Medicare before January 1, 2020, you may be able to purchase Plan C or F, which will cover the Part B deductible cost. If you already have a Plan C or F, you can keep it. Medigap insurance can’t be used to cover the costs of certain health care expenses, including long-term care, vision care, and eyeglass, dental care, hearing aids, or private-duty nursing care.
What isn’t Covered by Medicare?
Original Medicare doesn’t cover specific services, including:
- Long-term care
- Dental care (with some exceptions)
- Vision exams needed to prescribe glasses
- Dentures
- Cosmetic surgery
- Acupuncture
- Hearing aids and related exams
- Routine foot care
In closing, no matter what your Medicare need is. We are here to help.