What is Medicare?
Medicare is national health insurance for individuals age 65 and older, individuals with certain disabilities, or end-stage renal failure. There are four basic parts of Medicare, and it’s important to understand how they work together.
Medicare Part A – Hospital Insurance
Medicare Part A covers inpatient costs. In addition to hospitals, Part A helps with skilled nursing facilities, hospice, and home health care. It’s insurance for your “room and board” at the hospital.
While Part A will cover the cost of your room, it does NOT cover treatments such as scans or surgeries. Those fall under Part B.
Medicare Part A coverage is free for most people at age 65. During the years you worked, you paid Medicare taxes from your paychecks. If you don’t qualify for free coverage, most people can still apply, but they pay a premium which can be over $400 per month.
Medicare Part B – Medical Insurance
Medicare Part B covers outpatient medical expenses such as office visits, doctors’ care when you’re in the hospital, lab work, surgery, etc. Without Part B insurance, you would have to pay for these services out-of-pocket.
Perhaps the most important aspect of Medicare Part B is coverage of cancer therapy and kidney dialysis. These treatments are extremely expensive and could be financially devastating.
There is a cost for Medicare Part B. The amount you pay is determined by the adjusted gross income you report to the IRS. Costs may change from year-to-year. Most Medicare participants pay about $170.10 per month for Part B insurance. If your income is in one of the higher brackets, you will pay more.
Medicare Part C – Medicare Advantage
Medicare Part C is also known as Medicare Advantage program and is private insurance. The cost of Medicare Advantage varies from company to company so it’s important to compare plans. To enroll in a Part C plan, you must be enrolled in both Parts A and B. Even if you find a Part C plan with a very low premium, you still pay for Part B.
You also have to live within the plan’s service area. When you enroll in a Medicare Advantage plan, your coverage comes from the insurance company rather than Original Medicare.
Enrolling in Part C is voluntary. Some people prefer to get their coverage from Original Medicare and the traditional Medicare supplements (also known as Medigap plans). If you don’t want a Part C Medicare Advantage plan, simply don’t enroll in one. It is entirely your choice.
Medicare Part D
For over 50 years, Medicare did not have coverage for prescription drugs. In 2006, the government unveiled Medicare Part D. This is coverage for prescription drugs you either purchase at the pharmacy or order by mail. You choose a company and enroll in their prescription drug plan. It’s as simple as that.
Most states have about 30 different prescription plans to choose from, and it’s often best to work with your insurance agent to determine which plan is best for you. He/she will use Medicare’s prescription drug finder tool to help analyze your choices.
What are Medicare Supplements?
A Medicare Supplement Insurance, also known as a “Medigap Plan,” is health insurance you purchase from private insurance companies to cover the fees, or gaps, Medicare doesn’t pay.
Medicare gaps include coinsurance, copayments, and deductibles. You pay for these when accessing medically-approved services. If you have Medicare Supplement Insurance, it will pay for the Medicare gaps.
Medicare Parts A, B, C, and D work together to assist you with your health care coverage after age 65. Here’s a quick review.
Medicare Part A: This part covers hospital “room and board” expenses and is free to people who worked at least 10 years. If you don’t qualify for free coverage, you can apply for Part A coverage, but you pay a premium.
Medicare Part B: This coverage is for outpatient services such as office visits, copays, and inpatient doctors’ services. Everyone pays a premium for Part B coverage.
Medicare Part C: Part C, or Medicare Advantage, is private insurance. You must be enrolled in both Parts A and B to be eligible to enroll in Medicare Advantage.
Medicare Part D: This program covers prescription drugs. Most states have a wide variety of plans to choose from.