Medicare is a federal health insurance program designed to help people 65 and older, as well as some younger individuals with specific disabilities or medical conditions, pay for healthcare costs. While Medicare offers significant benefits, understanding exactly what is covered can be confusing, especially when it comes to the different parts of the program.
In this comprehensive guide, we’ll explain the key benefits of Medicare, break down what each part covers, and offer tips on how to maximize your Medicare coverage.
What is Medicare?
Medicare is made up of four parts, each of which provides different types of coverage:
- Part A: Hospital insurance
- Part B: Medical insurance
- Part C: Medicare Advantage (alternative to Original Medicare, offering additional benefits)
- Part D: Prescription drug coverage
Additionally, there is Medigap (Medicare Supplement Insurance), which helps cover out-of-pocket costs like deductibles, copayments, and coinsurance that aren’t covered by Original Medicare.
Now, let’s dive into the specifics of what each part of Medicare offers.
Medicare Part A: Hospital Insurance
Medicare Part A primarily covers inpatient care in hospitals. It also includes limited coverage for skilled nursing facilities, hospice care, and some home healthcare services.
Key Benefits of Medicare Part A:
Inpatient Hospital Care: Medicare Part A covers inpatient hospital stays for semi-private rooms, meals, general nursing, and drugs as part of your treatment. This also includes intensive and critical care units.
Skilled Nursing Facility (SNF) Care: After a qualifying hospital stay (three days or more), Part A may cover up to 100 days in a skilled nursing facility for rehabilitation or skilled nursing care. The first 20 days are covered in full, while the remaining 80 days will require a copayment.
Home Health Care: If you’re homebound and require part-time skilled nursing care or therapy, Part A may cover these services.
Hospice Care: Part A covers hospice care for individuals with a terminal illness who have a life expectancy of six months or less. Hospice care includes pain relief, symptom management, and support services for the terminally ill and their families.
Out-of-Pocket Costs for Part A:
- Most people do not pay a premium for Part A if they or their spouse have paid Medicare taxes for at least 10 years.
- There are deductibles and coinsurance costs for hospital stays and skilled nursing facility care.
Medicare Part B: Medical Insurance
Medicare Part B covers medically necessary services and preventive care. This includes doctor visits, outpatient care, home health services, durable medical equipment, and some preventive services like flu shots and cancer screenings.
Key Benefits of Medicare Part B:
Doctor Visits: Medicare Part B covers visits to your primary care doctor, specialists, and outpatient services such as lab tests, x-rays, and mental health services.
Preventive Services: Part B covers many preventive services at no cost to you, such as screenings for cancer, cardiovascular diseases, diabetes, and osteoporosis, as well as vaccines like flu and pneumonia shots.
Outpatient Care: This includes services received at a hospital outpatient department, such as surgeries that don’t require an overnight stay.
Durable Medical Equipment (DME): Medicare Part B helps cover medically necessary equipment like wheelchairs, oxygen equipment, walkers, and home-use hospital beds.
Out-of-Pocket Costs for Part B:
- Part B has a monthly premium (standard premium for 2024 is $174.70, but higher for higher-income individuals).
- There is also a yearly deductible, and after you meet it, you’ll typically pay 20% of the Medicare-approved amount for services.
Medicare Part C: Medicare Advantage Plans
Medicare Advantage (also known as Part C) is an alternative to Original Medicare (Parts A and B). These plans are offered by private insurance companies and must provide at least the same benefits as Original Medicare, but often include additional benefits like vision, dental, and hearing coverage.
Key Benefits of Medicare Part C:
Comprehensive Coverage: Medicare Advantage plans bundle Part A, Part B, and often Part D (prescription drug coverage) into one plan. Many also offer extra benefits, such as coverage for dental, vision, and hearing services.
Lower Out-of-Pocket Costs: Many Medicare Advantage plans have lower out-of-pocket costs compared to Original Medicare. They also have a yearly out-of-pocket maximum, which limits how much you pay for covered services during a year.
Additional Benefits: Some plans include perks like gym memberships, wellness programs, and transportation to medical appointments.
Costs for Part C:
- Medicare Advantage plan costs vary depending on the plan and provider. You’ll typically still pay your Part B premium, plus an additional premium for your Medicare Advantage plan, if applicable.
Medicare Part D: Prescription Drug Coverage
Medicare Part D helps cover the cost of prescription medications. It’s available as a standalone plan for those on Original Medicare or may be included in some Medicare Advantage plans.
Key Benefits of Medicare Part D:
Prescription Drug Coverage: Part D plans cover a wide range of prescription medications. Each plan has a formulary (a list of covered drugs) that is divided into tiers, with different cost-sharing requirements for each tier.
Catastrophic Coverage: Once your out-of-pocket spending on drugs reaches a certain limit, you enter catastrophic coverage, where your costs for medications are significantly reduced.
Out-of-Pocket Costs for Part D:
- Premiums for Part D vary based on the plan you choose and your income. Additionally, there are deductibles, copayments, and coinsurance costs for medications.
Medigap: Medicare Supplement Insurance
Medigap policies are offered by private insurance companies and are designed to fill in the gaps in Original Medicare, such as covering deductibles, copayments, and coinsurance. Medigap only works with Original Medicare, not Medicare Advantage.
Key Benefits of Medigap:
Reduced Out-of-Pocket Costs: Medigap plans help pay for costs like the Part A deductible, the 20% coinsurance under Part B, and foreign travel emergency care.
Standardized Plans: Medigap policies are standardized in most states, meaning the benefits for each type of plan (A, B, C, etc.) are the same no matter which company you buy from.
Costs for Medigap:
- You’ll pay a monthly premium for Medigap in addition to your Part B premium. Costs vary depending on the plan and provider, but Medigap can significantly reduce out-of-pocket expenses for frequent healthcare services.
