What is Medicare?*
Medicare is the federal health insurance program for people 65 and over; for individuals who receive disability benefits through Social Security; and those with Lou Gehrig’s (ALS) or End Stage Renal Disease (ESRD). There are four parts to Medicare: A, B, C, D. The federal government administrates Parts A and B. Both are referred to as Original (Traditional) Medicare. Parts C and D are offered by private insurance companies.
Four Parts of Medicare
Part A (Hospital Insurance): Covers acute care hospitalization, skilled nursing care, and hospice. Part A is premium free if you’ve worked ten years in the United States and paid into Social Security. But it’s not entirely free. Part A has a deductible. The deductible is $1,675 for a 60 day benefit period. If you’re readmitted into the hospital after 60 days, you will be charged another $1,675. If you’re hospitalized for 61 continuous days or longer, you are responsible for daily copayments.
Part B (Medical Insurance): Covers physician visits; laboratory work; diagnostic testing; outpatient surgery; emergency room; and ambulance. Outpatient care. Medicare pays 80%. Your share is 20%. The standard monthly premium is $185.00.** Your Part B premium is deducted from your monthly Social Security check and is reset every year. If you don’t receive Social Security, you are billed quarterly. Part B has an annual deductible. It is $257 and is reset every year. Unless you have employer insurance, or other credible coverage as defined by Medicare, you risk a lifetime penalty if you don’t enroll in Part B when first eligible.
Q. Can I get medical coverage with just Parts A and B?
A. Yes, you can. You’ll also need a separate drug plan (Part D). Parts A and B can be pricey. If you want to reduce the cost of your medical coverage, consider a Medicare Advantage or a Medicare Supplment Plan.
Part D: (Prescription Coverage): Covers prescription drugs and a number of vaccines. Most plans have a premium. Many come with a deductible. Unless you have employer insurance, or other credible coverage, as defined by Medicare, you risk a lifetime penalty if you decline Part D.
Part C: (Medicare Advantage): Medicare Advantage plans include all the benefits of Original Medicare but at a lower cost. Some plans come with no medical deductible. The hospital copay may be as low as $0. Physician visits may be $0 or have a small copay. Many plans include prescription coverage. Medicare Advantage includes benefits that Original Medicare doesn’t cover. Examples are routine dental, hearing, and vision; chiropratic care; gym memberships; and complimentary meal delivery post hospital discharge. Premiums on these plans can be as low as $0.
There are many cost advantages to Medicare Advantage plans but they come with restrictions. Medicare Advantage plans have provider networks. A network is formed when medical professionals, facilities, and medical companies contract to do business with the plan. A network limits the number of providers you can see. For example, if your primary care doctor, or specialist, is not in-network with the plan, you will need to choose other providers or enroll in a different plan.
Medicare Advantage plans may limit out of service area coverage to urgent and emergency care. HMOs typically require referrals from your primary care doctor. In recent years, insurance companies have built more flexibility into their HMOs. With some, you can get routine care outside your service area. This is typically for a short period of time. Some don’t require referrals from your primary care doctor to see a specialist. But the specialist may ask for one anyway. Consider a PPO if you want greater access to providers; a better chance of seeing specialists without a referral; and an extended period of time to get routine care outside your service area. You must have Parts A and Part B to enroll in a Medicare Advantage plan.
Medicare Supplement Insurance
Like Medicare Advantage, Medicare Supplement plans reduce the costs of Parts A and B. In contrast to Medicare Advantage plans, there are no provider networks and no limitations on where you can get medical care. These plans are essentially a passport for medical care anywhere in the United States. Because you have greater access to medical care, the monthly premiums are signficantly higher compared to Medicare Advantage. Medicare Supplement plans do not include prescription drugs. You will need a separate drug plan (PDP). These plans also lack the built-in extra benefits of Medicare Advantage. You must have Parts A and Part B to enroll. For a detailed description of Medicare Supplement Insurance, go to my blog on this topic.
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**Depending on your income, your Part B premium may be higher. If you’re eligible for full Medicaid, or participate in a Medicare Savings Program, you won’t pay the Part B premium.