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 or End Stage Renal Disease.  There are four parts to Medicare: A, B, C, D.  Parts A and B are known as Original Medicare.  They are administrated by the federal government.  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 have paid into Social Security.  But it’s not entirely free.  If you’re admitted into the hospital, you will be $1,736.00 for the first 60 days.  This is Part A’s deductible.  If you are readmitted 61 days, or more, you will be charged another $1,736.00.  Suppose you spend 75 continuous days in the hospital.  You will be charged $1,736.00 for the first sixty days and then $434.00 daily for the remaining 15 days, up to Day 90.  A new Part A deductible is established each year.  If you are paying a premium for Part A, a new premium is established each year as well.

Part B (Medical Insurance): Covers outpatient care.  Examples: physician visits; laboratory work; diagnostic testing; outpatient surgery; emergency room; and ambulance.  Medicare pays 80%. Your share is 20%. The standard monthly premium is $202.90 and is deducted from your Social Security check.  If you don’t receive Social Security checks, you are billed quarterly.  Part B’s annual deductible is $283.00.  The premium and deductible are 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, but Parts A and B can be expensive.  If you want to reduce the cost of your medical coverage, consider a Medicare Advantage or a Medicare Supplement 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.  For example, with some Medicare Advantage plans, there is no charge for a hospital admission.  Most Medicare Advantage plans include prescription coverage (Part D).  They also include benefits not included in Original Medicare, such as routine dental, vision and hearing, gym memberships, and complimentary meal delivery after a hospital or skilled nursing facility discharge.  The monthly premiums can be as low as $0.  To remain eligible for Medicare Advantage, you must have Medicare Part A and must continue to pay your Part B premium.   

While there are many cost advantages to Medicare Advantage plans, they come with important restrictions.  They have provider networks.  A network is formed when medical professionals, facilities, and medical companies contract to do business with the plan.  A network may limit the number of providers you can see.  For example, your doctor or a radiological facility you want to go to may not be in the network.  A number of Medicare Advantage plans only cover urgent or emergency care if you leave home.  Third, many Medicare Advantage plans require a referral from your primary care doctor to see a specialist.  Some Medicare Advantage plans offer greater flexibility.  Please check your plan’s Summary of Benefits and Evidence of Coverage for a complete list of benefits and what you can and cannot do with your plan.  

Medicare Supplement Insurance

Like Medicare Advantage, Medicare Supplement plans reduce the costs of Parts A and B.  However, there are no provider networks and no limitations on where or how you get medical care.  Think about Medicare Supplement Insurance as a passport for medical care anywhere across the United States and its territories.  Because these plans offer unrestricted access, with no referrals needed to see specialists, they have a higher cost compared to Medicare Advantage plans.  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.