What is Medicare: Medicare Explained
If you're new to the Medicare program, you may not realize that Medicare comes in different "parts." There's Medicare Part A and Part B, which together make up Original Medicare, the government-run health-care program for seniors and certain disabled individuals. There's Medicare Part C, available through Medicare Advantage plans, which is an alternative to the federal program. There's also Medicare Part D, or prescription drug coverage. Besides these "parts" of Medicare, there are Medicare Supplement plans, which help with certain out-of-pocket costs that Original Medicare doesn't cover.
Here's an overview of the different parts of Medicare and what's covered under Medicare Part A, Part B, Part C, and Part D.
What is Medicare Part A?
Medicare Part A is hospital insurance. This covers benefits like:
- Hospital services
- Limited skilled nursing facility care
- Hospice care
- Limited home health services
- Inpatient mental health services
Most people get Medicare Part A without having to pay a premium if they've worked at least 10 years (40 quarters) under Medicare-covered employment. If you don't have enough work history to qualify for premium-free Medicare Part A, you can also qualify through your spouse's work history. Or you can pay a monthly premium for it, with the amount varying depending on the number of work quarters you have.
Medicare Part A doesn't cover all costs. You'll still need to pay for costs like deductibles, copayments, and coinsurance. The amounts may vary depending on how long you're in the hospital or nursing facility and need care.
What is Medicare Part B?
Medicare Part B is medical insurance. This part of Medicare covers certain outpatient services, such as:
- Preventive services and screenings
- Doctor appointments, including yearly wellness exams
- Lab tests
- Certain vaccinations
- Ambulance services
- Limited home health care
- Outpatient mental health services
- Durable medical equipment, such as walkers, canes
- Certain prescription drugs administered to you in an outpatient setting
Unlike Medicare Part A, Part B always comes with a monthly premium. Your premium amount may depend on:
- When you enrolled in Medicare Part B
- Whether you're currently receiving retirement benefits
- Whether you're billed directly for your premiums
- Whether you get both Medicare and Medicaid
- Whether the modified adjusted gross income on your tax return from two years ago is above a certain amount.*
*If you make above a certain income, you may have to pay an additional amount known as an Income Related Monthly Adjustment Amount (IRMAA). This is on top of the standard monthly Part B premium amount. For more information on the Medicare Part B premium, visit Medicare.gov.
Medicare Part B comes with an annual deductible, which is $166 in 2016. After reaching the deductible, you'll typically pay 20% of the Medicare-approved amount for most Part B-covered services and durable medical equipment.
What is Medicare Part C?
Medicare Part C, also known as Medicare Advantage, is an alternative way to get your Original Medicare benefits. Instead of getting your Medicare benefits through the federally administered program, you can get them through a Medicare Advantage plan, which is available through Medicare-approved private insurance companies. There are several types of Medicare Advantage plans, and two of the most popular types, HMOs and PPOs, work similarly to health plans you may have had through an employer.
Medicare Advantage plans are required to offer at least the same level of coverage as Original Medicare, Part A and Part B (except for hospice care). However, one key difference between Medicare Part C and Original Medicare is that some Medicare Advantage plans may include benefits that go beyond the federal program. For example, Medicare Advantage plans may cover routine vision or dental care, hearing, wellness programs, or prescription drugs. These benefits aren't normally covered by Medicare Part A and Part B, although Original Medicare beneficiaries can get prescription drug coverage through a stand-alone Medicare Prescription Drug Plan.
Just as Medicare Part C benefits can vary by plan, costs may be different as well. For example, all Medicare Advantage plans have a yearly maximum out-of-pocket limit (the amount may vary by plan). Once your out-of-pocket costs (including the deductible) have reached the limit for your Medicare Advantage plan, the plan pays for 100% of covered costs for the rest of the year. Original Medicare doesn't have a maximum spending limit, meaning there's no ceiling on your out-of-pocket medical costs, no matter how high they may get.
If you enroll in a Medicare Advantage plan, you may have to pay a separate premium for your Medicare Part C coverage. Some Medicare Advantage plans may have premiums as low as $0. If your service area offers a Medicare Advantage plan with a $0 premium, remember to consider other costs you may have apart from the premium, such as copayments or deductibles. Also, remember that you'll need to keep paying the Medicare Part B premium, in addition to any premium your Medicare Advantage plan may have.
What is Medicare Part D?
Medicare Part D is prescription drug coverage. If you're enrolled in Original Medicare, Part A and Part B, this coverage isn't automatically included. You're covered for certain prescription drugs you get in an inpatient or outpatient setting, but you'll need to enroll in a stand-alone Medicare Prescription Drug Plan for coverage of most other medications.
You can also enroll in a Medicare Advantage Prescription Drug plan and have all of your Medicare Part A, Part B, and Part D benefits covered under one plan. You may prefer this option if you like the simplicity of managing all of your Medicare coverage through a single plan. Keep in mind that not every Medicare Advantage plan covers prescription drugs, so make sure the plan you're considering does if you're interested in this benefit.
If you have a Medicare Advantage plan and want prescription drug coverage, you'll typically get this benefit through a Medicare Advantage plan that includes prescription coverage. You shouldn't enroll in both a stand-alone Medicare Prescription Drug Plan and a Medicare Advantage Prescription Drug plan.
Medicare Part D comes with certain costs. You'll usually pay a monthly premium for your Medicare prescription drug coverage unless you qualify for Extra Help, a program that helps low-income beneficiaries with certain Part D costs. You may also have copayments and coinsurance costs when you fill prescriptions. Each Medicare plan that covers prescription drugs sets different costs for covered medications, so it's a good idea to shop around and compare plan options to get your prescription drugs covered at the lowest cost. To find out if a specific Medicare plan covers your medications, check the formulary, which is a list of prescription drugs covered by the plan. Keep in mind that formularies can change at any time. Your Medicare plan will notify you if there's been a formulary change.
What are Medicare Supplement (Medigap) plans?
Medicare Supplement plans are another coverage option you may have as a Medicare beneficiary. Also known as Medigap, these plans work alongside Original Medicare coverage to help with certain coverage gaps that you're normally responsible for paying out of pocket.
Unlike other types of Medicare coverage, these plans don't provide stand-alone benefits. You'll need to stay enrolled in Original Medicare, Part A and Part B, for your hospital and medical insurance and to be eligible for a Medigap plan. Instead, Medicare Supplement coverage helps with certain out-of-pocket costs that Original Medicare doesn't pay for, such as copayments, coinsurance, deductibles, and emergency overseas coverage. Please note that Medicare Supplement plans can't be used to pay for costs you may have with a Medicare Advantage plan.
There are 10 standardized plan types offered in most states, and three states (Minnesota, Massachusetts, and Wisconsin) offer different Medigap plans. Each plan type is labeled with a different letter (for example, Medigap Plan F) that corresponds with a different level of coverage. Because benefits are standardized, you'll get the exact same coverage from Medigap plans of the same letter type, regardless of your location or which insurance company you purchase the plan from. However, premium costs may vary, even if the benefits are the same.
Hopefully, you now have a better understanding of the different parts of Medicare and the different ways you can get coverage. If you'd like help finding coverage that may work for your needs and budget, feel free to contact eHealth to speak with a licensed insurance agent. Or, you can always use the plan finder tool on this page to start comparing Medicare plan options in your location right away.
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Last Updated Date: 11/5/2016