Your Medicare Guide ﹥ Medicare Parts Explained Medicare Parts Explained
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What Do You Need To Know
Medicare Parts Explained (A, B, C, D)
If you’re new to Medicare and considering how you’ll cover medical costs after retirement, then this article is for you. Understanding the different parts, how to enroll, when to enroll, and how much each part costs can be overwhelming and confusing. This article will provide you with a summary of the different Medicare parts, helping you choose the right plan for your needs.
Original Medicare
When researching Medicare plans, you’ll come across the Original Medicare often. Original Medicare refers to Medicare Parts A and B.
Other Medicare parts, including C, D, or supplement insurance, are all optional add-ons that can provide you with more coverage.
Part A
Medicare Part A is hospital insurance. It covers:
· Inpatient hospital care: This includes the care that you receive when admitted to an inpatient hospital. It typically covers policyholders for up to 90 days in each period. An additional 60 lifetime reserve days are also available for infrequent, more extended hospital stays. Part A may also cover up to 190 days total in a psychiatric hospital if deemed necessary.
· Skilled nursing care: Skilled nursing care covers costs related to a nursing facility. This includes caregivers who assist with things like administering medications or after-surgery care. Medicare Part A will typically cover up to 100 days in each period for skilled care. However, to qualify for professional nursing care, you must have spent a minimum of three days as an inpatient in a hospital and require care following discharge.
· Home health care: Home health care covers care in your home if you’re homebound. This includes up to 100 days of consecutive in-home care or an unlimited amount of intermittent care. To qualify, you must have also spent a minimum of three days in a hospital within 14 days of beginning care.
· Hospice care: Hospice care includes end-of-life medical care. Your provider must specify that you need it to be eligible.
There are exceptions to Part A coverage, which are essential to know so you can plan for unexpected costs. For example, Part A typically won’t pay for a private hospital room.
How Much Do Services Cost With Part A?
How much you pay for medical services will depend on whether or not the care you receive is approved. If eligible to use Part A benefits for hospitalization costs, you will typically still owe something. Medicare doesn’t usually cover the total cost of care. You may be subject to other expenses like your deductible, coinsurance, or copayments. Deductible rates of Part A vary each year but can be, on average, $1,484 per hospitalization visit.
Part B
Part B is medical coverage, sometimes referred to as outpatient coverage. This is because it includes outpatient care or costs not related to hospitalization. This includes:
· Medical providers: Medical provider coverage includes any medical services from a licensed provider that are necessary.
· Durable medical equipment: Durable medical equipment includes any medical devices that you may need for your medical care. This may include mobility devices. Medicare will typically only cover any supplies that come from an approved supplier.
· Home health: If you’re homebound and need medical care or physical therapy in the home, it may be included in Part B.
· Ambulatory services: Part B also covers emergency transportation to and from treatment. It only covers situations in which no other transportation is available.
· Preventative services: Part B also covers preventative care. This includes annual check-ups, and they typically come with no copayments.
· Therapy: Part B also includes any outpatient therapy services, which may include physical or speech therapy, as well as occupational therapy.
· Mental health: Part B may also include outpatient mental health treatment. This includes things like an annual depression screening, family counseling, psychiatric evaluations, and medication management.
· Diagnostic tests: Part B also covers diagnostic tests. This includes x-rays or laboratory tests.
· Chiropractic care: Medicare Part B may cover chiropractic care if it’s prescribed by a medical doctor. It must also include the treatment of subluxation.
· Medications: Part B may cover some prescriptions. However, the majority of them will be covered under Part D.
Because Part B is a part of Original Medicare, you can learn more about what it offers through Medicare.gov. This can help you plan for your upcoming medical needs.
How Much Do Services Cost With Part B?
Similar to Part A, most policyholders will be subject to costs with part B when receiving medical care. This includes deductibles, coinsurance, or copayments, as long as services are approved. If services aren’t approved by Medicare, then the policyholder will be subject to the full cost of the medical services.
Everyone pays a premium with Part B. However, that premium may vary, depending on a few factors, including your income and when you sign up for the Medicare program. With Medicare Part B, you’ll typically have to pay 20% of all doctor’s visits and bills as a copayment. Part B also typically comes with a deductible that you must meet before receiving benefits.
Part C
Medicare Part C refers to an Advantage Plan. If you choose a Part C plan, then you receive Parts A and B through the insurance provider you choose rather than through the government. Part C plans come from private providers who are regulated through the federal government.
This means that regardless of which Part C plan you choose, it must include the same benefits as the Original Medicare Parts A and B.
In addition to Parts A and B, Part C may also include:
· Hearing coverage
· Dental coverage
· Prescription coverage
· Vision coverage
Some Part C plans also include Part D, which is Medicare drug coverage. When you use your Part C benefits, you won’t use the traditional Medicare card. Instead, you’ll use the card provided through your Medicare provider.
Because Part C varies, depending on the provider, it can be a good way to receive additional services that you may need that may not be covered with Original Medicare. For example, if you require dental or hearing care, which isn’t typically available with traditional Medicare, you may be able to find an Advantage Plan that includes it. Part C plans are usually divided into the following types:
· HMO: An HMO (health maintenance organization) requires that you choose a primary physician who oversees your medical care. This will usually require a referral for other services.
· PPO: A PPO (preferred provider organization) requires that you choose medical physicians within a network of providers. If you receive services outside of this network, they may cost more.
· PFFS: A PFFS (private fee-for-service) doesn’t require that you choose a primary care physician. Instead, the plan allows you to choose your providers, but the company sets the price.
· SNPs: An SNP (special needs plan) is specifically designed for certain policyholders. It requires policyholders to have certain medical conditions.
There may be other options available, including HMO point of service or medical savings accounts. These plans listed, however, are the most common.
How Much Do Services Cost With Plan C?
As long as the insurance provider offers the minimum requirements of coverage, they can set their own rules and prices. This is why it’s important to compare policies when choosing Part C.
Part D
Part D is prescription coverage. This includes any outpatient medications prescribed by a medical provider. Part D is only available through private insurers. It’s not available through the government.
How Much are Medications With Plan D?
The cost of prescriptions using Plan D will depend on many factors, including the rules of the plan that you choose. Plan D is still subject to costs like a premium, deductible, copayments, and coverage gap. The tier of the medication, whether or not you have reached your deductible, the pharmacy you use, and your specific plan will all determine how much you pay.
Medicare Supplement Plans
When researching Medicare plans, you’ll also come across Medicare supplement plans, also referred to as Medigap. A Medicare Medigap supplement plan is an add-on policy that works with your Original Medicare. They are available through private insurance companies and help to cover other costs related to your Original Medicare, including copayments or coinsurance. A Medicare supplement plan steps in to cover any leftover costs that Medicare doesn’t pay.
The number of available Supplement plans may vary, depending on your location. Most supplement plans are state-specific, meaning availability will depend on where you live.
Other Available Medical Plans
Other plans that may be available to you within Medicare are Medicaid and a Medicare Savings Program. Medicaid is limited to those who meet eligibility requirements based on income. If you currently receive Medicare and have a limited income or expensive medical costs, you may qualify for assistance with Medicaid too.
A Medicare Savings Program is also available to eligible low-income people to assist with costs like premiums or deductibles.
Who’s Eligible for Medicare?
Determining your Medicare eligibility can help you plan for your healthcare needs. Medicare has a few eligibility requirements:
· You must have paid into the Medicare program for a minimum of 10 years. If you haven’t, however, it doesn’t disqualify you for benefits, but you may be subject to a higher premium.
· You’re already receiving benefits from Social Security or the Railroad Retirement Board, or you’re eligible to receive benefits but haven’t filed yet.
· You or your spouse previously had Medicare-government employment.
· If you’re currently enrolled in Medicare due to disability, you must re-enroll in the program once you’re within a few months of 65 years.
You must be turning 65 years within three months to file for Medicare benefits. The program may be available to others with chronic conditions.
When to Enroll in Medicare
Knowing when to enroll in Medicare is also important in avoiding costly mistakes that could leave you without healthcare. Enrollment eligibility is divided into different enrollment periods:
Initial Enrollment Period
The initial enrollment period is when you’re first eligible for Medicare benefits. You are eligible to apply for Medicare benefits from up to three months before you turn 65 to three months after.
Some people may be automatically enrolled in Medicare benefits. If you already receive Social Security benefits, then you will usually be automatically enrolled in Medicare. You will receive your Medicare card around your bday. However, if you want to enroll in a Part C or D plan, you’ll need to do so within your enrollment period.
Open Enrollment Period
The Open Enrollment Period is annually from October 15 – December 7. During this period, you can also switch or drop a Medicare plan.
General Enrollment Period
During the General Enrollment Period, you can enroll in Parts A and B if you haven’t been automatically enrolled or haven’t enrolled yourself. The GAP is available annually from January 1 – March 31. You must enroll during this period if you haven’t yet, and don’t qualify for the Special Enrollment Period.
If you still don’t enroll during this period, you may be subject to a premium increase if you choose to enroll later. For example, if you wait until the next GAP period and don’t have coverage, you will be charged a 10% penalty for each year of delayed enrollment.
Special Enrollment
Special enrollment is eligible for those who work past age 65 years. This may apply to you if you or your spouse continues to work. However, you must be covered by a work-related plan.
Before deciding how to proceed, it’s always a good idea to talk with your employer to learn any rules you must follow. For example, you may have to work a set number of hours to stay eligible for your benefits. Once you do retire, you must enroll within eight months of the end of your work policy. Even if you delay part B, you may still be able to enroll in Part A. You may also be able to do so without a premium.
When to Enroll in Medical Supplement Insurance
If you want to enroll in a Medical Supplement insurance plan, you’ll need to enroll during the open enrollment period. This is annually in the first six months of eligibility for Medicare B. During this time, private insurers cannot deny coverage based on any pre-existing conditions you may have. However, if you don’t enroll in a supplemental plan within your open enrollment period, insurance providers can deny coverage. They can also change prices based on any medical condition.
When to Enroll in Medicare Advantage Plan
Medicare Advantage plans are available through insurance providers within your state. You can enroll in an Advantage Plan during your initial or open enrollment period.
When to Enroll in Part D
If you want to enroll in Part D Medicare prescription drug coverage, you can do so in the same period of the initial enrollment for Original Medicare. This is three months before you turn 65, the month of your 65th birthday, and three months after you turn 65 years. If you’re new to Medicare or eligible for the special enrollment period, then you must enroll or change plans during Open Enrollment, which is October 15 – December 7.
However, if you don’t enroll in Part D during this time and you don’t have other coverage, you will receive a one percent penalty for each month that you don’t enroll if you decide to enroll during the open enrollment period later.
How Much Does Each Part Cost?
As you plan for your healthcare needs after retirement, it’s important to know how much each plan may cost. Here are a few things to know about pricing with each plan:
Part A
The majority of people won’t pay a Part A premium because it’s based on your previous work history. If you have worked and contributed to Medicare for a minimum of 40 quarters, your coverage is usually included. You may also be eligible if you have a spouse who has worked the minimum quarters. If you, or your spouse, hasn’t worked the minimum requirement to qualify for free Medicare Part A, you may have a monthly payment, which includes:
· Less than 30 quarters of employment: $471 per month
· 30-39 quarters of employment: $259 per month
It is important to keep in mind that these premium costs vary and may increase over time. Some people may also be exempt from premiums, even with a minimum contribution to the program.
Part B
The premium for Part B also changes each year. People with a higher income will typically have a higher premium. The average cost of Part B is $148.50 per month. The government sets the price of Part B. While not all policyholders will pay a monthly premium for Part A, most people will pay a premium for Part B. Part B also comes with a deductible and coinsurance requirements. Before you meet your deductible, you will have to pay for many Part B medical services out of pocket.
Part C
The cost of Part C will also vary, depending on the plan you choose. Different providers can charge different prices, so you can shop around and find the best one for you.
Part D
Part D is only available through private insurers. This means that if you want prescription Medicare drug coverage, you’ll have to add it to your policy. You can choose a Part C plan that includes prescription coverage, or you can keep your original Medicare plan and add on prescription Part D coverage.
Important Costs to Consider
When calculating your costs, it can be helpful to understand the different categories of expenses included with the different Medicare plans. They may include the following:
· Annual deductible: An annual deductible refers to the amount that you have to pay out-of-pocket to access your benefits. You must pay this amount before Medicare will step in and cover any of your eligible medical costs.
· Copayments: Copayments refer to another out-of-pocket cost that you may be responsible for paying. This is how much you have to pay each time you receive medical services and is most common with prescription drug plans.
· Coinsurance: Coinsurance refers to an amount that you must pay after you meet your deductible. It’s usually a percentage of the medical services you receive.
· Premium: A premium is a monthly payment you make to maintain your benefits. This amount is usually set by the government for Part A and B plans.
It’s important to note that not all plans have each of these costs. However, you can use this information to compare policies and to estimate your costs.
How to Enroll in Medicare
You can enroll during your enrollment period online, by phone, or in person at your local Social Security Administration office. Here are a few things to know about enrollment in Medicare:
Things to Do Before Enrolling in Medicare
Before enrolling in Medicare, there are a few things that you want to do, including:
· Check your eligibility requirements
· Decide which plan is right for you
· Determine if you want supplemental insurance
· Talk with your employer to find out about company health benefits
· Decide if you want to enroll in Medicare or maintain your work coverage
· Find out when your enrollment period is
· Consider your options if you plan to work past 65 years
· Notify Social Security if you plan to work past 65 years
· Check that your prescriptions are included in the Part D plan you choose
It may also be beneficial to collect the documents you may need when applying. Medicare may request documents and information like employment, spouse information, birth date and place, citizenship status, and Social Security information. Having this information ahead of time can make the application easier.
Frequently Asked Questions (FAQs)
Here are a few Medicare parts FAQ about Medicare enrollment:
Do You Need All 4 Medicare Parts?
Not only do you not need all four Medicare Parts, but you also cannot have all four of them at once. This is because when you choose to enroll in a Medicare Advantage Plan, it automatically comes with Parts A and B, removing the need for them. Additionally, if you want prescription Medicare coverage, you can usually add this to your Medicare Part C plan.
You also cannot have a Supplement Plan and a Medicare Advantage Plan. You will have to choose one.
Is It Mandatory to Enroll in Medicare Once You Turn 65 Years?
While it is not required to enroll in Medicare once you turn 65 years, it is required to do so if you enroll in Social Security. It’s best to enroll in Part A and delay Parts B, C, and D if you decide to take advantage of a work plan. It’s also a good idea to discuss your plan requirements with your current employer.
How Do I Choose Between a Supplement Plan and a Medicare Advantage Plan?
Because you have to choose between a Supplement Plan or a Medicare Advantage Plan, it’s important to consider your needs. If you choose a Medicare Advantage Plan, you’ll still have to pay your Part B premium. You’ll also be subject to the monthly premium set by the insurance company for Part C.
A Supplement Plan also comes with your Part B premium and the premium associated with the Supplement plan, but it helps cover deductibles and costs. A Supplement Plan also doesn’t typically cover other types of healthcare services that you may need, like hearing or dental, as a Medicare Advantage plan may.
When Does Coverage Begin?
Your Medicare coverage begin date depends on when you apply. If you apply within the initial enrollment period, you can expect benefits to begin as soon as you are approved. If approved, Medicare coverage will begin six months back from the date in which you applied, but not before you were eligible to receive Parts A or B.
You can expect coverage to begin based on the following enrollment dates:
· If you enroll before you turn 65 years: Coverage usually begins on the first day of your birth month.
· If you enroll within your birthday month: Coverage usually begins the first day of the month following the month in which you enrolled.
· If you enroll the first month after turning 65 years: Coverage usually begins the first day of the second month in which you were enrolled.
· If you enroll two to three months after turning 65 years: Coverage usually begins the first day of the third month.
· If you enroll in Medicare Parts A and B during the GAP period, then you can expect Medicare coverage to begin on July 1.
It’s important to plan your enrollment so you can ensure you have the coverage you need. Also, by enrolling during the right period, you can avoid costly premiums.
Planning your medical coverage is an important part of retirement. Consider how the different Medicare plans may help you cover your medical costs and choose which one is right for you.
Consult a Medicare Agent
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