As I near retirement I am thinking more about Medicare. Previously, I knew Medicare was the federal health insurance program for people aged 65 and older in the U.S. I didn’t know much more than that because it didn’t apply to me when I was younger. I felt I had years before it would. But time goes by so quickly and here I am.
Medicare details can be very confusing, and the abundance of information available is overwhelming. I am working now to learn all I can and thought a basic summary of the different parts of Medicare might be beneficial for others who have some of the same questions I did. I hope you find it helpful.
What is Medicare Part A?
Part A is often referred to as hospital coverage and covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. It covers your room and board; in other words, part A provides you a place to stay, with meals, while you receive medical services.
Medicare Part A free for most people as long as you have worked in the U.S. for at least 40 quarters (10 years). Those who did not pay Medicare taxes for 10 years or more in the U.S. can still get Medicare Part A but pay a premium. For example, in 2019, if you paid Medicare taxes for only 30-39 quarters pay a $240/month premium. If you paid Medicare taxes for fewer than 30 quarters, your premium is $437 per month.
What is Medicare Part B?
The definition for Medicare Part B is outpatient services. However, Part B covers many things that happen both in and out of the hospital such as doctor office visits, lab testing, diagnostic imaging, preventive care, surgeries, ambulance rides, chemotherapy and radiation, and even extensive dialysis care for people with renal failure. Though many of these procedures may occur in a hospital, they fall under Part B because physicians provide them. It is not always easy to determine what is considered inpatient vs. outpatient care.Part B is optional because some people who are still working may wish to delay it until they retire. However, if you are retired and have no access to other health coverage, Medicare becomes your primary insurance and, in that case, Part B is a critical component of your overall health package. Many people think Part A is enough and are unpleasantly surprised when faced with unexpected medical expenses for services that need to be paid out of pocket. The standard monthly Medicare Part B premium is $135.50 for 2019. Most people pay this amount, but higher-income earners are charged a higher premium.
What is Medicare Part C?
Part C, also called Medicare Advantage, offers an alternate way to receive your medical benefits. Unlike the other parts of Medicare which cover specific benefits, Medicare Part C is just another name for private Medicare insurance. In other words, Part C benefits are entirely separate from Medicare. Your benefits come from the private plan, and you pay copays for medical care and agree to use their network of providers except in emergencies. Medicare Part C is an “all in one” alternative to original Medicare. These “bundled” plans include Part A, Part B, and usually Part D. If you are interested in Part C, find an insurance agent who is a Medicare expert to help you find an affordable plan that best fits your needs. Note: You must have Medicare Part A and Part B to be eligible for Part C.
What is Medicare Part D? (Prescription Drug Coverage)
Part D is optional and provides prescription drug coverage from private insurance companies approved by Medicare. You do not enroll in this part through the Social Security office as with Parts A & B. Beneficiaries choose their prescription plan, which can be Original Medicare, some Medicare Cost Plans, some Medicare private plans, or Medicare Medical Savings Accounts Plans. Plans vary in cost and drugs covered. You may not need Medicare Part D if you have Medicare Advantage (Part C).With Part D, you pay a monthly premium to the insurance carrier. In return, they give you significantly lower copays on your medicines than you would pay if you had no Part D insurance.
What is a Medicare Supplemental Plan, and Do I Need One?
Supplemental plans go by a few different names – Medigap, Medicare supplemental, etc. – and pay as secondary insurance to Medicare. This means they pay after your Medicare first pays its portion of the bill. You stay enrolled in Medicare, and Medicare sends the remainder of your bills, i.e., what they don’t cover, to your Medicare supplement company.
These plans are purchased from private insurance companies that are licensed to sell them and offer a variety of coverage, terms, and monthly premiums. The premium is in addition to the monthly Part B premium. The plans all do the same thing; they add coverage to Medicare’s basic plan. Does that sound like something you need?
The answer is that you may need a supplemental plan, but you may not. In truth, no one is fully covered by the basic Medicare plan. Even with an Advantage plan, you will still have various fees to pay. How much you pay in fees depends on how often you need medical care. If you have a lot of extra expenses after Medicare pays its part, you are a good candidate for a Medicare supplement plan. Unfortunately, you won’t know if you need it until you look at what the plans cover and compare it to the expenses left over after Medicare is done covering you. You may not have a good idea if you need it or not until you have had Medicare for a few years.
Scam Alert: It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Advantage Plan unless you’re switching back to Original Medicare.
The Bottom Line:
The Medicare benefits you need are specific to your situation – no one plan, or package is right for everyone. Educate yourself as best you can and talk with a Medicare expert before making any final decisions about Medicare. A good insurance agent well-versed in all the different options should be able to help you wade through the myriad of available information.
Write any additional questions you have in the comments section below – I will do my best to find the answers and get back to you!