Parts of Medicare – The Medicare program contains an alphabet soup of letters – it’s no wonder many people find it confusing! It might take you some time to learn, but it is important that you have a basic understanding of the parts of Medicare, so you understand what kind of benefits you have and how your coverage works.
There are four parts to the Medicare program: A, B, C, and D. We’re going to give you an overview of each part today, and include some bonus information, so you can piece together the ones you need for your healthcare insurance.
Part A: Hospital Insurance
At least the program is kind enough to start with the first letter of the alphabet – Part A. Part A is your hospital insurance and will help pay your room and board expenses during an inpatient stay. You’ll be responsible for a deductible, as well as a coinsurance cost based on how many days you remain hospitalized.
The nice thing about Part A is that most beneficiaries receive it premium-free. As long as you or your spouse have worked for 40 quarters (or ten years) and paid taxes during that time, you’ll be eligible for premium-free Part A. If you haven’t met that requirement, you can still enroll in Part A, but will need to pay a monthly premium. Depending on how many quarters you paid taxes, that premium could be up to $499 in 2022.
Part B: Outpatient Insurance
Next on the list is Part B, your outpatient insurance. You’ll use it for doctor visits, diagnostic imaging, lab tests, surgeries, durable medical equipment, and preventive services like vaccines and screenings. Part B also has an annual deductible, copays, and coinsurance expenses. Once you’ve met the Part B deductible, you’re typically responsible for 20% of the cost for services.
Unfortunately, Part B is not premium-free. The standard premium this year is $170.10 per month. If you earn a higher income, you could pay more. In addition, you can apply for financial assistance that might reduce your premium if you’re eligible.
Part C: Medicare Advantage
Part C is optional, and you will not incur a penalty if you choose not to enroll in Part C. That being said, most people choose either a Medicare Advantage plan or a Medigap plan to cover some of the out-of-pocket expenses leftover by Original Medicare.
Private insurance companies offer Part C plans to Medicare beneficiaries. If you enroll in Part C, your benefits from Parts A and B will actually be rolled into your Part C plan, and the insurance company will be responsible for your medical claims.
Most Part C plans offer extra benefits that arent’ included in Original Medicare. Plans might have gym memberships, transportation services, prescription drug coverage, dental, vision, and hearing care, etc. Every Part C plan is different, so you’ll have to compare each plan to find out which extra benefits are included.
Another attractive feature of Medicare Advantage plans is that they often have $0 monthly premiums. (Not all of them, of course, but most are very low in cost.) However, don’t think that these plans are free. You’ll still have deductibles and coinsurance costs that you’re responsible for, and you’ll still have to pay the Part B premium.
Part D: Prescription Drug Plans
Part D includes all prescription drug plans. Medicare Parts A and B do not include prescription drug coverage. If you choose not to enroll in a Part C plan that has drug coverage, you’ll need to enroll in Part D. Even if you are not currently taking medications, you still need to enroll in Part D. If you don’t, you’ll be penalized later. In addition, you can only enroll in Part D at certain times of the year. If you wind up needing a prescription outside of one of those enrollment periods, you won’t be able to find an insurance plan that will cover your prescription, and you’ll have to pay completely out-of-pocket.
There are lots of Part D plans available, but they all work the same way, even if it’s included in your Part C plan. Each Part D plan has a drug formulary, which is a list of the medications included in the coverage and how much the enrollee must pay for the medication. You’ll select a Part D plan based on your current medications, which will also dictate how much your Part D premium is.
Bonus! Medicare Supplements or Medigap Plans
Medicare supplement plans are not a “part” of Medicare, but they are the second way beneficiaries can reduce their medical expenses. What makes the Medicare program even more confusing is that Medicare supplements are also named after letters of the alphabet. But, instead of “parts,” these are called “plans.”
A Medigap plan acts as your secondary form of insurance. After Original Medicare pays a claim, it is sent on to you Medigap policy for payment. How much the policy pays depends on which of the letter plans you have. Plans F, G, and N pick up most of the remaining costs and are, therefore, the three most popular Medicare supplements.
Premiums for Medicare supplements are based on which plan you choose, your gender, age, zip code, and tobacco use. Some carriers offer household discounts for couples who enroll with the same carrier or who are just over a certain age. Plan rates typically increase as you get older.
Clear as mud? If this is your first time reading about Medicare, you won’t have it all figured out just yet. It takes time to learn the ins and outs of the program. The good news is that if you have a great Medicare advisor, they can make that process a whole lot easier. Our licensed insurance agents are experts in the Medicare field, and they can help educate you on the program and help you choose the plans that work best for you. And the best part is that you won’t pay a dime for our services! Call us today and get all your Medicare questions answered.
