Medicare

Medicare is the country’s national health insurance program for people 65 or older and people under 65 who are receiving Social Security disability benefits. It was introduced as the “1965 Medicare Amendment to the Social Security Act” and included Hospital (Part A) and Medical (Part B), often now called “Original Medicare.”

The Medicare program helps with healthcare costs, but it does not cover all medical expenses or the cost of long-term care. You have choices for how you get Medicare and related insurance coverage.

You can choose to have Original Medicare and pair it with a Medicare supplement policy (also known as Medigap) from a private insurance company which will cover many of the costs that Medicare does not pay. In addition, Medicare Part D (Medicare prescription drug coverage) covers some of the cost of prescription drugs for people with Medicare Parts A and B.

Alternatively, you can choose to replace Original Medicare with a Medicare Advantage plan (Part C) and receive all your healthcare services plus prescription coverage through a private insurance company that is approved and regulated by Medicare.

Medicare Part A (Inpatient Hospital)

Medicare Part A pays for Medicare-covered hospital services when you are admitted to the hospital as an inpatient. This includes room and board charges, medications, labs and diagnostic imaging, surgery, anesthesia, nursing care, etc.

Part A has a deductible of $1,600 (2023). This deductible is not annual. It resets every 60 days, called the Part A Benefit Period.

There is coinsurance for hospital stays over 60 days. This starts at $400 per day (2023) and increases from there.

Part A also covers a limited amount of rehabilitation care in a skilled nursing facility, some medically-necessary home health care, and hospice care. People Age 65 or older, who are U.S. citizens or permanent residents, are eligible for Part A at no cost at age 65 if you meet required criteria.

Basic Key Features

The Medicare Part A deductible of $1,600 is unlike the annual deductible you are likely used to. An annual deductible resets each year. However, the Part A deductible resets every 60 days.
The first 60 day as a hospital inpatient is paid by the Part A deductible. If you are in the hospital longer than 60 days, you will be charged a per day copay.
Days 61–90: $400 coinsurance per day of each benefit period.
Days 91 and beyond: $800 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime).

Click each link below to learn more about the additional services covered by Part B

Medicare Part B (Outpatient Medical)

Medicare Part B, sometimes called “the Doctor’s Part,” pays for Medicare-covered outpatient services.

Medicare-covered services are those that Medicare deems to be -necessary, “services or supplies that are needed to diagnose or treat a medical condition and meet accepted standards of medical practice.” The deductible should be updated to be $226 Yearly Deductible.

Anyone who is eligible for Medicare Part A at no cost can enroll in Medicare Part B by paying a monthly premium. For most people receiving Social Security benefits, they will automatically deduct your premium from your benefit payment.

If you do not receive Social Security benefits, you will get billed quarterly for your Part B premium.

If you are not eligible for Part A at no cost, you can buy Part B, without having to buy Part A, if you are age 65 or older and meet certain criteria.

Some people with higher incomes will pay higher monthly Part B and Part D premium, called Income-Related Monthly Adjustment Amount (IRMAA). More about the rules for higher-income beneficiaries can be found here.

Basic Key Features

$203 Annual Deductible (2023)
After the deductible is met, you typically pay 20% of Medicare-covered services plus any excess charges.
Medicare has a fee schedule for each service or procedure. If a provider accepts Medicare, it means they accept the Medicare-approved amount as a payment for covered services. *Providers can charge up to 15% more than what Medicare approves "the excess charge. Medicare will only pay 80% of the approved charge.

Click each link below to learn more about the additional services covered by Part B

Medicare Part C (Medicare Advantage)

Medicare Part C and Medicare Advantage plans are two names for the same thing. They are offered by private insurance companies approved by Medicare to provide Part A and Part B benefits on Medicare’s behalf. A Medicare Advantage plan replaces Original Medicare, no bills go to Medicare, only to the private insurance company, but the Advantage plan companies must follow the rules set by Medicare.

You usually have a low premium—or sometimes a $0 premium—but you also have copays and/or co-insurance along the way as you utilize services. Each Medicare Advantage Plan can charge different out-of-pocket-costs for services.

Medicare Advantage plans may offer extra coverage like vision, hearing, dental and wellness programs. Most include Medicare prescription drug coverage (Part D). Unlike Original Medicare, with a Medicare Advantage plan you are usually protected with a max-out-of-pocket amount, or a worst-case scenario for the year.

Medicare Advantage Plans usually have a network of providers that belong to the plan. Some of the networks are HMOs (Health Maintenance Organizations) and some are PPOs (Preferred Provider Organizations). Different networks have different rules you must follow to access and receive services and supplies.

More About Medicare Part C

Private Insurance Company is the sole payer of benefits. No claims go to Medicare
A PPO or HMO type plans with provider network(s)
Usually includes additional benefits
Part C combines Part A and Part B and usually adds prescription drug (Part D) benefits.
Generally offers a lower premium than traditional Medicare Supplement, but members pay a copayment for provider services.
Unlike Original Medicare, there is an annual cap on your expenses (Maximum Out of Pocket: MOOP)
Participants continue to pay the Part B premium and are still enrolled in Medicare, though they don’t use their Medicare card.

Medicare Supplement

Medicare Supplement Insurance or Medigap plans help fill the “gaps” in Original Medicare and are sold by private insurance companies. Medicare pays for much, but not all, of the costs for covered services and supplies. Medigap plans work hand in glove with Original Medicare to pay some of the remaining healthcare costs.

With a Medicare Supplement plan, you keep Original Medicare as the primary payer, and add a Supplement plan to fill in some or most of the gaps that Medicare otherwise leaves you on the hook for. Bills go to Medicare first, Medicare pays its part, and what’s left over now goes to the Supplement plan. If you plug all the gaps that you can, you are left with a small deductible and no additional out of pocket for Medicare covered medical services.

Medicare Supplements in Many States Have Standardized Benefits (Core medical benefits are ALL the same). All Offer optional benefits, called “riders,” for an additional premium and you can usually choose to have all the optional benefits, or just pick some of them.

Medicare Supplement Basic Plan Cover:

Part A inpatient hospital care coinsurance (for stays over 60 days)
Part B coinsurance (the 20% you owe for outpatient medical services)
First 3 pints of blood
Hospice coinsurance or copayment
40 Home health care visits in addition to Medicare
Some chiropractic
Some limited nursing home care coverage

It’s Important to Compare! Comparing traditional Medicare supplement plans means comparing premium amounts, rate history, claims experience, and customer service.

More about Medicare Supplement Insurance can be found here.

Medicare Part D (Prescription Drug Coverage)

Medicare Part D is always administered by a private insurance company approved and regulated by Medicare.

Basic Key Features:

You pay a monthly premium, sometimes a deductible, and copays for your medications.
Coverage and cost varies from plan to plan.
The right plan for you depends on your particular prescription needs.
Creditable Coverage “Required” by Medicare
Late Enrollment Penalty