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  4. Different Parts of Medicare Explained

Different Parts of Medicare Explained

If you’re like most people, your past experience with health care coverage has involved choosing among three or four options offered by your employer. So the complexities of enrolling in Medicare can come as quite a shock. Not only are there dozens of plans and coverage types to choose from, but Medicare has its own strange terminology.

If you’re used to the simplicity of employer-sponsored coverage, it can feel a bit overwhelming. But take heart. Over 10,000 people enroll in Medicare every day, and you can navigate the system too. Here are four steps to understanding your Medicare options.

The Four Parts of Medicare Explained

4 Parts of Medicare Explained

Medicare is divided into four parts, labeled A, B, C and D:

  1. Part A covers hospitalization.
  2. Part B covers medical expenses when you’re not in the hospital, including doctors, tests, outpatient surgery, home medical equipment, mental health treatment and physical therapy. There are no provider networks with Part B – you can see any healthcare provider that accepts Medicare. Together, Parts A and B are known as “Original Medicare.”
  3. Part C is also known as Medicare Advantage. It is an alternative to Original Medicare, offered through private insurance companies. Part C plans may be HMOs or PPOs and may offer additional benefits like prescription, dental or vision coverage.
  4. Part D is prescription drug coverage for people enrolled Original Medicare or a Medicare Advantage plan that doesn’t cover prescriptions.

Understand Medicare Premiums

Many people think that Medicare is free, but in fact you’ll probably pay a monthly premium for your Medicare coverage. Here’s a basic summary:

  • Part A (hospitalization) is free for most people.
  • Most people pay a standard premium for Part B (medical) (It’s $134 or a little less per month in 2017.) But you may pay more if your income is above a certain amount.
  • If you enroll in a Part C plan, you will still pay your Part B premium. You may also pay your insurance company an additional premium amount, depending on the company and the plan you choose.
  • Part D premiums vary depending on your insurance company and your plan’s benefits. However, if your income is above a certain level, you will also pay an additional premium.

When weighing the costs of these plans, it’s a good idea to compare them to the cost of staying on employer-sponsored insurance, if you or your spouse is still working when you turn 65.

Medicare Benefits and Out of Pocket Costs 2017

Before you can decide on coverage, you need to know what you’ll pay in deductibles, co-pays and coinsurance – and where your benefits start and end.

  • Part A has a deductible ($1316 in 2017) and you must pay coinsurance of a few hundred dollars a day after your 60th day in the hospital. At some point after your 90th day, your coverage will run out and you’ll have to pay all your costs out of pocket.
  • Part B deductible is $183 a year for 2017, and after that, Medicare pays 80 percent of your medical costs.
  • Part C plans aren’t standardized. Your deductibles, co-pays and out of pocket costs will depend on the state you live in, the plan your choose, and whether your doctors are in your plan’s provider network.
  • Part D out of pocket costs also vary, depending largely on your plan and the cost of the medication you take. Most Part D coverage diminishes after you and your plan have spent $3700, but then picks up again and pays almost all your drug costs after $4950 has been spent. This is known as the “coverage gap” or “donut hole.”

Know Your Medicare Supplemental Coverage Options

By now you can see that Original Medicare won’t cover all your health care costs. However, Medicare Supplement plans, also known as Medigap, can take care of things that Original Medicare doesn’t pay, including deductibles, co-pays and coinsurance.

Here are important things to understand about Medigap:

  • Medigap plans are only available if you’re enrolled in Parts A and B. You can’t enroll in Medigap if you have Medicare Advantage (Part C).
  • There are 10 standardized Medigap plans, labeled Plan A through Plan N. Plan G provides the most comprehensive coverage, this plan is sometimes referred to as Medicare Part G.
  • Medigap is private insurance. Although the plans have a standard set of benefits, different companies may charge different premiums for the same coverage.
  • If you sign up for Medigap during the six-month enrollment window around your 65th birthday, you’re guaranteed coverage at the same premium regardless of your health. If you sign up later or decide to change plans, your coverage will be medically underwritten and you may be denied or charged more because of your age or preexisting conditions.

Additional FAQs

What Parts of Medicare are Mandatory?

  • No, enrollment is automatic when you received Social Security or Railroad Retirement, but it’s not mandatory. 

What Parts of Medicare are Free?

  • Most people get Part A free, this is sometimes called “premium free Part A.”

Find Medicare Supplement Quotes Online

At MedicareFAQ, we want to be your one stop resource center, we hope the 4 parts of Medicare explained here has been informational to you. We search all the top rated insurance companies in your area to find you the Medigap policy that suits your needs, with a premium you can afford. Let us get you started with a free, no obligation quote. Click here to find Medicare Supplement quotes online!

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