Medicare Parts Explained
The federal health program, Medicare, provides those over 65 and those with certain disabilities basic health coverage. It’s important to understand how Medicare works and the different parts.
If you’re like most people, past health care coverage came from an employer. The complexities of enrolling in federal health coverage 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. Over 10,000 people enroll in Medicare every day.
Medicare Parts Explained
Understanding the difference between Medicare parts and plans is seemingly impossible. However, explaining the parts of Medicare is our specialty.
Most new beneficiaries and some current ones need the parts explained in detail, which we’ve done here.
The 4 Parts of Medicare
- Part A: covers your hospital stay medical costs including room and board
- Part B: covers your doctors’ visits, also known as outpatient coverage
- Medicare Advantage (Part C): Replaces Parts A & B, offered by private insurance companies
- Prescription Drug Coverage (Part D): coverage for your prescription medications
Original Medicare Part A
Part A, Hospital Coverage, is generally offered at no additional cost to qualifying individuals who have at least forty calendar quarters, ten years, of employment in any job in which Social Security taxes were paid for in the United States.
You’re eligible if you qualify for Railroad Retirement benefits if you were a federal employee after Dec. 31, 1982, or a state or local employee after Mar. 31, 1986. The cost for Part A otherwise could cost you over $400 per month.
Part A covers most medically necessary hospital, skilled nursing facility, hospice care, and home health. Also, Part A is not full coverage; it has a reoccurring deductible and other out of pocket expenses.
Additionally, Part A won’t cover private nursing or hospital rooms unless medically necessary. Part A won’t cover long-term care or all custodial care. Purchasing additional insurance benefits seniors long term.
Original Medicare Part B
Part B, Doctors and Outpatient services, is optional coverage that requires a premium to be paid monthly. The premium will be based on, up to, the previous two years of annual income.
Medicare Part B covers most medically necessary doctors’ services, hospital outpatient services, durable medical equipment, preventive care, lab test, x-rays, mental health care, and some ambulance charges.
Part B is not full coverage. There is still a deductible and other out of pocket expenses.
Medicare covers 80% and the beneficiary is responsible for the other 20% of healthcare costs. Part B costs $135.50 a month and it’s usually a deduction from the Social Security check.
Part B excess charges allow doctors to charge patients 15% more than the Medicare-approved amount. Once Part B is beginning, you can enroll in a Medigap policy to help cover the high out of pocket expenses.
Original Medicare Part C
You can choose to get your coverage through an Advantage plan instead of traditional Medicare, but you cannot have both. You cannot have Parts A and B with Part C.
Medicare Advantage plans must offer at least the same benefits as Parts A and B but can do so with different costs, rules, and coverage restrictions. There are many choices for Advantage plans.
It’s possible to pay a monthly premium for this coverage, in addition to your Part B premium. Enrollment outside of your Open Enrollment is typically between Oct. 15th through Dec. 7th of each year, or Annual Enrollment Period (AEP).
Original Medicare Part D
Part D, or Prescription Drug Plans (PDPs), is the part of Medicare that provides prescription drug coverage. Medicare Part D Plans are through private insurance companies that have legal agreements with the government; it’s never directly from the government.
If you want Part D, you must choose Part D coverage that works with your health benefits.
If you have traditional Medicare, choose a stand-alone Part D plan. Enrollment outside of your Open Enrollment is typically between Oct. 15th through Dec. 7th of each year, or Annual Enrollment Period (AEP).
If a Part D plan is not picked up when eligible you will be penalized 1% each month you could have had the plan, and didn’t. This penalty will be paid separately to Medicare if you enroll in a Part D plan in the future.
There are three phases of coverage to understand this type of coverage. The three phases are the Initial Coverage, Donut-Hole, and Catastrophic. It’s important to understand these phases, particularly if you find yourself requiring a high cost for your prescribed medication.
What Parts of Medicare are Mandatory?
First, enrollment isn’t mandatory. However, enrollment is automatic when you received Social Security or Railroad Retirement.
If you don’t enroll in Part B or Part D when first eligible, you could incur a late enrollment penalty.
What Parts of Medicare are Free?
Medicare isn’t free. However, some receive “premium-free Part A”. This isn’t really free though; working a certain amount of time in the U.S. and paying taxes could qualify you for “premium-free Part A”.
How do I apply for Medicare?
Enrollment in Part A and B is done through Social Security. You can be complete enrollment online, in your local Social Security office or by calling the Social Security department.
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