We’ve all heard of Medicare but unless you’re using it, you probably haven’t given it much thought. If you’re approaching 65 or if a loved one has a long term disability, you owe it to yourself to get a basic understanding of the benefits available to you.
Medicare is the federal healthcare program created in 1965 for people over 65 regardless of health history, income, or health status. It was expanded in 1972 to include people under 65 who have long term disabilities. There are 60 million Americans who receive care through Medicare, or about 18% of the current population.
Medicare has multiple components which each provide a different type of coverage. You’ve probably heard about them: Parts A, B, C and D. Let’s look at what each part covers, if you pay for it, and how they work together:
Part A provides hospital coverage for medically necessary surgery and inpatient services. Part A also includes skilled nursing care, home health, and hospice services if specified to be necessary by your medical provider. Most people do not pay for Part A but there is cost sharing through copays and deductibles.
Part B covers doctor visits, medically necessary outpatient, preventive care, lab tests, x-rays, and medical supplies. Part B also covers therapy, mental services, ambulance, and a select list of prescription medications. Everyone must pay a monthly premium ($135 for 2019) for Part B, and as with Part A, there is cost sharing through deductibles and copays.
Part A and Part B together are commonly called Original Medicare because they’re the original offerings of Medicare.
Part C is what’s called Medicare Advantage (MA) which is the option to receive benefits from an insurance company contracted with the federal government instead of the government directly. Part C must include Part A and Part B and often includes Part D, as well as other coverage like dental, vision, hearing, and other wellness programs. There are different rules, coverage and costs between Medicare Advantage and Original Medicare.
Part D is the prescription drug benefit that covers most outpatient drugs. It’s available from private companies as a standalone benefit for those who are enrolled in Original Medicare. For those who are enrolled in Medicare Advantage or Part C, prescription coverage is included in the package.
In addition to the main parts of Medicare, there’s additional coverage called Medicare Supplement, or Medigap, which is private insurance to cover the gaps between what Medicare covers and what you pay in copays or coinsurance. Original Medicare doesn’t have lifetime out of pocket so there’s the possibility of significant gaps.
ABCDMedicare Supplement or MedigapCoverageHospital surgery, inpatient, skilled nursing home care, hospiceDoctor visits, outpatient, therapy, lab test, ambulanceParts A & B, plus a variety of additional items such as dental, vision, hearing. Offerings depend on plan chosenPrescription drugs. Each plan only covers drugs on their list.Covers the gap between Medicare coverage and copays, coinsurance, and deductibles.Cost$0 if you or spouse paid 10 years into Medicare$135.5 - $460.50 per month, depending on incomeVaries by providerVaries by provider
Varies by providerWho provides the coverage?Federal governmentPrivate insurers who contract with the federal governmentPrivate insurerPrivate insurerPrivate insurerCan I use my doctor?Yes, as long as your doctor is contracted with MedicareYes, as long as your doctor is contracted with MedicareDepends on plan (HMO,PPO) and doctor/facility networkNANAOut of pocket limitNo limitNo limitEach plan has a limit but it variesVariesVariesDeductible$1,364 per benefit period$185 per yearVariesVariesVariesCopayHospital: $0 - $682 per day depending on days.Nursing home: $0 - full cost depending on days.20% of Medicare approved amountVariesVaries by plan and incomeVaries
These are the main components that make up Medicare healthcare coverage. There are details to consider within each type of coverage but this hopefully gives you an overview of what all the parts are and what’s covered by each.