If you are like most, you need help understanding all of the different Parts of Medicare and are all of them needed.
Medicare is divided into 4 specific Parts or groups of coverages.
You are not alone if you are new to Medicare and you are finding this very confusing. You might be asking yourself why is there so many different pieces of Medicare. And what’s the difference between the Parts of Medicare versus Medicare Supplement Plans and Medicare Advantage Plans?
We are here to explain all of the moving parts for you, to make it simpler for you to understand what may be needed and what may not be required.
Prior to dealing with Medicare you had a traditional insurance plan. Now instead of an individual plan or employer sponsored plan you have a new term to deal with called Parts. So let’s break down these 4 parts of Medicare .
Part A of Medicare provides you with insurance coverage for hospitalization, Hospice, Skilled Nursing Facilities and Home health care needs. This part of Medicare also covers blood transfusions requiring more than 3 pints of blood.
Once you are eligible for Part A coverage, it is provided to you at no additional charge for most people as long as they have worked at least 10 years which equals 40 quarters in the U.S. or are married to someone who is at least 62 and has worked those quarters. This is because you have paid into this portion of your insurance throughout your work life.
If you worked less than 40 quarters you will be assessed a monthly premium based on the missing number of quarters you did not complete prior to being eligible for Part A.
However, it is important to mention that there are many services or items that are provided in a hospital that may fall outside of Part A and under Medicare – Part B. It’s important that you enroll in both Part A & B unless you have other coverage coordinating with Medicare.
Part B of Medicare provides coverage for outpatient services in which your Doctor says is medically necessary to treat you for a specific condition.
In 2019 the federal government assesses a monthly premium of $135.50 and in 2020 the monthly premium will be $144.30.
We recommend to have your Part B premium automatically deducted each month from your social security check. This why you will not risk losing your Part B coverage.
Medicare Part B includes coverage for services like doctor office visits, lab testing, diagnostic imaging, preventive care, surgeries, ambulance rides, chemotherapy and radiation, and even extensive dialysis care for people with renal failure.
Many of these procedures could occur while you are admitted in a hospital. Even through you are admitted in a hospital, they fall under Part B because physicians provide them, so it’s not always easy to determine what is inpatient vs outpatient care.
Sometimes people will ask us if they really need Part B. The answer is YES if Medicare will be your primary coverage or only coverage. In addition if you delay obtaining Part B coverage you will be assessed a lifetime penalty.
Part A and Part B together make up what is know as Original Medicare.
These two Parts together provide you with the minimum Federal insurance requirements. These minimums require you the consumer to pay your share of the cost for each Part above and beyond a monthly premium.
Your cost sharing is broken down in the following way.
Part A: If you are hospitalized in 2021, you will pay a deductible of $1,484. After 60 days in the hospital, you would then pay a copay of $371 per day and after 90 days you would pay a daily copay of $742 per day. After you pass your lifetime reserve benefit in the hospital you would be responsible for 100% of the cost.
Part B: For 2021 you are responsible for a $203 deductible for each calendar year. After you have satisfied your annual deductible you are responsible to pay 20% of all “Medicare approved” medical cost. In addition Doctors can charge you up to 15% above the Medicare approved cost.
The financial impact to you and your family is unlimited if you choose to only obtain Original Medicare. This is why many people obtain a separate Medigap insurance policy or a Medicare Advantage plan.
A Medigap plan allows you the option to fill in the gaps of Original Medicare while a Medicare Advantage plan will completely replace Original Medicare.
Part C of Medicare is also known as a Medicare Advantage Plan. Unlike the other parts of Medicare, which cover specific medical benefits, Medicare Part C is just another name for private Medicare insurance.
The Balanced Budget Act of 1997 created Part C, which is now more commonly referred to as Medicare Advantage.
Medicare Advantage plans is an insurance option that is provided by private health insurance carriers that you can choose instead of Original Medicare. You are still required to obtain both Part A, Part B, and sometimes also Part D coverage all from one insurance carrier. Medicare Advantage plans are typically HMO products, which will require you to pick a primary care provider within a specific provider network.
Medicare beneficiaries will pick a Part C plans as they are attracted to the zero dollar monthly premiums unlike a Medigap plans which do have monthly premiums. However, with a Medicare Advantage plan these are designed as a pay as you go plan so you could have to pay a copay or deductible when you use these plans. Advantage plans can also have a sizable max out of pocket cost.
Medicare Advantage plans also have what are known as Medicare Advantage – Special Needs Plans. These are specialized plans that geared towards people who have a chronic illness such as heart disease.
Before enrolling into either a Medicare Advantage Plan or Medigap plan we encourage you to reach out to one of our Medicare Insurance Agents to go over all of the pros and cons of each Medicare option.
Part D prescription drug coverage is designed to help contain your cost related to your retail pharmacy drugs. As your Medicare Insurance Agent we will help you select a prescription drug plan that meets your needs.
Part D coverage is not obtained through your local Social Security office. Instead, you obtain this coverage once you are enrolled into either your Part A and/or Part B coverage. Many Medicare beneficiaries forget to sign up for this coverage because they thought they enrolled into everything when they sign up for Part A and Part B.
Unfortunately, if you do not sign up and you don’t have creditable coverage you could face lifetime penalties once you do sign up in the future.
Some Part D plans charge a separate monthly premium that you will pay directly to the insurance carrier. Depending on your annual income you could also be charge a surcharge above and beyond the premium. This is not charged by the insurance carrier but rather the Social Security office.
There are rules for when you can enroll and dis-enroll from these drug plans, so be sure to visit the Medicare Part D section of our website for more details about how your drug coverage under Medicare will work.