What is Medicare?

Medicare is a federal health insurance program provided by the United States government to people aged 65 years or older, people with certain disabilities, and those diagnosed with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). The program covers a range of medical services and costs, and in this guide, we will go over each part of Medicare, including Part A (Hospital Insurance) and Part B (Medical Insurance).

Part A

Medicare Part A provides coverage for hospital stays, hospice care, and limited home healthcare services. Part A and Part B make up the Original Medicare.

Services covered under Part A of Medicare:

• Inpatient hospital stays
• Skilled nursing care
• Hospice care
• Limited home healthcare services
• Inpatient care received through:
  • Acute care hospitals
  • Critical access hospitals
  • Inpatient rehabilitation facilities
  • Long-term care hospitals
  • Mental health care
  • Participation in qualifying clinical research studies

To be eligible for Medicare Part A, you must meet the following criteria:

• U.S. citizen or permanent resident for at least five years in a row
• 65 years old or older or under 65 years old with certain disabilities (ESRD or ALS)
• Receiving Social Security benefits for at least 24 months

Special Rules

• Hospital stays: Covers up to 90 days of inpatient hospital care per benefit period, with an unlimited number of benefit periods.
• Hospice care: Covers hospice care for people with a life-limiting illness and their families.
• Home health care: Covers limited home health services for people who are homebound and need skilled nursing care or rehabilitation.

Costs of Part A

Most people do not pay a monthly premium for Part A if they have been working and paying Medicare taxes for at least 40 quarters. If they do not meet this requirement, the monthly premium is $506 in 2023. Also, there is a $1,600 deductible for each benefit period in 2023. When the deductible amount is met, the rest of the costs for that benefit period is on behalf of Medicare. There is one exception from that, after meeting the deductible, you will typically pay a coinsurance of $400 per day for days 61-90 of a hospital stay and $800 per day for days 90+ in 2023.

Enrollment

• Automatic enrollment: Individuals receiving Social Security benefits at least 4 months before becoming eligible for Medicare and residing in the United States (excluding Puerto Rico) are automatically enrolled in both Part A and Part B when they turn 65.
• Initial enrollment period: The initial enrollment period starts three months before your 65th birthday and lasts until three months after your 65th birthday. Coverage starts on July 1 of the year you enroll.
• Special enrollment: If you did not enroll in the Initial enrollment period and still want to enroll in Part A late, you may qualify for special enrollment if:
  • You were employed by a company with more than 20 employees when you turned 65 years old and had health insurance through your job, union, or spouse.
  • You can apply for Medicare Part A within 8 months after your previous coverage ended.

Part B

Medicare Part B, known as medical insurance, provides health coverage for outpatient medical services. It is the other Part of Original Medicare, besides Part A.

Services covered under Part B of Medicare:

• Doctor visits, including preventive care
• Outpatient care, such as lab tests, X-rays, and rehabilitation services
• Durable medical equipment, such as wheelchairs and hospital beds
• Preventive services, such as cancer screenings
• Flu shots
  
• Pneumococcal shots
  
• Outpatient mental health care
  
• Alcoholism counseling
  
• Chemotherapy
  
• Physical therapy
  
• Diabetes screenings, supplies, and self-management therapy

Part B Enrollment

Individuals who are eligible for Medicare Part A are automatically enrolled in Part B when they turn 65 years old or if they are under 65 and have certain disabilities. If you are not automatically enrolled, you may enroll during the initial enrollment period, which is from three months before your 65th birthday to three months after your 65th birthday. The general rule is that coverage starts on July 1 of the year you enroll.

Special enrollment is for individuals who did not enroll in the initial enrollment period but still want to enroll in Part B. You may qualify for special enrollment if you were employed by a company with more than 20 employees when you turned 65 years old and had health insurance through your job, union, or spouse. In this case, you may enroll within 8 months after your previous coverage ended.

It’s important to keep in mind that there is a penalty for enrolling in Part B late – late enrollment penalty fee, so it’s best to enroll during your initial enrollment period. The penalty is a higher monthly premium that is added to your Part B premium for as long as you have Part B coverage.

Medicare Advantage

Medicare Advantage, also known as Part C of Medicare, is an alternative to Original Medicare that is offered by private insurance companies approved by Medicare. It covers the same benefits as Original Medicare but typically provides additional coverage for things like vision, hearing, dental, and wellness programs. Medicare Advantage plans often have a network of healthcare providers that you must use, similar to a managed care plan, and often have a cap on out-of-pocket expenses, unlike Original Medicare.

One of the biggest advantages of Medicare Advantage is that it typically offers more comprehensive coverage for a lower cost. This can be a big benefit for seniors who are on a limited income, as many Medicare Advantage plans offer extra benefits such as dental, vision, and hearing coverage that are not covered by Medicare. Additionally, Medicare Advantage plans often have lower copayments, coinsurance, and deductibles than Original Medicare, making it more affordable for seniors to get the healthcare they need.

Another advantage of Medicare Advantage is that it provides a more coordinated approach to healthcare. Many Medicare Advantage plans work with healthcare providers to coordinate care and ensure that seniors receive the right care at the right time. This can help seniors avoid unnecessary tests and procedures, and can also help ensure that seniors receive the care they need to manage chronic conditions.

Medicare Advantage plans also often offer additional benefits, such as wellness programs, health screenings, and gym memberships, that are not typically offered by traditional Medicare. These extra benefits can help seniors maintain their health and improve their quality of life.

Medicare Advantage can be a great option for seniors who want more comprehensive coverage and lower out-of-pocket costs. However, it is important to carefully consider the potential disadvantages of Medicare Advantage, such as limited provider networks and restrictions on coverage, before choosing this type of plan.

Prescription Drug Coverage

Medicare Part D is a separate coverage option under Medicare that provides prescription drug benefits to eligible individuals. This coverage is available to anyone enrolled in Original Medicare (Part A and Part B), as well as those enrolled in a Medicare Advantage (Part C) that does not already include prescription drug coverage.

How does Medicare Part D work?

Individuals who are enrolled in Medicare Part D pay a monthly premium for their coverage. This premium can vary based on the specific plan an individual enrolls in. Some plans also have an annual deductible that must be met before the plan begins covering drugs. The average monthly premium for Part D in 2023 is $43.

Once an individual’s deductible has been met, they will typically enter a coverage gap or “donut hole.” During this time, the individual may be responsible for a higher percentage of the cost of their medications. However, the Affordable Care Act closed the donut hole, and by 2020, Medicare beneficiaries will only pay 25% of the cost of their drugs, while the Medicare Part D plan pays the rest.

When selecting a Medicare Part D plan, it’s important to consider the types of medications you take and how much you expect to pay for them each month. This will help you determine which plan will be the best fit for your needs and budget. Some Medicare Part D plans offer more comprehensive coverage and may include more of the drugs you need.

It’s also important to be aware of the formulary, or list of covered drugs, for each Part D plan with different carriers. This list changes each year, so it’s important to review it carefully and make sure your medications are still covered before enrolling in or renewing your Medicare Part D coverage.

Enrollment

Enrollment in Medicare Part D is available during specific enrollment periods, including the Initial Enrollment Period when you first become eligible for Medicare, the Annual Enrollment Period from October 15 to December 7 each year, and the Open Enrollment Period from January 1 to March 31 each year.

Individuals who do not enroll in a Medicare Part D plan when they first become eligible may face a permanent late enrollment penalty fee added to their monthly premium if they enroll at a later date.