Medicare is a critical component of healthcare, and it’s an essential piece of millions of people’s lives. With 44 million Americans currently on Medicare – and more signing up each year – this health insurance program funds many health and medical needs¹.
But Medicare can be confusing. With coverage broken down into different parts and plans, and available supplemental coverage options, it’s tough to understand what, exactly, Medicare covers. If you’re wondering what you need to know about Medicare, there are a number of important aspects.
Medicare is something of a mix-and-match health insurance program. Subscribers must choose between Original Medicare and Medicare Advantage plans, but you can also opt in to other types of coverage. Here’s an overview of the different pieces of Medicare, and what they entail.
Part A: Hospital Coverage
Medicare Part A makes up one half of what’s known as Original Medicare. When you become eligible for Medicare and apply, you’ll automatically be enrolled in Part A.
Part A covers all of your hospital care and needs. This coverage includes²:
- Inpatient hospital stays.
- Inpatient care at a nursing facility (not long-term).
- Skilled nursing facility care.
- Hospice care.
- Home health care.
Most Medicare subscribers won’t have to pay a premium for Part A. Your tax contributions over the years pay for your premium costs. However, Part A does come with a sizable deductible, which changes every year.
Part B: Doctors and Outpatient Medical Services
Medicare Part B is the other half of Original Medicare. It’s paired with Part A and includes coverage for medical care beyond the hospital – all of the outpatient, routine medical services you might require.
Medicare Part B covers typical medical care and common doctor’s visits or screenings. Part B coverage includes³:
- Doctor visits.
- Lab tests.
- Diagnostic screenings.
- Certain medical equipment.
- Ambulance transportation.
Other outpatient services are also included.
However, unlike Part A, Medicare Part B does involve a number of different costs. It comes with a monthly premium, which changes annually, and varies depending on your annual income. You’ll also be responsible for 20 percent of the cost of your outpatient services – Medicare covers the other 80 percent.
Part C: Medicare Advantage
Medicare Part C, which is commonly called Medicare Advantage, is very different from Original Medicare. And that means it’s also one of the more complicated pieces of this healthcare program.
Part C is its own type of plan. If you choose Part C, you’ll choose your own comprehensive plan. This means you can shop for your own health insurance plan, find coverage that suits your needs, and potentially get coverage for conditions beyond what Original Medicare covers. It’s more similar to traditional private health insurance: you shop around for a plan offered by an insurance company, and you pick the one that works best for your budget and health.
Medicare Advantage subscribers still have to enroll in Parts A and B and pay the Part B premium⁴. So, you’ll be paying for Part B and also pay a monthly premium for the specific Part C plan you choose from a private insurance company.
There’s a few benefits to choosing a Part C plan. First, the federal government requires all Medicare Advantage plans to cover everything that’s covered by Original Medicare⁵. Additionally, some Medicare Advantage plans cover services that Original Medicare doesn’t – like prescription drugs, vision, and dental. With a Part C plan, you may have more flexibility and more coverage, depending on the specifics of the plan you pick.
Part D: Prescription Drug Coverage
Medicare Part D is all about prescription drugs. As one of the most important aspects of health insurance coverage, Part D can help reduce the amount Medicare subscribers pay out-of-pocket for their medications.
However, in order to get Part D coverage, you must buy a Part D plan from a private insurance company⁶.
Part D features a monthly premium and out-of-pocket cost like copays. You’ll either pay a flat copay for your medications, or you’ll pay a percentage of the prescription costs; it depends on the specifics of your plan. In either case, all Part D plans may be subject to the Medicare coverage gap, or the Part D “doughnut hole.”
The doughnut hole is for Medicare subscribers with very high prescription drug costs. Once you’ve spent a certain out-of-pocket amount on your medications, you’ll see savings as the result of what’s called the Medicare coverage gap. The federal government is working to reduce this coverage gap each year, but there is currently still a gap. Make sure to check how much you’ll be expected to pay before savings begin.
Additionally, you’ll want to make sure your prescriptions are covered under Part D. That can help you decide if Part D is right for you, or if a Medicare Advantage plan may include coverage that suits your needs.
Medigap Plans: All Other Parts or Plans
In addition to Parts A, B, C, and D, there’s another section of Medicare plans available. These plans are supplemental, offering coverage that goes beyond basic Medicare. And they’re called Medigap plans.
Medigap plans are essentially “extra” health insurance. They’re labeled as Medigap Plans A through N, and they can cover anything Medicare doesn’t, like vision and dental care. These plans typically come with their own specific monthly premium cost, an annual deductible, and copays.
Anyone who’s already subscribed to Medicare Part A and Part B can sign up for a Medigap plan⁷. Those with Medicare Advantage (Part C) plans cannot get Medigap plans.
Keep in mind that Medigap plans can change. For example, Medigap Plans E, F, H, I, and J are no longer available for new Medicare subscribers.
Know Your Options If You’re a Medicare Subscriber
Medicare can be complicated. With so many different parts and pieces, optional supplemental coverage and even plans you can buy on your own, subscribing to Medicare comes with plenty of important details to learn. And each year, some aspects of Medicare coverage can change.
That’s why it’s so important to understand your options and all of the latest changes. Medicare subscribers, or those who will be eligible for Medicare soon, should stay up to date. Make sure to do your research before enrolling in Medicare. And always check for upcoming changes during the annual open enrollment period. This is the only way to know how your coverage will look.
Fortunately, you can learn more about Medicare, potential upcoming changes, and supplemental options online. Do your research, and you’ll be prepared for any of your Medicare needs.