ABC’s of Medicare
Medicare is a federal program that provides health insurance coverage, primarily for elderly and disabled people. Unlike Medicaid, it’s not specifically geared to those with the lowest incomes and most limited financial resources. Instead, it provides a safety net for people who might otherwise lack access to affordable health insurance because of age or poor health.Medicare is broken down into four categories known as A, B, C, D.
Medicare Part A
Medicare Part A is hospital insurance, and it generally covers inpatient care in hospitals, including critical access hospitals and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care (certain conditions must be met to get these benefits). Part A is free to most who have paid payroll taxes for 40 quarters or 10 years of their lives.
Medicare Part B
Medicare Part B is medical insurance that generally covers doctors’ services and outpatient care. It also covers some other medical services that Part A doesn’t cover, such as some physical and occupational therapy and home health care.
The Social Security Administration handles Medicare enrollment. You are automatically enrolled in Medicare Part A and Part B if you’re 65 and receive Social Security checks. Part B cost $104.90 per month for all person enrolled.
Medicare Part C
A Medicare Advantage Plan, also known as Part C, is a type of Medicare health plan offered by a private company that contracts with Centers for Medicare & Medicaid Services (CMS) to provide you with all of your Part A and Part B benefits and may offer extra benefits that Original Medicare (Parts A and B) does not cover, such as vision or dental services. Many Medicare Advantage Plans include prescription drug coverage. Monthly premiums vary according to the plan you choose.
Medicare Part D Prescription Drug Plans
Medicare Part D Plans are a paid add on, also known as “PDPs” are stand-alone prescription drug plans that are approved by CMS and offered by private insurance companies. Each Part D Plan covers different drugs; the list of drugs that are covered is known as a formulary. Anyone enrolled in either Medicare Part A or Medicare Part B is eligible to enroll in Medicare Part D. Medicare beneficiaries can sign up for Medicare Part D to add drug coverage to their Original Medicare coverage, Medicare Supplement (or Medigap), or certain Medicare Advantage Plans, including Cost Plans, Private Fee-for-Service (PFFS) Plans, and Medical Savings Account (MSA) Plans.
How Medicare Works
Medicare doesn’t pay all your medical costs after premiums. With original Medicare, you must pay a yearly deductible for Part A coverage of $1,260 as of 2015. In addition, you’ll pay coninsurance for any hospital stay beyond 60 days in a benefit period.
In original Medicare, you must also pay a Part B medical deductible of $147 per year and 20 percent of many services after the deductible, current as of 2015.
For Part D prescription coverage, the amount of the deductible and copayment or coinsurance depends on the insurance company and plan.
If you have original Medicare, you can buy supplemental insurance, called Medigap, to pay some of your deductibles and other costs, but Medigap isn’t available for Advantage plans.
Your costs for deductibles, coinsurance and copayments with Advantage plans depend on your choice of insurance company and plan.
Medigap Vs. Medicare Advantage Plans
Original Medicare is an 80/20 health care insurance plan with deductible and coinsurance requirements. Medigap and Medicare Advantage plans are two drastically different options for limiting these out-of-pocket costs. However, they do not work together, and you cannot enroll in both plans at the same time.
Medigap is supplemental insurance sold by insurance companies. Its objective is to work in conjunction with original Medicare. As of 2015, there are 10 standardized plans, each of which provides the same basic benefits. Medigap covers deductibles, coinsurance and co-payments that you would otherwise be responsible for paying. Some plans also cover expenses that original Medicare does not address, such as medical care when you travel abroad. Medigap does not pay for prescription drugs, vision or dental care, hearing aids, a private-duty nurse or nursing home care.
Medicare Advantage Plans
Insurance companies also sell Medicare Advantage plans. However, unlike Medigap, Medicare Advantage plans replace rather than supplement Medicare insurance. Although all plans must provide at least the same benefits as original Medicare, some offer additional benefits, such as dental and vision care, which Medicare does not provide. Medicare Advantage plans have deductibles and co-pays, but they also have yearly out-of-pocket spending limits, unlike Medicare
Contact us to learn more about how these plans can benefit you.