Understanding Medicare

At first, the subject of Medicare can seem a bit overwhelming, particularly when it comes to what is and isn’t covered. The first step in understanding Medicare is learning about its four “parts”— each of which covers a different area of health care costs. The different parts of Medicare are each designated by a letter, A through D. Let’s take a look:

Part A (Hospital Insurance)

Medicare Part A helps cover your inpatient care in hospitals and skilled nursing facilities, excluding custodial and long-term care. It also helps cover hospice and some home health care. Typically, you become eligible for Part A when you turn 65, even if you’re still working. During your working years, you have probably paid for Part A through payroll deductions. For this reason, most people don’t pay a premium for Part A. You should be aware that Part A does not pay all of your hospital expenses; you are responsible for copayments and a deductible.

Part B (Doctor and Medical Insurance)

Medicare Part B helps cover doctors’ services and outpatient care. It also helps pay for some preventive care and services Part A doesn’t cover, including physical and occupational therapy and some home health care (if these services are considered medically necessary). Most people must pay a monthly premium for Part B coverage. It’s important that you sign up for Part B when you become eligible; otherwise your Part B premium may be higher if you sign up late.

Parts A and B together cover much of the medical care you need, but not all of it. For example, Parts A and B (called Original Medicare) do not cover prescription drugs. This is where Parts C and D come into the picture.

Part C (Medicare Advantage)

Medicare Part C, more commonly known as Medicare Advantage coverage, acts as an alternative to Parts A and B. This coverage is offered by private companies approved by and under contract with The Centers for Medicare and Medicaid Services (CMS). To join a Medicare Advantage plan, you must be enrolled in both Medicare Parts A and B. You must continue to pay your Part B premium and, usually, a monthly premium for the coverage.

• Medicare Advantage plans provide all of the benefits of Part A and Part B coverage. Plus, they usually offer extra benefits not covered by Original Medicare, such as vision, hearing, dental, wellness programs and disease management programs.
• Part D prescription drug coverage is often included in Medicare Advantage plans.
• Unless your plan also provides out-of-network benefits, care is received from a primary care doctor, specialist or hospital in the plan’s network, except for emergencies and urgently needed care.

You have the convenience of one ID card, and you don’t have to pay separate premiums for your medical and prescription drug coverage.

Part D (Prescription Drug Coverage)

It’s important to know that Original Medicare does not cover most prescription drugs. Medicare Part D was created to help lower your current prescription drug costs and help protect against higher costs in the future. Like a Medicare Advantage plan, Part D coverage is only available from private insurers that contract with Medicare.

• Part D plans provide benefits for both brand name and generic prescription drugs at participating pharmacies.
• Many people pair a Medicare Prescription Drug Plan with a Medicare Supplement plan.

One more point…

Original Medicare pays for many health care services and supplies, but it doesn’t cover all your costs. Most people need additional private coverage to help pay for out-of-pocket costs.