What exactly is Medicare? What does it cover?
Though these may seem like simple questions, the answers are a little more complex. However, I’ll simplify and answer these questions in a straightforward, clear manner.
Medicare aka Original Medicare (some call this the ‘red, white and blue card’) is a government health insurance program for people aged 65 and older. It is also for people with certain disabilities or end-stage kidney failure. This program is split into various parts, and it is important to learn how they fit together.
The History of Medicare
Here is a brief background of Medicare and how it has evolved over the years.
In July of 1965, President Lyndon B. Johnson signed a Medicare bill into law where people 65 years and older could get healthcare coverage they needed from a national program. At that point, the only coverage options were Part A and Part B.
Today, over 56 million people get their coverage through the Medicare program. Though Part A and Part B provide coverage for most of your medical expenses, there are federally regulated Medicare Supplemental (Medigap) policies one can purchase to help fill in gaps that are not completely covered by Original Medicare. As we’ll discuss more below, many alternatively enroll in Medicare Advantage plans in part to also help address to a degree some of these gaps.
Medicare Part D, also called the Medicare Prescription Drug Benefit was added later into the Medicare insurance program. For half a century, there was no Medicare coverage for prescriptions. The Part D program went into effect in 2006.
The Different Parts of Medicare
What is Medicare Part A?
Medicare Part A is hospital insurance that covers you with the cost of inpatient care as well as skilled nursing facility stays. It also helps with hospice and home health care. In general, the Part A coverage for inpatient hospital benefit focuses specifically on the room and board in the hospital for a semi-private room. However, it does not cover many of the actual treatments or services that would occur in the hospital setting, such as CT scans or surgeries. Those are covered under Part B.
The cost of Part A for most people at age 65 or older is $0. This is because during your working years you paid taxes which pays for your Part A premiums. For those who don’t automatically qualify for premium-free coverage because you haven’t worked enough quarters over your career, then there’s the option to apply for it, and you’d pay a monthly premium to get that coverage.
What is Medicare Part B?
Medicare Part B is your outpatient medical coverage, covering many medical services other than your actual inpatient hospital fees, hospice care or skilled rehab. It covers lab work, preventive services, and surgeries, as well as cancer chemotherapy and kidney dialysis.
It goes without saying, no one wants or should go without having Part B active. Without Part B, you would be uninsured for doctor visits (including doctors who treat you in the hospital facility), aside from receiving a penalty. (An exception to this may be someone who has employer coverage, and either is paying little to nothing for it or finds extra value in it due to being on a very expensive medication.)
The cost of Part B is regulated by the government and changes from year to year. In 2022 the Part B premium is $170.10. Higher income individuals will pay more than the standard cost. This tax is known as the ‘income-related monthly adjusted amount’ (IRMAA), which is a surcharge added to Part B and Part D premiums. On the other hand, lower income individuals that are Medicaid eligible can be discharged from their part B. Your Part B premium is based on your modified adjusted gross income (MAGI) that is reported to the IRS.
So far so good, hopefully!:)
What is Medicare Part C?
What is Medicare Part C and why don’t you have to enroll in it through Social Security, like you do for the Parts A & B?
Medicare Part C is the Medicare Advantage programs, or private Medicare Insurance plans. The cost of Medicare Advantage plans varies by carrier, county of residence, and the specific plan. Many excellent plans have a $0 premium!
To enroll in a Medicare Advantage plan, you must first have both Original Medicare Parts A and B active. Enrolling in a Medicare Advantage plan, regardless of the premium, does not in any way remove your responsibility to pay for Part B. Also, your main residence needs to be in your plan’s service area.
Once you enroll in a Medicare Advantage plan, all your Medicare coverage will now be completely managed, covered, and serviced by the plan’s carrier – not by the government. Therefore, the actual enrollment is not done through Social Security or a government agency.
Some common reasons many people choose to enroll in a Medicare Advantage plan are because unlike Original Medicare, Medicare Advantage plans have a maximum out of pocket limit, which means that for all medical related services once you would reach the plan’s annual maximum out of pocket then you are covered 100% by the plan. Medicare Advantage plans usually have the Part D (prescription coverage) built into it. Other reasons people choose this route are due to the added benefits many carriers include in their plans. These specific benefits can vary a lot from plan to plan. They can include dental, vision, Over the Counter benefits, as well as free gym memberships – and the coverage level can also vary from one plan to another. Medicare Advantage plans have specific networks so you would want to be sure your plan is a good fit for you in regards to your Dr’s and medical facilities.
There are people, however, that prefer to get their Medicare coverage from Original Medicare and then may purchase a separate Medicare Supplement aka Medigap plan to fill in and close the gaps that exist with the Original Medicare Parts A & B. These Medicare Supplement members will naturally not enroll in a Medicare Advantage plan, as one cannot legally have a Part C Medicare Advantage plan together with a Medicare Supplement.
It is a choice everyone makes once one’s Original Medicare is active. Either you opt for a Medicare Advantage plan (which would replace your Original Medicare) or you remain with your original Medicare A & B and enroll in a Medicare Supplement plan (which would exist alongside your Original Medicare). Those choosing the latter route will need to enroll in a separate part D drug plan as well. And being that dental and vision coverage are typically not included in a Medicare Supplement, one may need to purchase these separately if they want coverage.
As great as a Medicare Supplement is – which it no doubt is, it’s important to know they are by definition laser focused specifically on filling in the gaps of Original Medicare Parts A & B only. As a result, if choosing this route, you’d need to separately purchase a Part D, as well as any dental & vision coverage.
A good Medicare agent will be able to help explain all the Medicare options and moving parts in more detail and can help guide you according to your specific needs, budget, and risk level.
What is Medicare Part D?
Medicare Part D are plans that cover retail prescription drugs that you either get at your local pharmacy or order through mail order. You can choose and enroll in a particular drug plan that fits your specific needs and budget. States have a number of drug plans to choose from. Depending on each plan, there’s copays and coinsurance for the different tiers of drugs. There’s a deductible as well, which on many plans won’t be subjected to generic drugs. You want to know the plans specific formulary, as well as each one’s pharmacy network.
You can enroll by researching plans on your own. A better, likely more efficient way is to have a trustworthy agent run an analysis based on your specific drugs and dosages to determine which plan is right for you. Also, reputable agents will not only explain to you the more important parts of the different coverage stages drug plans have, but also think out of the box and advise where you can possibly get drugs at a significant lower price than any plans can offer – especially if you are prescribed expensive drugs.
As noted earlier, getting a separate Part D plan is usually needed only for someone who’s not enrolling in a Part C Medicare Advantage plan, being that Medicare Advantage plans typically come with a drug plan automatically included.
What doesn’t Original Medicare cover?
Some people are unaware that Original Medicare does not cover every health expense that beneficiaries may confront.
Some key services Medicare itself (Original Medicare) does not cover:
As I’ve discussed above, though Original Medicare doesn’t cover these services, however, many Medicare Advantage plans will include coverage for some of these mentioned.
- Routine dental care
- Dentures and comprehensive dental
- Routine vision care
- Medical care outside of the U.S.
- Long-term care
- Hearing aids
- Plastic and/or cosmetic surgery
- Massage therapy
I’ve gone through a lot of important Medicare facts in the above article, and I sincerely hope it helped you. However, it’s virtually impossible to go into all the details of each part of Medicare, and how it fits in to each individual’s specific situation. I therefore invite and encourage you to reach out to a reputable licensed agent, or to me directly. I’ll be happy to answer your particular questions and help guide you through this challenging, yet exciting process.
Getting into a wrong plan can potentially cause you significant out of pocket costs, unnecessarily. You also want to work with an agent who represents all or many of the major insurance carriers so the agent can be truly objective and help guide you to the plan that is truly best for you!
I firmly believe you should and can be 100% comfortable knowing you’ve got the right and best plan for your situation, and as important, that you have someone you can trust and turn to on an ongoing basis – now and down the road!!
Ben Siegfried can be reached directly at (216) 835-1255 or via email at [email protected]