What is Medicare?
Medicare is a national health insurance program that is regulated under federal law. This program has begun in 1965, under Social Security Administration, but now is under the jurisdiction of the Centers for Medicare and Medicaid Services (CMS). It primarily serves as health insurance for U.S. citizens aged 65 or older, and secondary for younger citizens who are receiving disability benefits under SSA. People with End-Stage Renal Disease (ESRD) and Amyotrophic Lateral Sclerosis (ALS).
Medicare
Medicare consists of four parts. Part A and B are two main parts and they together are called Original Medicare. Part A is hospital insurance and covers inpatient services, whilst Part B is medical insurance which covers outpatient services and preventive care. Medicare Part C is commonly known as Medicare Advantage, and those plans are sold by private insurance companies. The Medicare Advantage plan must cover all the same benefits as Original Medicare, but provide additional benefits like dental, vision, hearing, and drug prescriptions- all in one. Part D stands for drug prescription plans. Original Medicare doesn’t cover drug prescriptions so, if you want drug coverage you must purchase Original Medicare alongside Original Medicare.
Medicare Part A and Part B, also known as Original Medicare, are considered to be the primary coverage managed by the federal government and include basic inpatient coverage during the hospital stays. Original Medicare Parts A and B cover a wide variety of health services. If you need coverage for glasses, prescription medication, hearing aids, or dental care, you may wish to explore your options through Medicare Advantage as Original Medicare doesn’t cover those.
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Medicare Part A
As mentioned above, Medicare Part A is a part of Original Medicare. In general, Medicare Part A includes coverage for inpatient care in hospital, skilled nursing facilities care, hospice care, and home health care. What Medicare Part A doesn’t cover are specific services such as private nursing, items for personal care, TV or phone, and private rooms.
Generally, you don’t have to pay anything for the Part A premium. This is the case when either your spouse or yourself have paid for Medicare taxes while working for at least ten years. If you don’t have these terms fulfilled you have the option of buying part A and the costs for it in 2023 will be between $278 and $506 per month. Part A costs are depending on how much of the time you or your spouse paid for Medicare taxes during your working period. It is important to mention that a large cost for Medicare Part A is the deductible, which is the amount you have to pay for medical care out of pocket before the plan’s benefits can begin. For 2023, the Medicare Part A deductible will be $1,600.
Medicare Part B
The other part of Original Medicare, known as Part B, covers services that are medically necessary to help you treat or diagnose your medical condition. Part B covered services would be ambulance services, clinical research, durable medical equipment, mental health services doctor visits, preventive care services, and some prescriptions for drugs such as drugs that are part of DME usage, some antigens, injectable osteoporosis drugs, drugs for helping with clotting factors, oral drugs if you have ERSD, and injectable and infused drugs. Part B doesn’t cover dental, vision and hearing services prescription for drugs coverage, and hospital stays that last longer than 100 days.
For most people, the cost for Part B premium in 2023 will be $164.90 per month. This amount is adjusted based on one’s income so for high earners, for example, the cost of Medicare Part B would be based on their adjusted gross income (AGI) from previous year’s taxes. Other than the premium, Medicare Part B enrollees are also obliged to pay the deductible which will be 226$ for 2023. Keep in mind that only after paying the deductible can the coinsurance benefits kick in.
Medicare Part C
Medicare Advantage plans, also known as Medicare Part C plans, are alternatives to Original Medicare and are sold by private insurance companies. Medicare Advantage plans provide the same benefits that exist under Original Medicare but also cover extra services that include, but are not limited to prescription drugs, dental, hearing, and vision care. It is mandatory to be enrolled in Original Medicare to enroll in a Medicare Advantage plan.
There are different types of Medicare Advantage plans: Health Maintenance Organization Plans, Private Fee-For-Service plans, and Special Needs Plans.
The average premium for a Medicare Advantage plan is 21$ but there are also some Advantage plans that have premiums as low as 0$. There’s also a maximum out-of-pocket limit for Part C plans which, in result, reduces the total out-of-pocket costs you’ll need to cover. In case you have a Medicare Advantage program you must pay for your Part B deductible. Some Advantage plans might partly cover for the deductible but you would need to check with your provider.
Medicare Part D
Medicare Part D is sold by private insurance companies approved by Medicare and provides prescription drug coverage and is purchased by many Medicare enrollees. Part D provides a prescription drug service for outpatient needs. It covers the costs of prescription medication available at local pharmacies, mail orders, and other centers. To secure yourself with a prescription drug coverage you can choose to purchase a Medicare Advantage plan that includes it or get a standalone Medicare Part D plan.
Some Part D plans may have $0 deductibles while some may have a high deductible. Nevertheless, Part D enrollees must pay plan premiums, copayments, and coinsurance costs to continue their coverage. The cost of Part D plan varies on numerous factors such as location, income, and the type of medications that are covered by the plan. The average monthly premium for a Part D plan is projected to be $31.50 in 2023, although the cost may vary.
Medicare Supplement Plans
Medicare Supplement plans act as supplemental insurance to Medicare Part A and Part B and are also known as Medigap insurance. These plans are offered by private insurance providers and they’re meant to help with some of the out-of-pocket costs associated with Original Medicare, such as copayments, coinsurance, and deductibles. In other words, if you have a Medicare Supplement plan, Medicare will cover the necessary medical expenses first and the Supplement plan will take care of the remaining out-of-pocket costs.
Even though Medicare Supplement plans all have standardized benefits, each Supplement plan’s cost is based on the insurance company you choose and other factors so there is no fixed answer concerning the costs of these plans. Insurance providers usually offer discounts on Medicare Supplement plans due to certain reasons such as discounts for non-smokers, women, or people who pay their premiums in advance each year.
Medicare Eligibility
Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) are available to the individuals below:
- Age 65 or older
- Disabled
- End-Stage Renal Disease (ESRD)
Part B is a voluntary program that requires the payment of a monthly premium for all months of coverage.
The eligibility rules for Part B depend on whether a person is eligible for premium-free Part A or whether the individual has to pay a premium for Part A coverage. Individuals who are eligible for premium-free Part A are also eligible for enrollment in Part B once they are entitled to Part A.
Individuals who must pay a premium for Part A must meet the following requirements to enroll in Part B:
- Be age 65 or older;
- Be a U.S. resident; AND
- Be either a U.S. citizen, OR
- Be an individual who has been lawfully admitted for permanent residence and has been residing in the United States for 5 continuous years prior to the month of filing an application for Medicare.
Medicare Enrollment
You can join, switch, or drop a Medicare Health Plan, with or without drug coverage, during these times:
- Initial Enrollment Period
When you first become eligible for Medicare around the age of 65, you can join a plan.
- Open Enrollment Period.
From October 15 – December 7 each year, you can join, switch, or drop a plan. Your coverage will begin on January 1 (as long as the plan gets your request by December 7).
- Medicare Advantage Open Enrollment Period
From January 1st – March 31st each year, if you’re enrolled in a Medicare Advantage Plan, you can switch to a different Medicare Advantage Plan or switch back to Original Medicare (and join a separate Medicare drug plan) once during this time.
Most people enroll in Part A and Part B at the same time. You are eligible to enroll in the Initial Enrollment period which begins 3 months before your 65th birthday and ends three months after your 65th birthday. Also, you have to be a U.S. citizen or have a permanent residence for a minimum of five years to be eligible for Original Medicare. If you don’t enroll during the Initial Time Period you may have to pay the late enrollment penalty.
However, if you have Social Security benefits already you’ll be enrolled in Part B automatically, but if you don’t, you’ll need to do it by yourself.
Medicare Supplement plans are offered by private insurance providers. They’re meant to help with some of the out-of-pocket costs associated with Original Medicare, such as copayments, coinsurance, and deductibles. Medicare Supplement plans are also known as Medigap insurance. These plans act as supplemental insurance to Medicare Part A and Part B, which you’re required to have to qualify for a Medicare Supplement plan
This means if you have a Medicare Supplement plan, Medicare will cover the necessary medical expenses first. In contrast, the Medicare Supplement plan will take care of the remaining out-of-pocket costs.
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