Medicare is a federal health insurance program in the United States that covers people over the age of 65, as well as people under the age of 65 with certain disabilities and people with end-stage renal disease. The program has four different parts, each of which covers specific services and has different premiums and out-of-pocket costs. Understanding the different Medicare options and coverage choices available is essential for individuals seeking to enroll in Medicare, as well as those who are already enrolled and looking to make changes to their coverage.
Part A: Hospital Insurance
Medicare Part A, also known as hospital insurance, covers inpatient hospital care, hospice care, skilled nursing facility care, and home health care. Most people do not have to pay a premium for Part A because they or their spouse paid Medicare taxes while they were working. However, there are some costs associated with Part A, including a deductible and coinsurance.
The Part A deductible for 2023 is $1,600 per benefit period. A benefit period begins when a person is admitted to a hospital or skilled nursing facility and ends when they have been out of the hospital or skilled nursing facility for 60 consecutive days. After the deductible is met, Medicare pays for all covered services for the remainder of the benefit period.
Part B: Medical Insurance
Medicare Part B, also known as medical insurance, covers doctor visits, outpatient care, preventive services, and medical equipment. Part B is optional and requires a monthly premium. The standard monthly premium for Part B in 2023 is $170.10, although higher-income individuals may pay more.
In addition to the monthly premium, Part B also has an annual deductible. The deductible for 2023 is $233. After the deductible is met, individuals typically pay 20% of the Medicare-approved amount for most services.
Part C: Medicare Advantage Plans
Medicare Advantage plans, also known as Part C, are offered by private insurance companies approved by Medicare. These plans combine the coverage of Part A and Part B, as well as often including additional benefits such as prescription drug coverage, vision, dental, and hearing. Many Medicare Advantage plans also offer fitness programs and wellness benefits. Part C plans have a network of providers, and individuals must use the providers within the network to receive coverage.
Medicare Advantage plans typically require a monthly premium in addition to the Part B premium. The amount of the premium varies depending on the plan and the insurer. Some plans have a $0 premium, although individuals should carefully review the plan’s cost-sharing and out-of-pocket costs.
Part D: Prescription Drug Coverage
Medicare Part D is prescription drug coverage that is offered by private insurance companies approved by Medicare. Part D is optional, but individuals who do not enroll in a Part D plan when they first become eligible may have to pay a penalty if they enroll later. The penalty is 1% of the national average premium for every month a person goes without coverage.
Part D plans have a monthly premium that varies depending on the plan and the insurer. Most Part D plans also have a deductible, which is the amount a person must pay before the plan starts covering their prescription drugs. In 2023, the maximum deductible for a Part D plan is $480. After the deductible is met, individuals typically pay a copay or coinsurance for their prescriptions.
When enrolling in Medicare, individuals have several coverage choices. They can choose to enroll in Original Medicare, which includes Part A and Part B, or they can enroll in a Medicare Advantage plan, which combines the coverage of Part A and Part B, as well as often including additional benefits. Individuals can also choose to enroll in a stand-alone Part D plan if they have Original Medicare, or they can choose a Medicare Advantage plan with integrated prescription drug coverage.
Medicare open enrollment occurs each year from October 15th to December 7th. During this time, individuals can make changes to their Medicare coverage choices. For example, individuals can switch from Original Medicare to a Medicare Advantage plan, switch from one Medicare Advantage plan to another, or enroll in a Part D plan.
It’s important to review Medicare coverage annually to ensure that it meets an individual’s current health needs and budget. Medicare Advantage and Part D plans can change their premiums, deductibles, and formularies (list of covered drugs) each year, which can affect an individual’s out-of-pocket costs and the drugs that are covered.
Medigap Policies
Medicare Supplement Insurance, also known as Medigap, is a private insurance policy that helps cover the out-of-pocket costs of Original Medicare, such as deductibles, copays, and coinsurance. Medigap policies are sold by private insurance companies and can be purchased by individuals who have Original Medicare.
There are ten standardized Medigap plans available in most states, labeled A, B, C, D, F, G, K, L, M, and N. Each plan provides a different level of coverage, and the cost of the policy varies depending on the plan and the insurer. It’s important to note that Medigap policies do not cover prescription drugs, so individuals who want drug coverage will need to enroll in a separate Part D plan.
Final Thoughts
Medicare insurance plans offer coverage for a range of health care services, including hospital stays, doctor visits, prescription drugs, and more. There are four parts of Medicare, and individuals have the option to choose different coverage options depending on their needs and budget. During Medicare open enrollment, individuals can make changes to their coverage choices, including enrolling in a Medicare Advantage plan or a Part D plan.
It’s important to review Medicare coverage annually to ensure that it still meets an individual’s health needs and budget. Additionally, individuals who have Original Medicare may want to consider purchasing a Medigap policy to help cover the out-of-pocket costs of Original Medicare. By understanding the different Medicare options and coverage choices available, individuals can make informed decisions about their health care coverage and get the care they need.