Medicare is a federal health insurance program that pays for a variety of health care expenses. It’s administered by the Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS). Medicare beneficiaries are typically senior citizens who are 65 years of age and older. Adults with certain approved medical conditions or qualifying permanent disabilities may also be eligible for Medicare benefits.
Similar to Social Security, Medicare is an entitlement program. Most U.S. citizens earn the right to enroll in Medicare by working and paying their taxes for a minimum required period. However, even if you didn’t work long enough to be entitled to Medicare benefits, you may still be eligible to enroll, but you will pay more.
There are four different parts to the Medicare program. Parts A and B are sometimes called “Original Medicare.”
Part A is Hospital Insurance. Medicare Part A covers inpatient hospital care, time in a skilled nursing care facility, certain home health, and hospice care. The majority of Part A enrollees do not have to pay a monthly fee (premium) to be covered under this part of Original Medicare.
Medicare Part A does not cover the full amount of your hospital bill. You will share in the cost. You must pay a deductible before Medicare benefits begin. Medicare will then pay 100 percent of the cost up to 60 days in a hospital or up to 20 days in a skilled nursing facility. After that, you pay a flat amount up to the maximum covered days. Your Medicare benefits cover a total of 150 days in a hospital and 100 days in a skilled nursing facility.
Part B is Medical Insurance. Part B of Medicare benefits covers non-hospital medical expenses like doctors’ office visits, blood tests, X-rays and outpatient hospital care. You pay a monthly fee (premium) for this part of Original Medicare. The fee can be higher for people with high incomes. Medicaid could also help cover your part B premium in most cases.
You share the costs for your medical care. You’ll pay a small deductible each year before your Part B Medicare benefits begin. Then you generally pay 20 percent of the bill when you go to a doctor who accepts Medicare. Medicare pays 100 percent of the cost of lab services that help your doctor make a diagnosis.
Part C – Medicare Advantage is Private Insurance. This is called “Medicare Advantage” no matter which private insurance company you go to.
Medicare Advantage is optional, but to have this private insurance, you must also have Medicare Parts A and B (Original Medicare).
While all Medicare Advantage plans must provide all Medicare Part A and Part B benefits, plans can include different additional benefits depending on the private health insurer that offers it. Some plans might have a lower deductible. Your share of the remaining costs might be lower too. The plan might even cover certain health care services that Original Medicare does not cover like eye exams, hearing aids, dental care or health care received while traveling outside the United States.
Part D is Prescription Drug Insurance. This part of your Medicare benefits is optional and you will pay a separate monthly fee for it. Medicare Part D is offered through private insurance companies and the monthly fee varies among insurers. You will share in the costs of your prescription drugs according to the specific plan you enrolled in. Those costs can include a deductible, a flat copay amount, or a percentage of the full drug cost (called “coinsurance”).
If you have limited income and cannot afford your medications even with your Part D Medicare benefits, you may qualify for the Extra Help program for financial assistance with your monthly premium, deductible, copay or coinsurance.
What is Medicare Supplement?
Need help paying your Medicare deductibles, copayments and coinsurance? A Medigap insurance policy (also called Medigap supplemental insurance or Medicare supplemental plans) helps pay the “gap” between what Original Medicare (Medicare Parts A and B) pays for your health care and what you pay out of your own pocket.
You can get a Medicare supplemental plan only if you have Original Medicare. Medigap covers Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). It does not cover Medicare Part C (Medicare Advantage Plans), Medicare Part D (prescription drug plans) or any other private health insurance, Medicaid, Veterans’ Administration benefits, or TRICARE.
You can get a Medicare supplement through private insurance companies. The Medigap policy must be clearly identified as “Medicare supplement insurance.” There are 10 different Medigap coverage options to choose from. Plans are labeled A, B, C, D, F, G, K, L, M and N to signify the plan differences. Plans E, H, I and J are no longer available.
Because Medigap policies are regulated by state and Federal laws, all benefits for all options are the same regardless of insurer. The differences will be in the price, who administers the plan, and which of the ten options the insurer chooses to offer. You may want to choose a health insurer that you already feel comfortable with. Or you can shop around for the best prices.