You have probably heard of Medicare, as it is one of the biggest subjects in today’s media. With so much information and misinformation floating around about this subject, it is easy to get lost and confused. That’s why we are here to offer you all the information you need.
Medicare is a federal healthcare program that offers insurance to certain groups of people. These groups include people aged 65 and older, young children with disabilities, as well as people with permanent kidney failure. Medicare has four parts and, below, we will dive into each one in great detail. Read on to find out all there is to each one of them.
Medicare Part A, also called hospital insurance, covers all costs of hospitalization. You automatically receive this part of Medicare when you enroll in the program. It happens either when you reach 65 or when you get diagnosed with any conditions that make you eligible for it.
The majority of people eligible for Part A don’t have to pay anything. However, there is a deductible applied annually. For example, in 2020, this deductible was $1,408. In 2021, the deductible is a little bit higher, standing at $1,484.
The services that Medicare Part A covers are varied. They include:
Although this list seems pretty straightforward, there are certain exceptions. For example, Medicare Part A covers hospice care at your home. However, it does not cover care at a hospice facility.
In addition, the deductible complicates things even further. If you have to stay at a hospital for more than two months, you will not get coverage for every full day. Rather, you will have to pay a portion of the expenses for each day you spent there.
The deductible also comes into play if you have to be admitted to a hospital several times a year. In such cases, the deductible might apply for each separate visit.
To receive Medicare Part B, you have to pay a monthly premium. In 2020, this premium was $144.60, while in 2021 it is $148.50. This sum might be deducted from your monthly Social Security premium if you are on Social Security in the first place.
In most cases, you are required to enroll in Part B to be able to receive it. That is a difference from Part A, which you are enrolled in automatically. You don’t need to enroll if you have creditable coverage from your employer or your spouse’s employer.
Some fees may apply if you don’t enroll as soon as you become eligible and you don’t have coverage from another source. Thus, enrolling immediately upon reaching 65 or getting diagnosed with a condition is important.
Here is what Medicare Part B covers:
The deductible you pay for Part B is $203 in 2021. When you meet this sum, you have to pay 20% of the cost of the service. But there is something you should be aware of: there is no limit to how much the 20% expense can be.
This expense depends on the total sum of the services you were provided with. If, for example, the total cost of the services was $100,000, you will be responsible for 20% of it, or $20,000. Likewise, if your expenses were $1,000, you will pay $200.
These numbers are rather serious. They point to a worrisome fact: patients who need long-term medical care have to spend up to 60% of their income on medical bills.
Conversely, patients don’t have to pay anything for preventive services. These include flu shots or diabetes screenings. As long as your healthcare provider accepts Medicare, these services will be free.
Traditional Medicare (Parts A and B) never covers prolonged care if that care is only custodial. If you are diagnosed with a chronic condition that requires an assisted-living facility, these parts will not cover your expenses.
On the other hand, Medicare will cover acute-care hospital services. These are services for patients who need to be transferred from an intensive or critical care unit. The services covered include respiratory therapy or head trauma.
The explanation for this lack of coverage is that Medicare was never meant to cover long-term care. If patients want that, they need to get long-term health insurance or a rider on their life insurance policy that offers it.
Other services Parts A and B don’t cover include:
Medicare Part C is an alternative to traditional Medicare. Part C coverage usually includes Parts A and B, Part D (more on that below), and several other healthcare benefits you can opt for.
The ones who administer Part C are private insurance companies. They are also the ones who collect your Medicare payments from the government.
You might need to pay a premium for a Medicare Advantage plan. However, paying this premium is often much more affordable than having to pay for each Medicare part separately.
Whether you will pay separate premiums does not depend on whether you connect your Medicare plan to your Social Security. So, no matter if you decide to have Parts C/D deducted from Social Security, you will still pay the premium for Medicare Advantage.
Medicare Part D is also administered by private insurance companies, just like Part C. This part includes prescription drug coverage. Paying for Part D is optional, but most Medicare Advantage plans include it.
Most plans require you to meet an annual deductible before they start covering your meds. Some of them also require you to pay a certain amount before you can get meds through Medicare Part D. The cost of this co-pay varies.
In addition, Medicare Part D has a coverage gap. Put simply, once you hit a certain limit, the plan will no longer pay for your prescription drugs. In 2021, this limit is $4,130. Once you’ve exceeded that amount, your meds will no longer be covered by Medicare.
To get Part D coverage once again, you need to reach a certain sum of out-of-pocket payments for drugs. In 2021, this sum is $6,550. Once you’ve had to pay more than that for meds, you reach the “catastrophic coverage” level.
Reaching this level takes you out of the limit zone. In other words, Medicare Part D starts covering most of your prescription drugs expenses once again.
Closing this coverage gap has been a big problem for years. Many states have tried providing patients with insurance options that cover it. However, you have to pay extra premiums for such options.
Now that you know what each part of Medicare covers, it is time for another important topic: filling in the gaps that traditional Medicare doesn’t cover. Below, we will discuss them in detail.
Medigap or Medicare Advantage plans offer you the coverage that traditional Medicare doesn’t. Enrolling in such a plan ensures that you will not have to pay huge amounts of money for services not covered by parts A and B.
These plans are supplements to regular Medicare rather than stand-alone policies. So, if you don’t have traditional Medicare, you can’t be eligible for or enroll in Medigap or Medicare Advantage.
Something to look out for when choosing a Medicare Advantage supplement plan is whether they include Medicare Part D. Some Medigap options include coverage for your meds, but some require that you buy a separate Medicare D policy.
Sometimes, it might be better to purchase Part D separately. But it always depends on the type of policy you look at. Research is, thus, of utmost importance.
As you have read, there is a lot to know about Medicare and its various parts. Above, we covered Medicare Parts A, B, C, and D, as well as different Medigap plans. Hopefully, our guide helps you understand which parts of Medicare you need so that you can make the best decisions for you and your health. Good luck, and stay healthy.