What Is Medicare – If you are nearing your 65th birthday, Medicare might be on your mind. Understanding the basics of Medicare will go a long way in helping you get familiar with what it covers, how it works, and the other Medicare insurance products you should consider adding to your insurance portfolio.
Today, we’re going to discuss the foundations of Medicare.
The Parts of Medicare
There are quite a few working parts of Medicare, and it’s important to be able to tell the difference between each one. There are four parts to the Medicare program: A, B, C, and D.
Part A is hospital insurance. It’s going to help with your financial costs if you are ever admitted as an inpatient to either a hospital or skilled nursing facility. You can think of it as your room and board coverage.
There are deductibles and coinsurance expenses associated with Part A. These are the amounts you’ll be responsible for if you use your hospital insurance. First, there is a Part A deductible. In 2022, that amount is $1,556 per benefit period. A benefit period begins the day you’re admitted and ends 60 days after you’ve been out of the hospital. Yes, it’s possible to pay this deductible multiple times within a one-year period.
You’ll also have coinsurance amounts based on how many days you’ve been hospitalized. Part A will take care of the first 60 days at no charge to you. Then from day 61 to day 90, you’ll pay $389 per day. After that, you’ll pay the full cost each day unless you have any or all of your 60 lifetime reserve days remaining. If you use one of these lifetime reserve days, your cost will be $778 per day.
The great thing about Part A is that most Medicare beneficiaries receive premium-free Part A. As long as you or your spouse has paid FICA taxes for at least 40 quarters, you’re entitled to Part A for $0 per month. If you haven’t met this requirement, you can still enroll in Part A, but you’ll pay up to $499 per month for the coverage.
Part B is outpatient insurance. You’ll use this when you visit your doctor, need labwork or x-rays, have surgery, or purchase durable medical equipment. Your expenses under Part B are a little more straightforward.
You will pay a $233 Part B deductible (in 2022), and then Part B works on an 80/20 cost-sharing basis. Medicare pays 80%, and you pay 20%. You may also incur Part B excess charges if your healthcare provider does not accept Medicare assignment. This is rare, but if it happens, you’ll be responsible for up to an additional 15%.
Everyone pays a premium for Part B, regardless of how long you paid FICA taxes. The standard premium for Part B is $170.10 this year. If you earn a high income, you’ll pay IRMAA, the Income Related Monthly Adjustment Amount.
Part C includes all Medicare Advantage plans. Now, this is a topic that needs quite a bit more explaining, but we’ll cover the basics here.
Medicare Advantage plans are one of two ways beneficiaries can increase their Medicare coverage. The Medicare program pays private insurance companies to offer Part C plans, as long as they meet certain requirements. If you enroll in Part C, your Part A and B benefits will be rolled into your Part C plan, and the insurance company will provide all your benefits, not the federal government.
Medicare Advantage plans often include extra benefits you won’t find in Parts A or B. Things like prescription drug coverage, preventive and restorative dental care, vision and hearing services, medical transportation, gym memberships, and a whole lot more. In addition to those great benefits, these plans are often very affordable. (You still have to pay the Part B premium, though.) The only “catch” is that you’ll have to adhere to a few rules set up by each individual plan.
There are many insurance carriers that offer Part D plans. The one you enroll in will depend on where you live and what medications you’re currently taking. When you choose a plan, the amount you’ll pay for each medication depends on the drug formulary, which is a list of what medications are covered and at what cost. Most plans include a deductible, but they often waive the deductible on common medications like those for high blood pressure.
One important thing many people don’t realize about Part D is that you need to sign up for a plan even if you don’t take any medications. If you postpone enrollment, you’ll pay penalties if you choose to enroll in the future. In addition, you can’t enroll in Part D year-round. If your doctor prescribes a medication and you’re outside of the enrollment window, you’ll have to wait and will be responsible for paying for the medication with no insurance coverage.
The only exception to this is if you enroll in a Part C plan that includes prescription drug coverage. If that’s the case, you have Part D within your Part C plan, so you won’t enroll in a separate policy.
If you have questions about how Medicare works, give one of our experts a call. Our licensed insurance agents specialize in this field and can answer all of your Medicare questions.