The Four Parts of Medicare
Medicare is a Federal health insurance program covering millions of Americans aged 65 and older, people under the age of 65 with certain disabilities, and people with End-Stage Renal Disease (ESRD). The Centers for Medicare and Medicaid Services (CMS) is the federal agency that oversees Medicare.
Medicare Part A: Hospital Coverage (Inpatient)
- Hospital Inpatient Care: Medicare Part A will pay for all medically necessary services for your stay at the hospital, such as your room, meals, nursing services, drugs, lab tests, X-rays, operating room, and recovery room costs. Medicare does not cover the television or telephone in your room or private duty nurses.
- Recovery Care in a Skilled Nursing Facility: To qualify for care in a Skilled Nursing Facility, you must have been an inpatient in a hospital for three or more consecutive days. Skilled nursing facilities provide 24-hour care for people who need rehabilitation services or suffer from serious health issues that are too complicated to be tended at home. However, Medicare only covers up to 100 days in a skilled nursing facility. In addition, Medicare does not cover long-term care or custodial care.
- Hospice Care: To be eligible for Medicare’s hospice benefit, a beneficiary must be certified by a physician to have a life expectancy of six months or less. Medicare pays for this kind of comprehensive end-of-life care delivered at home or in a hospice facility. Hospice care changes the focus to comfort care (palliative care) for pain relief and symptom management instead of care to cure the patient’s illness.
- Home Health Care: These are medically necessary services that have to be ordered by a doctor. Your doctor must certify that you’re unable to leave your home without some difficulty; in other words, you’re homebound. Medicare home health care is for part-time care and for a limited time. Medicare, in general, won’t cover if the only care you need is custodial such as bathing, dressing, using the bathroom, cooking, cleaning, or round-the-clock care.
- Part A is free if you have worked the required amount of time, generally 10 years or 40 quarters, and paid Medicare taxes while working.
Medicare Part B: Medical Insurance (Outpatient)
Part B of Medicare provides Outpatient medical coverage to examine, diagnose, and treat your health conditions. You can receive these outpatient medical services and treatments at a doctor’s office, hospital, or clinic. There is an annual deductible of $203 for Part B medical services, and after the deductible is met, Medicare only covers 80% of Part B medical expenses.
- Doctor’s office exam
- Preventive services and screenings
- Some vaccines
- Diagnostic and Lab tests (MRI, CT Scan, EKG, X-rays, Blood work, Urinalysis)
- Same day hospital visit
- Outpatient surgery
- Chemotherapy and Radiation treatments
- Kidney dialysis
- Physical, speech, and occupational therapy
- Durable medical equipment
- Mental health services
- Ambulance services
- Emergency Room
You pay a monthly premium to the government for your Part B coverage. The standard Part B premium for 2021 is $148.50. If your income exceeds a certain amount, your premium could be higher than the standard premium.
If you are currently receiving Social Security Benefits before your turn 65, you will be automatically enrolled in Medicare.
If you are not receiving Social Security Benefits when you turn 65, you need to request your Medicare by either going to your local Social Security office or you can apply online at ssa.gov.
Medicare Part C: Medicare Managed Care Plans
Part C of Medicare refers to Medicare Advantage Plans (MA Plans). These plans (HMO or PPO) are managed care plans offered by private insurance companies approved by the Center for Medicare and Medicaid Services. These managed care plans are not considered supplemental Medicare coverage. When you enroll in an MA Plan, you receive your health care from the insurance company, not Medicare. The managed care plan will provide all of your Part A and Part B coverage, and your doctor must go through the insurance company, not Medicare, for all pre-approvals. Advantage Plans offer the same benefits as Original Medicare Part A and Part B, but they can apply different rules, costs, and restrictions than Medicare does. For example, they can require you to get a referral before seeing a specialist and only go to the doctors and hospitals in their network.
Medicare Advantage plans have provider networks for doctors and hospitals (HMO or PPO). With Medicare-managed care plans, the limits on which doctors and hospitals you can see may be the most crucial drawback. Even if the doctors you currently go to are in the plan’s network, you should consider that your medical needs could change in the future, and you may need to see other doctors who may not be in the network. If you want to see a specialist or surgeon who is not in the plan’s network, you’d have to pay some or all of the cost yourself. When faced with a serious illness, you could find out there are substantial financial gaps in your coverage. Depending on the plan, you could be responsible for as much as $7,500 in out-of-pocket costs in a calendar year for Medicare-covered services. If you use out-of-network providers, your out-of-pocket cost may be higher. Most Medicare Advantage plans include Part D prescription drug coverage. If you enroll in a Medicare Advantage plan, you must continue to pay the Medicare Part B premium.
Medicare Advantage or Disadvantage
Out-of-pocket costs will quickly add up when you get sick with a Medicare Advantage Plan. This is a list of typical copays and coinsurance with Advantage Plans offered in Alabama until you have reached your maximum out-of-pocket for the year.
- Inpatient hospital Stay–$295-$325 copay per day for days 1-6
- Skilled Nursing Facility–$0 copay for days 1-20
$184 copay per day for days 21-48
- Outpatient surgery–$295-$325 copay
- Radiation treatments for cancer– $50-$60 copay per treatment
- Chemotherapy treatments—20% coinsurance per treatment
- Durable medical equipment and prosthetics–20% coinsurance
- Kidney dialysis—20% coinsurance per treatment
- Physical therapy–$25-$40 copay each visit
- Ambulance–$205-$325 copay per one-way trip
Medicare Part D: Prescription Drug Coverage
Part D of Medicare is the prescription drug benefit that covers outpatient prescription drugs. Part D is offered by private companies that have contracts with the government to offer this coverage. You pay a monthly premium to an insurance company for your Part D plan. You will have an annual deductible to meet and have to pay a copay or a percentage of the drug’s cost. Each Medicare prescription drug plan has a list of covered drugs, called its formulary. Medicare drug plans place medications in their formulary that are placed in Tiers 1-5. The lower the tier, the less you pay for the medication. Brand name medications that are not available in generic can be expensive with a Medicare drug plan and could add substantially to your out-of-pocket costs when you go on Medicare. Unless you have creditable drug coverage, you should enroll in a Part D prescription drug plan when you first go on Medicare. If you delay enrollment, you will have to pay a late enrollment penalty and have gaps in your coverage.