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 of Medicare is free for most people. You’ve already paid into the system in the form of the Medicare tax deduction on your paycheck during your working years
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 Medicare (the government) for your Part B coverage. The standard Part B premium for 2021 is $148.50, but you may pay more if your income is above a certain amount. If you want to enroll in a Medicare Supplement Plan, you must enroll in Part A and Part B of Medicare.
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 or life-threatening 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. These plans can offer additional benefits that Medicare does not cover, such as dental, vision, and hearing. The benefit levels for these extra benefits can vary among MA plans, and the benefits for each plan are state-specific. It is crucial to understand how your medical expenses are covered and which doctors and hospitals are in their network before enrolling. The devil is always in the details. Keep in mind that as you get older, you will utilize more and more medical services. My advice is to enroll in a Medicare Supplement Plan that will provide you with excellent coverage in good or bad health. When you enroll in a Medicare Advantage Plan, you must continue to pay your Medicare Part B premium.
Medigap Vs. Medicare Advantage
Managed Care Part C Plans
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. There are 32 prescription drug plans offered in Alabama for 2021. My advice is not to choose a Medicare drug plan because it has a low premium. Base your decision on how well the drug plan covers your medications at the pharmacy you want to use. It is important to shop for your Part D drug plan each year. Your drug plan’s benefits, formulary, pharmacy network, premium, co-payments, or co-insurance may change on January 1 of each year. Medicare gives you an annual election period (October 15-December 7), during which you can change your plan if you desire to do so. If you do not make a change by December 7, your plan will automatically renew. If you are happy with your drug plan, that’s fine, but if you’re not, you are stuck with it for another year.