In 1965, Lyndon B. Johnson signed a bill into law giving people 65 and older health coverage from a new national program known as Medicare. Today, Medicare is available to citizens and legal permanent residents who are 65 and older, people with certain disabilities, and those with end-stage kidney failure. Over 56 million people receive Medicare coverage in America. 

In the beginning, there was only Part A and Part B, and the federal government provided coverage. Now, however, there are many types of Medicare plans in addition to Original Medicare. Medicare enrollees now have options for their health coverage; it’s no longer a one-size-fits-all program. That’s why it’s important to know how each part of Medicare works so you get the coverage you need for your unique situation.

Part A

Part A is known as hospital insurance and it helps pay for your inpatient care or skilled nursing facility stay. Medicare Part A covers things such as a semi-private hospital room and operating room fees if you have inpatient surgery.

Medicare Part A also covers some home health care services that you receive after your inpatient stay. These could include physical therapy, skilled nursing care, and medical social services. Keep in mind that Medicare will not cover long-term nursing home care or custodial care services in your home. 

The Part A deductible for 2020 is $1,408. The Part A deductible is not an annual deductible; you pay it for each new benefit period. In other words, you could pay the Part A deductible multiple times in a single calendar year.  

Part B

Medicare Part B is your medical coverage. Part B covers medically necessary services to diagnose and treat illness and disease, including doctor visits, durable medical equipment, and home health care. It also covers services such as   radiation, chemotherapy, surgeries, scans, and renal dialysis. Part B also pays for preventive care and screening tests for certain cancers and diseases.   However, Part B doesn’t pay for routine vision, dental, or hearing services. There is also very limited coverage for prescription drugs. 

Medicare typically pays 80% of medically necessary services after you have met your $198 annual deductible.

Part D

Medicare Part D is voluntary prescription drug coverage; it helps pay for prescription drugs you take at home.  

Because Part D is voluntary, it is offered by private insurance companies and not the federal government. If you want Part D coverage, you can buy any plan offered in your area. Monthly premiums  vary depending on which plan you choose.  There are some zero-premium Part D plans available, but the average plan costs between $25 and $50 a month.  Coverage varies from plan to plan, so it’s important to make sure the plan you buy covers the medications you take on a daily basis. 

Medicare sets the maximum Part D deductible, which is $435 in 2020. Plans may set their deductible below the maximum allowed by the government, however. It’s a good idea to compare premiums and deductibles when shopping for a Part D plan.  

Medicare Advantage

Medicare Advantage is sold by private insurance companies; it’s an alternative way to get your Medicare benefits under Part A and Part B.  You must be enrolled in e Part A and Part B to buy a Medicare Advantage plan and you must continue to pay your Part B premium in addition to any premium charged by your plan.  

Most Medicare Advantage plans include Part D prescription drug coverage, so you get all your Medicare benefits in one plan. Many also include extra benefits not available under Original Medicare such as routine vision, dental, and hearing coverage. 

Premiums, deductibles, and copayments are set by the individual insurance companies and costs can vary a lot from plan to plan. Some plans also require you to use a provider network, so if you have a doctor you like, be sure he or she participates with your plan before you sign up. Otherwise, you may need to choose a different doctor. 

Medigap

Medigap is an optional plan that helps pay your out-of-pocket costs under Original Medicare (Part A and Part B).  You buy Medigap plans through private insurance companies; premiums vary from company to company and plan to plan. 

Medigap benefits are standardized by the federal government. This means that a Plan G sold by Humana has essentially the same benefits as Plan G sold by Aetna. The only significant difference is the premium. 

There are ten Medigap plans authorized by the government, but depending on your state, some may not be available to you. It’s important to note that Medigap only works with Part A and Part B; it can’t be used with Medicare Advantage or to help cover your Part D prescription drug costs. 

Medicare is a lot to take in when you’re new to the program, so   don’t be afraid to ask questions or seek advice from a Medicare broker.  It’s important to do your research before enrolling. Medicare brokers represent many different insurers and plans, so they are a great resource to help you make the right Medicare decision.  

Dom Pauwly