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The ABC’s of Medicare

If you are just beginning to learn about Medicare, it can seem like the entire alphabet is being thrown at you. That gets confusing, so in this article, we are going to discuss the letters you’ll see throughout your Medicare journey.

Medicare Part A

Medicare Part A is your inpatient hospital coverage. An easy way to think about this is as your “room and board” coverage for hospital stays.

Part A will pay for inpatient hospital care, skilled nursing facility care, nursing home care, hospice care, and home health care. There are limits on the total number of days per benefit period you may receive these types of care. Also, Part A will only pay for 80% of the cost of covered services. In 2021, the deductible for Part A is $1484.

Most people receive premium-free Part A. As long as you have worked for ten years (or 40 quarters) and paid Medicare taxes during those working years, you will receive Medicare Part A for no monthly premium.

Those who have not met that requirement will pay a monthly premium for Part A. If you paid Medicare taxes for less than 30 quarters, the Part A premium is $471 in 2021. If you paid Medicare taxes for 30 to 39 quarters, the premium is $259.

 

Medicare Part B

Medicare Part B covers your outpatient, medically-necessary services. It also provides coverage for many preventive services.

Part B will pay for clinical research, ambulance transportation, durable medical equipment (DME), inpatient and outpatient mental health care, and some outpatient prescription drugs. Most prescription drugs are covered under a separate policy that we will discuss later. However, Part B covers some injectable medications that patients or caregivers can administer with instruction.

Just like Part A, Part B will only cover 80% of the costs associated with this coverage. In 2021, the deductible for Part B is $203.

Unlike Part A, Part B does come with a premium. In 2021, the standard premium for Part B is $148.50. Most people qualify for this standard premium, but there are exceptions. High-income earners may pay a higher premium for Part B. This is determined by using your adjusted gross income from two years prior to your coverage. Low-income earners may qualify for special financial assistance programs and pay a lower premium.

Medicare Part C

Medicare Part C is often referred to as Medicare Advantage or MA for short. These plans bundle the coverage of Original Medicare (which is made up of Parts A and B) and move it into one policy. These policies are offered by private insurance companies that have been approved by Medicare to offer coverage.

Medicare Advantage plans offer additional benefits not provided in Original Medicare. This can include benefits for routine dental, vision, and hearing services as well as prescription drug coverage. Some plans even offer gym memberships.

MA plans often come with a $0 premium. This is because the federal government pays providers who elect to participate in the plans. Individuals with Medicare Advantage plans often have to see a provider that is within the plan’s network.

Coverage, deductibles, coinsurance, and copays will vary greatly depending on your location and which carrier you choose for your policy.

Medicare Part D

Medicare Part D contains all of the prescription drug plans. Part D plans are also offered by private insurance companies.

Like Part C plans, your prescription coverage will vary depending on the specific plan you choose. However, all Part D plans must offer antidepressants, antipsychotics, anticonvulsants, immunosuppressants, antiretrovirals, and antineoplastics.

Other than those medications, your prescription drug plan will come with a drug formulary. This is the list of drugs covered by the plan. Each drug is placed in a tier within the plan. The lower tiers contain common, generic medications, while the higher tiers contain specialized, brand-name drugs. The higher tiers are associated with a higher out-of-pocket cost.

Your monthly premium and any deductibles, coinsurance, or copays will depend on the plan you choose.

Medicare Supplements

Medicare supplements are commonly referred to as Medigap plans. These plans were created to fill in the “gaps” left by Original Medicare. They are meant to help pay for the out-of-pocket costs remaining after Original Medicare has paid.

Like Part C plans, Medigap plans are offered by private insurance companies. However, these plans are standardized by the federal government. Standardization means that each of these plans will be the same, no matter which carrier you purchase one through.

Currently, there are 10 Medigap plans on the market: Plans A, B, C, D, F, G, K, L, M, and N.

You can purchase Plan F (for example) at Company X or Company Y, and you will have the exact same coverage. The only difference may be your premium.

The most popular Medigap plans are F, G, and N. Plan F is only available to those who turned 65 before January 1, 2020. Since Plan F is not available to any newly eligible beneficiaries, Plan G is now the most popular, with Plan N trailing closely behind.

We hope this guide has given you a better understanding of the ABCs of Medicare. Medicare can take a while to learn and can still be overwhelming for someone who has been enrolled for years. However, understanding just these basic principles will be very helpful.

We are always just a phone call away if you have any questions about how Medicare works. When you are ready to discuss your enrollment, give us a call!

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