Medicare consists of four different types of coverage: Part A, Part B, Part C, and Part D. Each one comes with its own costs and benefits and can be combined to create the right coverage for each beneficiary. If you already have Medicare, your Medicare card will tell you if you have Part A and/or Part B and when your coverage begins.
Part A – Hospital Insurance
Medicare Part A, also known as “hospital insurance,” covers costs relating to a hospital stay. This includes:
- Inpatient care in a hospital
- Inpatient care in a skilled nursing facility
- Nursing home care
- Hospice care
- Home health care
While Medicare Part A does have a monthly premium, most people do not have to pay this premium. If you or your spouse paid Medicare taxes on your income for at least 10 years, then you will not have to pay the premium. If not, the monthly premium can be up to $437 a month (as of June 2019).
Additional costs of Part A include a $1,364 deductible for each benefit period (each time you visit the hospital or skilled nursing facility) and coinsurance. For a hospital stay, the coinsurance costs are as follows:
- Days 1-60: $0 coinsurance for each benefit period
- Days 61-90: $341 coinsurance per day of each benefit period
- Days 91 and beyond: $682 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)
- Beyond lifetime reserve days: all costs
Part B – Medical Insurance
Medicare Part B, or “medical insurance”, covers medically necessary services and preventive services. Medically necessary services are services or supplies that are needed to diagnose or treat a medical condition and can include outpatient doctor visits, wheelchairs, walkers, and tests. Preventive services are those that prevent illness like the flu or detect it at early stages and cover screenings and annual wellness exams. Part B also covers a long list of services, which can be found on the Medicare.gov page and ranges from clinical research and ambulance services to mental health and limited prescription drugs.
The overall cost for Medicare Part B includes the deductible and monthly premium in addition to a 20% copay for the cost of services. The annual deductible for 2019 is $185 and the standard monthly premium is $135.50; however, this increases with your income. There is no cap on the amount you could be subject to pay from the 20% copay. If you receive benefits from a government program, such as Social Security, the premium for Part B is automatically deducted from your benefit payment. The cost of Part B could increase if you do not sign up when you’re first eligible.
Part C – Medicare Advantage Plans
Medicare Part C has a wide range of plan types, but the most common is a Medicare Advantage (MA) plan. These plans are offered by private insurance companies and bundle together Part A and Part B into one plan. They provide the same basic coverage as Parts A and B and can include additional benefits such as hearing, dental, and vision. Medicare Advantage Prescription Drug (MAPD) plans also include Part D prescription drug coverage. To learn more about MA plans, click here.
The costs of MA depend on the type of plan you get and what benefits it includes, such as:
- Whether the plan charges a premium (some have no premium)
- Whether the plan pays any of the Part B premium (some pay all or part of it)
- Whether the plan has a yearly deductible
- How much you pay for each visit/service (copayment or coinsurance)
- Type of healthcare services you need and how often
- Network vs. out-of-network providers
- Yearly limit on out-of-pocket costs
MA plans can change from year to year and beneficiaries can decide to change Medicare Advantage plans if they would like to during the Annual Enrollment Period (October 15 – December 7).
Medicare Supplements are a way to add to Medicare Parts A and B by filling in some of the cost gaps, including copays, coinsurance, and deductibles. They are sold separately by private insurance companies. While you pay a higher monthly premium, the plan covers all other expenses and you will rarely receive any medical bills in the mail.
Supplement plans cannot stand on their own, and you must have Part A and Part B separately. Medicare will pay its share of the bill first (typically 80%) and send the remainder to the insurance carrier with which you have your supplement plan to pay the balance and the deductible. These plans usually cover costs for Medicare approved health services. Supplement plans also do not include Part D coverage, which must be enrolled in separately.
The cost of Medicare Supplement plans also varies depending on the plan and the benefits it offers, like Medicare Advantage plans. The monthly premium for a Medicare Supplement plan is often higher than Medicare Advantage plans.
Part D – Prescription Drug Insurance
Medicare Part D covers prescription drug costs, and anyone who has Medicare Part A and/or Part B can purchase a Part D plan from a private insurance company. Each plan has a prescription drug formulary that tells the beneficiary which drugs are covered. Some Medicare Advantage plans include Part D coverage, in which case it does not need to be purchased separately.
Part D costs can be confusing and include the cost of the plan (monthly premium and deductible) in addition to the amount you pay for each drug. The amount you pay for each drug depends on a number of factors including the retail cost of the drug, which drug tier the medication falls within, and the pharmacy that is filling your prescription. All of these costs vary. Click here for more information on Part D costs.
There is a cost associated with many parts of Medicare and some costs can add up quickly. However, each part also offers benefits that cover a variety of healthcare services. To find the best coverage for the cost of Medicare, talk to a licensed Medicare agent today.