Whether your 65th birthday is on the horizon or in the review mirror, revisiting the fundamentals of Medicare is critical in understanding the benefits, especially with the ever-changing health insurance options. Medicare is no longer a one-time retirement decision and should be considered annually during open enrollment, which runs between October 15th and December 7th.
What is Medicare?
Medicare is a government-funded national health insurance program that was established in 1966. It is designed to offer coverage to individuals 65 or older, those under 65 with qualifying disabilities, and those with end-stage renal disease (ESRD).
Medicare is broken down into several parts that cover specific services identified by the letters A, B, C, and D. Let’s discuss the different parts of Medicare to help you determine what plans will work for you and your healthcare needs.
Parts A and B:
The two main components of Medicare are A, covering hospital insurance, and B covering medical insurance.
Part A covers hospital-related expenses such as:
- In-patient hospital care
- Skilled nursing facility costs
- Lab tests
- Some home health care services.
Most beneficiaries don’t pay Part A premiums out of pocket if they or their spouse paid Medicare taxes while working, however, annually adjusted deductibles still apply. In 2022, the current in-patient hospital deductible is $1,556 per visit. It is important to note there is no limit to the number of benefit periods you can have in one year, meaning you may have to pay the deductible more than once a year.
You should know that Medicare Part A will only cover a maximum of 100 days of nursing home care (provided certain conditions are met). Under the current Part A rules, you would pay $0 for days 1-20 of care in a skilled nursing facility (SNF). During days 21-100, a $176 daily coinsurance payment may be required.
Realizing the limitations of Part, A, some people look for other choices when it comes to managing the costs of extended care.
Part B covers medical insurance expenses such as:
- Physicians’ fees
- Outpatient hospital care
- Certain home health services
- Durable medical equipment
- Some offerings not covered by Medicare Part A
Part B is not free. Premiums vary according to the Medicare recipient’s income level and are adjusted annually. In 2022, The standard monthly premium is $170.10, with a yearly deductible of $233.
You might also pay a monthly penalty if you don’t sign up for Part A or Part B when you’re first eligible for Medicare, which is normally when you turn 65.
Part C: Medicare Advantage
Medicare part C is often referred to as Medicare Advantage (MA) and are often viewed as an all-in-one alternative to Original Medicare.
MA plans are offered by private companies approved by the federal government. Although these plans come with standardized minimum coverage, the additional protection can differ drastically from one person to the next. This is due to unique provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits.
If you are interested in obtaining a MA plan, you should compare prices and services offered by different vendors.
Part D: Prescription Drug Coverage
While MA plans often offer prescription drug coverage, insurers also sell federally standardized Medicare Part D plans as a standalone product to those with Medicare part A and B.
Every part D plan has its list of covered mediations. If you are interested in obtaining a Part D plan, Medicare’s website offers the formulary of approved drugs and prices, organized by tiers.
Since Medicare is no longer a one-time decision, a recap on the basics of benefits is nice, especially before you start considering your new options during open enrollment. If you need help deciding if you should change your Medicare Coverage check out our quick flowchart to help evaluate your options.
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