Part A covers hospital stays, care in a skilled nursing facility, hospice case, and some home health care. Most of the time Part A does not cost anything. You are eligible at no cost at age 65 if you or your spouse has worked for at least 10 years in the United States. If you haven’t worked for 10 years, you can still purchase Part A coverage. If you have already enrolled in Social Security, you will be automatically enrolled in Part A. If not, you will need to contact the Social Security office to enroll.
Part A Costs
Part A coverage and costs are based on benefit periods. A benefit period begins the day you are admitted to the hospital, and it ends when you have been out of the hospital for 60 consecutive days.
For each benefit period, you must pay a deductible before Part A starts to pay a share of your costs. You pay only one deductible each benefit period, even if you had more than one hospital stay.
Home hospice patients may pay a small coinsurance amount for inpatient respite care or durable medical equipment used at home.
There is no copay for hospital stays up to 60 days and skilled nursing facility stays up to 20 days in one benefit period. Copays for longer stays may be assessed.
What is Medicare Part B?
Part B is outpatient medical coverage. Part B helps pay for medically necessary services performed on an outpatient basis that are needed to diagnose and treat a medical condition. Surgeries, lab work, and preventative services are all covered under part B. The same eligibility for Part A applies for Part B, however, there is a monthly premium.
Part B costs
Part B charges a monthly premium. The amount you pay can vary depending on your taxable income from two years prior to the current year. Part B premium is deducted from your monthly Social Security check, or you pay Medicare directly.
You must pay an annual deductible before Part B starts paying a share of your costs.
You typically pay a coinsurance of 20% of the Medicare-approved amount for Medicare covered services. Medicare pays the remaining 80%.
Part B may charge a premium penalty if you don’t sign up when you are first eligible. You could pay an additional 10% of the premium amount for each full 12-month period enrollment is delayed. The penalty is charged every month for as long as you have Part B.
What is Medicare Part C?
This plan is also called Medicare Advantage (MA). It is an alternative benefit form of Original Medicare offered by private insurance companies approved by Medicare. In addition to Part A and Part B benefits, Medicare Advantage plans may include prescription drug coverage, along with other benefits, such as dental, vision, hearing, and wellness benefits like gym memberships.
Part C costs
Medicare Advantage plan costs vary with each plan provider. Medicare Advantage plans frequently have a $0 monthly premium. You will continue to pay your Part B premium directly to Medicare, and your Part A premium too, if you have one.
Some Medicare Advantage plans may charge premiums, deductibles, copays, or coinsurance. Plan premiums can change each year. Copay amounts and coinsurance may vary based on the provided service. Deductibles may be applied to prescription drug benefits and not medical benefits when a plan covers both.
Medicare Advantage plans have a built-in mechanism to limit your financial exposure called maximum out-of-pocket (MOOP). This puts a cap on your out-of-pocket costs for the year. The amount varies by plan but can never exceed the annual limit set by Medicare.
Types of Medicare Advantage plans
· Health Maintenance Organization (HMO)
· Preferred Provider Organization (PPO)
· Special Needs (SNP)
· Point of Service (POS)
· Private-Fee-For-Service (PFFS)
· Medical Savings Account (MSA)
HMO, PPO, SNP, and POS plans are coordinated care plans and typically come with rules about providers and seeking care within a contracted network of doctors and hospitals.
What is Medicare Part D?
Medicare Part D is also known as prescription drug coverage. Part D coverage is available as a stand-alone option (PDP) or as part of a Medicare Advantage plan. Part D plans are offered by private insurance companies contracted and approved by Medicare. Your choices vary depending on where you live. All prescription drug plans are required to meet the same basic guidelines created by Medicare, but not all plans are the same.
Every prescription drug plan has a drug list known as a formulary, that lists all the brand name and generic medication it covers. Most formularies categorize medications within their list into tiers based on how much they cost. Covered medications and costs vary from plan to plan.
Part D Costs
There are several costs you may pay: a monthly premium, a deducible, copay and coinsurance. These costs vary by plan and provider since each plan sets their own cost sharing amounts. Stand-alone prescription drug plans charge a premium, and the amount will vary based on the plan. Some plans may charge a deductible and others will not. Medicare sets a maximum annual deductible amount each year. Most plans require a copay each time you fill a prescription for a covered medication. Copays also
will vary between plans. Certain medications or drug tiers may require a coinsurance payment each time you fill your prescription.
There are four cost stages to Part D coverage. You pay a share of the cost of your medications in each stage up to a limit. You may not reach all the stages and the cycle restarts each year.
· Annual Deductible – You pay for your medications until you reach the plan deductible. If your plan doesn’t have an annual deductible, your coverage starts with the first prescription you fill.
· Initial Coverage – You pay a copay or coinsurance for your prescriptions and your plan pays the rest. You stay in this stage until your total drug costs reach the limit set by Medicare each year.
· Coverage Gap (Donut Hole) – You pay 25% of the cost for both brand-name and generic drugs during this stage. You stay in this stage until you reach your total out-of-pocket costs established by Medicare each year.
· Catastrophic Coverage – You pay a small copay or coinsurance amount for your prescriptions. You stay in this stage for the remainder of the year.
It is important that you enroll in Part D coverage when you are first eligible. If you fail to do so, you could pay an additional 1% of the average Part D plan premium for each month you delay enrollment. The penalty is charged every month for as long as you are enrolled in Part D.
What is Medicare Supplement Insurance (Medigap)?
Medicare Supplement Insurance (Medigap) plans are offered by private insurance companies but are standardized by the federal government. Each plan is labeled with a letter, and all plans with the same letter offer the same benefits nationwide. You can request to enroll in a Medigap plan at any time, but it is possible you can be denied coverage or charged a higher premium based on your health history if you enroll after your Medicare Supplement Open Enrollment Period.
Medigap plans help pay some of the out-of-pocket expenses not covered by Part A and Part B. All Medigap plans include full or partial coverage for:
· Part A hospital coinsurance
· Part B coinsurance or copays
· Cost of blood transfusions (first 3 pints)
· Costs for 365 extra hospital days
· Hospice care coinsurance
Some Medigap plans also help pay for:
· Part A deductible
· Part A skilled nursing facility care coinsurance
· Part B deductible (Not available to beneficiaries newly eligible for Medicare after January 2020)
· Part B excess charges
· Cost of foreign travel emergency care up to plan limits
Medigap plans set their own premiums. Typically, the more generous the coverage, the higher the premium. Different plans will pay differently for various health care service and items. The level of coverage and what you will pay varies by plan. Some plans share certain costs with you up to a set limit. Others leave certain costs for you to pay on your own.