Medicare is a low-cost federal health insurance program managed by the federal government with extensive, diverse coverage, making it a must-have for seniors 65 and older. It has four parts, all optional, and can be purchased separately: Medicare Part A, Part B, Part C, and Part D. Part A is designed to be hospital care insurance, Part B provides coverage for medical outpatient services, Part C is known as Medicare Advantage, providing at least the same amount of coverage as it is provided through Original Medicare – Parts A and B, and finally, Part D is known as prescription drug coverage, providing financial help when buying medications.
Parts A and B are considered Original Medicare and it is provided and administered by the federal agency CMS – Center for Medicare and Medicaid Services. Part C or Medicare Advantage is sold and managed by private insurance companies, and its coverage varies from carrier to carrier and from state to state. As for prescription drug coverage, it can be purchased as a stand-alone Part D plan alongside Original Medicare, or it can be purchased as part of the Medicare Advantage bundle.
What Is Medicare Part A
Medicare Part A provides inpatient coverage in a hospital or skilled nursing facility. It also provides coverage for hospice care, home health services, and any treatment or service you get admitted as an inpatient, including surgeries and the hospital’s room and board.
What you pay in premiums depends on when you signed up and how you have worked and paid Medicare taxes. Join during the Initial Enrollment Period, which starts three months before your 65th birthday and ends three months after, to avoid being exposed to a late enrollment penalty fee. You are qualified for premium-free Part A if you have worked for at least ten years while paying Medicare taxes. If not, the Part A premium can be up to $506 in 2023.
As an inpatient, you pay a deductible ($1,600 in 2023) per benefit period, and your coverage kicks in after the deductible has been satisfied.
Your coinsurance is $0 for the first 60 days of your hospital stay. If you stay longer, you pay $389 per day for days 61-90 and then $778 per day for days 91+.
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What Is Medicare Part B
Medicare Part B is outpatient hospital care coverage and covers a broad range of treatments and services, including:
- Medically services that are deemed necessary
- Preventive services
- Mental health services
- Durable medical equipment
- Ambulance services
- Some outpatient prescription drugs
Its costs in 2023 are:
- $164.90 as a monthly premium
- An annual $226 deductible
- Copayment (as set by your insurer)
- Coinsurance (you pay 20% after Medicare covers 80% of the bill for the covered services)
What Is Part C – Medicare Advantage
Medicare Advantage combines inpatient, outpatient, and in some instances, prescription drug coverage and puts them into one plan. But it is not limited only to Part D as an additional benefit. Often there is DHV (dental, hearing, and vision) coverage offered in a Part C bundle, or some other benefit that is not offered by Medicare. It can be purchased by private companies approved by Medicare.
But in general, it covers everything Original Medicare does, plus additional services such as meal preparation and gym memberships.
Medicare Advantage plans have different premiums, as private insurers offer these plans. Premiums are often low, with some being $0. Other than that, your inpatient and outpatient services costs are the same.
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What Is Part D
Medicare Part D provides prescription drug coverage. Each prescription drug plan has different formularies or lists of drugs covered. Your Part D plan will try to find the best cost for your prescribed medications. If your prescription isn’t on the formulary, it will help you find a similar one. In some cases, it is possible to demand the specific medication to be put on the list, but with no guarantee that it would actually happen.
Part D costs in 2023 are:
- $31.50 for the national base beneficiary monthly premium, but premiums will vary across each plan and carrier you want to purchase from
- Part D deductibles also vary, but no Part D plan has an annual deductible any higher than $445
- Coinsurance and copayment amounts are different depending on the plan