- Original Medicare is comprised of Medicare Part A and Part B.
- It’s available to most people 65 and older and to some younger people with certain conditions and disabilities.
- Part A covers inpatient hospital services, and the monthly premium is free for most people.
- Part B covers medically necessary outpatient and preventive care, but there are are monthly premium costs.
- Any gaps in coverage from original Medicare can be filled by additional parts or plans that are available to buy.
Original Medicare is a federal program that provides healthcare for Americans 65 and older. It also provides coverage for some people with specific conditions and disabilities, regardless of age.
Original Medicare is also sometimes referred to as “traditional Medicare.” It is comprised of two parts, Part A and Part B. Read on to learn what these parts cover, their costs, how to enroll, and more.
Medicare has multiple parts: Part A, Part B, Part C, and Part D. There is also Medigap, which is made up of 10 plans that you can choose from.
Original Medicare only has two parts: Part A and Part B.
Medicare was founded in 1965 as a public health insurance program for older adults. It is managed by the Centers for Medicare & Medicaid Services (CMS).
The main source of funding for Medicare Part A is payroll taxes and taxes on Social Security income. That’s why Medicare Part A is free for most people who have worked, or whose spouses have worked, for at least 10 years.
Part B and Part D are mostly paid for by corporate, income, and excise taxes, as well as the monthly premiums that beneficiaries pay. Medicare Part B and Medicare Part D are voluntary programs and are not free from monthly costs.
Medicare Part A coverage
Medicare Part A covers inpatient hospital services, such as:
- semiprivate rooms
- nursing care
- medications, services, and supplies you need as an inpatient
- inpatient care if you participate in certain clinical research studies
Part A covers inpatient services at these types of facilities:
- acute care hospital
- critical access hospital
- long-term care hospital
- skilled nursing facility
- inpatient rehabilitation hospital
- psychiatric hospital (inpatient mental health care has a 190-day lifetime cap)
- at-home health care
Medicare Part B coverage
Medicare Part B covers medically necessary services such as doctor visits and preventive care. It also covers ambulance services, durable medical equipment, and mental health services.
Part B covers 80 percent of the Medicare-approved costs of services you receive as an outpatient. It also covers some services you might need in a hospital.
Some specific examples of services covered by Medicare Part B include:
- medically necessary care provided by your general practitioner or a specialist
- doctor visits you have as an inpatient within a hospital setting
- outpatient hospital care, such as emergency room treatment
- ambulance transportation
- preventive care, such as mammograms and other types of cancer screenings
- most vaccines, including flu shots and pneumonia shots
- smoking cessation programs
- laboratory tests, blood tests, and X-rays
- durable medical equipment
- mental health care
- some chiropractic services
- intravenous medications
- clinical research
Medicare Part C coverage
Medicare Part C (Medicare Advantage) is optional insurance that is available for Medicare beneficiaries who have parts A and B. Part C plans legally must cover at least as much as original Medicare, as well as extras like vision, dental, and prescription drugs.
Medicare Part D coverage
Medicare Part D covers prescription medications. It is voluntary but beneficiaries are strongly urged to get some type of prescription drug coverage. If you decide you want a Medicare Advantage Part C plan, you do not need Part D.
Medigap (Medicare supplemental insurance) is designed to pay for some of the gaps in original Medicare. It is not actually a part of Medicare. Rather, it is comprised of 10 plans that you may be able to choose from (note that one plan, Plan F, has two versions). These plans vary in terms of availability, cost, and coverage.
The two parts of original Medicare were designed to cover services needed in hospitals and as an outpatient. You might think these two categories cover every imaginable service, but they do not. For that reason, it’s always important to check if the services or supplies you need are covered by Medicare.
Some of the things original Medicare does not cover include:
- shingles vaccine (Part D covers the shingles vaccine)
- most prescription medications
- vision care
- dental care
- custodial (long term) care, such as nursing homes
- services or supplies that are not considered medically necessary
Medicare Part A costs
Most people who are eligible for Medicare are also eligible for premium-free Part A. You will most likely be eligible for premium-free Part A if:
- you are eligible for Social Security retirement benefits
- you are eligible for Railroad Retirement Board benefits
- you or your spouse had Medicare-covered government employment
- you are younger than 65 but have received Social Security or Railroad Retirement Board disability benefits for at least 2 years
- you have end stage renal disease (ESRD) or amyotropic lateral sclerosis (ALS)
If you are not eligible for premium-free Part A, you can purchase it.
Part A monthly premiums range from $252 to $458, based on how much Medicare tax you or your spouse paid while working.
Typically, people who buy Part A must also buy and pay monthly premiums for Part B.
Medicare Part B costs
However, if your income is above a certain amount, you may also pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare looks at the gross income you reported on your taxes from 2 years ago. If your annual income exceeds $87,000 as an individual, your monthly premium may include an IRMAA. Married people with combined incomes over $174,000 also pay higher monthly premiums.
The Social Security Administration will send you an IRMAA letter in the mail if it is determined you need to pay a higher premium.
Original Medicare Costs at a Glance
- Premium-free for most people
- Also available to purchase if you don’t qualify for premium-free Part A
- Monthly premium cost ranges from $252 to $458
- $198 annual deductible (in 2020)
- Typical monthly premium of $144.60
- Some people with higher incomes may also pay an IRMAA on top of their monthly premiums for a combined monthly total ranging from $202.40 to $491.60
Part C, Part D, and Medigap costs
Medicare Part C, Part D, and Medigap all have varying costs based on your county, zip code, and the plan provider you choose.
These plans are purchased through private insurance companies but are required to follow federal guidelines. For that reason, there are caps on associated costs, such as your out-of-pocket maximums, deductibles, and monthly premiums.
For example, for Medicare Part C, your maximum out-of-pocket annual limit for in-network providers is $6,700. If you use both in-network and out-of-network providers, your maximum out-of-pocket annual limit is $10,000.
Many Part C plans have a $0 premium. Others can go as high as $200 a month, or more, which is in addition to your monthly Part B premium.
The national base beneficiary premium for Medicare Part D is $32.74. However, this cost can be higher based on your income. Some Part D plans also have a $0 deductible.
Medicare requires you to use Medicare-approved providers and suppliers when you seek medical care. Most doctors in the U.S. accept Medicare, but there are exceptions. It’s always important to ask if your doctor takes Medicare when you make an appointment.
To be eligible for original Medicare, you must be a U.S. citizen or a permanent U.S. resident who has lived here lawfully for at least 5 consecutive years.
Most people are eligible for Medicare when they are are 65 or older. However, there are exceptions. Some people who are under 65 are eligible if they or their spouse have received disability benefits from Social Security or Railroad Retirement Board for at least 24 months.
You can enroll for Medicare online at www.socialsecurity.gov. You can also enroll by calling Social Security at 1-800-772-1213. TTY users can call at 1-800-325-0778. If you prefer to enroll in person, you can do so at your local Social Security office. Call first to see if an appointment is required.
Important Dates for Enrollment
- Original (initial) enrollment: Your initial enrollment period lasts for 7 months. It starts 3 months before you turn 65, the month of your birthday, and ends 3 months after your birthday.
- Medigap enrollment: This starts 6 months after the first day of the month that you apply for Medicare or turn 65. If you miss this enrollment period, you may pay higher premiums or may not be eligible for Medigap.
- General enrollment: You can sign up for original Medical and Medicare Advantage plans annually from January 1 through March 31.
- Medicare Part D enrollment: This takes place annually from October 15 to December 7.
- Plan change enrollment: You can change your current Medicare Advantage or Part D plan during open enrollment between January 1 and March 31 or October 15 to December 7.
You may be able to apply late for original Medicare if you waited to sign up because you were employed and had health insurance. This is referred to as the Special Enrollment Period.
The size of your company will determine your eligibility for special enrollment. If you qualify, you may apply for original Medicare within 8 months after your current coverage ends or for Medicare parts C and D within 63 days after your coverage ends.
Part D plans can be changed during special enrollment periods if:
- you moved to a location not served by your current plan
- your current plan has changed and no longer covers your county or zip code area
- you moved into or out of a nursing home
Determining your current and anticipated medical needs can help you create a roadmap to help you choose coverage. Consider the following issues as you decide:
- Prescription drugs. Even though Medicare Part D is voluntary, it is important to consider your prescription medication needs. Signing up for Part D, or for an Advantage plan that includes medications, may save you money in the long run.
- Vision and dental needs. Because these aren’t covered by original Medicare, it may make sense for you to buy a plan that provides this coverage.
- Budget. Plan out your anticipated monthly and annual budget after retirement. Some plans have low monthly premiums, which make them attractive. However, these plans often have higher copays. If you have a lot of doctor appointments during an average month, add up what your copays will be with a $0 premium plan before you buy.
- Chronic conditions. Keep in mind any known chronic condition or one that runs in your family, as well as upcoming procedures you know will be needed. If you are comfortable using in-network doctors, going with a Medicare Advantage plan might make the most sense for you.
- Travel. If you travel extensively, opting for original Medicare plus Medigap may be a good option. Many Medigap plans pay for a large portion of emergency medical services you may need when traveling outside the U.S.
Original Medicare is a federal program that is designed to provide healthcare for Americans 65 years and older and for those with certain disabilities who are under 65.
Many people might assume that Medicare is free, but unfortunately, that is not the case. However, there are affordable options within Medicare that can fit into most budgets.