• Medicare coverage is divided into several parts that each cover a different aspect of care.
  • Medicare Part A covers inpatient care and is often premium-free.
  • Medicare Part B covers outpatient care and has an income-based premium.
  • Medicare Part C (Medicare Advantage) is a private insurance product that combines parts A and B with additional benefits.
  • Medicare Part D is a private insurance product that covers prescription drugs.

Medicare provides healthcare coverage to people over age 65 and those with disabilities or certain health conditions. This complex program has many parts, and it involves the federal government and private insurers working together to offer a wide variety of services and products.

Original Medicare is made up of parts A and B. This coverage allows you to go to doctors and facilities that accept Medicare without getting permission or prior approval from your plan. Premiums and copayments apply, but they’re usually income-based and may be subsidized.

Medicare Advantage (Part C) plans are private insurance plans. These plans combine multiple elements of Medicare, like parts A and B, with other services, such as prescription, dental, and vision coverage. They offer more services, but they might cost more and come with network restrictions.

While Medicare’s many options give you flexibility in your healthcare coverage, it also means you have to navigate through and understand a lot of information.

Read on for a detailed breakdown of the different parts of Medicare and how they can help you.

Medicare Part A is the part of original Medicare that covers your hospital costs and other inpatient care. Most people do not pay a monthly premium for Part A because they paid into the program through taxes during their working years.

Specifically, Medicare Part A will cover:

  • inpatient hospital stay
  • limited stay in a skilled nursing facility
  • stay in a long-term care hospital
  • nursing home care that is not long-term or custodial
  • hospice care
  • part-time or intermittent home healthcare

To ensure that Medicare covers your stay, you must:

  • have an official order from your doctor stating that you need the care for an illness or injury
  • make sure the facility accepts Medicare
  • ensure you have days left in your benefit period to use (for skilled nursing facility stays)
  • confirm that Medicare and the facility approve the reason for your stay

Under Medicare Part A, you can expect to pay the following costs in 2021:

  • no premium if you worked at least 40 quarters (10 years) in your lifetime and paid Medicare taxes (you’ll pay up to $471 per month if you worked less than 40 quarters)
  • a $1,484 deductible for each benefit period
  • daily coinsurance costs based on the the length of your inpatient stay: $0 for days 1 to 60, $371 per day for days 61 to 90, and $742 per day for days 91 and beyond
  • all costs if you are in the hospital for more than 90 days in one benefit period and you have exceeded your 60 lifetime reserve days

Medicare Part B is the part of original Medicare that covers the costs of your outpatient care. You’ll pay a monthly premium for this coverage based on your income level.

Medicare Part B will cover the cost of things like:

To be sure Medicare Part B covers your appointment, service, or medical equipment, ask if your doctor or service provider accepts Medicare. You can also use the Medicare coverage tool to determine whether your appointment or service is covered.

Under Medicare Part B, you can expect to pay the following costs in 2021:

  • a premium of at least $148.50 per month (this amount increases if your individual income is above $88,000 per year or $176,000 per year for married couples)
  • a $203 deductible for the year
  • 20 percent of Medicare-approved amounts after your deductible is met for the year

Medicare Part C (Medicare Advantage) is a private insurance product that gives you all the coverage of Medicare parts A and B, plus extra services.

Most of these plans offer prescription coverage in addition to inpatient and outpatient services. Benefits like dental and vision coverage can be added too.

You can customize your Medicare Advantage plan based on what the company that administers your plan offers and what you want to pay.

Medicare will pay a set amount each month to your Medicare Advantage plan provider to contribute to a share of your coverage.

Medicare Part C plans usually fall into a few different classifications:

  • Health Maintenance Organization (HMO) plans require that you receive nonemergency care from specific providers within your plan’s network.
  • Preferred Provider Organization (PPO) plans allow you to use providers either within or outside of your network, but you do pay less for in-network care.
  • Private Fee-for-Service (PFFS) plans also allow you to see providers that are either within or outside of the plan’s network; however, the plan sets rates for what it will pay for its member services and what your share will be.
  • Special Needs Plans (SNPs) are Medicare Advantage plans created for people with certain diseases or conditions. These plans tailor services and coverage to your specific situation.

Medicare Part C costs vary depending on the plan type and insurance provider you choose.

Medicare Part D is a plan that offers coverage for prescription medications.

This is an optional Medicare program, but if you don’t enroll when you’re first eligible, you may pay penalties when you do sign up later. Those penalties will apply for as long as you have a drug plan and will be added to the cost of your monthly premium.

Prescription medication coverage must be offered at a standard level set by Medicare. But different plans can choose which medications they list in their drug lists, or formularies. Most prescription drug plans group covered medications by:

  • formulary, which is a list of prescription medications covered in the plan – typically with at least two choices for each drug class or category
  • generic medications that may be substituted for brand-name medications with the same effect
  • tiered programs that offer various levels of medications (generic only, generic plus name brand, and so on) for a range of copayments that increase with your medication prices

The cost of Medicare Part D plans depend on which plan you choose and what medications you need. You can compare the cost of various Medicare prescription drug plans online by clicking here.

Medicare supplement insurance, or Medigap, plans are private insurance products meant to help cover costs not paid for by Medicare parts A, B, C, or D. These plans are optional.

Medigap plans can help cover Medicare expenses like:

  • copayments
  • coinsurances
  • deductibles

A few major changes were made to the Medigap program in 2020.

Medigap plans can no longer be used to pay for the Medicare Part B deductible. This means that two types of Medigap plans – Plan C and Plan F – stopped being sold to new members as of January 1, 2020. People who already had these plans, however, are able to keep their coverage.

Medigap plans may not cover all out-of-pocket costs, but you can find the one that best suits your financial and health needs. You have a variety of plans and coverage levels to choose from.

Here’s an overview of what each of the 10 Medigap plans cover:

Medigap planCoverage
Plan AMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, and hospice care coinsurance or copayments
Plan BMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, and your Part A deductible
Plan CMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, skilled nursing facility coinsurance, your Part A deductible, your Part B deductible*, and foreign travel exchanges up to 80%
Plan DMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, coinsurance for skilled nursing facilities, your Part A deductible, and foreign travel exchanges up to 80%
Plan FMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, coinsurance for skilled nursing facilities, your Part A deductible, your Part B deductible*, Part B costs that your provider charges beyond what Medicare allows (excess charges), and foreign travel exchanges up to 80%
Plan GMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, coinsurance for skilled nursing facilities, your Part A deductible, Part B costs that your provider charges beyond what Medicare allows (excess charges), and foreign travel exchanges up to 80%
Plan KMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, 50% of Part B coinsurance or copayments, 50% of the cost of the first 3 pints of a blood transfusion, 50% of hospice care coinsurance or copayments, 50% of coinsurance for skilled nursing facilities, 50% of your Part A deductible – with an out-of-pocket limit of $6,220 for 2021
Plan LMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, 75% of Part B coinsurance or copayments, 75% of the cost of the first 3 pints of a blood transfusion, 75% of hospice care coinsurance or copayments, 75% of coinsurance for skilled nursing facilities, 75% of your Part A deductible — with an out-of-pocket limit of $3,110 for 2021
Plan MMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, coinsurance for skilled nursing facilities, 50% of your Part A deductible, and foreign travel exchanges up to 80%
Plan NMedicare Part A coinsurance and the costs of 365 days’ worth of care after Medicare benefits are exhausted, Part B coinsurance or copayments, the first 3 pints of a blood transfusion, hospice care coinsurance or copayments, coinsurance for skilled nursing facilities, your Part A deductible, and foreign travel exchanges up to 80%

*After January 1, 2020, people who are new to Medicare can’t use Medigap plans to pay the Medicare Part B deductible. But if you’re already enrolled in Medicare and your plan currently pays it, you can keep that plan and the benefit.

It can take time and effort to sift through the many types of Medicare plans. But these options give you more choices when it comes to coverage and the cost of your healthcare.

When you’re first eligible for Medicare, be sure to review all its parts to find the best fit for you and avoid penalties later.

This article was updated on November 17, 2020, to reflect 2021 Medicare information.

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