- Medicare is a health insurance option available to individuals age 65 and older and those with certain health conditions or disabilities.
- Original Medicare (parts A and B) cover most of your hospital and medical needs.
- Other parts of Medicare (Part C, Part D, and Medigap) are private insurance plans that offer additional benefits and services.
- Monthly and yearly Medicare costs include premiums, deductibles, copayments, and coinsurance.
Medicare is a government-funded health insurance option that is available to Americans who are age 65 and older and those with certain chronic health conditions and disabilities. There are many different options for Medicare coverage, so it’s important to understand what type of coverage each plan can offer you.
In this article, we will explore everything there is to know about the Medicare basics, from coverage, to costs, to enrollment, and more.
Medicare is a government-funded program that provides health insurance to Americans who are age 65 and older. Some individuals who are younger than age 65 and have chronic health conditions or disabilities may also be eligible for Medicare coverage.
Medicare consists of multiple “parts” that you can enroll in for different types of healthcare coverage.
Medicare Part A
Medicare Part A, also known as hospital insurance, covers services you receive when you’ve been admitted to a hospital or other inpatient healthcare facility. There is a deductible to meet and coinsurance fees. You may also have to pay a premium for Part A coverage, depending on your income level.
Medicare Part B
Medicare Part B, also known as medical insurance, covers outpatient preventative, diagnostic, and treatment services related to your health conditions. There is an annual deductible and a monthly premium to cover, as well as some coinsurance costs.
Together, Medicare parts A and B are known as “original Medicare.”
Medicare Part C
Medicare Part C, also known as Medicare Advantage, is a private insurance option that covers both Medicare Part A and Part B services. Most Medicare Advantage plans also offer additional coverage for prescription drugs, vision, dental, hearing, and more. You may pay monthly premiums and copays with these plans, although each has different costs.
Medicare Part D
Medicare Part D, also known as prescription drug coverage, can be added onto original Medicare and helps cover some of your prescription drug costs. You will pay a separate deductible and premium for this plan.
Medigap, also known as Medicare supplemental insurance, can also be added onto original Medicare and helps cover some of your out-of-pocket Medicare costs. You will pay a separate premium for this plan.
Your Medicare coverage depends on which parts of Medicare you are enrolled in.
Part A coverage
Medicare Part A covers most hospital services, including:
- inpatient hospital care
- inpatient rehab care
- inpatient psychiatric care
- limited skilled nursing facility care
- limited home healthcare
- hospice care
Medicare Part A does not cover outpatient hospital services, such as emergency room visits that do not result in inpatient stays. Instead, outpatient hospital services are covered under Medicare Part B.
Part A does not cover most hospital room amenities, private and custodial care, or long-term care.
Part B coverage
Medicare Part B covers medically necessary preventative, diagnostic, and treatment services, including:
- preventive services
- emergency ambulance transportation
- diagnostic services, like blood tests or X-rays
- treatments and medications administered by a healthcare professional
- durable medical equipment
- clinical research services
- outpatient mental health services
Medicare Part B covers a host of preventative services, from disease screenings to mental health screenings. It also covers certain vaccines, including those for the flu, hepatitis B, and pneumonia.
Part B does not cover most prescription drugs and only offers very limited drug coverage.
Part C coverage
Medicare Part C covers everything under original Medicare Part A and Part B. Most Medicare Part C plans also cover:
- prescription drugs
- dental services
- vision services
- hearing services
- fitness programs and gym memberships
- additional health perks
Not all Medicare Advantage plans cover the services above, so it is important to compare your coverage options when shopping around for the best Medicare Advantage plan for you.
Part D coverage
Medicare Part D covers prescription drugs. Each Medicare prescription drug plan has a formulary, or list of approved drugs that are covered. The formulary must contain at least two drugs for each of the commonly prescribed drug categories, as well as:
There are certain prescription drugs that are not covered under Part D, such as those used to treat erectile dysfunction or over-the-counter drugs.
Each prescription drug plan has its own rules, so it’s important to consider this when comparing plans.
There are currently 10 different Medigap plans that you can purchase through private insurance companies. Medigap plans help cover the out-of-pocket costs associated with your Medicare services, which may include:
- Part A deductible
- Part A coinsurance and hospital costs
- Part A hospice coinsurance or copayment costs
- Part B deductible and monthly premium
- Part B coinsurance or copayment costs
- Part B excess charges
- blood transfusions (first 3 pints)
- skilled nursing facility coinsurance costs
- medical costs while traveling outside the United States
It’s important to know that Medigap plans do not offer additional Medicare coverage. Instead, they only help with the costs associated with the Medicare plans you are enrolled in.
Most people are eligible to begin enrolling in original Medicare 3 months before their 65th birthday. However, there are some situations when you may be eligible for Medicare coverage at any age. These exceptions include:
- Certain disabilities. If you receive monthly disability benefits through the Social Security Administration or Railroad Retirement Board (RRB), you are eligible for Medicare after 24 months.
- Amyotrophic lateral sclerosis (ALS). If you have ALS and receive Social Security or RRB benefits, you are eligible for Medicare from the first month.
- End stage renal disease (ESRD). If you have ESRD, you are automatically eligible to enroll in Medicare.
Once enrolled in Medicare parts A and B, eligible Americans can enroll in a Medicare Advantage plan.
Most people who are eligible for Medicare coverage must enroll during the enrollment periods. The periods and deadlines for Medicare enrollment include:
- Initial enrollment. This includes the 3 months before, the month of, and the 3 months after you turn age 65.
- General enrollment. This is from January 1 through March 31 if you missed your initial enrollment period. However, late enrollment fees may apply.
- Special enrollment. This is an option for a certain number of months depending on your reason for qualifying.
- Medigap enrollment. This includes the 6 months after you turn 65 years old.
- Medicare Part D enrollment. This is from April 1 to June 30 if you missed your original enrollment period.
- Open enrollment. You can change your coverage from October 15 to December 7 each year if you want to enroll in, drop, or change a Medicare plan.
You will be automatically enrolled into Medicare parts A and B if:
- you are turning age 65 within 4 months and have been receiving disability benefits
- you are not turning age 65 but have been receiving disability benefits for 24 months
- you are not turning age 65 but have been diagnosed with ALS or ESRD
For individuals who are not automatically enrolled into Medicare, you’ll need to enroll through the Social Security website. If you do not sign up during the enrollment periods, there are penalties for late enrollment.
Your Medicare costs will depend on what type of plan you have.
Part A costs
Medicare Part A costs include:
- Part A premium: as low as $0 (premium-free Part A) or as high as $471 per month, depending on how long you or your spouse has worked over your lifetime
- Part A deductible: $1,484 per benefit period
- Part A coinsurance: ranging from $0 to the full cost of services depending on the length of your stay
Part B costs
Medicare Part B costs include:
- Part B premium: starting at $148.50 per month or higher, based on your income
- Part B deductible: $203 per year
- Part B coinsurance: 20 percent of the Medicare-approved amount for covered Part B services
Part C costs
You will still pay the original Medicare costs when you enroll in Medicare Part C. Medicare Advantage plans may also charge plan costs, which can include:
- monthly premium
- yearly deductible
- prescription drug deductible
- copayments and coinsurance
These Medicare Advantage plan costs can vary based on where you live and the insurance provider you choose.
Part D costs
You will pay a separate premium for a Medicare Part D plan, as well as copayments for your prescription drugs. These copayment amounts vary based on which formulary “tier” your prescription drugs fall into. Each plan has different costs and drugs included in their tiers.
You will pay a separate premium for a Medigap policy. However, keep in mind that Medigap plans are intended to help offset some of the other original Medicare costs.
Some of the ways to pay your Medicare bill each month include:
- Medicare’s website, with a debit or credit card
- by mail, using a check, money order, or payment form
Another way to pay your Medicare bill is called Medicare Easy Pay. Medicare Easy Pay is a free service that allows you to pay your monthly Medicare Part A and Part B premiums through automatic bank withdraws.
If you are enrolled in Medicare parts A and B, you can find out more about how to enroll into Medicare Easy Pay by clicking here.
Medicare is the government-funded health insurance program available to Americans age 65 and older and those with certain conditions or disabilities.
Medicaid is the government-funded health insurance program available to qualifying Americans with low income.
You may be eligible for both Medicare and Medicaid coverage. If this happens, Medicare will be your primary insurance coverage and Medicaid will be your secondary insurance coverage to help with costs and other services not covered by Medicare.
Medicaid eligibility is decided by each individual state and is based on the following criteria:
- yearly gross income
- household size
- family status
- disability status
- citizenship status
You can see if you’re eligible for Medicaid coverage by contacting or visiting your local social services office for more information.
Medicare is a popular health insurance option for Americans who are age 65 and older or have certain disabilities. Medicare Part A covers hospital services, while Medicare Part B covers medical services.
Medicare Part D helps cover prescription drug costs, and a Medigap plan helps cover Medicare premium and coinsurance costs. Medicare Advantage plans offer the convenience of all the coverage options in one place.
To find and enroll in a Medicare plan in your area, visit Medicare.gov and use the online plan finder tool.
This article was updated on November 18, 2020, to reflect 2021 Medicare information.
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