Medicare is a federal health insurance program paid for in part by your income tax and the FICA tax that is deducted from your paycheck.
The term “Medicare” usually refers to combined Medicare Parts A and Part B, also known as Original Medicare.
Original Medicare covers most healthcare services and medical procedures that are widely accepted by the medical community as necessary to treat an illness.
Part A covers hospital and other inpatient health care, as well as services provided in a skilled-care nursing facility, home health, and hospice. You are required to pay any deductible and copayment for your inpatient care. Deductibles are capped within benefit periods, but copayments may apply to many provided services.
Part B covers doctors’ services, outpatient care, and medical equipment. After you pay the Part B annual deductible, Part B will pay 80% of the covered costs. You are responsible for the remaining 20%, known as Part B’s “coinsurance”.
A Benefit Period is the length of time involved in a single inpatient medical occurrence. For example, the first day of an inpatient hospital stay begins a benefit period.
A Benefit Period ends when you have not received inpatient, or skilled nursing facility, care for 60 consecutive days.
Although there are ceilings on amounts paid by Medicare during any Benefit Period, there is no overall lifetime limit on Benefit Periods. Each separate Benefit Period renews Medicare’s obligation to pay its share of the costs of care, as well as renewing the patient’s deductible and copayment responsibilities for that new period.
NO. Unlike most private or employer-sponsored health plans, Original Medicare has no network restrictions. You are free to choose any doctor, hospital, or other medical provider that you wish, anywhere that you wish, as long as they accept Medicare. Before making an appointment, simply ask the facility if they accept Medicare.
YES. In addition to Original Medicare’s Part A and Part B, there are Parts C and D.
Part Cis known as the private insurance option. Private insurance companies contract with Medicare to provide “Medicare Advantage” plans that are regulated by the federal government. They cover all services covered by Original Medicare, except for hospice care. (When you enroll in a Medicare Advantage plan, Original Medicare will still cover your hospice care.) Many also cover services not covered by Original Medicare, such as vision or dental care.
Part D helps with prescription drug costs.
There are private insurance Medicare supplement plans known as MEDIGAP plans.
There are broad-coverage, private insurance plans known as MEDICARE ADVANTAGEplans.
For extra Medicare coverage, you can select one of the two types of plans. You are not permitted to enroll in both a Medigap and a Medicare Advantage plan. You must choose one or the either.
MEDIGAP is a private insurance supplement plan that covers most, or all, of your copayments not covered by Original Medicare.
Because MEDIGAP plans still entitle you to receive services from any doctor or any hospital that accepts Medicare, these plans usually have a substantially higher monthly fee than Medicare Advantage plans.
MEDICARE ADVANTAGE plans are private insurance plans that incorporate the coverages of Original Medicare’s Parts A and B, usually with prescription drug coverage, and sometimes with other coverages as well.
Because MEDICARE ADVANTAGE plans work within networks of doctors and hospitals, they usually have a significantly lower monthly plan fee than Medigap plans.
To see how a Medigap plan works, please see here.
To see how a Medicare Advantage plan works, please see here.
Medicare Part A:
No monthly fee, but deductible and copayment obligations, with no annual or lifetime out-of-pocket limits for patients.
(Must meet an age or disability requirement to qualify for Part A)
(Must meet the “length of work” requirement to qualify for the no-premium plan. People who have been working and paying income taxes for a least 10 years usually qualify for no-premium Part A coverage.)
Medicare Part B:
Moderate monthly fee plus deductible and copayment obligations, with no annual or lifetime out-of-pocket limits for patients.
(Must qualify for Part A to get Part B)
Medicare Part D:
Small to significant monthly fee (depending upon plan) plus deductible and copayment obligations, with high annual out-of-pocket limits for patients.
(Must have Part A and/or Part B to get Part D)
Medigap Supplement Plan:
Significant monthly fee with limited or no copayment obligations. If you enroll in Medicare for the first time during or after the year 2020, the most comprehensive coverage policy you can get is Medigap Plan G, which covers all services Medicare covers, except for the $203 Part B annual deductible.
You must have Part A and Part B to get a Medigap Supplement plan. Part D is also recommended because Medigap plans do not cover prescription drugs.
(When you add a Medigap plan to your Medicare coverage, you may not also enroll in a Medicare Advantage plan.)
Medicare Advantage Plan:
Small to no monthly fee plus deductible and copayment obligations, with an annual out-of-pocket limit for patients and likely no need to pay separately for Part D prescription drug coverage.
(Certain locations, such as the Bay Area, may have higher Medicare Advantage Plan costs than other geographic areas.)
You must have Part A and Part B to get a Medicare Advantage Plan.
(When you enroll in a Medicare Advantage plan, you may not enroll in a Medigap plan at the same time.)
NO. Original Medicare Parts A and B do not cover prescription drugs that are taken at home.
YES. Original Medicare does, however, cover drugs that you receive in a hospital or in a skilled nursing facility. It also covers a limited range of other drugs, most of which are injectable medications that you may receive at your doctor’s office or at a clinic.
Unless your current or former employer continues to provide you with prescription drug coverage after you have enrolled in Medicare, you must enroll in Medicare Part D to get prescription drug coverage.
Part D provides prescription drug insurance plans run by private insurance companies and regulated by the federal government to ensure that the drug plans meet certain consumer-friendly standards.
Part D plans do not have a maximum out-of-pocket limit, but when your out-of-pocket costs for the prescription drugs covered by your plan exceeds certain limits, the costs of all drugs covered by your plan are likely to be substantially reduced.
YES. Part D is a recommended addition for MEDIGAP plans. Even if you supplement your Original Medicare coverage with a Medigap (Medicare supplement) plan, you should consider enrolling in Part D, because, like Parts A and Part B in Original Medicare, Medigap plans do not cover prescription drugs.
LIKELY NOT. Part D is seldom necessary with MEDICARE ADVANTAGE plans.
When you join a Medicare Advantage plan, especially when you are in the Bay area, prescription drugs are usually covered by the plan, eliminating the need to enroll in a standalone Medicare Part D plan.
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