Medicare Parts A, B, C, and D Explained
Figuring out how Medicare works feels a little like learning the alphabet for the first time.
There are the four general parts of Medicare: A, B, C, and D. Then you have the 10 types of Medicare supplement plans: A, B, C, D, F, G, K, L, M, and N.
As confusing as that might seem, it's important to take the time to educate yourself. Medicare’s parts and supplement plans cover different things. They have different costs; participating doctor and hospital networks; availability; and other rules. You'll most likely be enrolled in multiple parts and/or plans at the same time. Getting familiar with them lets you choose the best health insurance for your needs.
Medicare Parts A and B are run by a federal agency called the Centers for Medicare and Medicaid Services. Together, these two parts are known as Original Medicare. With Original Medicare, you can see any doctor or hospital anywhere in the country -- as long as they participate in the program and are accepting new Medicare patients. If you see a non-participating doctor, your out-of-pocket expenses go up.
Most people sign up for Original Medicare during their initial enrollment period. This is the 7-month period that starts 3 months before the month of your 65th birthday and ends 3 months after.
OK, how about Part A specifically? This is Medicare’s program for illness or injury serious enough to need care in a hospital or other health care facility. Generally, Part A covers:
A hospital stay that a doctor says is needed
A stay in a skilled nursing facility or nursing home when that care is short-term, ordered by a doctor, and follows a hospital stay
Home health care for services your doctor orders, like physical, occupational, and speech therapies
Hospice care when doctors certify that you're expected to die within 6 months
Most people can get Part A without paying a premium. If you or your spouse paid Medicare taxes for at least 10 years, you qualify for no-premium coverage. You also qualify if you get retirement benefits from Social Security or the Railroad Retirement Board.
Part A is not going to cover your long-term care costs unless they are really medically necessary.
If not, you can buy coverage. Your premium amount varies, depending on how long you paid Medicare taxes while you worked. You'll also pay a deductible. After that, you're responsible for a share of costs (this is called coinsurance).
While Part A is meant for inpatient care, don't make the mistake of thinking that it will pay for assisted-living care or long-term care that wasn't ordered by your doctor.
Part B is Medicare’s coverage for doctor visits, tests, and other outpatient services. It covers medically necessary services and some preventive ones, like checkups. It also may pay for:
· Participation in a clinical research study
· Ambulance rides (including some nonemergency trips)
· "Durable" medical equipment like walkers or oxygen tanks
· Mental health services
· Certain prescription drugs that are usually given by a doctor or at a hospital
· A premium that can increase with your income
· A deductible
· Typically, 20% of the costs for each medical service (as coinsurance)
· This raises an important point: Original Medicare may be run by the government, but that doesn’t mean it’s free to you.
Also, keep in mind that parts A and B don’t cover most dental care, eye exams, hearing aids or exams to fit them, cosmetic surgery, acupuncture, or routine foot care. Parts A and B also don’t cover most prescription drugs. You need to enroll in a Part D or Medicare Advantage plan for that.
If you want extra services like those -- and are willing to pay more to get them -- Part C, or a Medicare Advantage plan, may be for you.
These plans are basically another way to get your Medicare benefits. They're sold by private insurance companies that are approved by Medicare.
The plans must at least offer you the same benefits as Part A and Part B. The private insurers then add extra services. In addition to vision, dental, and hearing services, these sometimes include things like:
· A wellness program
· Adult day-care services
· Transportation to doctor visits
· Most also offer the prescription drug coverage you'd otherwise get through Medicare Part D (more on that later).
With Part C, the government pays the insurance company a fixed amount per month for your care. But the company sets your out-of-pocket costs. You also deal with deductibles and coinsurance, just as you did with your employer’s insurance.
Some Medicare Advantage plans also charge monthly premiums. If you enroll in one of these, you may pay that on top of your Part B premium. Some plans, though, cover all or part of your Part B premiums. You might hear this called the "give-back benefit."
· You can choose among several types: Health maintenance organizations (HMOs), preferred provider organizations (PPOs), private fee-for-service (PFFS) plans, and special needs plans (SNPs). Each operates a bit differently.
· You may need a referral to see a specialist, or preauthorization for certain services.
· Medicare Advantage plans generally have smaller networks of doctors and hospitals than Original Medicare does. And people in rural areas may have fewer plans to choose from.
· Your Medicare Advantage insurer can make changes to your out-of-pocket fees as often as once a year.
· You can’t enroll in Medicare Advantage and buy a private Medicare supplement (Medigap) plan at the same time.
Maybe you don't want to sign up for a Medicare Advantage plan, or the plans in your area don't offer the kind of drug coverage you need. You’ve got one more option to explore: a private insurance company’s Part D plan.
All Part D plans must offer a range of prescription drugs that people with Medicare often take, plus more specialized medications like cancer drugs and insulin. Each Part D plan publishes a list of its covered drugs, called a formulary. In each formulary, drugs are organized into different levels with varying costs.
· You must have Part A and Part B coverage to enroll in one.
· Drug coverage is optional. But if you don't sign up for Part D when you first enroll in Medicare, you may pay penalties for joining later on.
· If you get drug coverage through your Medicare Advantage plan, you don't need a separate Part D plan.
Medigap, or Medicare supplement, plans are extra insurance to pay for all or part of the deductibles, coinsurance, and copayments you have with Original Medicare. You buy them from private insurance companies.
There are 10 Medigap plans, which vary in what and how much they cover. Each is identified by a letter: A, B, C, D, F, G, K, L, M, and N. They're standardized, which means a Plan A offered by one company has the same benefits as a Plan A sold by another one. Your premiums may differ, though. To find out what benefits are offered under each plan, go to the Medicare website.
Each insurance company decides which Medigap plans it wants to sell, although some states’ laws require them to offer certain plans there.
· You'll still pay your Part B premiums, along with your Medigap premiums.
· Each policy covers just one person. Your spouse will need a separate one if you both want coverage.
· Those sold to people who are newly eligible for Medicare don't cover Part B deductibles. New enrollees haven't been allowed to buy C or F Medigap plans since Jan. 1, 2020.
· The best time to buy one is when you're first eligible. You'll likely face fewer choices and higher prices if you try to get one later on.
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The best time to buy a Medigap policy is during your Medigap Open Enrollment Period.
This period lasts for 6 months and begins on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B.
During this period, an insurance company can’t use medical underwriting to decide whether to accept your application. This means the insurance company can’t do any of these because of your health problems:
• Refuse to sell you any Medigap policy it offers
• Charge you more for a Medigap policy than they charge someone with no health problems
• Make you wait for coverage to start
Why is it important to buy a Medigap policy when I’m first eligible?
When you’re first eligible, you have the right to buy any Medigap policy offered in your state. In addition, you generally will get better prices and more choices among policies. It’s very important to understand your Medigap Open Enrollment Period. Outside of Medigap Open Enrollment, Medigap insurance companies are generally allowed to use medical underwriting to decide whether to accept your application and how much to charge you for the Medigap policy.
However, if you apply during your Medigap Open Enrollment Period, you can buy any Medigap policy the company sells, even if you have health problems, for the same price as people with good health. If you apply for Medigap coverage after your Open Enrollment Period, there’s no guarantee that an insurance company will sell you a Medigap policy if you don’t meet the medical underwriting requirements, unless you’re eligible for guaranteed issue rights.
In most cases, it makes sense to enroll in Part B and buy a Medigap policy when you’re first eligible for Medicare, because you might otherwise have to pay a Part B late enrollment penalty and might miss your 6-month Medigap Open Enrollment Period. However, there are exceptions if you have employer coverage.
If you have group health coverage through an employer or union, because either you or your spouse is currently working, you may want to wait to enroll in Part B. Benefits based on current employment often provide coverage similar to Part B, so you wouldn’t want to pay for Part B before you need it, and your Medigap Open Enrollment Period might expire before a Medigap policy would be useful. When the employer coverage ends, you’ll get a chance to enroll in Part B without a late enrollment penalty which means your Medigap Open Enrollment Period will start when you’re ready to take advantage of it. If you or your spouse is still working and you have coverage through an employer, contact your employer or union benefits administrator to find out how your insurance works with Medicare.
The Open Enrollment Period runs from, November 1 to December 15, If you don't act by December 15, you can't get coverage unless you qualify for a Special Enrollment Period.