Fortunately, we can break this down to make it simpler for you to understand. Medicare itself has different parts (not plans), so let’s start with those 4 parts of Medicare explained.
There are four main Medicare parts to know: Part A, Part B, Part C, and Part D.
Medicare Part A
PART A of Medicare is your hospital insurance. This part of Medicare provides you a semi-private room for your hospital stay and with meals and medical services while you are in the hospital. It also helps cover common hospital expenses for services. A few such examples are hospice, home health care and skilled nursing facilities, as well as blood transfusions requiring more than three pints of blood.
Part A is premium-free for most people as long as they have worked at least 10 years (or 40 quarters) and paid into social security in the United States, or are married to someone who is at least 62 and has worked for that amount of time.
Sometimes particularly healthy people wonder if they may need only Part A. Perhaps they don’t use many medical services yet and so they wonder if they can get away with Part A alone. They do not take into account that there are many things that happen in a hospital that fall under another part of Medicare – Part B, so it’s important that you enroll in both A & B unless, you have other coverage coordinating with Medicare such as VA insurance.
Medicare Part B
PART B of Medicare is for outpatient services that are deemed medically necessary. Medicare Part B includes coverage for services like doctor office visits, lab testing, diagnostic imaging, preventive care, surgeries, ambulance rides, chemotherapy and radiation, and even extensive dialysis care for people with renal failure. Although many of these procedures may occur in a hospital, some may fall under Part B since they are provided by physicians, so it’s not always easy to determine what is inpatient versus outpatient care.
Sometimes people will ask us if they really need Part B. The answer for most people is absolutely, especially if Medicare will be your primary coverage or only coverage.
Parts A and B together make up what we call “Original Medicare”. They are the only two parts that you will sign up for at the Social Security office or Railroad Retirement Board. Even if you select a Medicare Advantage or a Medicare Supplement Plan (Medigap), you will still sign up (and pay for) for Medicare Parts A and B. Many people pay for their Part B premium in fact directly from their Social Security check.
Medicare Part C – Private Medicare Insurance
Part D is your prescription drug coverage. Unlike Medicare Part A and B, you will not enroll in Part D through the Social Security office. Instead, you will select one of the Part D plans available in your area from private insurance carriers.
Medicare drug plans are optional. You’ll have a monthly premium that you will pay to the insurance carrier. In return, they give you significantly lower copays on your medicines than you would pay if you had no Part D insurance.
There are rules for when you can enroll and dis-enroll from these drug plans, so be sure to visit the Medicare Part D section of our website for more details about how your drug coverage under Medicare will work. Like Parts A and B, if you do not sign up for Part D, you will face penalties if you enroll later. Please note that most since most Medicare Supplement plans do not provide creditable Part D coverage, you will want to enroll in Part D separately to avoid penalties down the road if your plan does not.
Costs involved with Medicare
Original Medicare is considered Part A and Part B. Part A is typically at a zero premium so long as you have worked for 40 quarters or more paying into social security benefits (or your spouse). Part B premium for 2023 is $164.90. There are many out of pocket expenses in the form of deductibles, co-pays and coinsurance with original Medicare. Unlike plans covered by the Affordable Care Act (Obamacare or ACA), there is no Out of Pocket Maximum on these out of pocket costs, which may come as a surprise to beneficiaries. The best resource is to the cost page on Medicare.gov: https://www.medicare.gov/basics/costs/medicare-costs
In addition, Original Medicare (Parts A and B) do not cover vision, dental, hearing or even Prescription Drug coverage.
Because of these gaps in coverage, it is imperative to determine the best avenue to fill in the holes Original Medicare does not cover whether it be through a Medicare Supplement plan (and usually Part D), or a Medicare Advantage Plan. We provide customized solutions for each and every client tailored to their unique health and financial goals.