The ABCD’s of Medicare
- Part A – Hospital Services
- Part B – Outpatient / Physician Services
- Part C – Medicare Advantage Plans
- Part D – Prescription Drug Plans
- Medicare Supplement Plans
Part A – Hospital Services
Medicare Part A beneficiaries receive coverage for hospital expenses that are critical for inpatient care. These include a semi-private room, nursing services, meals, medications required during inpatient treatment, and other related services and supplies from the hospital.
Medicare Part A insurance DOES NOT cover a private hospital room, private-duty nursing, or personal care items such as shampoo, telephone, and television. It also does not cover the cost of blood unless the hospital receives blood from a blood bank without a charge. For hospitals purchasing the blood, the cost of the first three units is the beneficiary’s responsibility.
Coverage Includes:
- Inpatient Hospital Care
- Hospice Care
- Skilled Nursing Facility
- Nursing Home Care – Provided if Custodial Care is not the only care required
- Home Health Care – Conditioned Home Health Services
Costs Associated with Part A:
- Monthly Premium – $0 If Medicare Taxes were paid for 10 years
- Annual Deductible – The amount changes annually. $1,600.00 in 2023
- Inpatient Hospital & Skilled Nursing Co-Pays
- 20% Co-Insurance – The portion of Covered Medical Expenses that Medicare does not pay
Part B – Outpatient / Physician Services
Medicare Part B beneficiaries receive coverage for medical expenses that are important for outpatient health care. Anyone eligible for Medicare Part A is qualified for Medicare Part B by enrolling and paying a standard monthly premium (premium tiers based on Modified Adjusted Gross Income two years prior to enroling).
Coverage Includes:
- Physician Services
- Outpatient Surgery
- Lab & X-ray Services
- Ambulance Services
- Some Preventive Services
- Durable Medical Equipment
Costs Associated with Part B:
- Medicare Part B Monthly Premium – The amount changes annually
- Annual Deductible – The amount changes annually
- 20% Co-Insurance – The Covered Medical Expenses Medicare does not pay
- Any late penalties incurred from not obtaining Part B Coverage when first eligible
A Partial List of Services NOT Covered by Medicare Part B:
- Preventative Care & Wellness Programs
- Routine Hearing Exams & Hearing Aids
- Routine Vision Exams & Corrective Lenses
- Comprehensive Dental Coverage
- Worldwide Emergency Assistance Outside The U.S.
Part C – Medicare Advantage Plans
One of the options a Medicare beneficiary has as a resource to tackle Original Medicare’s Co-Insurance, Co-Pays, and Deductibles is using a Medicare Advantage plan, also known as Part C.
Medicare Advantage plans are Medicare approved insurance plans offered through private health insurance companies. They combine Original Medicare, Part A, Part B, and generally Part D into one plan. Enrolling in a Medicare Advantage plan requires a person to first enroll in Original Medicare Part A & Part B and to reside in the plan’s service area.
Medicare Advantage plans, at a minimum, include all benefits, services, and coverages outlined in Original Medicare. They generally have additional benefits and services Medicare does not cover, such as:
- Preventative Care & Wellness Programs
- Routine Hearing Exams & Hearing Aids
- Routine Vision Exams & Corrective Lenses
- Comprehensive Dental Coverage
- Worldwide Emergency Assistance Outside the U.S.
If a person enrolls in a Medicare Advantage plan, they must continue to pay their Original Medicare Part B premium to the Social Security Office. With that said, Medicare Advantage plan premiums (paid to the insurance company) vary, but there are many $0 premium plans to choose from. This is a great option for reducing the exposure to Medicare’s 20% co-insurance. By selecting a Medicare Advantage plan, the insurance company becomes your primary insurance, and by doing so, it has very distinct advantages and disadvantages, such as:
Advantages:
- Low or no monthly premium
- Part D is generally included
- Provides predictable out-of-pocket costs
- Usually includes extra benefits not provided by Original Medicare
Disadvantages:
- As a rule, working within a network is mandatory
- Normally, working with a Primary Care Physician is necessary
- In general, requires a referral to see a Specialist
Two Types of Medicare Advantage Plans: HMO or PPO
HMO – Health Maintenance Organization:
- Covers eligible services from providers and facilities inside the network only, except in an emergency
- As a rule, uses a network of providers/facilities within a specified geographical area
- In-Network, Out-of-Pocket expenses are limited
- Out-of-Network expenses are mostly out-of-pocket
- Normally, require a Primary Care Physician
- Typically, require a referral to see a Specialist
- Generally, require pre-authorization for procedures
PPO – Preferred Provider Organization:
- Cover eligible services for providers and facilities inside the network
- Cover eligible services for providers and facilities outside the network (at a lower amount than in-network)
- Have broad network with nation-wide coverage
- Out-of-Pocket expenses are limited
- Normally, do not require a Primary Care Physician
- Typically, do not require a referral to see a Specialist
- Generally, do not require pre-authorization for procedures
Part D – Prescription Drug Plans
Part D Prescription Drug plans are Medicare-approved plans offered through private health insurance companies. These plans are either found as a Stand-Alone Prescription Drug Plan or included in a Medicare Advantage Plan (Part C). Part D Prescription Drug plans cover brand name and generic medications supplied by a pharmacy. Coverage varies by plan, and each plan has a formulary. A formulary is a list of the drugs covered by that plan.
The Costs Associated with Part D:
- Part D monthly plan premium
- Deductible
- Co-pay
- Costs associated with the CMS Part D Coverage Stages (see below)
- Any late penalty incurred from not obtaining Part D Coverage when a person is first eligible
Understanding Medicare Part D Coverage Stages:
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Annual Deductible: At this stage, prescriptions are paid by the beneficiary until the deductible is met. Not all Part D Plans have a deductible. If the plan does NOT have a deductible, the coverage starts with the first filled prescription.
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Initial Coverage: At this stage, the beneficiary pays a co-pay, and the plan pays the rest. This stage continues until the *Total Drug Costs reach the amount set by CMS for that calendar year.
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Coverage Gap (Donut Hole): In this stage, after the *Total Drug Costs reach the amount set by CMS for that calendar year, the co-pay becomes 25% of the costs for brand-name and generic drugs. This stage continues until the *Total Out-of-Pocket Costs reach the amount set by CMS for that calendar year.
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Catastrophic Coverage: In this stage, after the *Total Out-of-Pocket Costs reach the amount set by CMS, only a small copay or coinsurance is owed. This stage continues for the rest of the calendar year.
*Total Drug Costs: Equals the amount a beneficiary pays (deductible and co-pay) and what the plan pays for prescription drugs each calendar year. It does not include the plan premiums.
*Total Out-of-Pocket Costs: Equals the amount the beneficiary pays, including the deductible for prescription drugs each calendar year. The total out-of-pocket costs also include the discount paid by the drug manufacturers during this stage. It does not include the plan premiums.
Note – The Part D deductible and coverage gap do not apply when a person qualifies for Extra Help.
Medicare Supplement Plans
A Medicare Supplement plan helps “fill the gap” by partially or fully covering expenses that original Medicare Part A and Part B don’t cover.
For instance, Medicare Part B generally covers 80% of Part B expenses. You’re responsible for the remaining 20%. A Medicare Supplement insurance plan will partially pay your share.
Medicare Supplement plan benefits are “standardized.” This simply means that no matter what insurance company you chose to enroll through, the Part A and Part B benefits are the same with each company. The difference between companies is their premium rates, financial stability, and their customer service.
Advantages:
- You can choose any doctor, specialist or facility that accepts Medicare
- No referral required