What is Medicare?
Medicare is an important topic, and it’s important to understand the basics of it. That’s why we created this guide - to provide you with information about Medicare and what it covers. We want to make it easier and more understandable for everyone, so we’ll break down all the key points about Medicare in a simple to understand way. In this guide, we’ll discuss:
- What is Medicare?
- Differences between Medicare Parts A & B
- Medicare Part C (Medicare Advantage)
- Medicare Part D
- Premiums & Cost Sharing
- Enrollment Process
- Specialized Benefits
- Compare Private Insurance vs. Medicare
- Medicaid & Medicare
- Healthcare Services Not Covered by Medicare
By the end of this guide, you should have a much clearer idea of how Medicare works, and what it can do for you. Let’s get started!
What is Medicare?
Medicare is a health insurance program for people who are 65 and older, as well as those with certain disabilities. It was created in 1965 as part of the Social Security Act and has evolved to include all elderly and disabled individuals. The purpose of Medicare is to provide access to affordable healthcare for those who would otherwise not be able to afford it.
To qualify for Medicare, individuals must be either 65 years old or older, have a disability, or have end-stage renal disease (ESRD). Generally, if an individual is eligible to receive Social Security benefits, they are also eligible to receive Medicare.
Medicare provides coverage for a variety of medical services, including doctor visits, hospital care, lab tests, diagnostic imaging, prescription drugs, and more. There are four basic parts to Medicare: Part A, Part B, Part C, and Part D.
Medicare Parts A & B
Medicare is divided into four different parts. Parts A and B are known as Original Medicare – they provide hospital and medical insurance coverage, respectively. Part C is also known as Medicare Advantage and Part D is prescription drug coverage. Each part of Medicare has different costs associated with it.
Part A of Medicare covers the cost of inpatient hospital care, skilled nursing facilities, hospice care and in some cases, home health care services. Most people do not have to pay a premium for Part A, however, there are deductibles and coinsurances that must be paid.
Part B of Medicare covers the costs of medically necessary services such as doctor's visits, lab tests, x-rays, and preventive health care services. People must pay a monthly premium for Part B coverage, as well any applicable annual deductibles and coinsurances.
Medicare Part C (Medicare Advantage)
Medicare Part C, also known as Medicare Advantage, is an option for those who want more coverage than Original Medicare offers. It provides additional benefits such as vision and dental coverage, as well as coverage for preventive care services. Medicare Advantage plans are offered by private insurance companies which are contracted with Medicare.
Medicare Advantage plans come in several different types including Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service (PFFS) plans, and Special Needs Plans (SNPs). Each of these plans offers different levels of coverage and costs, depending on the features and services they include.
For example, HMO plans generally have lower out-of-pocket costs but require you to get your care from a network of providers. PPO plans provide more flexibility and access to a broader range of providers but usually have higher out-of-pocket costs. SNPs are designed for people with specific chronic health conditions or disabilities.
When choosing a Medicare Advantage plan, it's important to consider all of your options and to compare plans based on their premiums, deductibles, copayments, coinsurance, and other factors. Make sure the plan you choose covers the services you need.
Medicare Part D - Prescription Drug Coverage
Medicare Part D is a type of prescription drug coverage for people enrolled in Medicare. It helps pay for many of the medicines you need, including brand name and generic drugs. It is important to understand all of the different costs associated with this coverage so you can make an informed decision about which plan best fits your needs.
When you enroll in Medicare Part D, you will be required to pay a monthly premium as well as a yearly deductible. This deductible can vary depending on the plan that you choose. Once you meet your deductible, you will be responsible for a copayment or coinsurance amount when you get your prescriptions filled. The amount you pay at the pharmacy will depend on the type of plan you have chosen.
Most Medicare Part D plans also include an out-of-pocket limit (also known as a maximum). Once you reach this limit, you will no longer be responsible for paying any further costs for covered medications. It is important to note that this limit can vary depending on the plan you choose.
Medicare Part D plans also cover a wide range of prescription drugs, including both generic and brand name medications. Before enrolling in a plan, it is important to check to see if the drugs you take are covered and if there are any restrictions such as quantity limits or prior authorization requirements.
Premiums & Cost Sharing
Medicare is not a free program, and there are various associated premiums, deductibles, coinsurance, and out of pocket maximums you need to be aware of. Here is an overview of all the potential costs you could encounter as part of your Medicare coverage.
Premiums
Premiums are recurring payments that you must make in order to maintain your coverage. For Part A, premium amounts vary depending on your work history. Part B premiums are based on your income and can change from year to year. Part C premiums depend on the type of policy you have and your location, while Part D premiums depend on the coverage selected.
Deductibles
A deductible is an amount that must be paid by you before your insurance begins to cover the cost of services. For Part A the deductible in 2020 is $1,408, for Part B it's $198, and Part C & D plans may have varying deductibles depending on your plan.
Coinsurance
After the deductible, you will pay a portion of the bill known as coinsurance. With Part A and some Part C plans you will pay a set percentage of the bill after the deductible is reached. For Part B services, you will typically pay 20% of the cost of covered services.
Out-of-Pocket Maximums
Once you reach the out-of-pocket maximum, you will no longer have to pay for the services covered by your plan. With Part A and Part B, the out-of-pocket maximum in 2020 is $6,350. For Plans C and D, the out-of-pocket maximum is determined by your plan.
Enrolling in Medicare
Enrolling in Medicare is a straightforward process, but it's important to be aware of the deadlines and paperwork associated with it. Here are the steps for enrolling in Medicare:
- Figure out whether you’re eligible for Medicare – You must be 65 or older and/or have a qualifying disability.
- Decide if you need to sign up for Part A and/or Part B. If you or your spouse have worked and paid into Social Security for 10 years or more, you may qualify for free premium Part A coverage.
- Review available options for Part C (Medicare Advantage Plans) or Part D (Prescription Drug Plans).
- Select a plan that fits your needs and budget.
- Complete and submit the enrollment form to your chosen plan.
When enrolling in Medicare, it's important to note that there is an initial enrollment period that lasts seven months. The time frame begins three months before your 65th birthday, includes your birthday month, and ends three months afterward. After that period, you may be subject to penalties and other fees.
It’s also advised to consider the total cost for your coverage when signing up for Medicare, including premiums, deductibles, coinsurance, and other out-of-pocket costs.
If you have any questions about enrolling in Medicare, contact your local Social Security office or consult your doctor.
Specialized Benefits for People with Special Needs
Medicare provides specialized benefits for people with certain disabilities or illnesses. These benefits are designed to help make sure individuals get the quality care they need and can afford. People who qualify will often pay reduced premiums and have lower out-of-pocket costs.
Some of the specialized benefits offered through Medicare include:
- Home health care services for those who cannot leave the house to go to a doctor
- Skilled nursing facility care for those who need around-the-clock medical monitoring
- Hospice care for those facing end of life choices
- Transportation to medical appointments for those without access to transportation
- Mental health services for those struggling with depression, anxiety, and other mental health issues
- Physical therapy services for those recovering from surgery or illness
These benefits are available to people with chronic or disabling conditions. Individuals may be eligible if they receive Supplemental Security Income and/or Medicaid.
Comparing Private Insurance vs Medicare
When it comes to health care coverage, it’s important to understand the differences between private insurance and Medicare. Private insurance is typically provided through employers or purchased directly from a private insurer. It may include a wide variety of coverage options, including hospitalization, doctor visits, and medical supplies. Medicare, on the other hand, is a government-funded health insurance program specifically for people over the age of 65 and certain individuals with disabilities.
One of the major differences between private insurance and Medicare is the amount of coverage each offers. Private insurance generally provides more comprehensive coverage, with a wider range of benefits such as prescription drugs and vision care. Most Medicare plans provide coverage for hospital stays and doctor visits, but they do not usually cover vision or dental care, or long-term care. Additionally, private insurance plans often have deductibles and coinsurance that the insured must pay, while Medicare does not.
The cost of private insurance plans varies greatly depending on the plan type and provider, while the cost of Medicare is generally lower. Medicare Part A and Part B have no premiums or deductibles; however, most people who are eligible for Medicare will need to pay for additional coverage through Part C (Medicare Advantage) plans or Part D (Prescription Drug Coverage) plans. For people who are eligible for Medicaid, many states offer low or even free premiums for Medicare Part A and Part B.
When comparing private insurance and Medicare, it's important to consider your own needs and budget when deciding which plan is right for you. Private insurance may be suitable for those who want more comprehensive coverage, while Medicare may be beneficial for those who need more basic coverage and have limited incomes.
Medicaid & Medicare: How Do They Work Together?
Medicare and Medicaid are two different health programs with unique purposes and areas of coverage. Medicare is a federal health program for seniors (65+) and disabled individuals, while Medicaid is a joint federal/state health program for those with a lower income or for those who meet certain criteria related to disability or age. Both programs provide health coverage but they cover different types of services.
Medicare provides coverage for hospital visits, doctor visits, preventive care, and prescription drugs. It also provides coverage for nursing home care and some medical equipment. Medicaid, on the other hand, covers a wider range of services including long-term care services, vision and dental care, mental health and substance abuse treatments, and home and community-based services.
The two programs work together to help people who need assistance with medical costs and services. Those who quality for Medicare may also qualify for Medicaid if their income and assets meet certain criteria. In this case, Medicaid could help cover the cost of premiums, deductibles, coinsurance, and copayments. For those who qualify for both programs, Medicaid will pay what Medicare does not cover for medical services.
Healthcare Services Not Covered by Medicare
Medicare does not cover all healthcare services. It’s important to know what is and isn’t covered so that you can plan for additional healthcare costs if needed. Here are some of the services not covered by Medicare:
- Most long-term care services (like assistive care)
- Most dental care, dentures, or corrective devices
- Most vision care, including eyeglasses and examinations
- Hearing aids and exams
- Cosmetic surgery
- Acupuncture
It’s also important to note that there may be additional services not covered by your particular Medicare plan. Be sure to review your plan for an accurate list of what is and isn’t covered.
If you need these healthcare services and they aren't covered by your Medicare plan, you will need to pay for them out-of-pocket or find an alternate solution. Some non-traditional options like barter programs or sliding scale fees may be available through community clinics or your doctor's office. Additionally, some private health insurance plans may include coverage for some of these otherwise non-covered services. Check with your provider to learn more.
Conclusion
Medicare is a federal health insurance program designed to cover a range of medical services for people over the age of 65 and certain younger individuals with disabilities. It can help to alleviate some of the financial burden of medical costs and give access to a variety of health services. Medicare consists of four parts: Part A, B, C (also known as Medicare Advantage), and D. Each part offers different levels of coverage and cost sharing. The enrollment process for Medicare is straightforward, but there are important deadlines to keep in mind. Additional specialized benefits are often available to those with specific needs. In comparison to private insurance, Medicare offers cost-effective coverage, though it does not cover all healthcare services.
We hope this guide helped you gain an understanding of Medicare and what it covers. If you have any further questions, please consult with your doctor or visit the official Medicare website for more information.
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Diane Carbo