I believe a thousand page thesis could be written on the subject, What is Medicare. In this article I’ll try to narrow it down to more like a thousand words. One way I’ll do that is by skipping all of the history of how it was started and why, which much has already been written about. Instead I’m going to break it down into a simple to understand topic with bullet points that should give you a good understanding of What is Medicare?
Medicare consists of 4 basic parts:
- Part A
- Part B
- Part C
- Part D
Medicare Part A
Medicare Part A covers your hospital room and board, labs, skilled nursing, hospice, and home health care. I could simply regurgitate what Medicare.gov says on it’s website about what specifically is covered by Medicare Part A, but I believe what would be more useful to you is explaining what is not covered by Medicare Part A. You are responsible for paying as of now:
- $1316 co-pay per 60 day inpatient hospital stay
- $329/day co-pay for for days 61-90 of a hospital stay
- $658/day days 91+ for 60 days (these days are gone once they are used)
- $0 days 1-20 for inpatient skilled nursing care
- $164.50/day days 21-100, all costs starting on day 101
These costs that you have to pay for Medicare Part A increase on a yearly basis.
Medicare Part B
Medicare Part B covers doctor’s visits as well as physician care while you are in a hospital including surgery and any supplies that may be needed. Again I’ll show you what is not covered by Medicare Part B
- $134/month – $428.60/month depending on your income level
- $183 annual deductible
- 20% of Medicare approved charges after the deductible is met
As you can see there is quite a bit that Medicare Part A and Part B do not cover. One thing that generally is overlooked by many is the 20% that you must pay under Part B. With private insurance than many of us are familiar with, there is typically some kind of MOOP (Maximum Out of Pocket) that caps that 20% in order to protect us. Medicare has NO MOOP or cap meaning that your 20% that you must pay goes to infinity. With healthcare costs on the rise, you must protect yourself in this area! This is typically done by signing up for a Medigap or Medicare Supplement policy that pays some or all of what Medicare does not pay. The other option that many have been taking recently as well is signing up for Medicare Part C.
Medicare Part C
Medicare Part C is a way of covering your Medicare Part A and Part B through private insurance. This private insurance typically consists of an HMO or PPO that you are probably already familiar with. Medicare requires the private insurance companies to at least provide the same coverage or more that you would receive through Medicare Part A and Part B. This means that you don’t lose coverage by signing up with a Medicare Part C company. These companies always have a network of providers that you are required to use, or should use in order to keep your costs down. These plans have varying costs that vary from plan to plan and even from county to county. Some typical costs that you should expect to pay would be:
- $0-$100 for a typical monthly premium with most plans being closer to the $0 as of now
- $0-$50 for a typical copay to see a physician. Expect to pay less for an in-network primary care doctor and more for an out of network specialist
- $200-$1000/day copay for a hospital stay. There is usually a cap of the amount of days that you are charged.
- $0-$500 copay for diagnostic testing such as MRI’s, etc…
- $250 or more copay for outpatient surgery. Many plans are now charging 20% or more for Outpatient as well as diagnostic testing
- $0-$100 copay for prescription drugs
These are not all, but are most of the costs that you will encounter when using a Medicare Part C private health insurance plan. ALWAYS verify the plan’s network of providers so that you are not caught being unable to see the provider of your choice.
Medicare Part D
Medicare Part D is coverage for prescription drugs and is way more complex than it needs to be. You should sign up for a Medicare Part D plan as soon as you are eligible in order to avoid paying a penalty by signing up too late. Currently, the penalty is equal to 1% per month calculated off of the average Medicare Part D premium. Medicare Part D is like Medicare Part C in that is also provided through private insurance companies. Some typical costs that you should expect to pay would be:
- $15-$200/month premium
- $0-$100 copay for prescription drugs
- $400 maximum deductible this year
- Higher costs inside the coverage gap (Donut Hole) starting at $3700
Expect to see tiers in every Part D drug plan with higher copays as the tiers go higher. Also, not every drug is covered by every Medicare Part D drug plan so be sure to check their formulary to see if your drug plan is covered. The best place to do this is on Medicare.gov, but it can be quite cumbersome. I’ve created a quick 3 minute video that will walk you through how to find the best Medicare Part D plan for you!
And there you have it! A synopsis of the question…What is Medicare in under a thousand words instead of in a 1000 page document that no one will ever want to read. I wish you the best in your quest for Medicare coverage, and feel free to ask any questions that you have. I’ll be glad to answer as many as I can.