The A, B, C, and D of Medicare
Breaking down the basics and what each part covers.
Whether your 65th birthday is on the horizon or a while off yet, you should understand the parts of Medicare—what they cover and where they come from.
Parts A and B: Original Medicare. Part A is hospital insurance. It provides coverage for inpatient stays at medical facilities. It can also help cover the costs of hospice care, home health care, and nursing home care—but not for long and only under certain parameters.[1,2]
Seniors are frequently warned that Medicare will pay for only a maximum of 100 days of nursing home care (provided certain conditions are met). Part A is the part that does so. Under current rules, you pay $0 for days 1–20 of skilled nursing facility care under Part A. During days 21–100, you may be required to pay a $170.50 daily coinsurance payment.[2]
Part B is medical insurance and can help pick up some of the tab for physical therapy, physician services, expenses for durable medical equipment (e.g., hospital beds and wheelchairs), and other medical services, such as lab tests and health screenings.[1]
Part B isn’t free. You pay monthly premiums to get it and a yearly deductible (plus 20% of costs). The premiums vary according to your income level. The standard monthly premium amount this year is $135.50. The current yearly deductible is $185. (Some people automatically receive Part B coverage, but others must sign up for it.)[3]
Part C: Medicare Advantage plans. Insurance companies offer these Medicare-approved plans. To maintain your Part C coverage, you must keep up your payment of Part B and C premiums. To say not all Part C plans are alike is an understatement. Provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits can vary widely, so shopping around is wise. During Medicare’s annual open enrollment period (October 15 to December 7), seniors can switch out of Original Medicare to a Medicare Advantage plan or vice versa—although any such move is wiser with a Medigap policy already in place.[4,5]
How does a Medigap plan differ from a Part C plan? Medigap plans (also called Medicare Supplement plans) emerged to address the gaps in Part A and Part B coverage. If you have Part A and Part B, a Medigap policy can pick up some copayments, coinsurance, and deductibles for you. You pay Part B premiums in addition to Medigap plan premiums to keep a Medigap policy in effect. These plans no longer offer prescription drug coverage.[6]
Part D: Prescription drug plans. While Part C plans commonly offer prescription drug coverage, insurers also sell Part D plans as a standalone product to those with Original Medicare. As per Medigap and Part C coverage, you need to keep paying Part B premiums in addition to premiums for the drug plan to keep Part D coverage going.[7]
Every Part D plan has a formulary, a list of medications covered under the plan. Most Part D plans rank approved drugs into tiers by cost. The good news is that Medicare’s website will help determine the best Part D plan for you. Go to medicare.gov/find-a-plan to start your search; enter your medications, and the website will do the legwork for you.[8]
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
Citations1 - mymedicarematters.org/coverage/parts-a-b/whats-covered/ [1/29/19]2 - medicare.gov/coverage/skilled-nursing-facility-snf-care [1/29/19]3 - medicare.gov/your-medicare-costs/part-b-costs [1/29/19]4 - medicareinteractive.org/get-answers/medicare-basics/medicare-coverage-overview/original-medicare [1/29/19]5 - medicare.gov/sign-up-change-plans/joining-a-health-or-drug-plan [1/29/19]6 - medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap [1/29/19]7 - ehealthinsurance.com/medicare/part-d-all/medicare-part-d-prescription-drug-coverage-costs [1/29/19]8 - https://www.medicare.gov/drug-coverage-part-d/what-drug-plans-cover [1/29/19]
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