Parts of Medicare – Are you turning 65 soon? Do you need a refresher on how Medicare works? If so, this will be a helpful article for you. There are several working parts in the Medicare program, and it can be difficult to remember how they work together to provide you with comprehensive medical coverage.
Today, we will review the parts of Medicare to make sure you know how to use your benefits to the fullest.
The Parts of Medicare
There are four parts of Medicare: Parts A, B, C, and D. There are also a few ancillary products you can choose to add more coverage, but we’re going to stick with the basics today.
Part A providers your hospital insurance. You can think of Part A as your coverage for room and board during a hospital stay. It will also work if you get admitted to a skilled nursing facility.
Part A has a deductible and coinsurance costs that you’ll be responsible for paying. The deductible is $1,556 in 2022, and it applies every time you become an inpatient at a hospital, as long as you’ve been out of the hospital for 60 consecutive days. That’s right; you could pay the Part A deductible multiple times in one year.
After that, you’ll have coinsurance expenses based on how many days you’ve been hospitalized. The first 60 days are taken care of by Part A, but you’ll pay $389 per day from day 61 to day 90. If you have any of your 60 lifetime reserve days left starting on day 91, your cost will be $778 per day. After those are exhausted, you’re responsible for the full inpatient expense each day.
You can see that Part A expenses can add up rather quickly. The nice thing is that most Medicare beneficiaries are eligible to receive Part A premium-free. If you or your spouse has paid FICA taxes for ten years, you’ll be eligible for Part A at no cost. (Your FICA taxes paid your Part A premiums in advance.) If you haven’t met the 10-year requirement, you’ll still be eligible for Part A, but you will pay a premium, which could be up to $499 each month.
Part B provides outpatient insurance. You’ll need Part B for doctor visits, surgeries, diagnostic tests, preventive care, and durable medical equipment.
The Part B deductible of $233 (in 2022) is an annual deductible, so you’ll only pay it once per year. After that, Part B has 80/20 cost-sharing. You’ll pay 20% of covered services, and Medicare pays 80%. If you visit a doctor who doesn’t accept Medicare, which is pretty rare, you’ll be responsible for Part B excess charges, which could add on another 15%.
Unlike Part A, Part B is not free. The standard premium in 2022 is $170.10. Individuals who earn a higher income are subject to IRMAA, an Income Related Monthly Adjustment Amount. IRMAA will increase your Part B premium based on your adjusted gross income (AGI) from 2 years prior.
Part C is Medicare Advantage. If this is something you’re interested in, you’ll need to learn a lot more than what we’ll go into here. But let’s look at the basics of how Part C works.
The Medicare program allows private insurance companies to sell Medicare Advantage plans to people who are enrolled in Parts A and B. Part C plans must offer at least the same amount of benefits found in Parts A and B, but most offer even more. If you decide to enroll in a Part C plan, all your Medicare benefits will be consolidated into that one plan, and the insurance carrier will be responsible for your claims.
Medicare Advantage plans are attractive for several reasons. They offer extra benefits, a convenient all-in-one Medicare solution, and very low monthly premiums. The only limitation of these plans is that they require members to get care within specific networks, and some have strict rules on how you can receive the care you need.
Part D of Medicare includes prescription drug coverage. These are also referred to as PDPs (prescription drug plans), and you can remember this by thinking, “Part D for drugs.”
Like Part C plans, Part D plans are sold by private insurance companies. Not all plans are available everywhere, so you’ll have to look at which ones are available where you live. To choose the best one for you, you should compare your current medications with the drug formulary. A drug formulary is the list of covered medications within a Part D plan.
Premiums for Part D plans are relatively low. The more medications you take, the higher your premium. Most plans use the standard deductible, which is $480 in 2022. However, common medications like those for high cholesterol are often not subject to the deductible.
Even if you’re not currently taking any medications, it’s important that you enroll in a Part D plan. (Unless it’s already included within your Part C plan.) You should enroll even if you’re not on any prescriptions because if you don’t, you’ll pay penalties later.
We can go into a lot more details about the parts of Medicare, but this information should be plenty for you to understand how your coverage works and help you decide if you’d like to enroll in any supplemental insurance products. If you have more questions, our Medicare advisors are here to help. Give our office a call and schedule a visit with a licensed insurance agent.