BASICS OF MEDICARE
4 Parts of Medicare
What does it cover? What does it cost?
There are 4 parts of Medicare. But people don’t get all 4 parts.
Here’s which ones you need and which ones you don’t.
ORIGINAL MEDICARE
Parts A and B make up Original Medicare. This is what you get from the federal government.
Part A – Hospital Insurance
Part A covers you for inpatient care in a hospital or skilled nursing facility. Most people do not pay a monthly premium for Part A.
But you are responsible for paying a $1,600 deductible before Medicare starts to pay. And this is a unique deductible because you could potentially pay it multiple times per year.
Co-insurance is what you pay, after you have met your deductible.
When you are in the hospital you have to pay co-insurance of $400 per day for days 61-90 spent in the hospital.
But if you are in a skilled nursing facility then you have to pay co-insurance of $200 for days 21-100.
This cost can add up quickly if you spend a month or more in a skilled nursing facility.
Part B – Medical Insurance
Part B covers you for doctor visits, outpatient care like physical therapy, chemotherapy, and lab work.
Most people will pay $164.90 per month for Part B in 2023.
You may pay more if Medicare considers your income high due to IRMAA.
In addition to that premium, you are responsible for paying a $226 deductible before Medicare starts paying anything for part B.
After that Medicare pays 80% and you have to pay 20% of the costs.
There is NO CAP to 20% of costs regardless how large that bill is.
20% of $1,000 means you owe $200.
But 20% of $50,000 means you owe $10,000!
PART D – Rx DRUG COVERAGE
Original Medicare doesn’t cover any prescription medications. So what can you do to have coverage for something as important as medications?
Medicare requires you to have credible prescription coverage or you could face if you enroll later.
Drug plans are sold by insurance companies. They must be approved by Medicare in order to offer those plans. Part of that approval means they have to meet a minimum standard. They could be better than that minimum standard but Medicare requires them to be at least meeting that standard.
You normally have a choice of around 25 different plans with different premiums, different pharmacies you can use, and different costs for the same medications.
The average premium for Part D plans is around $30 per month. But that is just the average so the actual premium can vary greatly.
Part C – Medicare Advantage
Medicare Advantage is known as Part C. It’s an option you can choose. But it’s an alternative to a Medicare supplement.
A big difference from Original Medicare is this coverage is offered by insurance companies instead of the federal government.
This is an alternative option that we’ll cover in more detail now.
