People tend to have many questions about what Medicare is and how it works. When you first qualify for the program or if you have a loved one who relies on it, it can seem complex and unclear at first. The answers are simpler than you might think, and you’re in the right place to see them answered.
In short, Medicare is a national health insurance program for people who are 65 years of age or older. Additionally, younger people may qualify under specific conditions. Confusion about the difference between Medicare and Medicaid is common, but these are different programs. Medicaid exists to help low-income individuals regardless of age, and it’s possible to qualify for it as well as Medicare. As of 2020, over 56 million people rely on Medicare for their health care coverage.
Medicare exists in four parts. Part A, Part B, Part C, and Part D each play a distinct part in laying down how Medicare works and the care it provides. While Medicare covers the majority of necessary medical expenses, it also includes substantial copays and deductibles. However, beneficiaries can use supplemental plans to reduce or eliminate these out-of-pocket expenses.
UNDERSTANDING THE FOUR MEDICARE PARTS
When Medicare started, there was only Part A and Part B. These constitute traditional Medicare coverage, while Part C allows for the private use of Medicare benefits. The Clinton administration created this element to the Medicare program in 1997. Nine years later, the Bush administration introduced the fourth part, Part D.
WHAT DOES MEDICARE PART A DO?
Medicare Part A is insurance for various forms of inpatient care such as visits to skilled nursing facilities or hospitals. Hospice care, home health care, and the cost of a stay in the hospital all fall under the Part A umbrella.
Part A is free for most people above the age of 65. This is because they’ve spent their working years paying taxes into Medicare, which works to prepay the program for them. Anyone who doesn’t qualify for free coverage can obtain Medicare coverage by paying their own premiums. Part A has a substantial deductible, but it’s possible to supplement a Medicare plan to eliminate this out-of-pocket expense.
While Part A covers inpatient stays and visits to facilities, it does not cover medical procedures and care that occur at them. This is where Medicare Part B comes into play.
WHAT DOES MEDICARE PART B DO?
Medicare Part B serves a complementary role to Part A by providing inpatient medical coverage. It provides virtually all coverage for medical procedures that Medicare includes. With Part B, beneficiaries have insurance for doctor’s visits, cancer therapy, dialysis, and much more.
Social Security sets the price of Part B with a progressive pricing model that they update year by year. Those in higher income brackets pay a larger premium for Part B, while people who earn less pay less.
WHAT IS MEDICARE PART C AND MEDIGAP?
Medicare Part C, Medicare Advantage, and private Medicare coverage are all the same thing. Enrolling in Part C is essentially requesting that the government offloads your medical risk onto a private insurer. Afterward, the insurer will receive the value of your Medicare benefits while covering you in line with your chosen plan.
While many people use Medicare Advantage plans and the number rises steadily, traditional Medicare is still more popular. While turning to a private insurer through Part C is one way to expand your coverage, you can also stick with Medicare Parts A and B while enrolling in Medigap plans.
Medigap: Medicare Supplemental Insurance
There are ten Medigap plans, and they each exist to eliminate certain copays, deductibles, and coinsurances in Medicare. With Medicare Part A and B and a comprehensive plan such as Plan F, you can enjoy Medicare with no out-of-pocket expenses. Choosing between Medigap and Medicare Advantage depends on your unique needs, the plans available to you, and your healthcare priorities.
WHAT DOES MEDICARE PART D COVER?
From 1965 to 2006, Medicare included no coverage for prescription drugs. With drug prices on the rise, the government created Medicare Part D so that beneficiaries could access cheaper drugs. Beneficiaries sign up for Medicare Part D by choosing a carrier and enrolling in their plan, at which point they benefit from Part D coverage.