What is medicare and who does it cover? This simple question often times gets a variety of different answers. It doesn’t matter if you’re approaching the age of 65 or if you’ve had medicare for 10 years, get to know medicare first and all else will make sense. If you’re considering whether you should take medicare or if you can take medicare, we’ll clarify the confusing letters, the parts, the plans ect.
What is Medicare?
Medicare is health insurance provided by the federal government for certain eligible individuals. The only people that are eligible for medicare are:
- Over the age of 65
- Qualify to draw Social Security Disability payments
Just like every health insurance policy medicare is designed to assist in paying for your medical bills for doctor office visits, testing, surgery, hospitalizations and prescription medications. The biggest difference between every health insurance policy you’ve ever had and medicare is that medicare is actually a government program under the CMS (Centers for Medicare and Medicaid Services).
- (Medicare is completely separate from medicaid. Medicaid is financial assistance for medical services for those with a low income and has nothing to do with retirement age or disability. It is possible to have medicare and medicaid at the same time.)
The Parts of Medicare
Medicare itself is made up of 4 distinct parts labeled A, B, C and D. That sounds so easy! Oddly enough, these letters are where many begin to get lost and for good reason but we’ll come back to that later.
- Hospital coverage. Put another way it covers all things inpatient including skilled nursing care, hospice, and inpatient hospitalization. Part A has a deductible that is currently $1316. This deductible is not annual but will cover you for 60 days.
- Medical coverage. This portion of medicare covers all things outpatient including doctor office visits, outpatient surgery, lab testing and clinical visits. There is an annual deductible of $183 followed by the infamous 20% you’re responsible to meet.
- Advantage Plans. This portion of medicare regulates and oversees private insurance policies offered by major medical companies. Often the most confusing part of medicare you can learn more about it here. Most important is that this replaces Part A and B.
- Prescription Plans. Much like part C, Part D regulates and oversees private insurance companies offering prescription coverage only. It’s important to note that if you opt out of taking a prescription plan for a year medicare will assess a penalty to you that is permanent.
It’s important to understand all 4 parts of medicare first before looking into some form of supplement to cover the costs medicare doesn’t cover. Firstly because you of course would want to know what a supplement would be paying for. Secondly because you don’t want to make duplications in coverage or choose the wrong type of coverage.
The first 2 parts of medicare parts A and B together make up what is commonly known as Original Medicare. Doctor and hospital coverage together make up a comprehensive health insurance plan. They are both provided by and paid for by the federal government. This means that once you’re on medicare A and B if you go to your doctors office and use your medicare to pay for the visit the doctor’s office send your bill to the federal government who pays their portion and then the remainder will be billed to you.
Parts C and D
Medicare parts C and D are not the government. These are plans offered by private insurance companies that have contracts with the federal government to offer medical insurance for seniors in place of medicare. You can choose to enroll in one of these plans but while you are participating in an advantage plan you will not be able to use your red white and blue medicare id card. These companies have to abide by strict standards set by medicare to ensure you’re always receiving as good if not better coverage than Original Medicare. These plans for Part C and D ARE medicare. This is an often revisited and misunderstood topic. Many people are hesitant to look into an advantage plan because they don’t want to either give up their medicare, or opt out of their medicare. While you’re enrolled in a medicare part C plan all of your doctor visits, hospitalizations and surgeries will get billed to the insurance company you signed up with, not medicare. As a result the providers you see will need to accept the insurance plan you’re enrolled in, not medicare.Despite all of this the very moment you disenroll from your plan you’ll be defaulted back to Original Medicare so there is never any risk of losing medicare by enrolling in an advantage plan.
Wait, More Letters?
Finally there are other plans known as medigap plans and sometimes called supplement plans. These are insurance policies that are designed to cover medical expense costs that Original Medicare does not. The policies work exclusively with Original Medicare and will not work at all if you’re enrolled in an advantage plan (part C). Each of the plans are named with a letter of the alphabet so as alluded earlier the confusion between Medicare Part A (hospital coverage) and medigap plan A (a supplement insurance) is natural. Talk to your agent about the difference between advantage plans and medigap plans and which would be best suited to your needs.